Goldsmith v Kang

1. [1]

   HIS HONOUR: By an amended statement of claim filed 11 August 2017 (“the ASOC”), Mr Barrie Goldsmith (“the plaintiff”) sought final relief in the form of a freezing order against Mr Edward Kang (“the defendant”) pursuant to r 25.14 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) and costs. The freezing order was sought with respect to monies owed in consequence of judgments entered in various courts. An interim freezing order was made by this Court on 8 June 2017 (“the interim freezing order”). Over the course of the proceedings all monies owning by the defendant (under the original statement of claim and the ASOC) were paid. What remains for adjudication is the question of costs and the retention of an interim freezing order.

COURSE OF THE PROCEEDINGS

1. [2]

   These proceedings were commenced by way of statement of claim filed on 6 June 2017 (“the statement of claim”).

2. [3]

   In the statement of claim, the plaintiff pleaded:

   1. (1)

      As at the date thereof, the defendant was indebted to him for five amounts pursuant to judgments or orders of Courts (at para 3); and

   2. (2)

      There was sufficient prospect that judgments would also be registered in this Court following the issue of certificates of determination in respect of two sets of proceedings brought by the plaintiff against the defendant in the Local Court of New South Wales (at para 4).

3. [4]

   On 8 June 2017, the plaintiff filed a notice of motion seeking an interim freezing order (“the motion”), which was before the Duty Judge, Davies J. His Honour made an interim freezing order in the following terms:

4. [5]

   On 8 June 2017, the Court also made, inter alia, the following orders:

5. [6]

   The defendant did not, on or before 13 July 2017, file and serve any affidavits in answer or any defence.

6. [7]

   On 9 August 2017, the defendant filed in the Registry and served both an affidavit and a defence, notwithstanding that he did not have leave to do so.

7. [8]

   On 10 August 2017, the Common Law Registrar, Registrar Bradford, made the following orders:

8. [9]

   On 11 August 2017, the plaintiff filed and served the ASOC. The effect of the amendments was to substitute the amounts owed as at the date thereof:

   1. (1)

      between 6 June and 8 August 2017, the defendant had paid the five amounts that had been pleaded in the statement of claim; and

   2. (2)

      to claim the costs of the first and second Local Court proceedings that had been subsequently assessed in the amounts of $30,595.47 and $8,445.50, respectively.

9. [10]

   On 23 August 2017, there was no appearance by or on behalf of the defendant. Registrar Bradford made the following orders:

10. [11]

    The defendant did not:

    1. (1)

       On or before 31 August 2017, file any defence to the ASOC, notwithstanding the order made on 10 August 2017.

    2. (2)

       On or before 31 August 2017, file any further affidavits upon which he relied in answer to the motion, notwithstanding the order made on 10 August 2017.

    3. (3)

       On or before 31 August 2017, give discovery of categories of documents, notwithstanding the order made on 23 August 2017.

11. [12]

    On 25 October 2017, the ASOC was listed for final hearing, together with the motion, before the Court as presently constituted. At the outset of the proceedings, counsel for the defendant, Mr G D McDonald, sought to make an oral application that the proceedings brought by the plaintiff, by the ASOC, were incompetent and should be struck out. The defendant, in that respect, submitted: “[t]he claim for final relief in the [amended] statement of claim is, in effect, a permanent injunction restraining my client from ever dealing with his assets”. It was contended that such a result is not supported by r 25.14 of the UCPR (“the competency issue”).

12. [13]

    Prior to considering the competency issue raised by the defendant, the Court returned to the standing of the defendant in light of the orders made by Registrar Bradford on 23 August 2017. Counsel for the defendant confirmed the defendant’s non-compliance with order 1 of 23 August 2017 and accepted that, in the result, by operation of order 2, a self-executing order, the defendant’s defence of 9 August 2017 was struck out and the defendant was debarred from defending.

13. [14]

    Notwithstanding the nature and effect of order 2, the defendant sought to by-pass or delay the effect of the order 2 by making two oral applications to vary the orders of Registrar Bradford made on 10 and 23 August 2017, respectively. In short, it was submitted that a variation of the due date, with respect to both the filing of a defence to the ASOC and the giving of discovery, would effectively grant the defendant an extension of time, which would enable the defendant time to comply with the orders. In that light, counsel for the defendant further submitted: “I am not asking for that decision to be challenged, I am asking for the date to be varied”. Given the nature and effect of the applications sought, including with respect to the competency issue, a further oral application for an adjournment was made.

14. [15]

    In support of the adjournment application, and in the absence of any formal application or evidence, it was contended that no prejudice would run against the plaintiff because the interim freezing order, presently in force, would continue to operate in the event that an adjournment was granted.

15. [16]

    The plaintiff opposed the proposed variation of orders and the adjournment application.

16. [17]

    As to circumstances in which the adjournment application was made, the plaintiff cited Aon Risk Services Limited v Australian National University [2009] HCA 27 (“Aon”) and submitted that the lateness at which the application was made, given that a hearing date that had been fixed since 10 August 2018, and the absence of evidence was not tolerable or acceptable conduct and stood contrary to the principles stated in Aon.

17. [18]

    The Court, ultimately, refused the defendant’s applications with respect to the variations sought (namely, a variation of order 3 made on 10 August 2017 and a variation of order 1 made on 23 August 2017) and the adjournment application. As to the issue of competency, given the nature of the issue, the Court granted Mr McDonald leave to appear on a limited amicus curiae basis, for the purposes of putting a submission as to the competency issue, following which, counsel for the defendant would be excused from further appearance. That course was not opposed by the plaintiff.

18. [19]

    The competency issue concerned the form and effect of the final relief sought and raised an issue as to the jurisdiction of the Court. It did not extend to the interim relief granted by Davies J; whilst similar in terms to the final relief sought, the interim nature of the order did not agitate the same issues vis-à-vis jurisdiction. No issue was raised as to the Court’s jurisdiction to continue and/or extend the interim freezing order.

19. [20]

    There was a further development bearing upon the hearing, namely, the impending completion of the related bankruptcy proceedings against the defendant. In those circumstances, the plaintiff accepted it would not be adverse to his position to await the completion of the bankruptcy proceeding prior to advancing any further submissions for a final freezing order.

20. [21]

    It was in that light the Court made the following orders:

    1. (1)

       The proceedings be stood over to 5 December 2017 at 9:30am for directions.

    2. (2)

       Subject to any existing costs orders, the defendant pay the plaintiff’s costs of the proceedings thrown away.

    3. (3)

       The Court reserved the right of the plaintiff to apply for:

21. [22]

    On 5 December 2017, the parties were in agreement that the interim freezing order should continue to run, as the related bankruptcy proceedings were yet to reach completion, and the matter be stood over. It may be noted that Mr McDonald continued his appearance on that occasion as amicus curiae and raised no objection to that course. The matter was adjourned to 28 February 2018 for further directions. The Court also made the following order:

22. [23]

    Following that direction the plaintiff filed and served a further affidavit in the proceedings. The defendant did not file or serve any evidence.

23. [24]

    On 28 February 2018, the plaintiff confirmed that the defendant had then paid the plaintiff all amounts previously owing pursuant to orders of any court (as discussed below), and that the only outstanding issues were in relation to the various costs aspects of these proceedings. The remaining costs issues were set out as follows:

    1. (1)

       the reserved costs of the motion;

    2. (2)

       the plaintiff’s application for indemnity costs; and

    3. (3)

       the plaintiff’s application for gross costs.

24. [25]

    As to the fate of the interim freezing order, it was agreed that would be dealt with at the same time as the resolution of costs.

25. [26]

    It may be noted that the issue as to the nature of the appearance of the defendant was also once again agitated at this time, noting that leave extended to Mr McDonald as amicus curiae was limited to the competency issue.

26. [27]

    On this occasion, Mr K Kelly, solicitor, sought to be heard on behalf of the defendant. Mr Kelly informed the Court that he wished to seek leave on behalf of the defendant to file and serve evidence and submissions in relation to the plaintiff’s applications for cost. For the purposes of the facilitating a costs hearing without further delay, Mr Kelly accepted an appropriate course was that he be granted leave to provide submissions addressing whether he should have the right be heard on the question of costs, together with the submissions and evidence as to costs that he would advance in the event a right to be heard was established (the plaintiff also accepted that procedure). A program was fixed as to the disposition of the costs issue, which was set out in short minutes of order executed under seal on 9 March 2018 (“the 9 March order”), extracted below:

27. [28]

    In accordance with order 1, the plaintiff filed written submission on 20 March 2018 and his affidavit affirmed 19 March 2018. The defendant did not file and serve material on or before 11 April 2018 in accordance with order 2.

28. [29]

    On 13 April 2018, the defendant sent the following communication by email to Chambers:

29. [30]

    The attached notice of motion was dated 13 April 2018 (“the unfiled motion”). By the unfiled motion, subject to leave, the defendant sought the following orders:

30. [31]

    The defendant ultimately filed submissions late, on 16 April 2018. Those submissions made reference to the orders sought by the unfiled motion.

31. [32]

    On 20 April 2018, the plaintiff filed submissions in reply, together with an affidavit affirmed 20 April 2018.

32. [33]

    On 23 April 2018, the defendant requested an oral hearing with respect to matters referred to in order 1 of the 9 March order.

33. [34]

    Due to the non-compliance of the defendant with the directions of the Court made 9 March 2018, together with the application for leave to move upon the unfiled motion, the matter was listed for directions on 31 May 2018. Following a communication advising the unavailability of the plaintiff, a new date for directions was fixed, 28 June 2018.

34. [35]

    On 28 June 2018, following confirmation that all material required by the Court’s directions of 9 March 2018 had been provided, notwithstanding their lateness, an additional consideration was now raised by the defendant filing a notice of motion on 27 June 2018 (“the defendant’s motion”).

35. [36]

    The defendant’s motion was next listed before Registrar Bradford on 3 July 2018. The orders sought were as follows:

36. [37]

    It may be noted that the defendant’s motion did not seek orders with respect to the interim freezing order of Davies J.

37. [38]

    The Court confirmed the course that would be adopted, in summary, as follows:

    1. (1)

       as to the defendant’s motion, the application would run its course, noting it was presently fixed before the Registrar, and would not be adjudicated upon by the Court as presently constituted;

    2. (2)

       as to the question of costs, in light of the material received, the matter would be dealt with on the papers;

    3. (3)

       as to the interim freezing order, a directions hearing would be fixed (in short order following the determination of costs), to determine whether the interim freezing order would be dissolved and the proceedings brought to a conclusion.

38. [39]

    For completeness, in the intervening period, the defendant’s motion was heard before R A Hulme J on 28 November 2018. His Honour made the following orders:

39. [40]

    It may be noted that the scope of that order did not extend to the issue costs. The issue with respect to the right of the defendant to appear, in that respect, will be dealt with below. Further, no application, within the limits of the leave granted by R A Hulme J, was filed.

40. [41]

    By way of summary, to date, the following cost orders have been made in these proceedings:

    1. (1)

       On 8 June 2017, hearing of the motion before Davies J: costs reserved.

    2. (2)

       On 10 August 2017, directions hearing before Registrar Bradford: costs in the cause.

    3. (3)

       On 23 August 2017, directions hearing before Registrar Bradford: defendant to pay the plaintiff's costs;

    4. (4)

       On 25 October 2017, at the hearing before the Court as presently constituted: subject to any existing costs orders, the defendant pay the plaintiff’s costs of the proceedings thrown away. On that occasion the Court also reserved the right of the plaintiff to apply for an order for indemnity costs and/or gross sum costs.

    5. (5)

       On 28 November 2018, at the hearing of defendant’s motion by R A Hulme J: defendant to pay the plaintiff's costs of the motion.

Costs

1. [42]

   The general rule as to costs is set out in s 98 of the Civil Procedure Act 2005 (NSW) and Pt 42 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), namely, that costs follow the event.

2. [43]

   As to the principles applicable in that respect I refer to my judgment in Moseley v AB (No 2) [2017] NSWSC 1812 at [64]-[79].

3. [44]

   The power to award indemnity costs is found in s 98(1)(c) of the Civil Procedure Act and r 42.5 of the UCPR. Section 98(1) is extracted below:

4. [45]

   Rule 42.5 of the UCPR is as follows:

5. [46]

   The overriding purpose of the Civil Procedure Act is to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s 56(1). A party to civil proceedings is under a duty to assist the Court to further the overriding purpose and, to that effect, to participate in the processes of the Court and to comply with directions and orders of the Court: s 56(3)

6. [47]

   One of the leading authorities on indemnity costs remains Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801. In that case, Sheppard J noted some of the circumstances which have been thought to warrant the exercise of the discretion to order indemnity costs (at 233-234):

7. [48]

   A summary of the relevant authority was set out by Slattery J in Ly v Dong [2018] NSWSC 122. His Honour observed (at [45]-[46]):

8. [49]

   In Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11, at [44], the Court noted:

9. [50]

   An award of indemnity costs should be compensatory and not punitive: Hamod v State of NSW (2002) 188 ALR 659; [2002] FCA 424.

10. [51]

    Section 98(4)(c) of the Civil Procedure Act empowers the Court to make an order for a specified gross sum instead of assessed costs. It provides that at any time before costs are referred for assessment the court may make an order for a specified gross sum instead of assessed costs.

11. [52]

    A leading authority on gross sum costs is Idoport Pty Ltd v National Australia Bank [2007] NSWSC 23. In that decision, Einstein J provided a recitation of the principles which formed the exercise of the discretion (at [9]):

12. [53]

    The principles regarding s 98(4) are referred to Hamod v New South Wales [2011] NSWCA 375 at [813]-[820] (per Beazley JA, with whom Giles and Whealy JJA agreed). The relevant part of that judgment is extracted below:

Freezing Orders

1. [54]

   For completeness, r 25.14 of the UCPR is extracted below:

Plaintiff’s Evidence

1. [55]

   The plaintiff has filed six affidavits affirmed by him on:

   1. (1)

      6 June 2017 ("the plaintiff’s first affidavit");

   2. (2)

      8 August 2017 ("the plaintiff’s second affidavit");

   3. (3)

      23 October 2017 ("the plaintiff’s third affidavit");

   4. (4)

      23 February 2018 ("the plaintiff’s fourth affidavit");

   5. (5)

      19 March 2018 ("the plaintiff’s fifth affidavit"); and

   6. (6)

      20 April 2018 (“the plaintiff’s sixth affidavit”).

Defendant’s Evidence

1. [56]

   The defendant has filed one affidavit, sworn by him on 9 August 2017.

The Nature and Circumstances Surrounding the Payment of the Debt

1. [57]

   By way of background, the debt owed by the defendant to the plaintiff related to payment for legal services. The following summary of the nature and circumstances surrounding the payment of the debt is derived from the submissions and evidence of the plaintiff.

2. [58]

   In the plaintiffs first affidavit, he deposed as to the five amounts owing and the five judgments or orders that had been entered or made in his favour:

   1. (1)

      The first amount owed was pursuant to a judgment of the Local Court, given on 12 September 2016 in the sum of $8,505.34;

   2. (2)

      The second amount owed was pursuant to an order of the Local Court made on 9 February 2017 in the sum of $1,000;

   3. (3)

      The third amount owed was pursuant to a judgment of this Court in the sum of $32,756.25. Those proceedings were limited to the registration of certificates of determination of costs in connection with the work done by the plaintiff for and on behalf of the defendant and as a result of the non-payment of which the plaintiff commenced the first and second Local Court proceedings identified as follows:

   4. (4)

      The fourth amount owed was pursuant to an order of the Federal Circuit Court of Australia made on 27 April 2017 in the sum of $25,000.

   5. (5)

      The fifth amount owed was pursuant to another order of the Federal Circuit Court of Australia made on 27 April 2017 (in separate proceedings to those referred to in (4) above) in the sum of $4,000.

3. [59]

   In the plaintiff’s second affidavit, he deposed that the defendant had since paid the amounts, listed above. However, as to monies owed with respect to the first and second Local Court proceedings, he gave the following evidence:

   1. (1)

      In relation to the costs of the first and second Local Court proceedings, those costs were subsequently assessed in the amounts of $30,595.47 and $8,445.50, respectively. Those amounts were registered by way of a judgment on 27 July 2017;

   2. (2)

      On 4 August 2017, the plaintiff caused a bankruptcy notice to be issued with respect to the judgments entered on 27 July 2017; and

   3. (3)

      As at 8 August 2017, those amounts remain unpaid.

4. [60]

   In the plaintiff’s third affidavit, he provided further information with respect to the nature and circumstances surrounding the outstanding debts owed by the defendant:

   1. (1)

      In addition to the unpaid monies, the defendant was indebted to him for a further sum of $2,665 pursuant to an order of the Federal Circuit Court of Australia made on 5 September 2017;

   2. (2)

      He would also be claiming from the defendant the costs of a Creditor's Petition filed by him against the defendant, being proceedings numbered SYG2825/2017; and

   3. (3)

      He would be claiming the costs of these proceedings which, at that time, according to the plaintiff’s computerised ledger report, amounted to about $25,000, plus Court fees of about $1,500.

5. [61]

   In the plaintiff’s fourth affidavit, with respect to relevant developments since 5 December 2017, he deposed the following:

   1. (1)

      Subsequent to the hearing on 5 December 2017, the defendant had paid the amounts in relation to the costs of the first and second Local Court proceedings and the costs in relation to the defendant’s unsuccessful application in the Federal Circuit Court, referred to above, for $2,665;

   2. (2)

      On 12 December 2017, the Federal Circuit Court of Australia ordered the defendant to pay to the plaintiff a sum of $7,500 in respect of the costs of a Creditor's Petition;

   3. (3)

      As the defendant did not pay the costs referred to in (2) above, the plaintiff caused a further bankruptcy notice to be issued to the defendant;

   4. (4)

      On 20 February 2018, the defendant paid the net amount due under the bankruptcy notice; and

   5. (5)

      Having regard to those payments, the defendant had paid to the plaintiff all amounts ordered by any Court and the only outstanding issues were in relation to the various costs aspects of these proceedings (including the question of costs in relation to the motion).

6. [62]

   Thus, as a result, the application for final relief need not be determined. As mentioned, judgment concerns a determination of costs. The issue of the interim freezing order, which remains extant, will be returned to following a determination of costs.

Costs on the Motion

1. [63]

   The plaintiff submitted that the costs of the hearing of the motion should follow the event, namely, the defendant should pay such costs (and, if appropriate, pay them on the indemnity basis and/or pursuant to an order for gross sum costs).

2. [64]

   It was further submitted that it is customary for costs of an application for interim relief, at least so far as the first hearing of the application is concerned, to be reserved, so that the Court will be able to ascertain, in due course, the position of the defendant. It was contended, as no defence was heard or determined in this case, the plaintiff was justified in bringing the application for interim relief.

3. [65]

   The defendant made not submission with respect to the costs reserved on the motion.

Costs Thrown Away

1. [66]

   The plaintiff contended, by the defendant’s submissions vis-à-vis his application for leave to be heard, that the defendant also sought to challenge the order for costs made on 25 October 2017 (albeit not in express terms), namely, that the defendant to pay the plaintiff’s costs of the proceedings thrown away. As to that order, the plaintiff submitted it remained “a binding order unless or until it is set aside, otherwise discharged, or varied”. It may be noted that, whilst the defendant sought to challenge the validity of the Registrar’s Bradford’s orders, he did not advance any submissions to challenge the validity of the costs order made on 25 October 2017. I will return to the question of indemnity costs after the summary of the parties’ submissions.

Indemnity Costs

1. [67]

   The plaintiff advanced the following submissions in support of his application for an award of indemnity costs:

   1. (1)

      The defendant has acted in breach of s 56(3) of the Civil Procedure Act. This was supported with reference to the examples of repeated non-compliance with the orders of the Court including, inter alia, orders with respect to filing evidence and his defence on 8 June, 10 and 23 August and 5 December 2017. Further, the defendant was not present or represented at the hearing on 23 August 2017 and no explanation was provided as to his non-attendance.

   2. (2)

      It was contended that the defendant had a history of not participating in the processes of the Court and of failing to comply with directions and orders of the Court – he has had proceedings both in this Court and in the District Court of New South Wales dismissed for those very reasons (see paras 9 and 12 of the plaintiff’s first affidavit).

   3. (3)

      The defendant had further acted in a delinquent manner by:

   4. (4)

      Reference was also made to the events and information disclosed at the hearing on 25 October 2017:

   5. (5)

      In summary, the substantive claim in these proceedings is relatively straightforward. There was little factual contention and any legal issues involving competency and the other matters raised by Mr McDonald on 25 October 2017 are relatively narrow. The defendant has been represented by solicitors and Counsel from the outset (including Ms Obrart of counsel, who appeared 8 June 2017). The case should have been heard and determined on 25 October 2017. It was not so heard solely as a result of the defendant's conduct. Further, his failure to pursue a defence to hearing, in view of his other failings, should justify an order for indemnity costs.

2. [68]

   The defendant advanced the following submissions in reply to the plaintiff’s application for indemnity costs:

   1. (1)

      First, in light of the interim freezing order, dealing with the question of the costs on an indemnity basis or otherwise is premature. It was submitted that the Court should deal with the issues raised by its notice of motion emailed to Chambers on 13 April 2018. However, as previously mentioned, that motion was not before the Court. (As earlier mentioned, notwithstanding the orders of R A Hulme J, no further motion regarding the interim freezing order has been filed).

   2. (2)

      Second, the defendant contended that there is an absence of “relevant delinquency” such as to engage the Court’s jurisdiction, as the defendant paid the relevant debt in full and has not breached the interim freezing order. It was contended that the plaintiff acknowledged payment occurred in or about December 2017 (at para 3 of plaintiff's fourth affidavit) and that the prospective (unassessed) judgment debts too had been paid in full by 20 February 2018 (paras 5-6 of plaintiff's fourth affidavit).

   3. (3)

      The defendant relied upon the following authorities:

   4. (4)

      It was contended that the plaintiff’s submission with respect to s 53(3), mischaracterised the effect of the following orders: orders 3(A) and 3(B) made on 8 June 2017; order 4(A) made on 10 August 2017; and the direction made 5 December 2017. Each of those orders (including the direction), it was submitted in reply, did not require the defendant to take any steps and the defendant's failure to take any steps was, therefore, not a breach of the orders.

   5. (5)

      As to the plaintiff’s reference to alleged conduct by the defendant in earlier proceedings before both the District Court and this Court, it was contended that the Court should disregard that submissions as a party's conduct prior to the proceedings is generally irrelevant.

3. [69]

   The plaintiff advanced the following submissions in reply:

Gross Sum Costs

1. [70]

   In support of its application for gross sum costs, the plaintiff set out a summary of the relevant factual circumstances:

   1. (1)

      To-date, the plaintiff has been required to undertake 4 costs assessments involving the defendant, even though the defendant did not make any objections or responses to the plaintiff’s submissions in the assessments (see para 8 of the plaintiff’s fifth affidavit). A further assessment of the costs of these proceedings will simply subject the plaintiff to further expense and also further delay in the finalisation of all matters between the parties.

   2. (2)

      The plaintiff has given evidence, see in particular para 7 of the plaintiff’s fifth affidavit, of the considerable aggravation that he has suffered as a result of what can be described as endless litigation involving the defendant and, put simply, all caused by the defendant's failure to pay amounts that he was ordered to pay.

2. [71]

   As to the approach to adopted, if costs are determined on a gross sum basis, the plaintiff contended the following would be considered logical, fair and reasonable in light of facts:

   1. (1)

      The plaintiff has provided evidence of four costs agreements entered into by his firm with the defendant in 2015 (see Annexure C of the plaintiff’s fifth affidavit). Those costs agreements identify the hourly rates charged by the plaintiff and members of his firm as at the dates thereof. Paragraph 2 of the costs agreements predicts an increase in the hourly rates by 5% on 1 July in each year. As such, it was submitted, the Court should be satisfied as to the fairness and reasonableness of the hourly rates that the Court is requested to take into account in determining any gross sum costs.

   2. (2)

      The plaintiff has provided a copy of his firm's computerised ledger report covering work done and time spent in these proceedings from 7 April 2017 to 28 February 2018 (see Annexure B of the plaintiff’s fifth affidavit). He has invited the defendant to ask any reasonable questions in relation to the items of work referred to, which he will answer.

   3. (3)

      In this case, the plaintiff does not have an "external" client. The nature and extent of the work carried out by the plaintiffs firm are, generally, self-evident from the documents filed in Court and any records of attendance at Court.

3. [72]

   In summary, the plaintiff submitted that the making of a gross sum costs order would bring to a conclusion (subject to payment of the amount) over 2 years’ worth of litigation between the parties. It would also result in the cessation of aggravation for the plaintiff. It was submitted that the Court should be in a position to fix an amount that is logical, fair and reasonable.

4. [73]

   The defendant advanced the following submissions in reply to the plaintiff’s application for gross sum costs:

   1. (1)

      The defendant repeated his submission that no costs order in relation to the proceedings generally should be made until final orders are made (referencing the extant interim freezing order) and the evidence of the plaintiff be proven to the requisite standard required for final relief.

   2. (2)

      The defendant placed emphasis upon the following legal principles:

   3. (3)

      Those legal principles are particularly relevant, in the current matter, in that:

   4. (4)

      The evidence and submissions of the plaintiff are largely irrelevant to the considerations of the Court in relation to the making of a gross sum costs order. It was contended that the plaintiff's evidence and submissions do not address the matters required to be considered whether determining whether a gross sum costs order should be made and the quantum of any such order.

   5. (5)

      The defendant submitted that the plaintiff’s reliance upon earlier agreement with the defendant, as relevant to the Court’s determination, is contrary to the authorities.

   6. (6)

      Finally, as to the plaintiff’s submissions with respect to the “computerised ledger report”, it was submitted that the onus lies with the plaintiff to justify the reasonableness of his claimed costs and to specify which were incurred as a witness and which were incurred in his professional capacity: Lawrence v Nikolaidis (2003) 57 NSWLR 355; [2003] NSWCA 129 at [61]. Further, that in the absence of that sufficient proof, it would not be appropriate (even if the Court was minded to make final costs orders despite the defendant's submission that such a course would be premature) for the Court to order a gross sums costs order. Indeed, the plaintiff has failed to specify the specific sum sought pursuant to the sought gross sum costs order and, for that additional reason alone, it was further contended that such an order ought not be made.

5. [74]

   The plaintiff advanced the following submissions in reply:

   1. (1)

      It was contended that the defendant’s opposition to a gross sum costs order is consistent with his objective of causing further expense and delay in the finalisation of all matters between the parties and in subjecting the plaintiff to further considerable aggravation.

   2. (2)

      As to the defendant’s contention that the plaintiff has failed to specify the specific sum sought, the plaintiff submitted it is unnecessary for him to specify a specific sum sought and “that the Court, based upon the material before it, is in a position to adopt an approach that will be logical, fair and reasonable”.

   3. (3)

      Turning to the “computerised ledger”, it was submitted that “no reasons have been advanced by the defendant as to why the plaintiff should not be awarded all costs as recorded in his firm's computerised reports and the plaintiff submits that such an amount should be duly fixed”. Reference was made the plaintiff’s sixth affidavit as evidence that the hourly rates charged by the plaintiff and his firm were clearly reasonable, particularly when compared to the hourly rates agreed to by the defendant in 2015 (see para 12 of the plaintiff’s fifth affidavit).

Defendant’s Application for Leave to be Heard

1. [75]

   The defendant made a number of arguments as to why leave should be given to receive his submissions on cost, central to those submissions was that the debarring order should be set-aside on the basis that it was either beyond the Registrar’s power or, alternatively, not warranted in the circumstances. The practical question of the Court as to costs has been that the substance of the defendant’s contentions as to costs have been considered by the Court but rejected. As a practical matter, leave is given, in that respect, but orders for costs will be made in favour of the plaintiff.

CONSIDERATION

1. [76]

   It is apparent from the written submissions on costs, that the parties’ submissions, in that respect, were directed at not only costs of the motion but costs of the ASOC; at least insofar as orders for costs thrown away were made in the context of a final hearing of the ASOC with an express reservation that the questions of indemnity and gross lump sum costs would be dealt with in that respect.

2. [77]

   A further introductory consideration, raised in the defendant’s written submission, was that the determination of costs should await the final adjudication of the interim freezing order. That proposition should be rejected for two reasons:

   1. (1)

      First, there is no remainder of issue as to the final orders sought on ASOC and, further, the plaintiff has not pressed for those orders since 25 October 2017. The only remaining question, in that respect, since that time, has been the application for indemnity and gross lump sum costs.

   2. (2)

      Second, as to the defendant’s contention that the determination of costs should await the final adjudication of interim freezing order, that submission has some greater force. However, it should not be accepted for two reasons:

3. [78]

   Noting my earlier summary of costs orders made in the proceedings (see at [41]) and observing that there should properly be made costs orders against the defendant with respect to the hearing of the motion by Davies J and the hearing before Registrar Bradford on 10 August 2017, the balance of cost considerations arising from the parties’ submissions concern indemnity costs and gross sum costs (save for those considerations and any residue of the concurring interim freezing order discussed above, the plaintiff would have costs of the proceedings ).

4. [79]

   In my view, there is ample basis to make an award of costs in favour of the plaintiff on an indemnity basis with respect to the ASOC and the motion for the following reasons:

   1. (1)

      On 25 October 2017, the proceedings were listed for final hearing and the plaintiff was ready to proceed. The date had been fixed for more than 2 months. The matter, at that stage, had already been the subject of an interlocutory application for interim relief and two directions hearings before Registrar Bradford. The case should have been heard and determined on 25 October 2017.

   2. (2)

      The loss of the hearing, for which an order of costs thrown away was made, is entirely attributable to the delinquent conduct of the defendant. Notwithstanding earlier orders of the Court on both 10 and 23 August 2017, granting liberty to apply, and the direction to file a defence to the ASOC by 31 August 2017 (which was never, ultimately, filed), the defendant utilised the listing for final hearing to agitate three unsuccessful applications, notwithstanding an extant barring order made by Registrar Bradford, without filing a notice of motion or evidence, and ultimately sought to adjourn the proceedings. It is clear that prior to that listing, it was completely within the capacity of the defendant to file his defence to the ASOC and to apply to vary (or challenge the validity of) the orders the Registrar in advance of the final hearing but he did not do so. The defendant caused unnecessary delay and expense by his conduct in these proceedings.

   3. (3)

      Further, it should be emphasised, as to the competency issue raised by counsel on an amicus basis, the contention was not pleaded on the defence filed on 9 August 2017. An explanation for the lateness was provided by Mr McDonald (the defendant’s then counsel), whom advised that he acted upon instructions received the night before the final hearing. That explanation by the defendant is not satisfactory, particularly in circumstances in which Mr McDonald had previously appeared in this matter on 10 August 2017. For the reasons set out above, it was completely within the capacity of the defendant to challenge the competency of the proceedings upon the ground that there was no power of the Court to make a final freezing order, in advance of the final hearing. The final hearing was not so heard as a direct result of the defendant’s conduct. It may also be noted, that at the listing for the final hearing and the subsequent directions hearing on 5 December 2017, no issue was raised by counsel to the defendant as to the continuance of the interim freezing order.

   4. (4)

      As to the defence filed on 9 August 2017, that defence was ultimately never pursued. This failure to pursue a defence to the hearing, particularly in view of his other failings, further indicates that the defendant had not intended to commence final argument on 25 October 2017 and by his conduct wasted the Court’s time, all of which weighs in favour of an order for indemnity costs.

   5. (5)

      To that may be added that the bar to defending the proceedings, made by Registrar Bradford, was entirely available to the Registrar. On 23 August 2017, the defendant failed to enter an appearance or to provide explanation as his non-attendance. This disregard for a fixture by the Court, specifically for the purposes of ensuring the just, quick and cheap resolution of case management issues in the proceedings prior to the final hearing, is amplified in its significance because:

   6. (6)

      As to the interim relief, there was also ample basis, with respect, to grant that order, particularly in circumstances where a defence was not ultimately pursued. It should also be noted that the defendant has since objectively failed to take the steps available to him to dissolve that order prior to the belated submissions (advanced in the absence of any formal application) as to costs, notwithstanding the direction to provide evidence in reply to the motion by 13 July 2017 and the liberty to apply granted on 10 and 23 August 2017, respectively.

   7. (7)

      Further, the defendant’s approach to challenging the interim freezing order was introduced in a manner entirely inconsistent with s 56 of the Civil Procedure Act. First, no application has been filed to discharge or vary the freezing order made on 8 June 2017 since the making of the interim freezing order. Secondly, the issue was introduced by two undeveloped and inappropriate means, namely, inclusion within an unfiled motion and written submissions as to costs, in the context of a final determination of the costs on the motion and ASOC. The “application” was improperly brought both in terms of form and with respect to the timing, having been introduced very late in the proceedings on 13 April 2018. The conduct of the defendant, particularly in light of the final issues remaining for determination being costs (and not a contested hearing for final relief), were in flagrant breach of the defendant’s duty to assist the Court in the facilitation of the just, quick and cheap resolution of the real issues in the proceeding (namely, costs) with appropriate participation in the process of the Court and compliance with its directions: s 56(3) of the Civil Procedure Act.

   8. (8)

      For similar reasons set out above, I also find the defendant’s submissions as to the validity of Registrar Bradford’s orders advanced in submissions as to costs to have been introduced far too late in the proceeding and by improper means, namely, within submissions as to costs, wherein that contention was advanced for the first time, and without notice. Interlocutory applications should be made and dealt with in a timely manner by both the parties and the practice and procedure implemented by the Court: ss 56 and 59 of the Civil Procedure Act. Registrar Bradford had made provision for liberty to apply on both 10 and 23 August 2017, respectively. A direction that provided a mechanism for the parties to make an application to the Court vis-à-vis the orders of Registrar Bradford in advance of the final hearing and, by doing so, encouraged the elimination of unnecessary delay once the final hearing commenced: ss 56 and 59 of the Civil Procedure Act (see also, Abigroup v Abignano (1992) 112 ALR 497 at 509). The defendant’s conduct worked against the timely disposal of issues and undermined the case management of Registrar Bradford, such that not only has the defendant acquiesced in his right to bring such an application, the defendant was entirely not ready to proceed on the date fixed for final hearing.

   9. (9)

      I reject (as the second reason (see at [77(2)(b)]above)) the contention of the defendant that in light of the interim freezing order, dealing with the question of the costs on an indemnity basis or otherwise is premature. That contention was first put before the Court via an unfiled motion and then partially developed in written submissions. It was never formally put before the Court for adjudication (including proceedings before R A Hulme J). Further, the consideration of the operation of the interim freezing order was squarely put to the defendant at the listing for final hearing, when submissions vis-à-vis competency were introduced (as to final orders), at which time the defendant confirmed its submissions did not cavil with the orders of Davies J granted on an interim basis. It should also be noted, R A Hulme J gave the defendant the opportunity to formally make an application to vary or set-aside the interim freezing order, but the defendant never took it. That failure is underlined by the fact that the defendant seeks the reverse by means of submissions on costs.

5. [80]

   In addition to the foregoing reasons, I now turn to deal with some specific contentions raised by the defendant against an award of costs on an indemnity basis:

   1. (1)

      The defendant contended that the plaintiff’s submissions as to the defendant’s non-compliance with orders in these proceedings mischaracterised the effect of the orders. Even if some of the orders identified did not strictly require the defendant to take any steps, the defendant was debarred from defending this matter on the basis of his failure to act upon the directions of Registrar Bradford on 10 August 2017, which failure set the foundation for several unsuccessful interlocutory steps by the defendant to attempt to reverse the effect of the self-executing debarring order of Registrar Bradford.

   2. (2)

      It was also contended that the defendant’s compliance with the interim freezing order was a relevant factor with respect to indemnity costs. Such a submission has no basis, particularly in circumstances where interim relief was granted to ensure that final relief was not compromised.

   3. (3)

      The defendant contended that consideration should be given to the fact he had paid the amount owing, but the fact is he did not. It is true, partial repayment of the debt followed the commencement of the proceedings in this Court. However, final payment of the debt only occurred following the matter being listed for final hearing, the filing of the ASOC, the commencement of bankruptcy proceedings and several directions hearings before both the Court as presently constituted and Registrar Bradford. The strained circumstances in which payment was made, which may be briefly stated:

   4. (4)

      Reliance was also placed upon the plaintiff’s acknowledgement that payment of the debt occurred in or about December 2017 and that the prospective (unassessed) judgment debts too had been paid in full by 20 February 2018. The payment of the debt does not negate the initial basis for proceedings, being the non-compliance with costs order by various courts, nor does it undermine the proper basis, as I will find, to award of indemnity costs. As stated above, following the commencement of proceedings in this Court, payment of the debt occurred in instalments both before and after the date fixed for final hearing. Further, the final determination of the appropriate course forward, with respect to both the interim and final relief, was stagnated by the outstanding debt and related bankruptcy proceedings.

   5. (5)

      As to the plaintiff’s reference to alleged conduct by the defendant in earlier proceedings before both the District Court and this Court, however, I agree with the submission of the defendant that the Court should disregard those submissions as a party's conduct prior to the proceedings is generally irrelevant.

6. [81]

   In all the circumstances I find it is appropriate that costs are awarded in favour of the plaintiff and on an indemnity basis.

7. [82]

   Finally, turning to the application for a gross sum costs order, in my view, it should not be made in the present matter for the following reasons:

   1. (1)

      The material before the Court to make an assessment as to costs at an appropriate sum which is fair to the respective parties is, in my view, insufficient, even if the kind of detailed examination that would be appropriate on taxation or a formal assessment of costs is not required: Harrison v Schipp (2003) 54 NSWLR 738 at [22].

   2. (2)

      There is insufficient evidence to suggest that any assessment process would be unduly protracted or result in significant unrecoverable costs. Nor do I consider the past experience and conduct of the defendant, as cited by the plaintiff, should dictate that a conclusion of that kind should be made: Harrison v Schipp at [21]-[22]; Zepinic at [29].

8. [83]

   Accordingly, costs will be as agreed or, in default of agreement, as assessed on an indemnity basis.

CONCLUSION

1. [84]

   Whilst acknowledging the plaintiff’s appropriate cause for concern, as to the implications for the recovery of costs if the interim freezing order is dissolved, there appears to be much in favour of dissolving the interim freezing order, having regard to both the principle of finality and the considerations arising earlier in this judgment. Notwithstanding those considerations, the Court intimated at an earlier time that it would hear the plaintiff and the defendant as to that question. Accordingly, an opportunity will be provided for the parties to do so in short compass, with the plaintiff having leave to make submissions as to the disposition of the interim freezing order, if he chooses to do so, within 7 days of the publication of this judgment, and the defendant having the opportunity to make submissions in reply, within 7 days thereafter. If an oral hearing is sought, that should be indicated in the submissions filed in relation to that question.

2. [85]

   If the plaintiff does not make submissions to retain the interim freezing order, then short minutes of order should be provided by the plaintiff as to the final disposition of these proceedings in the light of this judgment within 7 days, namely, an order for costs in favour of the plaintiff on an indemnity basis.

ORDERS AND DIRECTIONS

1. [86]

   The Court makes the following orders and directions:

   1. (1)

      Leave is granted to the parties to provide submissions as to the disposition of the interim freezing order as follows:

   2. (2)

      In the event the plaintiff does not wish to be heard as to the continuation of the interim freezing order, the plaintiff is to file short minutes of order as to the final disposition of these proceedings, in the light of this judgment, by 4pm on Friday, 9 August 2019. The Court will make orders administratively in Chambers.