Tran v Bakour (No 2)

1. [1]

   On 27 February 2025, I gave judgment in these proceedings: see Tran v Bakour [2025] NSWSC 101 (Principal Judgment).

2. [2]

   These reasons assume familiarity with, and maintain the same abbreviations as in the Principal Judgment.

3. [3]

   In the Principal Judgment, I made orders for specific performance of the contract for sale and purchase of the Property and directed the parties to confer to seek to agree the appropriate costs order.

4. [4]

   The parties were not able to agree on costs and provided written submissions supporting their respective positions.

5. [5]

   These reasons determine the appropriate costs order.

Overview of the respective positions

1. [6]

   The plaintiff sought the following orders:

   1. (1)

      An order that the defendant pay his costs in the gross sum of $215,000.

   2. (2)

      The cross claim be dismissed.

2. [7]

   Underlying this position was the contention that the defendant should pay the plaintiff’s costs on the ordinary basis up to 13 January 2025 and indemnity costs from 14 January 2025. An offer of compromise was served on 13 January 2025 and not accepted.

3. [8]

   The defendant contended that the appropriate orders should be:

   1. (1)

      The defendant/cross claimant is to pay the plaintiff’s costs of the proceedings on a party/party basis as agreed or assessed.

   2. (2)

      The plaintiff is to pay the defendant/cross claimant’s costs of the application for a lump sum costs order.

4. [9]

   Two issues thus arise:

5. [10]

   I consider each in turn.

Should indemnity costs be ordered?

1. [11]

   On 13 January 2025, under cover of an email sent at 1.23pm, the plaintiff served an offer of compromise on the defendant (Offer of Compromise). The Offer of Compromise was relevantly on the following terms:

   1. (1)

      Judgment be entered forthwith against the defendant and in favour of the plaintiff on the following terms:

   2. (2)

      The closing date for acceptance of this offer is 14 days after the date on which it is made.

2. [12]

   The defendant does not dispute that the Offer of Compromise complies with Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 20.26 and allowed a reasonable time for acceptance.

3. [13]

   The defendant contended that it was reasonable to not accept the offer because it was a demand to surrender. The only compromise was costs. Reliance in this regard was placed on Cater v Mehment (No 3) [2022] NSWCA 64 (Cater v Mehment) at [32] per Meagher, Gleeson and Payne JJA.

4. [14]

   On 3 March 2025, the defendant’s solicitor wrote to the plaintiff’s solicitor appearing to accept that indemnity costs after 13 January 2025 was appropriate. The plaintiff’s written submissions proceeded on this basis. I was subsequently informed by the defendant that the plaintiff had misapprehended that there was an agreement to pay indemnity costs when there was no agreement and as such, submissions in reply were provided by both parties on the indemnity costs question.

5. [15]

   The plaintiff’s written reply submissions disputed that the only compromise contained in the offer of compromise was on costs. The plaintiff contended that he offered to forgo half of his costs as well as agreeing to an extended timeframe for the defendant to complete the transaction. The plaintiff further contended that the only real area for compromise, in the circumstances of the case, was as to costs. This is because of the nature of the proceedings whereby the plaintiff sought specific performance of a contract for the sale of land. The defendant sought to be relieved of her obligation to perform. Only one issue was alive and the outcome was binary.

6. [16]

   Under UCPR r 42.14(2), indemnity costs should be ordered from the day after the offer of compromise, unless the Court otherwise orders. I am not satisfied that the Court should otherwise order. Accepting, as was stated by the Court of Appeal in Cater v Mehment at [32] that a significant (but not necessarily determinative) factor that may justify the Court ordering “otherwise” is where the rejection of the offer was reasonable, I am not satisfied that in the present case the defendant’s rejection was reasonable. It was not disputed that at the time the offer was made, all of the substantive evidence had been filed, and no suggestion was put that the defendant was not possessed of sufficient information to form a reasonable view at the time as to her prospects of success.

7. [17]

   Having regard to the nature of the proceedings, whereby the plaintiff wanted to complete on the purchase of the Property from the defendant, the only substantive matter for compromise was costs. The compromise of fifty percent of the plaintiff’s costs was significant in the circumstances. Further, there is no substance to the defendant’s contention that the defendant could not accept the offer but could only accept the plaintiff’s application to the Court for the declaration and order for specific performance to be made in the exercise of the Court’s discretion. Had the offer been accepted, no basis has been put forward as to why the Court would not make the consent declaration and order specific performance. The plaintiff had produced considerable evidence to provide a basis for the consent declaration to be made and for orders for specific performance to be made. The defendant could also have simply agreed to settle on the transaction.

8. [18]

   Accordingly, the appropriate costs order is that the defendant pay the plaintiff’s costs on the ordinary basis up to 13 January 2025 and on the indemnity basis on and from 14 January 2025.

Should a gross sum costs order be made?

1. [19]

   In support of the application for a gross sum costs order, the plaintiff relies upon the affidavit of his instructing solicitor, Penelope Leigh Cable, sworn 5 March 2025.

2. [20]

   Ms Cable deposes to the fact that she was admitted as a solicitor of the Supreme Court of New South Wales in June 1992. In terms of her experience in relation to costs assessment, at [38] of her affidavit, she deposes to the fact that she has “from time to time spoken to costs assessors, solicitors and barristers about the costs assessment process. I have also read cases, including the following cases, which deal with costs assessments, reviews and appeals”. Thereafter, eight cases are set out, five of which appear to relate to the one set of proceedings.

3. [21]

   The derivation of the $215,000 gross sum figure is set out in the following table:

4. [22]

   The strike through in relation to barristers’ fees up to 13 January 2025 reflects an error in the calculation originally submitted by the plaintiff whereby the fees of a junior counsel previously retained on behalf of the plaintiff were double counted in the original assessment.

5. [23]

   Ms Cable’s affidavit sets out the timing and nature of the costs incurred, the rates at which lawyers charged and their relative experience and the like. She also expresses the view that in her experience, the vast majority of assessments return a result in the range of 65 to 85 percent on the ordinary basis and 85 to 95 percent on the indemnity basis of the solicitor’s costs claimed, but that this percentage reduction does not generally apply to disbursements.

6. [24]

   As I understood the submissions, the plaintiff contended that this was an appropriate case for the Court to make a gross sum costs order. Reliance was placed on the following matters:

7. [25]

   The defendant contended that this was not an appropriate case for the Court to make a gross sum costs order. Reliance was placed on the fact that:

8. [26]

   Section 98(4)(c) of the Civil Procedure Act 2005 (NSW), provides that “at any time before costs are referred for assessment, the Court may make an order to the effect that the party to whom costs are to be paid is to be entitled to … a specified gross sum instead of assessed costs”.

9. [27]

   In Gabrielle v Abood (No 4) [2023] NSWCA 100, the Court (Bell CJ, Kirk and Adamson JJA) stated at [6]:

10. [28]

    In Maximus Holdings (NSW) Pty Limited trading as Schreuder Partners Compensation Lawyers (ABN 40 110 829 868) v Sandra Primerano [2024] NSWSC 321 at [65] I set out the summary of relevant principles of Peden J in Bell v Hartnett Lawyers (No 4) [2023] NSWSC 1592 at [49].

11. [29]

    To these principles, I would simply add as Hammerschlag CJ in Eq recently stated in Michael Wilson & Partners Ltd as the assignee of Robert Colin Nicholls & Temujin International Limited (as trustee of Temujin International (trading) Trust) & Temujin Services Limited v Emmott – Gross Sum Costs Order [2025] NSWSC 179 at [33] that “the Court will, of course, also bring to bear its own experience with respect to costs”.

12. [30]

    In my view, it would be appropriate for the Court to make a gross sum costs order in the circumstances of the present case, provided there is sufficient information to enable an appropriate gross sum to be ordered so as to be fair between the parties. To require the plaintiff to go through an assessment process would be to simply impose further cost and delay on the plaintiff.

13. [31]

    On the material presented, however, I do not have sufficient confidence in arriving at an appropriate sum to be fair between the parties. I am conscious that Ms Cable has set out the basis for the gross sum sought, and that this includes a discount on the total fees invoiced to the plaintiff, and that no competing evidence has been filed on behalf of the defendant. Against this, however:

14. [32]

    For these reasons, I decline to make a gross sum costs order.

Conclusion and orders

1. [33]

   I do not propose to make any separate costs order in relation to this argument on costs.

2. [34]

   The Court orders that:

   1. (1)

      The defendant pay the plaintiff’s costs of the proceedings up to 13 January 2025 on the ordinary basis and on and from 14 January 2025 on the indemnity basis.

   2. (2)

      The cross claim be dismissed.