Arys Health Pty Ltd v David Le

[2021] NSWSC 976

Supreme Court

New South Wales

Medium Neutral Citation:

Arys Health Pty Ltd v David Le [2021] NSWSC 976

Hearing dates:

On the papers

Date of orders:

4 August 2021

Decision date:

04 August 2021

Jurisdiction:

Equity

Before:

Robb J

Decision:

The Court orders that pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW) the costs payable by the plaintiff to the first defendant pursuant to order 4 made by the Court on 16 April 2021, upon the hearing of the first defendant’s notice of motion filed on 2 March 2021, is specified in the gross sum of $16,500.

Catchwords:

COSTS — Costs assessment — Gross sum costs order — Where the first defendant sought an order that the plaintiff pay its costs on the indemnity basis and that the amount payable be assessed on a gross sum basis — Where the plaintiff failed to prosecute the proceedings with due despatch — Where the plaintiff’s conduct with respect to the notice of motion was not so unreasonable as to warrant costs being ordered on the indemnity basis — Where the Court ordered that the plaintiff pay the first defendant’s costs on the ordinary basis and assessed the costs on a gross sum basis discounted by 25%

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131

Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) [2008] NSWSC 199; (2008) 65 ACSR 324

Category:

Costs

Parties:

Arys Health Pty Ltd (plaintiff)
David Le (first defendant)
Sydney Mechanics’ School of Arts (second defendant)

Representation:

Counsel:
A Galapo (plaintiff)
E Peden SC/ R Pietriche (first defendant)

Solicitors:
ZRA Lawyers (plaintiff)
Keith Bagley Lawyer (first defendant)
Stewart Cuddy & Mockler (second defendant)

File Number(s):

2019/219390

Judgment

1. By notice of motion filed on 2 March 2021, the first defendant sought an order against the plaintiff under Uniform Civil Procedure Rules 2005 (NSW) r 12.7(1) dismissing the proceedings on the ground that the plaintiff had not prosecuted the proceedings with due despatch.

2. The notice of motion came on for hearing before me on 16 April 2021. The plaintiff was represented by counsel who had only recently come into the matter. Senior and junior counsel appeared for the first defendant.

3. It was plain that the history of the plaintiff’s failures to comply with the Court’s orders that it file and serve its evidence, including lay and expert evidence, and that it complies with a notice to produce served by the first defendant, justified a finding by the Court that the plaintiff had failed to prosecute these proceedings with due despatch. Indeed, on 5 February 2021, the Court made an order that, if the plaintiff failed to comply with the order then made extending the time for it to file its lay and expert evidence, it would not be entitled to rely upon such evidence without the leave of the Court. The plaintiff failed to comply with this order.

4. At the hearing on 16 April 2021, counsel for the plaintiff fought a rear-guard action designed to preserve the plaintiff’s claim and entitle it to have one more chance to file and serve its evidence.

5. By order 1 made by the Court on 16 April 2021, the plaintiff was ordered to file and serve all further affidavit evidence by 27 April 2021. This was, in the circumstances, a significant indulgence to the plaintiff, by way of the plaintiff being given one last chance.

6. The plaintiff served what purported to be expert evidence to support its claim for damages on 28 April 2021, but on 29 April 2021, the Court ruled that the purported expert report should not be treated as an adequate compliance with order 1 made on 16 April 2021, because of its patent failure to comply with the requirements of proper expert evidence.

7. Counsel for the plaintiff informed my Associate on 30 April 2021 that the plaintiff wished to maintain its claim in the proceedings for enforcement of its right to quiet enjoyment under the sublease. In summary, in these proceedings, the plaintiff seeks to maintain its right to enjoy a sublease of premises from the first defendant, but originally the plaintiff also made a claim for damages against the first defendant for breach of the covenant for quiet enjoyment in the sublease. The effect of the failure of the plaintiff to comply with order 1 made on 16 April 2021 was that the plaintiff had not filed any evidence in proper form to support its claim for damages. A further effect of the plaintiff not having served any further evidence was that it had elected to go to trial, in respect of the remainder of its claims, on the basis of the evidence in chief that it had served before 27 April 2021.

8. On 18 May 2021, by order 6, I ordered that the plaintiff’s claim in its summons and points of claim for the payment of damages was dismissed for want of due despatch.

9. I also made an order that the costs of the plaintiff’s claim in its summons and points of claim for the payment of damages were reserved, and made case management orders for the preparation of the remaining part of the plaintiff’s claim for hearing.

10. By order 4 made on 16 April 2021, I ordered the plaintiff to pay the first defendant’s costs of the notice of motion, and that the costs be payable forthwith. I made that order because the plaintiff’s position was entirely disorganised, the first defendant was in principle entitled to an order dismissing the plaintiff’s claim, and the plaintiff had been given one further extension as an indulgence.

11. On 1 June 2021, the first defendant submitted to my Associate written submissions in respect of the costs order made on 16 April 2021. The first defendant sought an order that the plaintiff pay its costs on the indemnity basis, and that the amount payable be assessed by the Court on a gross sum basis pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW).

12. The plaintiff has not served written submissions in response to the first defendant’s submissions.

13. I consider that it is not appropriate for the plaintiff to be ordered to pay the first defendant’s costs on the indemnity basis, but it is appropriate for the Court to determine the amount of the costs that should be paid as a gross sum.

14. While the conduct of the plaintiff, in so consistently failing to comply with case management orders for the service of the plaintiff’s evidence and other matters required for the preparation of the case for hearing, that the claim for damages has been dismissed for want of due despatch, may reasonably be described as delinquent, that delinquency goes to the substance of the plaintiff’s case, and not the costs of a notice of motion for the dismissal of that case. The present costs application relates to the first defendant’s costs of the notice of motion, and not the costs of that part of the plaintiff’s claim that has been dismissed. I do not consider that the response of the plaintiff to the first defendant’s notice of motion has been so unreasonable as to justify an order that he pay the first defendant’s costs of the notice of motion on the indemnity basis. What happens with the reserved costs of the part of the plaintiff’s claim that has been dismissed is another matter to be decided in the future. I therefore do not consider that the plaintiff is guilty of “relevant delinquency”: Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) [2008] NSWSC 199; (2008) 65 ACSR 324 at [24]; Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 at [6].

15. I have been influenced in making this judgment by the fact that the first defendant seeks the costs rendered by both senior and junior counsel. I propose to allow both of those disbursements; although it is arguable that the plaintiff’s lack of despatch was so clear that the notice of motion could have been conducted by experienced junior counsel. I consider that it would be excessive in the circumstances to allow the costs of two counsel and then require the plaintiff to indemnify the first defendant. To some degree, it was the first defendant’s choice to reduce its risk by retaining senior counsel.

16. One of the reasons that justifies the Court in making a gross sum costs order is that the conduct of the party liable to pay the costs has demonstrated that the party is unlikely to participate in a costs assessment in an efficient and timely manner. The plaintiff’s conduct of these proceedings thus far satisfies me that it would be irrational for the Court to think that the plaintiff will conduct a costs assessment properly, given that it has been entirely delinquent in conducting its own case to such an extent that the Court has found that it has not exercised due despatch.

17. The claim made by the first defendant for its solicitor’s costs is $7,359.00 (inclusive of GST). The fees rendered by senior and junior counsel are $8,745.00 and $4,820.19 (both inclusive of GST). All of the legal costs relate to the preparation for and hearing of the notice of motion up to 16 April 2021. Having reviewed the three tax invoices, I am satisfied that the amounts charged are reasonable and relatively moderate. All lawyers have charged for a full day on 16 April 2021, which is justified, as their availability was required for a full day because of the disorganisation of the plaintiff’s defence of the notice of motion.

18. The total amount of the costs claimed by the first defendant is $21,975.27. It is appropriate for the Court to approach the assessment in a broad-brush way, although the relative simplicity of the tax invoices does not require the Court to make an evaluative judgment as to the appropriate amount of the costs to be paid. It is necessary to discount the amount claimed to allow for the fact that the costs are payable on the ordinary basis. It is necessary to bear in mind that counsels’ fees are a disbursement, but a reduction is still warranted because of the first defendant’s choice to retain two counsel. It is also conventional for the Court to make a further reduction to reflect the fact that the first defendant will be spared the costs and delay involved in conducting a costs assessment.

19. In all of the circumstances, I consider that an order should be made that the plaintiff pay an amount of 75% of the costs incurred by the first defendant, which rounded is $16,500.

20. The order of the Court is:

1. Pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW) the costs payable by the plaintiff to the first defendant pursuant to order 4 made by the Court on 16 April 2021, upon the hearing of the first defendant’s notice of motion filed on 2 March 2021, is specified in the gross sum of $16,500.

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Decision last updated: 06 August 2021