Australia and New Zealand Banking Group Ltd v Pola

[2014] NSWSC 59

Supreme Court

New South Wales

Medium Neutral Citation:

Australia and New Zealand Banking Group Ltd v Pola [2014] NSWSC 59

Hearing dates:

4 February 2014

Decision date:

12 February 2014

Jurisdiction:

Equity Division - Commercial List

Before:

Stevenson J

Decision:

Judgment for debt, possession and costs

Catchwords:

PROCEDURE - judgment and orders - whether separate judgments on claim and cross claim or single judgment for the balance

COSTS - who achieved substantial success - whether contractual obligation to pay indemnity costs enlivened

COSTS - exceptions to the general rule that costs follow the event - multiple parties - Bullock orders - Sanderson orders

COSTS - assessment - gross sum costs order

Legislation Cited:

Civil Liability Act 2002
Civil Procedure Act 2005
Property Law Act 1974 (QLD)
Supreme Court Rules 1970

Cases Cited:

Abigroup Limited v Sandtara Pty Ltd [2002] NSWCA 45
Cretazzo v Lombardi (1975) 13 SASR 4
In the matter of Cheal Industries Pty Ltd - Fitzpatrick v Cheal [2012] NSWSC 932
Dominello v Dominello; Dominello v The Nominal Defendant [No 2] [2009] NSWCA 257
Gomba Holdings (UK) Limited v Minories Finance Ltd (No 2) [1993] Ch 171
Gould v Vaggelas (1985) 157 CLR 215
Hamod v State of New South Wales [2011] NSWCA 375
Harrison v Schipp (2002) 54 NSWLR 738
Investec Bank (Australia) Limited v Glodale Pty Ltd [2009] VSCA 97; (2009) 24 VR 617
Kyabram Property Investments Pty Ltd v Murray [2005] NSWCA 87
Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (No 3) [2010] NSWSC 1139
Steppke v Nation Capital Development Commission (1978) 21 ACTR 23
Waterman v Gerling Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111

Category:

Consequential orders

Parties:

Australia and New Zealand Banking Group Ltd (Plaintiff/First Cross-Defendant)
Laurence James Pola (Defendant/First Cross-Claimant)
Silvia Frances Pola (Interested Party/Second Cross-Claimant)
Elders Rural Services Limited (Third Cross-Defendant)
Richard Allpass (Fourth Cross-Defendant)
Brendan Devine (Fifth Cross-Defendant)
Agrimas Pty Ltd (Seventh Cross-Defendant)
Devbar Pty Limited (Eighth Cross-Defendant)

Representation:

Counsel:
G Lucarelli (Plaintiff/First Cross-Defendant)
S Blount (Defendant/Cross-Claimants)
C Hyde (solicitor) (Third Cross-Defendant)
B Heath (solicitor) (Fourth and Seventh Cross-Defendants)
Solicitors:
Minter Ellison (Plaintiff/First Cross-Defendant)
Palmers Solicitors & Attorneys (Defendant/Cross-Claimants)
Curwoods Lawyers (Third Cross-Defendant)
Carter Newell Lawyers (Fourth and Seventh Cross-Defendants)
Doyle Wilson Solicitors (Fifth and Eighth Cross-Defendants)

File Number(s):

SC 2010/425175

Publication restriction:

Nil

Judgment

1. I delivered reasons for judgment in this matter on 6 December 2013 (Australia and New Zealand Banking Group Ltd v Pola [2013] NSWSC 1801).

1. I invited the parties to bring in short minutes to give effect to those reasons. As the parties were not able to agree, I heard argument as to the orders that should be made on 4 February 2014.

1. I propose to make orders to the following effect:

(1)   Judgment that the defendant pay the plaintiff $1,738,632.40.

(2)   Judgment that the defendant give the plaintiff possession of the land contained in Folio Identifiers:

(a)   1/1134909, 2/1134909, 22/754015, 4/754015, 1/660026 being the land situated at Tullamore in NSW and known as "Morella" ("the Morella Property"); and

(b)   3/1110558, 4/1110558, 1/186374, 11/754015 and 23/754015 being the land situated at Tullamore in NSW and known as "North Star" ("the North Star Property").

(3)   Grant leave to the plaintiff to issue writs of possession for the Morella Property and the North Star Property.

(4)   Order that the First Cross-Claim be otherwise dismissed as against the first cross defendant.

(5)   Order that the First Cross-Claim be dismissed against the third, fourth, fifth, seventh and eighth cross defendants.

(6)   Order that the Cross-Claimants pay 25 per cent of the first cross defendant's/plaintiff's costs.

(7)   Order that the Cross-Claimants pay the costs of the third, fourth, fifth, seventh and eighth cross defendants'.

1. What follows comprises my reasons for making those orders. I shall adopt the same abbreviations as in my judgment of 6 December 2013.

What judgments should be entered?

1. The Bank brought these proceedings against Mr Pola seeking possession of the Morella Property and the North Star Property and seeking judgment in an amount in the order of $2.1 million.

1. The Bank's claim arose out of a Letter of Offer it made on 7 September 2007 to Mr Pola, Mrs Pola and Mr Stuart Pola. The facilities offered in that Letter of Offer comprised an overdraft facility of $500,000 and an "ANZ Business Loan" of $6.7 million.

1. The securities offered by Mr and Mrs Pola and Mr Stuart Pola for the proposed facilities included the Morella Property, the North Star Property and the "Property" referred to in my judgment of 6 December 2013 to which, to avoid confusion, I shall refer in this judgment as "the Queensland Property".

1. Mr and Mrs Pola, and Mr Stuart Pola, accepted the offer made by the Bank in the Letter of Offer on 14 September 2007 and agreed that the facilities thereby offered (see [6] above) were to be given on the conditions set out in the Letter of Offer and in the "Finance Conditions of Use" annexed to the Letter of Offer.

1. The amount claimed by the Bank in these proceedings against Mr Pola of approximately $2.1 million was the amount owed by Mr Pola (and also by Mrs Pola and Mr Stuart Pola) referrable to the Overdraft Facility and the ANZ Business Loan referred to in the Letter of Offer after taking into account the proceeds of sale of various securities granted to the Bank.

1. In these proceedings the Bank was entitled to recover the amounts due under those facilities from Mrs Pola and from Mr Stuart Pola, but elected not to do so.

1. The only defence offered by Mr Pola to the Bank's claim for debt and possession of the Morella Property and North Star Property was a set off arising from the Cross-Claim made by Mr and Mrs Pola in these proceedings. That Cross-Claim related to the circumstances in which the Bank sold the Queensland Property. It related in no way to the North Star or Morella Properties or the Bank's mortgage security over those properties.

1. Thus in opening submissions it was stated on behalf of Mr Pola:

"Mr Pola's defence to [the Bank's claims for debt and possession of the Morella and North Star Properties] is principally one of set off. The claims upon which Mr and Mrs Pola rely to establish the set off (and other relief claimed) are set out in the First Cross Claim...

If this cross claim is wholly unsuccessful, Mr Pola does not maintain any defence to the claims made [by the Bank] in the Amended Statement of Claim, subject to proof of the amount actually owing."

1. Ultimately Mr and Mrs Pola's Cross-Claim against the Bank was, in substance, confined to a claim that the Bank had failed to exercise its obligation under s 85 of the Property Law Act1974 (QLD) to take reasonable care to ensure that the Queensland Property was sold at market value.

1. Mr and Mrs Pola sought to set off the damages thereby claimed against the Bank's claim in debt. In these proceedings, the Bank made that claim in debt only against Mr Pola. However, for the reasons I have set out above, Mrs Pola was equally liable to the Bank for that debt (as was Mr Stuart Pola).

1. As Mr Lucarelli, who appeared for the Bank, pointed out, so much was recognised by the declaration sought in the Cross-Claim by both Mr and Mrs Pola that neither one of them was indebted to the Bank.

1. For the reasons set forth in my judgment of 6 December 2013, I have held that, had the Bank complied with its duty under s 85 of the Property Law Act to ensure that the Queensland Property was sold at market value, it would have achieved a sale price of $7 million, rather than the price of $6.1 million actually achieved. Accordingly, I held that Mr and Mrs Pola were entitled to damages against the Bank for $900,000 (at [336]).

1. There was argument before me as to whether those damages should be set off against the amount claimed by the Bank against Mr Pola (but also due to the Bank by Mrs Pola) or whether these should be separate judgments on the Bank's claim against Mr Pola on the one hand and on Mr and Mrs Pola's Cross-Claim against the Bank on the other.

1. In my opinion, although I have a discretion under s 90(2) of the Civil Procedure Act 2005 to give judgment "for the balance only of the sums of money awarded on the respective claims" or to "give judgment in respect of each claim", the appropriate course to adopt is to give judgment for the balance.

1. The object of an award of damages under s 85 of the Property Law Act is to place the mortgagor in the same position he, she or it would have been in had the mortgagee complied with its duty to ensure that the relevant property was sold at market value.

1. The evidence reveals that the net proceeds of the Queensland Property were credited to the account of Mr and Mrs Pola and Mr Stuart Pola. Had the Bank achieved a sale price of $7 million for the Queensland Property (rather than the $6.1 million actually achieved) an extra $900,000 would have been available to be so credited. Taking into account the slightly higher figure that would have been payable for agents commission in that event, the result would have been that a further sum slightly less than $900,000 would have been credited to the account of Mr and Mrs Pola and Mr Stuart Pola.

1. The evidence reveals that had that occurred, and were interest on the account to be recalculated to allow for that credit (and excluding any legal costs debited to the account), the amount owing by Mr and Mrs Pola and Mr Stuart Pola to the Bank would be $1,738,632.40 as at 4 February 2014.

1. In my opinion the appropriate course is to enter judgment against Mr Pola for that amount and otherwise to dismiss the Cross-Claim against the Bank.

1. For those reasons, I propose to make orders to the effect of those referred to in [3(1) to (4)].

1. I should add that Mr Lucarelli accepted that it must follow from the making of such orders that, were the Bank minded to commence proceedings against Mrs Pola and Mr Stuart Pola in respect of the amounts they owe the Bank, they would also be entitled to the notional credit of $900,000 to which I have referred.

Costs as between the Bank and Mr and Mrs Pola

1. In order to be, in substance, successful in these proceedings it was necessary for Mr and Mrs Pola to recover damages from the Bank exceeding the amount of the Bank's debt.

1. Mr and Mrs Pola have fallen far short of achieving this goal. Mr and Mrs Pola and Mr Stuart Pola still owe a considerable amount to the Bank; judgment is to be entered against Mr Pola for the amount of that debt. Although the Bank has not sued them, Mrs Pola and Mr Stuart Pola are also indebted to the Bank in that amount. Further, the Bank is, as it has contended, entitled to possession of the Morella and North Star Properties.

1. In the proceedings Mr and Mrs Pola made two distinct claims against the Bank, both under s 85 of the Property Law Act.

1. The most significant claim made by Mr and Mrs Pola was that the Bank acted in breach of its duty by not seeking to sell separately Water Allocation 1518, claimed by their valuer Mr Harrison to be worth $2.895 million. For Mr and Mrs Pola to achieve substantial success in this litigation it was necessary that they succeed on this claim. That claim took up the bulk of the hearing time before me; and failed.

1. The second claim made by Mr and Mrs Pola related to the omission from the Advertisements of any reference to water entitlements. That claim did not occupy a significant amount of hearing time and in substance, revolved around the form of the Advertisements themselves and the affidavit evidence of Mr Allpass (see my judgment of 6 December 2013 at [318]).

1. That claim did yield an entitlement to damages in the sum of $900,000. That is, of course, a significant amount. But its award to Mr and Mrs Pola does not, in my opinion, alter the fact that, in substance, the Bank has achieved greater success in these proceedings than Mr and Mrs Pola.

1. Mr Blount, who appeared for Mr and Mrs Pola, drew my attention to the observations of Brereton J in Waterman v Gerling Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111 to the effect that the Court is hesitant to deprive "a successful plaintiff who has failed on certain issues" of its costs of those issues.

1. Mr Blount also drew my attention to the decision of Ward J (as her Honour then was) in In the matter of Cheal Industries Pty Ltd - Fitzpatrick v Cheal [2012] NSWSC 932 in which her Honour cited at [181] the observations of Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4, 16:

"The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of the issues upon which he may have succeed, placed merely on his success in those particular issues."

1. I do not find these observations to assist resolution of the issues before me in this case. No party suggested that I should make a costs order by reference to particular issues (for example that the Bank have its costs of the Water Allocation 1518 issue and that Mr and Mrs Pola have their costs of the Advertisements issue). I would not, in any event, have been inclined to make such an order, which would doubtless give rise to further argument and disputation during the assessment process.

1. This case is not one where a claimant has failed in relation to some issues but has, overall, been successful. The Bank in this case is not "a party against whom the judgment goes" to adopt the language of Jacobs J in Cretazzo.

1. The parties against "whom the judgment goes" in this case are Mr and Mrs Pola. They had been successful in relation to one issue but have, overall, been unsuccessful in the proceedings.

1. A further factor relevant to what costs order should be made is the large number of issues abandoned by Mr and Mrs Pola in the course of the proceedings. These included:

(a)   the "subdivision issue": Mr and Mrs Pola pleaded that the Bank ought to have subdivided the Queensland Property to allow for a separate sale of the mortgaged assets. That claim was abandoned prior to the hearing;

(b)   the "overland flow issue": this involved an allegation by Mr and Mrs Pola that Water Licence 602026 was separately saleable and should have been so treated by the Bank. That allegation was abandoned during the hearing; and

(c)   the "levy bank issue": this involved an allegation by Mr and Mrs Pola that the Bank was negligent in the care and maintenance of the Queensland Property and thus liable for the destruction of the cotton crop during the March 2001 floods (see my judgment of 6 December 2013 at [84]). That claim was abandoned during the trial.

1. In all these circumstances, my opinion is that the justice of the case requires not only that Mr and Mrs Pola do not obtain an award of costs against the Bank but that, rather, the Bank obtain an award of costs against Mr and Mrs Pola, albeit not an award of all of its costs.

1. Mr Lucarelli submitted that the Bank should obtain an award of 75 per cent of its costs. I think this too high although I accept that it is not possible to be scientific about an exercise such as this. Overall, and taking into account the measure of success achieved by both Mr and Mrs Pola on the one hand and the Bank on the other, my opinion is that the appropriate order is that Mr and Mrs Pola pay 25 per cent of the Bank's costs of the proceedings.

Costs on an indemnity basis?

1. The Bank claims its costs on an indemnity basis.

1. The Bank relies a number of provisions that it contends contain a promise by Mr and Mrs Pola to pay its costs on an indemnity basis.

1. The general rule is that where there is a contractual right to costs on a particular basis, the Court's discretion should ordinarily be exercised to reflect the contractual right: Gomba Holdings (UK) Limited v Minories Finance Ltd (No 2) [1993] Ch 171. However, the "court is not bound to give effect to any extra curial contract as to costs when exercising its discretion to award costs, and the order for costs continues to be at the discretion of the court" (per Nicholas J in Macquarie International Health Clinic Pty Limited v Sydney South West Area Health Service (No 3) [2010] NSWSC 1139 at [22]; citing Abigroup Limited v Sandtara Pty Limited [2002] NSWCA 45 at [9] and Kyabram Property Investments Pty Limited v Murray [2005] NSWCA 87 at [14]).

1. The Bank relies on a term of the contractual relationship between Mr and Mrs Pola (and Mr Stuart Pola) and the Bank that they pay the Bank all of its costs "in connection with the Transaction Documents" and that:

"This includes [the Bank's] Costs in taking any action in connection with a Transaction Document, in particular...enforcing or protecting [the Bank's] rights under the Transaction Documents".

1. The definition of "Transaction Documents" included the Bank's mortgages over the Morella and North Star Properties.

1. "Costs" was defined to include "legal costs (calculated on a full indemnity basis)".

1. Otherwise than in relation to the Bank's costs of its Amended Statement of Claim (which must be minimal, as no defence was offered to it by Mr and Mrs Pola beyond the Cross-Claim) I do not consider the terms of these provisions to have been enlivened.

1. Mr and Mrs Pola made no challenge in these proceedings to the Bank's mortgage securities over the Morella and North Star Properties. Nor did Mr and Mrs Pola make any challenge to the Bank's mortgage security over the Queensland Property. Mr and Mrs Pola's claim against the Bank under s 85 of the Property Law Act proceeded on the basis that the Bank was entitled, as mortgagee, to sell the Queensland Property. The costs incurred by the Bank in defending Mr and Mrs Pola's Cross-Claim were not costs incurred "in connection with" or of "enforcing" or "protecting" its "Transaction Documents".

1. The Bank also relied on a provision in the Memorandum of Common Provisions incorporated by reference into the North Star and Morella mortgages obliging the mortgagors to pay, on an indemnity basis, the Bank's costs incurred "as a result of exercising, trying to exercise or not exercising its rights under a law or under this mortgage".

1. In my opinion, this provision takes the matter no further. The costs incurred by the Bank defending Mr and Mrs Pola's Cross-Claim are not costs of the kind described in that provision.

1. Accordingly, I do not propose to make an order for indemnity costs.

Costs as between Mr and Mrs Pola and the Agents

1. I have held that Mr and Mrs Pola's claims against the Agents fail.

1. Mr Blount submitted that as the Agents (or at least Mr Allpass and Mr Devine) were responsible for the form of the Advertisements, and as I have held that by publishing the Advertisements in that form the Bank acted in breach of its duty under s 85 of the Property Law Act, the Agents were disentitled to their costs of the Cross-Claim.

1. I do not accept that submission. The nature of the claim by Mr and Mrs Pola concerning the Advertisements against the Bank was quite distinct from the claims they made against the Agents about the Advertisements. The former succeeded. The latter did not. I see no reason why costs should not follow the event.

1. It must follow that Mr and Mrs Pola must pay the Agents' costs.

A "Bullock" or "Sanderson" order?

1. Alternatively, Mr and Mrs Pola seek either a "Bullock" or "Sanderson" order so that, in substance, the Bank bears the Agents' costs.

1. I see no basis for making such an order.

1. For there to be a Bullock or Sanderson order against the Bank, it would have to be shown that the conduct of the Bank was such as to make it fair to impose on it a liability to pay the Agents' costs (for example, see Blackburn CJ in Steppke v Nation Capital Development Commission (1978) 21 ACTR 23 at 30-31; cited with approval by Gibbs CJ in Gould v Vaggelas (1985) 157 CLR 215 at 230). As the Court of Appeal observed in Dominello v Dominello (No 2) [2009] NSWCA 257 what is typically found to be a basis for a Bullock or Sanderson order is a "positive assertion [by the unsuccessful defendant], express or implied, that [it] is not liable because [the successful defendant] is" (per Handley JA at [20], with whom Beazley and Macfarlan JJA agreed).

1. Mr Blount submitted "[t]he joinder of the Agents was a reasonable and necessary step in the face of an anticipated plea of apportionment by the Bank".

1. It is true that, in its Defence to Mr and Mrs Pola's Cross-Claim, the Bank pleaded that Mr and Mrs Pola's claim was an "apportionable claim" within the meaning of, inter alia, s 34 of the Civil Liability Act2002 and thus, implicitly, that the Agents were "concurrent wrongdoers" within the meaning of that section.

1. Had the Bank notified Mr and Mrs Pola of its intention to take that course prior to delivery of the Cross-Claim, and had the Bank threatened to argue that, even if unsuccessful, it would contend its liability should be limited under s 35 of the Civil Liability Act by reason of the conduct of the Agents, there may be have been some basis for a conclusion that it would be fair to impose on the Bank all or some of Mr and Mrs Pola's obligation to pay the Agents' costs.

1. But that is not what happened. Mr Blount candidly conceded that although Mr and Mrs Pola had "anticipated" that the Bank would make a "plea of apportionment" this was not the result of any communication from or on behalf of the Bank. Mr and Mrs Pola, acting on their own advice, decided to not only Cross-Claim against the Bank but to also Cross-Claim against the Agents. The Bank did nothing to provoke that course of action.

1. I see nothing in the circumstances of this case to make it fair to impose any liability on the Bank concerning the Agents' costs and I decline to make any such order.

Gross sum costs order

1. Elders and Mr Allpass sought an order pursuant to s 98(4)(c) of the Civil Procedure Act that they be awarded a specified gross sum for their costs.

1. In Harrison v Schipp (2002) 54 NSWLR 738, Giles JA considered the relevant principals (in the context of the forerunner to s 98, Supreme Court Rules1970 part 52A rule 6). His Honour said at [21] and [22]: -

"The power conferred by Pt 52A, r 6(2) is not confined, and may be exercised whenever the circumstances warrant its exercise. It may appropriately be exercised where the assessment of costs would be protracted and expensive, and in particular if it appears that the party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment (Leary v Leary [1987] 1 WLR 72; [1987] 1 All ER 261; Sparnon v Apand Pty Ltd (Federal Court of Australia, von Doussa J, 4 March 1998, unreported); Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119; Hadid v Lenfest Communications Inc [2000] FCA 628).

Of its nature, specification of a gross sum is not the result of a process of taxation or assessment of costs. As was said in Beach Petroleum NL v Johnson (at 124), the gross sum 'can only be fixed broadly having regard to the information before the Court'; in Hadid v Lenfest Communications Inc (at [35]) it was said that the evidence enabled fixing a gross sum 'only if I apply a much broader brush than would be applied on taxation, but that ... is what the rule contemplates'. The approach taken to estimate costs must be logical, fair and reasonable (Beach Petroleum NL v Johnson (at 123); Hadid v Lenfest Communications Inc (at [27])). The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available (Wentworth v Wentworth (Court of Appeal, 21 February 1996, unreported) per Clarke JA.)"

1. The relevant principals have been further considered in Hamod v State of New South Wales [2011] NSWCA 375 per Beazley JA at [813] - [820].

1. On the face of it, this is an appropriate case for the making of a gross sum costs order.

1. Assessment of costs will be protracted and expensive. The evidence suggests that there is reason to believe that Mr and Mrs Pola may not have the means to meet the liability likely to result from the assessment.

1. However, as Giles JA observed in Harrison v Schipp, the power to order a gross sum for costs should only be exercised if it can be done fairly and only when there is sufficient material before the court to enable it to arrive confidentially at an appropriate figure.

1. That is not the position in this case. The evidence adduced on behalf on Elders and Mr Allpass is not sufficient to enable me to determine what figure should be appropriately ordered for costs.

1. So far as Elders is concerned, the evidence before me comprised an affidavit sworn by Mr Craig Hyde, a solicitor employed by Elders' solicitors, Curwoods Lawyers. Mr Hyde had the day to day conduct of the proceedings on behalf of Elders. He annexed to his affidavit copies of the tax invoices sent by Curwoods Lawyers to Elders. Mr Hyde deposed that the amount of professional fees that Elders had paid to Curwoods Lawyers was in the order of $134,022 and that Elders had also paid disbursements of $112,253.84 (a total of $246,275.84). Mr Hyde said that in his professional experience in civil litigation in NSW since 2000 (and earlier in New Zealand and England) that:

"[t]he general rule adopted by solicitors in the negotiation of party/party costs is that a successful party will recover between 65% and 75% of their professional fees on assessment and most if not all of their disbursements".

1. Upon that basis, Mr Hyde expressed the "professional opinion" that he would expect Elders to recover "in the vicinity of $206,069.24 on any assessment of party/party costs". Mr Hyde submitted that an appropriate figure for a gross sum costs order was $175,000 (which represents something in the order of 71 per cent of Elders' total actual costs and disbursements).

1. Mr Hyde's evidence was, however, unaccompanied by any independent expert evidence as to the reasonableness of the fees and disbursements charged. Nor was any breakdown given of the disbursements, save lump sum figures included in Curwoods Lawyers' tax invoices to Elders in respect of counsel and expert witnesses.

1. I am not able to assess, from a perusal of Curwoods Lawyers' tax invoices to Elders, whether the professional costs it charged are reasonable. In the absence of independent expert evidence on that topic, it would not be appropriate for me to seek to do so. As there is no evidence before me as to the details of the disbursements for which Elders have been invoiced, I am also not able to make any assessment as to the reasonableness of those amounts.

1. In those circumstances I am not prepared to make the gross sum costs order sought by Elders.

1. As for Mr Allpass, the evidence comprised an affidavit by Mr Brett Heath, a solicitor employed by Carter Newell Lawyers who assumed the role of counsel in the preparation for, and conduct of these proceedings on behalf of Mr Allpass.

1. Mr Heath also tendered a report from Ms Deborah Vine-Hall, an expert costs consultant.

1. Mr Heath's affidavit did not place into evidence tax invoices sent from Carter Newell Lawyers to Mr Allpass. Rather Mr Heath provided what he described an "overview" of the work done, but without "a description of every task performed in the conduct of the defence".

1. Mr Heath annexed to his affidavit a schedule setting out the work done by the various lawyers at Carter Newell Lawyers (principally Mr Heath), the hourly rates of those lawyers, the hours worked, and the resultant professional costs charged.

1. The total number of "hours worked" was stated to be 918.12 (of which 546.97 was attributed to Mr Heath). The total professional costs were stated to be $276,134.24 (of which $183,234.95 was attributed to Mr Heath).

1. Mr Heath's affidavit did not reveal how much time any particular legal service took or how much was charged in relation to any particular legal service.

1. Mr Heath also annexed a "schedule of disbursements" (including counsel's fees, accommodation, travel and other like expenses) totalling $51,665.02. Thus Mr Heath's affidavit revealed that the total costs and disbursements incurred by Mr Allpass were in the order of $328,000.

1. In her report, Ms Vine-Hall purported to opine that "the amount of the reasonable costs payable by" Mr Allpass was in the order of $321,000.

1. Mr Blount objected to the admission into evidence of that purported opinion and, in the course of hearing, I upheld that objection and rejected the relevant paragraphs of Ms Vine-Hall's opinion. The basis of that ruling was that (save for explaining why Ms Vine-Hall discounted certain disbusments charged by Carter Newell to Mr Allpass by some $15,000) Ms Vine-Hall's report did not explain by what process of reasoning she reached the conclusion she purported to give.

1. Ms Vine-Hall opined that:

(a)   the rates charged by the various lawyers at Carter Newell Lawyers were reasonable;

(b)   the amounts paid to external counsel were reasonable;

(c)   the division of labour between the various lawyers within Carter Newell was reasonable;

(d)   staffing levels at Carter Newell were conservative; and

(e)   with one minor exception, the disbursements incurred were reasonable.

1. Ms Vine-Hall did not, however, express any opinion that the amount of time spent by the various lawyers at Carter Newell, including Mr Heath, was reasonable. That was no doubt because the form of Mr Heath's affidavit was such that she was unable to do so. In those circumstances, I was not able to understand by what process of reasoning Ms Vine-Hall reached the conclusions to which objection was taken.

1. In my opinion the evidence adduced on behalf of Mr Allpass is not adequate for me to make a gross sum costs order and I decline to do so.

Final orders

1. I will allow the parties a short time to make any submissions by email to my Associate concerning the form of the final orders to be made in these proceedings.

1. If no such submissions are received by my Associate within 48 hours, I will make the orders in [3] above.

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Decision last updated: 12 February 2014