Bailey v O'Dea
[2021] NSWSC 1420
•04 November 2021
Supreme Court
New South Wales
Medium Neutral Citation: Bailey v O’Dea [2021] NSWSC 1420 Hearing dates: On the papers Date of orders: 4 November 2021 Decision date: 04 November 2021 Jurisdiction: Equity Before: Darke J Decision: Gross sum costs order made in favour of the plaintiffs in the sum of $40,000 (including GST).
Catchwords: COSTS – specified gross sum costs order – risk that a costs assessment would be unnecessarily complex and costly relative to modest amount claimed – court in a position to make a logical, fair and reasonable estimate of costs likely to be recovered on an assessment – gross sum costs order made
Legislation Cited: Civil Procedure Act 2005 (NSW), s 98(4)(c)
Cases Cited: Bahamad v Wong [2020] NSWSC 991
Category: Costs Parties: Liam Bailey (First Plaintiff)
Christopher Palmer (Second Plaintiff)
Michael Thomas O’Dea (Defendant)Representation: Solicitors:
Holman Webb Lawyers (Plaintiffs)
File Number(s): 2021/62417 Publication restriction: None
Judgment
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The plaintiffs are trustees for sale appointed by the Court pursuant to s 66G of the Conveyancing Act 1919 (NSW) in respect of a block of units at Bondi Beach. The property was formerly co-owned by the defendant and his now deceased brother. The proceedings arose out of a contract for the sale of the property which was entered into by the plaintiffs with the defendant on 7 March 2018. The plaintiffs terminated the contract on 13 July 2018 and claimed to be entitled to recover the deposit of $634,500. The Statement of Claim was filed on 4 March 2021. The defendant failed to file any Defence or any Cross-Claim. On 16 July 2021 the matter was set down for hearing on 20 September 2021 on the basis that the matter was undefended.
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On that day applications for leave to file a Defence and Cross-Claim, or further time to file such pleadings, were refused. Following the hearing on 20 September 2021 the Court made final orders including a declaration that the plaintiffs are entitled to retain and forfeit a sum of $158,625 that was paid by the defendant as part of the deposit under the contract, and an order that judgment be entered for the plaintiffs against the defendant in the sum of $556,419.14 (which sum includes pre-judgment interest). In essence, the judgment was for the unpaid portion of the deposit which the Court held the plaintiffs were entitled to recover following their termination of the contract for the defendant’s breach.
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The Court also ordered that the defendant pay the plaintiffs’ costs of the proceedings. The plaintiffs indicated that they wished to apply for a gross sum costs order. Reliance was placed upon an affidavit of their solicitor, Mr Hadley, dated 16 September 2021. A gross sum of $42,969.44 (including GST) was sought. A direction was made for the defendant to serve and provide to my Associate any affidavits and brief written submissions concerning the gross sum costs application by 18 October 2021. The defendant has not served or provided any affidavits or submissions.
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On 27 October 2021 Mr Hadley sent an email to my Associate, copied to the defendant, which foreshadowed that a further affidavit would be filed to bring up to date the position on costs incurred. The further affidavit of Mr Hadley was filed on 28 October 2021. On the basis of that affidavit, the plaintiffs now seek a gross sum costs order of $42,069.23 (including GST).
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The power of the Court to make a gross sum costs order is found in s 98(4)(c) of the Civil Procedure Act 2005 (NSW), which provides that the Court may, at any time before costs are referred for assessment, order that a party to whom costs are to be paid is entitled to a specified gross sum instead of assessed costs. As the plaintiffs’ costs have not been referred for assessment they can be the subject of an order under s 98(4)(c).
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The plaintiffs submitted that having regard to the conduct of the defendant in these proceedings and the earlier s 66G proceedings, it is likely that any assessment of costs would be protracted, causing unnecessary expense for the plaintiffs. It was further submitted that if additional costs were so incurred, that may lead to further disputes between the beneficiaries of the statutory trust in relation to the distribution of the trust funds.
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In my view these considerations warrant the making of a gross sum costs order (see Bahamad v Wong [2020] NSWSC 991 at [15]). The defendant, even when represented by a solicitor in these proceedings, failed to comply with directions of the Court concerning the filing of pleadings. No cogent explanation was given for that failure. On 20 September 2021 the defendant terminated the retainer of his solicitor, being apparently dissatisfied with the manner in which he was presenting arguments. The defendant thereafter inappropriately interrupted the proceedings of the Court on more than one occasion and repeatedly sought to renew the applications that had been ruled upon adversely to him. Whilst the defendant might be capable of dealing with a costs assessment in a reasonably efficient and focused manner, I think there is a substantial risk that he would fail to do so, thereby making the process unnecessarily complex and lengthy, and costly relative to the fairly modest sum claimed. Moreover, the evidence of Mr Hadley establishes the actual amount of costs incurred, thereby placing the Court in a position to make an estimate, that is logical, fair and reasonable, of the amount of costs likely to be recovered on an assessment.
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The figure of $42,069.23 (including GST) is based on a recovery of 80% of the solicitor’s costs of $24,813.25, and full recovery of the disbursements of $22,218.63. Mr Hadley gave evidence, based on his 13 years of experience as a litigation solicitor, that he would expect that to be the recovery on an assessment.
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I accept that evidence as showing that an assessment would likely yield an amount in the order of $42,069.23 (including GST). My overall impression is that the amounts charged to the plaintiffs were reasonable in the circumstances for a case of this type. However, in order to guard against the possibility that an assessment would result in a lower amount being recovered, I will round the claimed figure down to $40,000 (including GST).
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Accordingly, the Court will order pursuant to s 98(4)(c) of the Civil Procedure Act that the plaintiffs are entitled to the gross sum of $40,000 (including GST) instead of assessed costs in relation to the costs order made in their favour on 20 September 2021.
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Decision last updated: 04 November 2021
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