Benkath Nominees Pty Ltd v The Bah Company Pty Ltd (No 2)
[2019] NSWSC 1091
•23 August 2019
Supreme Court
New South Wales
Medium Neutral Citation: Benkath Nominees Pty Ltd v The Bah Company Pty Ltd (No 2) [2019] NSWSC 1091 Hearing dates: On the papers Decision date: 23 August 2019 Jurisdiction: Common Law Before: Adamson J Decision: (1) Fix the amount of the costs which the second defendant is obliged to pay the plaintiff pursuant to order (2) made on 7 May 2019 at $18,000 plus GST.
(2) I note that such costs are to be paid at the conclusion of the proceedings.Catchwords: COSTS – application for gross sum costs order – order not opposed – issue as to quantum – quantification of appropriate gross sum – relevance of principal and agent having been retained – whether costs payable forthwith or at the conclusion of the proceedings Legislation Cited: Civil Procedure Act 2005 (NSW), s 98 Cases Cited: Dale v Clayton Utz (No 3) [2013] VSC 593 Category: Costs Parties: Benkath Nominees Pty Ltd (Plaintiff)
The Bah Company Pty Ltd (First Defendant)
John Joseph Harkins (Second Defendant)
Nikola Coric (Third Defendant)
Michelle Anne Coric (Fourth Defendant)Representation: Counsel:
Solicitors:
B Le Plastrier (Plaintiff)
K Fraser, solicitor (Second Defendant)
MacGregor O’Reilly Nash Solicitors (Plaintiff)
BHM Lawyers (Second Defendant)
File Number(s): 2018/265568
Judgment
Introduction
-
Benkath Nominees Pty Ltd (the plaintiff) seeks an order that its costs of the application by John Harkins (the second defendant) to set aside a default judgment entered against him be paid in a gross sum pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW) (the Act).
-
When the matter came before me on 7 May 2019, the parties indicated that they agreed that an order ought be made by consent to set aside the default judgment. The only outstanding issue was the costs of the application. After hearing argument, I ordered the second defendant to pay the plaintiff’s costs of the default judgment and the application to set it aside and gave reasons ex tempore. In its submissions handed up in court on 7 May 2019 the plaintiff proposed that such an order be made and nominated the sum of $17,500. However, as the plaintiff did not adduce adequate evidence in support of this sum, I granted leave to the plaintiff to apply for an order pursuant to s 98(4)(c) of the Act and made directions about the filing of such evidence. The plaintiff has revised its claim (to take account of costs incurred in the interim) to $22,826.51, including GST (or $21,061.60 plus GST). These amounts take account of the discounts referred to below.
-
The plaintiff relies on an affidavit of Matthew Wells sworn 14 May 2019 in support of its application. The plaintiff is registered in Queensland and instructed solicitors in Queensland to commence the proceedings. This brought about the need for the appointment of an agent in Sydney to appear in this Court as required. There has inevitably been an increase in costs by reason of the agency arrangement. Mr Wells is a solicitor with Makinson d’Apice, the firm which acts as agent (the Sydney agents). Mr Wells has annexed a time sheet from the Queensland solicitors (the Queensland principals) together with the invoice rendered by the Sydney agents to the principal firm and the invoice from counsel.
-
The time sheets of the Queensland principals total an amount of $13,843.50, including GST (being $12,585 excluding GST). The invoice rendered by the Sydney agents to the Queensland principals is $13,890.80, including GST. The invoice for counsel’s fees is in the amount of $5,362.50 including GST. The plaintiff proposes that the solicitors’ fees be discounted by 30% (to give a percentage on assessment of 70%) and that the barrister’s fees not be discounted at all.
-
The plaintiff seeks an order that the second defendant pay the costs forthwith. It relies on Dale v Clayton Utz (No 3) [2013] VSC 593 and submitted that this case falls into categories (a) and (c) of those considered at [65] of that decision as follows:
“Courts have recognised that the demands of justice may require a departure from the ordinary rule [that costs not be payable until the conclusion of the proceedings] for one or more of three broad reasons:
(a) Because of the conduct of the unsuccessful party;
(b) Because of the likely delay before the final completion of the proceeding; and
(c) Because the interlocutory application involves a separate or discrete issue.”
-
The second defendant does not oppose the making of an order under s 98(4)(c) of the Act but has submitted that as the plaintiff has not tendered an actual invoice from the Queensland principals in support of its application, there ought be a discount applied to reflect the costs which would actually be charged to the client as distinct from those recorded in the time sheets. The second defendant has also submitted that there ought be a further discount applied because of the use of the Sydney firm as agent in circumstances where the matter involved a mortgage and possession application relating to real property and defendants in New South Wales. The second defendant also submitted that counsel’s fees were excessive as the only issue in dispute on 7 May 2019 was costs. The second defendant submitted that it would be appropriate to discount by 50% the fees sought, by reason of the matters referred to above and that the appropriate amount would be, accordingly, $12,606.50 (excluding GST), not including counsel’s invoice dated 14 May 2019.
-
The second defendant submits that it is appropriate that the costs not be payable until the conclusion of the proceedings.
-
In response, the plaintiff submitted that the second defendant’s objections to the amount claimed are general and that the second defendant has not identified any particular item or items which ought not be recoverable. The plaintiff submitted that the second defendant failed to identify any item which constituted “double-counting” between principal and agent and that, accordingly, the generally accepted discount of 30% should be applied by this Court. The plaintiff also submitted that the time sheets gave as much detail of amounts that would be charged as any invoice would give and that the amounts on the Queensland principals’ time sheet should not be discounted by more than 30%.
Consideration
-
I am satisfied that it is appropriate to make an order under s 98(4)(c) of the Act. The costs in issue are not substantial and the assessment process is likely to delay their quantification and add to the costs. I also take into account that the second defendant does not oppose the making of such an order.
The quantum of the gross sum
-
No assumption can be made that the amounts that will be charged by the plaintiff’s Queensland solicitors will accord with the amounts recorded in the timesheets and not be discounted. Because the amounts referable to the work of the principal and that of the agent are of the same order but the agent appears to have done the work for the hearings, I consider that the solicitors’ fees should be discounted by more than the plaintiff has made allowance for. The barrister’s fees do not appear to be unreasonable since it would appear that the work was done before it was known that the matter would be resolved. However, they, too, ought be discounted somewhat, although not by as significant a percentage as the solicitors’ fees, to take account of the broad brush nature of the approach taken when fixing costs under s 98(4)(c) of the Act. It would be at odds with the nature of the process to reduce the calculation to a purely mathematical one. I consider $4,000 plus GST to be appropriate for counsel’s fees and $14,000 plus GST for the combined solicitors’ fees. These deductions take account of the matters referred to above.
-
In all the circumstances I fix the gross sum at $18,000 plus GST, being the amount which the second defendant is obliged to pay the plaintiff pursuant to order (2) made on 7 May 2019.
When the costs ought be payable
-
In its written submissions made on 7 May 2019, the plaintiff submitted that the second defendant ought pay the plaintiff’s costs of setting aside the default judgment as a condition of its being set aside. I regard this submission as having been overtaken by the plaintiff’s consent to the setting aside of the default judgment.
-
At the conclusion of my reasons for making the costs order on 7 May 2019 I indicated that I was inclined, if I made a gross sum costs order, to order that the costs be paid within a specified time rather than at the conclusion of the hearing: [10] of my reasons. However, this was a preliminary view which was subject to the parties’ submissions.
-
Having considered those submissions, I am not persuaded by the plaintiff’s submission that the second defendant’s conduct and the discrete nature of the issue (setting aside the default judgment) warrant a departure from the ordinary rule that costs are not payable until the conclusion of the proceedings. That the plaintiff consented to the setting aside of the judgment had the effect that this Court did not need to engage in a determination of the conduct that led to its being entered by default. Further, although the question is discrete, there may, in litigation, be many discrete points on which a party may win or lose without it being in the interests of justice to order the costs to be payable forthwith. It is not without significance that the second defendant, in his submissions on costs, pointed to an irregularity in the order for possession (which had been made by default) since no such order was claimed in the statement of claim. The consequence of the judgment having been set aside is that the plaintiff has had the benefit of regularising its claim, and therefore any order which may subsequently be made on the basis of it.
Order
-
I make the following order and notation:
Fix the amount of the costs which the second defendant is obliged to pay the plaintiff pursuant to order (2) made on 7 May 2019 at $18,000 plus GST.
I note that such costs are to be paid at the conclusion of the proceedings.
**********
Decision last updated: 26 August 2019
0