Butler v JSL Racing Pty Ltd

[2016] VSC 110

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

S CI 2011 03522

FRANCIS KEVIN BUTLER & ORS	Plaintiffs
v
JSL RACING PTY LTD  (ABN 668 018 293 505) & ORS	Defendants

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JUDGE:	JOHN DIXON J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	7 MARCH 2016
DATE OF JUDGMENT:	7 MARCH 2016 (Revised 21 March 2016)
CASE MAY BE CITED AS:	BUTLER & ORS v JSL RACING PTY LTD & ORS
MEDIUM NEUTRAL CITATION:	[2016] VSC 110

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COSTS – Application for gross sum costs order – Principles applying – Defendant an undischarged bankrupt – Appropriate discount – r 63.07 Supreme Court (General Civil Procedure) Rules 2015 (Vic).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr M A Robins QC	Mr Nathan Kuperholz
For the third Defendant	Ms S Laxon (in person)
For the first, second and fourth Defendants	No appearance

HIS HONOUR: 

1. In this proceeding the plaintiffs seek a gross sum assessment of their costs of the proceeding under the court's power to do so in r 63.07(2)(c) of the Supreme Court General Civil Procedure Rules2015 (Vic).

1. Recently in Sheehan v Brett Young & Ors (No 4),[1] I reviewed the cases applying to the rule in this jurisdiction and I referred to the principles that govern such an application. I will exercise the discretion under this rule in accordance with those principles without setting them out seriatim in these reasons. 

   [1][2016] VSC 53.

1. The plaintiffs have not received any payment from any of the defendants of any amount in satisfaction of the principal judgment (with interest and costs), which they obtained against those defendants on 22 October 2014. 

1. I am satisfied in the present case that Ms Laxon has neither the means to contest this application or to contest a taxation, nor the means to pay any costs ordered.  She has informed me that she is presently an undischarged bankrupt.  These are matters of considerable significance in the exercise of the discretion to assess the costs as a gross sum. 

1. Although exercising the discretion in favour of the plaintiffs avoids the plaintiffs being vexed by incurring further considerable expense in a taxation process, the gross sum assessment denies to the defendant the opportunity to undertake a detailed analysis of the costs being claimed by the plaintiffs through the process of taxation. 

1. However, the primary purpose of the rule is to avoid the expense, delay and aggravation that is involved in assessing costs on a taxation.  The present assessment process does not envisage that any form of analysis similar to that undertaken in a taxation should be undertaken by me.  What is generally undertaken by the courts on such an assessment is much more broad brush than a taxation. 

1. What I am required to do is estimate the costs in a manner that is logical, fair and reasonable.  I need to be astute to avoid both overestimating the recoverable costs and underestimating the appropriate amount, for example, by applying an arbitrary discount to the amounts claimed. 

1. The plaintiffs base their application upon an affidavit of their solicitor, Mr Nathan Kuperholz, sworn 11 February 2016, in which he confirms the nature and extent of the work done as summarised and referred to in the affidavit of Mr Raymond John De La Rue, also sworn 11 February 2016. 

1. Mr De La Rue is a costs consultant with over 40 years’ experience who has regularly appeared in this court in relation to the taxation of costs and is familiar with the processes and procedures of the Costs Court.  He has analysed Mr Kuperholz’ file and records and he recorded in his affidavit the results of his investigations of this material.  He then assessed the plaintiffs' professional costs on the basis of what, in his opinion, the Costs Court would allow in the event that such costs were referred to taxation. That assessment was $54,921.93, those costs being limited to the issues that remained for trial in this proceeding on 2 February 2016.  The assessment of those costs was done on a party/party basis until 31 March 2013, and thereafter on the standard basis that was introduced by amendments to the rules that came into effect from 1 April 2013. 

1. Mr De La Rue has also reviewed the fees charged by counsel and the disbursements and other expenses that were incurred and has assessed the amounts that would be recovered on taxation to be $41,090 for counsels’ fees, $808.80 for transcription and $3,324.07 for Mr De La Rue's costs in the preparation of this assessment.

1. Mr Robins QC, who appeared for the plaintiffs submitted that various findings that were made by Digby J in the trial of the principal issues between the parties should be considered, but I am not persuaded that those matters are of any importance in the exercise of my discretion. 

1. The claim for gross costs has been discounted in the following way.  Mr Kuperholz is claiming 70 per cent of the costs assessed by Mr De La Rue, that is the sum of $38,445.36.  For counsels’ fees, the plaintiffs are accepting a discount of 15 per cent, which is a figure of $34,926.50, and the disbursements that I have already referred to, making a total of $77,504.73, rounded down to $77,500. 

1. I bear in mind that ultimately assessment of costs by this court is not achieved by a debate between experienced and well-credentialed cost experts.  The history of this litigation suggests a prospect that any taxation could be contested, although Ms Laxon has frankly conceded in court this morning that she does not have the resources to participate in a taxation. She has expressed an interest in challenging the judgment that was entered on 2 February 2016. 

1. I accept that the plaintiffs’ discount will contribute very substantially to eliminating or reducing the risk that a lump sum assessment would be unfair to the defendants through denial of the opportunity to assess or challenge each item of a taxable bill, but it remains the case that making a gross sum order will deny the defendants that opportunity. In order for the gross sum assessment to be logical, fair and reasonable, in my view a further discount is needed to deal with the vicissitudes and exigencies that are inherent in a taxation. 

1. In making this further discount, I am not making an arbitrary assessment.  As the review of the authorities by Sackville J in Seven Network Limited v News Limited[2] demonstrates, most awards of gross sum costs seem to fall broadly within the range of 60 to 70% of total costs and disbursements.  The precise discount to be allowed is a matter for judgment in the circumstances of the particular case. 

   [2][2007] FCA 2059, [33].

1. In the present case, although the taxation would not be particularly complex, the quantum of costs claimed is relatively modest.  The prospect of the costs of a taxation process becoming a substantial proportion of the costs sought to be recovered cannot be discounted. 

1. In balancing all of the factors that are relevant to the exercise of my discretion, I am persuaded that this is a proper case for the court to order a gross sum costs award and accordingly the court will order that the defendants pay the plaintiffs' costs of the proceeding assessed in the sum of $70,000. 

1. The order of the court will be in the form submitted by Mr Robins QC.  The second and third defendants are to pay the costs of the plaintiff of the defamation claim pleaded in paragraphs 45B to 45H of the defence and counterclaim dated 10 April 2013, including reserve costs, and such costs are fixed in the gross sum of $70,000. 

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