Filmlock Pty Ltd v Nissi Investments Pty Ltd (No 3)

[2013] NSWSC 1594

Supreme Court

New South Wales

Medium Neutral Citation:	Filmlock Pty Limited v Nissi Investments Pty Limited (No 3) [2013] NSWSC 1594
Decision date:	01 November 2013
Jurisdiction:	Equity Division - Expedition List
Before:	Pembroke J
Decision:	See paragraph [9]
Catchwords:	COSTS - gross fixed sum costs order
Legislation Cited:	Civil Procedure Act 2005 (NSW)
Cases Cited:	Filmlock Pty Limited v Nissi Investments Pty Limited (No 2) [2013] NSWSC 959 Idoport Pty Limited v National Australia Bank Ltd [2007] NSWSC 23 Mark Gerard Ireland as Executor of the Estate of the late Charles Stuart Gordon v Sandra Jane Retallack (No 2) [2011] NSWSC 1096
Category:	Costs
Parties:	Filmlock Pty Limited - first plaintiff Pearse Property Group Pty Limited - third plaintiff Nissi Investments Pty Limited - first defendant Samuel Ng - second defendant Soni Tanuwidjaja - third defendant
Representation:	Counsel: Ms L Chan - for the first and third plaintiffs No appearance for the defendants Solicitors: P J Donnellan & Co - for the first and third plaintiffs No appearance for the defendants
File Number(s):	2009/00289710

Judgment

1. In my judgment Filmlock Pty Limited v Nissi Investments Pty Limited (No 2) [2013] NSWSC 959 I ordered that the defendants pay the first and third plaintiffs' costs of and incidental to the proceedings and noted that this was an appropriate case for the making of a gross fixed sum costs order. The first and third plaintiffs now seek a gross fixed sum costs order in the amount of $264,763.01.

Power of the court to make a gross fixed sum costs order

1. The power of the court to make a gross sum costs order is contained in Section 98(4)(c) of the Civil Procedure Act 2005 (NSW) which provides:

(4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to:

. . .

(c) A specified gross sum instead of assessed costs . . .

1. I summarised the principles which inform the exercise of the discretion to make a gross fixed sum costs order in Ireland v Retallack (No 2) [2011] NSWSC 1096 at [38] to [44]. In particular, I said that 'I regard the power under Section 98(4)(c) as a helpful addition to the arsenal available to the court. Its use will only serve to enhance interests of justice and further the overriding purpose in an appropriate case'. In Idoport Pty Limited v National Australia Bank Ltd [2007] NSWSC 23 at [9] Einstein J summarised the principles as follows:

ii. the touchstone requires that the Court be confident that the approach taken to estimate costs is logical, fair and reasonable: Beach Petroleum at [16];

iii. the fairness parameter includes the Court having sufficient confidence in arriving at an appropriate sum on the materials available: Harrisonv Schipp (2002) 54 NSWLR 738, per Giles JA at para [22]; [following (Wentworth v Wentworth (CA, 21 February 1996, unreported, per Clarke JA) and adopted in Sony Entertainment v Smith (2005) 215 ALR 788; [2005] FCA 228; BC200500963 at para [199];

iv. a gross sum assessment, by its very nature, does not envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place: Harrisonv Schipp at para [22];

v. the gross sum "can only be fixed broadly having regard to the information before the Court": Beach Petroleum at 124;

[In Hadid v Lenfest Communications Inc [2000] FCA 628 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".]

vi. nevertheless the power to award a gross sum must be exercised judicially, and after giving the parties an adequate opportunity to make submissions on the matter: Leary v Leary [1987] 1 WLR 72 at 76, and Beach Petroleum NL v Johnson (No.2) (1995) 57 FCR 119 at 120";

vii. In terms of the necessity for the approach taken to be logical, fair and reasonable, Von Doussa J in Beach Petroleum NL & Anor v Johnson& Ors(No 2) (1995) 57 FCR 119, put the matter as follows, at paras [16]:

"On the one hand the Court must be astute to prevent prejudice to the respondents by overestimating the costs, and on the other hand must be astute not to cause an injustice to the successful party by an arbitrary "fail safe" discount on the cost estimates submitted to the Court: Leary v Leary at 265. ..."

Quantum

1. In this case, the defendants withdrew from the hearing after failing to persuade me on the first morning that there should be a further vacation of the hearing date. I made clear that I regarded the defendants' conduct as an unmeritorious attempt to delay the likelihood of a final judgment against them. Given the defendants' obfuscation and unwillingness to engage in the proceedings, there is good reason to assume that an assessment would not be an efficient or economical utilisation of the resources of the parties. It is appropriate, in my view, that there be a gross fixed sum costs order in this particular case.

1. Although the fixing of a gross sum is not an exercise in arithmetical fastidiousness, the first and third plaintiffs commissioned Valerie Edith Higinbotham, a legal costs consultant, to prepare a detailed report setting out her opinion of the amount of costs that should be reasonably recoverable in this matter. Ms Higinbotham concluded that the plaintiffs' costs recoverable:

(1)   for costs thrown away by reason of the adjournment of the proceedings on 3 September 2012 on an indemnity basis in the amount of $36,597.25; and

(2)   for the costs of the proceedings on an ordinary basis in the amount of $261,398.81

are logical, fair and reasonable. These amounts represent 82.8% of the overall costs incurred by the first and third plaintiffs.

1. In addition, on 12 August 2013 I ordered that the sum of $55,000 held by the solicitor for the first and third plaintiffs be released and paid forthwith to those solicitors. This amount should be deducted from the above costs.

1. Ms Higinbotham is a highly experienced and respected member of her profession and I can see no rational reason to depart from her assessment of what constitutes a fair and reasonable amount in the circumstances. This is particularly so in the absence of any contradictory evidence from the defendants. Nothing about her report or her conclusions suggested either substantive unfairness or error in principle.

1. I should note that the defendants have had an adequate opportunity to make submissions on the matter. On 14 and 15 October 2013 my Associate wrote to each of the second and third defendants notifying them of the plaintiffs' application, enclosing copies of the plaintiffs' submissions and evidence in support, and requesting that the defendants respond by 28 October 2013 if they wished to contribute any submissions. No response was forthcoming.

Orders

1. For those reasons I order the defendants to pay the first and third plaintiffs' costs of the proceedings in the gross fixed sum of $242,996.06.

Decision last updated: 01 November 2013