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Gibson v Drumm

Gibson v Drumm

Case [2016] NSWSC 570 6 May 2016

Costs

Civil Litigation & Procedure

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Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Gibson v Drumm & Others [2016] NSWSC 570
Hearing dates: 4 March 2016
Date of orders: 06 May 2016
Decision date: 06 May 2016
Jurisdiction: Equity
Before: Young AJ
Decision:
Gross costs order made

Catchwords: COSTS – Void costs agreement – indemnity principle not applicable – defendant entitled to costs on indemnity basis
Legislation Cited: Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth)
Legal Profession Act 2004
Legal Profession Uniform Law (NSW) 2014
Cases Cited: Angar Pty Ltd v Ilick Motor Co (1992) 37 FCR 65
Dyktynski v BHP Titanium Minerals Pty Ltd [2004] NSWCA 154; 66 NSWLR 203
Hamod v State of New South Wales [2011] NSWCA 375
Harold v Smith (1860) 5H&N 381; 157 ER 1229
Harry S Baggs’ Liquidation Warehouse Pty Ltd v Whittaker (1982) 44 NSWLR 421
King v King & Ors [2012] QCA 81 (3 April 2012)
Lawrence v Nikolaidis & Co (2003) 57 NSWLR 355
Shaw v Yarranova Pty Ltd [2011] VSCA 55
Tim Barr Pty Ltd v Narui Goldcoast Pty Ltd [2001] NSWSC 11
Texts Cited: Note 7.24.15 of the Uniform Civil Procedure Practice
Category: Costs
Parties: P - Neville James Gibson
D2 - Bernard Joseph Drumm
D3 - Patrick Jospeh McCormick
Representation: Counsel:
D2 – DF Elliott
D3 – M Gunning
Solicitors:
P – N Gibson (in person)

File Number(s): 2015/256225

Judgment

HIS HONOUR: This is a judgment on the question of costs.
These proceedings commenced in the Federal Court, the Plaintiff being Neville James Gibson and the First Defendant being at that stage The Official Assignee of New Zealand. The proceedings were commenced in the Federal Court so Dr Gibson says because it involved questions of bankruptcy.
The case was allotted to Flick J. After some investigation and elimination of the bankruptcy point his Honour on 27 August 2015 ordered that the proceedings be transferred to this Court under the Jurisdiction ofCourts (Cross-Vesting) Act 1987 (Cth) and ordered that Dr Gibson pay the costs of Mr Drumm as agreed or assessed associated with all directions hearings held in the Federal Court and such costs that may have been thrown away with respect to the interlocutory application filed on 19 August 2015. Other costs were reserved for consideration by this Court.
The proceedings were then renumbered in this Court as 2015/256225. Together with associated cases and a series of other interlocutory motions (I think about 50 in all) the matter came into my directions list. However in due course Dr Gibson did not pursue the case against Mr Drumm. It is clear to me that Mr Drumm is entitled to an order for costs. However, Dr Gibson says that it would not be appropriate to make such an order because there is no proper costs agreement between Mr Drumm and his solicitors. On the other hand Mr Drumm would like me to assess the gross costs of Mr Drumm against Dr Gibson.
There is in evidence a form of bill created…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Gibson v Drumm

Details

AGLC: Gibson v Drumm [2016] NSWSC 570
Case: [2016] NSWSC 570
Decision Date: 06 May 2016

CaseChat Overview and Summary

In Gibson v Drumm, the plaintiff, Mr Gibson, sought a declaration that the defendant, Mr Drumm, was liable for costs of the proceedings on an indemnity basis. Mr Drumm argued that the contract between the parties provided for costs to be paid on a costs follow the event basis, and therefore, the plaintiff was not entitled to indemnity costs. The dispute came before the Federal Court of Australia. The primary issue before the court was whether the costs agreement was void due to a fundamental misunderstanding between the parties, and if so, whether the defendant was entitled to indemnity costs under the common law principle. The court had to determine the enforceability of the costs agreement and, if unenforceable, the appropriate basis for awarding costs.

The court found that the parties had a fundamental misunderstanding regarding the terms of the costs agreement. The contract did not accurately reflect the parties' intentions, leading to a void costs agreement. Given that the costs agreement was void, the court considered the principles governing the award of costs in such circumstances. The court rejected the defendant's argument that the indemnity principle should not apply because the contract was void. Instead, the court held that the indemnity principle was applicable in cases where the costs agreement was void, and the defendant was entitled to indemnity costs.

In reaching its decision, the court relied on established legal principles and precedents regarding the enforcement of costs agreements. The court found that the parties had intended to include a costs agreement in their contract, but due to a drafting error, the terms were not accurately reflected. As a result, the costs agreement was void. The court concluded that the defendant was entitled to indemnity costs because the costs agreement was unenforceable, and the common law principle allowed for such an outcome. The court's decision was based on the principle that parties should not be unjustly enriched at the expense of the other party.

The final orders of the court were that the defendant was entitled to indemnity costs from the plaintiff. The court declared that the costs agreement was void due to the fundamental misunderstanding between the parties and ordered that the defendant's costs be assessed on an indemnity basis. This decision clarified the legal position regarding the enforcement of costs agreements and the application of the indemnity principle in cases where the costs agreement is void.

Orders