In the matter of Aquaqueen International Pty Ltd

[2015] NSWSC 739

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Aquaqueen International Pty Ltd [2015] NSWSC 739
Hearing dates:	16 March 2015 (last date for submissions 10 June 2015)
Decision date:	12 June 2015
Jurisdiction:	Equity Division - Corporations List
Before:	Black J
Decision:	Order that the Defendant and Ms Shirley Penson jointly and severally pay costs and disbursements of the Plaintiffs pursuant to specified costs orders quantified in the gross sum of $77,993.88. Order that interest be payable on those costs pursuant to s 101(5) of the Civil Procedure Act 2005 (NSW) from the date of this judgment.
Catchwords:	Procedure – costs – quantification of gross sum costs order. Procedure – costs – whether interest payable on gross sum costs from date of judgment under s 101 of the Civil Procedure Act 2005 (NSW).
Legislation Cited:	Civil Procedure Act 2005 (NSW) ss 98(4), 101(1), 101(4), 101(5)
Category:	Procedural and other rulings
Parties:	Titan National Pty Ltd and Kathryn Wood Weber (Plaintiffs) Aquaqueen International Pty Ltd (Defendant) Shirley Penson (Third Party)
Representation:	Counsel: Ms C Perry (solicitor) (Plaintiffs) Mr P Beazley (solicitor) (Third Party) Solicitors: Pure Legal (Plaintiffs) Beazley Singleton Lawyers (Third Party)
File Number(s):	2013/297134

Judgment

1. On 4 May 2015, I delivered judgment ([2015] NSWSC 500) in respect of an application by the Plaintiffs, Titan National Pty Ltd and Ms Kathryn Wood-Weber, inter alia, for gross sum costs orders under s 98(4) of the Civil Procedure Act 2005 (NSW) in respect of certain aspects of these proceedings; an order that costs be determined on an indemnity basis; and an order that Ms Shirley Penson, a director of the Defendant, Aquaqueen International Pty Ltd (in liq) (“Aquaqueen”) be jointly and severally liable with Aquaqueen for the Plaintiffs’ costs of the proceedings.

Amount of lump sum costs order

2. In the course of my judgment, I set out certain adjustments that needed to be made in determining the costs and disbursements that would be the subject of a gross sum costs order, and otherwise held that a gross sum costs order should be made, quantified as to 70% of the costs as adjusted in respect of specified categories, and as to the whole of the disbursements as adjusted in respect of those categories. I also held that both Aquaqueen and Ms Penson should be jointly and severally liable in respect of that costs order. I directed that:

“The parties should bring in Short Minutes of Order to give effect to this judgment within 14 days, which should be supported by a schedule indicating the adjustments which have been made as noted above.” [emphasis added]

3. On 18 May 2015, the Plaintiffs’ solicitor submitted proposed orders, indicating that she had sought to obtain comments on those orders from Ms Penson’s solicitor but had not been successful in doing so. The Plaintiffs’ solicitor also submitted what she described as “supporting calculation sheets” for the Court’s consideration, in excess of 30 pages that did not indicate, at least in any transparent way, the adjustments that had been made as a result of my judgment. I sought to draw that difficulty to the parties’ attention by an email sent by my Associate on 19 May 2015, by which I requested clarification whether the “supporting calculation sheets” submitted on 18 May were intended to be the schedule required by my orders, and how they indicated the adjustments made in accordance with my earlier judgment.

4. Regrettably, that email did not lead the parties’ solicitors simply to point out where the several adjustments required were found in the “supporting calculation sheets” submitted on 18 May, so as to allow orders to be made promptly. Instead, the Plaintiffs’ solicitor responded by an email dated 19 May 2015 indicating that the “supporting calculation sheets” she had provided incorporated all of the adjustments set out in my judgment and indicating that she understood that she had “picked up all of the matters referred to” in the judgment. As it turns out, that proposition was largely, but not entirely correct. However, that response did not identify where those adjustments were made in the supporting calculation sheets”, to allow me to satisfy myself of their correctness, as I needed to do, particularly where Ms Penson had not made submissions or indicated her agreement with the Plaintiffs’ calculation of those costs and disbursements.

5. My Associate made a further attempt to communicate what was needed, by a further email dated 19 May 2015, as follows:

“His Honour has asked me to advise that the purpose of the schedule requested was to allow him to satisfy himself that the costs to be excluded by reason of his judgment, including paragraphs 33, 38, 40 and 42 had been excluded in the proposed draft orders. The schedules provided do not clearly indicate what has been excluded in accordance with the judgment. His Honour invites you to provide a schedule which indicates the exclusions made so that he can satisfy himself of that matter. …”

The Plaintiffs’ solicitor responded that she and Ms Penson’s solicitor had met to seek to agree the amount of the costs order that followed from my judgment.

6. The Court was not then advised, for some time, as to what had occurred following that meeting and, on 4 June 2015, my Associate advised the parties that I would further extend the time for an agreed schedule showing the adjustments made pursuant to my judgment, or separate schedules in the event of disagreement to 10 June, and would then deliver judgment by reference to any material received by the specified time, so that the matter could be finalised. That advice prompted a further response from the Plaintiffs’ solicitor indicating that amendments or consent orders had not been agreed with Ms Penson’s solicitor and adding that:

“We do not understand in these circumstances as to why ongoing extensions continue to be granted to file materials particularly in circumstances where [the Plaintiffs] continues [sic] to be detrimentally affected by failure to be able to enforce or receive interest on such orders.”

There is an obvious question as to the appropriateness of that communication, but I need do no more than note that the extensions granted reflected the difficulties that arose from the parties’ failure to provide information in a form that would readily allow the Court to satisfy itself that the orders sought reflected my earlier judgment. On 10 June 2015, Ms Penson’s solicitor then wrote to my Associate seeking a further extension of time, by reason of the relocation of his practice. My Associate advised, at my request, that, given the number of previous extensions of time, any such application, unless by consent, should be made by interlocutory process supported by affidavit evidence. No such application was then made.

7. It is possible, with some difficulty, to deduce the adjustments made by the Plaintiffs in the “supporting calculation sheets”, by a page by page review of them, although the form in which that information was provided has meant that what should have been straightforward has not been. I have been troubled by the fact that the Court has now been left to make further adjustments, although in narrow scope, to give effect to its judgment, in that situation. Ms Penson had submitted at the previous hearing before me that the Court should not make a gross sum costs order, where there was a dispute as to particular categories of costs that would need to be addressed in order to make such an order, and that submission is strengthened where the Court has now had to adjust not only the categories, but the particular costs included in two of those categories to give effect to my judgment. I gave consideration to whether the proper course would now be to decline to make a gross sum costs order as contemplated by my earlier judgment, on the basis that the parties had not given me appropriate assistance in doing so. I have concluded that that course would be unfair to the Plaintiffs, where it would impose a substantial practical detriment upon them, including exposing them to potentially long delays in assessment given the history of the matter. I consider that the preferable course, doing the best it can with the information that has been provided, is for the Court make the adjustments that will give effect to my judgment in formulating the orders to be made.

8. The amount initially claimed by the Plaintiffs was $88,148.90, incorporating the costs and disbursements that were the subject of orders made on 20 November 2014 and 30 April 2014. The Plaintiffs’ adjusted claim as it emerged from the “supporting calculation sheets” was made up of costs and disbursements referrable to the orders made on 20 November 2014, which were reduced from $74,297.46 as originally claimed to $53,059.50; costs and disbursements referrable to the orders made on 30 April 2014, which were reduced from $13,851.44 as originally claimed to $9,792.92; and costs in respect of the hearing before me on 4 May 2015 in the amount of $16,317.86, which I had also ordered should be paid on a gross sum basis. In each case, the solicitors’ costs claimed were reduced to 70% of solicitor/client costs in accordance with my judgment.

9. In paragraph 33 of my judgment, I indicated that Aquaqueen and Ms Penson could not be fairly held liable for costs of $300, to which Ms Penson had objected, that related to matters as between the Plaintiffs and an expert who was conflicted by reason of joining the firm from which the Plaintiffs sought to appoint a liquidator. That amount has been deducted by three $100 deductions in the “supporting calculation sheets”.

10. In paragraph 38 of my judgment I noted an objection by Ms Penson to $918.40 out of photocopying costs of $1,080.40 charged by the Plaintiffs’ solicitors at a rate of $1 per page, and noted that the photocopying charges should be reduced from that amount to the lower amount conceded by Ms Penson. That required a deduction of $918.40 to be made from photocopying costs of $1,080.40, leaving a balance of $162.00. The “supporting calculation sheets” provided by the Plaintiffs’ solicitor indicated that she had misunderstood that paragraph and reduced photocopying costs by only $162.00, claiming the balance of $918.40. That error can readily be corrected by the Court. In making the orders below, I have replaced the incorrect claim $918.40 from the costs claimed in the “supporting calculation sheets” with the amount permitted under my judgment of $162.00.

11. In paragraph 52 of my judgment, I had indicated that costs of file storage and taxi fares should not be permitted in calculating the costs permitted under the gross sum costs order, and those costs have now been excluded.

12. In paragraph 40, I indicated that certain adjustments should be made in respect of applications on 4 August, 18 August and 25 August. The adjustment in respect of 4 August does not seem to have been made by the Plaintiffs’ solicitor and the order below corrects that error by reducing the amount of $420.00 referable to that date to nil. Adjustments have been made by the Plaintiffs’ solicitor in respect of the other dates.

Interest on costs orders

13. In her submission dated 18 May 2015, the Plaintiffs’ solicitor also noted that I had held, in my judgment, that the basis for an order for interest on costs under s 101(4) of the Civil Procedure Act had not been established, by reason of the absence of evidence as to if or when those costs have been paid. She pointed out that:

“… given this is an order for costs interest will not run on the unpaid costs post-judgment under s 101(5) of the Civil Procedure Act unless an express order for interest is made (see Joseph Lahoud & Anor v Victor Lahoud & Ors [2006] NSWSC 126 (10 March 2006)). There is no requirement to satisfy the Court that the circumstances of the proceedings are out of the ordinary in respect to this proposed order.”

14. This submission reflects the fact that s 101(1) of the Civil Procedure Act provides that interest is ordinarily payable on so much of the amount of judgment (exclusive of any order for costs) as is from time to time unpaid. Accordingly, the default position is that interest payable on a judgment does not extend to a judgment for costs. Section 101(4) in turn provides that the Court may order that interest is to be paid on any amount payable under an order for the payment of costs. The effect of s 101(5) is that such an order may be made from the date on which the costs concerned were paid – the issue which I addressed in my earlier judgment – or such later date as the Court may order.

15. The difference between the two positions was not identified by the form of order sought by the Plaintiffs, namely an “order for payment of interest pursuant to s 101(5) of the Civil Procedure Act 2005”, which did not identify whether one or both paragraphs of s 101(5) were relied on or the date from which such interest should run. The parties also made limited submissions as to ss 101(4)–101(5) of the Civil Procedure Act at the costs hearing before me, the time for which was admittedly limited, and I had understood that application as directed to an order for interest on costs from the date they were paid under s 101(5)(a) of the Civil Procedure Act and had not addressed the question whether interest should be awarded on costs from the date on which costs are awarded in favour of the Plaintiffs under s 101(5)(b) of the Civil Procedure Act in my judgment.

16. It seems to me that this matter was fairly raised by the Plaintiffs’ solicitor in her email of 18 May 2015, both because it is directed to an omission in my judgment that could properly be addressed under the slip rule, and because the judgment is interlocutory in character and orders have not yet been made to give effect to it. Ms Penson’s solicitor did not respond to this matter. It seems to me that the history of these proceedings amply demonstrates that there is a substantial risk that there will be delay, and possibly a substantial delay, before the Plaintiffs are able to recover the costs ordered in their favour. It seems to me that the case for interest from the date of the costs orders is made out on that basis.

Orders

17. Accordingly, I make the following orders:

1   Order that the Defendant, Aquaqueen International Pty Ltd, and Ms Shirley Penson jointly and severally pay costs and disbursements, pursuant to the orders made on 30 April 2014 by Brereton J and 20 November 2014 by Black J, quantified in the gross sum of $77,993.88.

2. Order that interest be payable on the costs the subject of this order, pursuant to s 101(5) of the Civil Procedure Act 2005, on and from 12 June 2015.

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Decision last updated: 16 June 2015