In the matter of Cardinal Group Pty Ltd (in liq) and Cardinal Project Services Pty Ltd (in liq) (Lump Sum Costs)

[2018] NSWSC 895

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Cardinal Group Pty Ltd (in liq) and Cardinal Project Services Pty Ltd (in liq) (Lump Sum Costs) [2018] NSWSC 895
Hearing dates:	On the papers
Decision date:	15 June 2018
Before:	Gleeson JA
Decision:	(1)   That the applicants pay the respondents’ costs of the amended notice of motion filed on 21 May 2018, such costs to be fixed in the sum of $6,400 (net of GST) and are to be payable forthwith.
Catchwords:	COSTS – application for lump sum costs order – whether amount claimed fair, reasonable and proportionate to the time and costs involved in the application
Legislation Cited:	Civil Procedure Act 2005 (NSW), s 98 Corporations Act 2001 (Cth), s 597 Uniform Civil Procedure Rules 2005 (NSW), R 42.7
Cases Cited:	Bobb v Wombat Securities Pty Ltd (No 2) [2013] NSWSC 863 Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1; [2002] NSWSC 432 Gupta v Fordham Laboratories Pty Ltd (No 2) [2018] NSWSC 694 Hamod v State of NSW [2011] NSWCA 375 Hancock v Rinehart (Lump sum costs) [2015] NSWSC 1640 Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 Liberty Industrial Pty Ltd v Donald Mcarthy Trading Australia Pty Ltd [2013] NSWSC 279 Monterio v Parole Authority of NSW [2016] NSWSC 903 Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 Re Aquaqueen International Pty Ltd [2015] NSWSC 500 Re Palladium Consulting Pty Ltd [2013] NSWSC 92 Russo v Russo (No 4) [2016] NSWSC 1133
Category:	Costs
Parties:	Mr Sam Ebeid and Ms Elize Malan (Applicants) Richard Andrew Stone and Peter William Marsden as Liquidators of Cardinal Group Pty Ltd ACN 129 933 393 and Cardinal Project Services Pty Ltd ACN 090 113 705 (Respondents)
Representation:	Counsel: Mr D Allen (Applicants) Mr D Krochmalik (Respondents)   Solicitors: Gardner Ekes Lawyers (Applicants) Stacks Law Firm (Respondents)
File Number(s):	2014/151499

Judgment

1. GLEESON JA: This judgment deals with the question of costs following orders made on 24 May 2018 dismissing an application by Mr Sam Ebeid and Ms Elize Malan (the applicants) to set aside examination summonses issued to each of them pursuant to s 597 of the Corporations Act 2001 (Cth) and to also set aside orders for production issued to two law firms: Re Cardinal Group Pty Ltd (in liq) and Cardinal Project Services Pty Ltd (in liq) [2018] NSWSC 748.

2. Pursuant to directions of the Court, the respondent-liquidators lodged written submissions on the question of costs, which the Court directed would be determined on the papers. No submissions have been received from the applicants.

3. The liquidators seek a lump sum costs order in the sum of $6,424.80, payable forthwith against each of the applicants, Mr Ebeid and Ms Malan.

4. The liquidators rely upon the unchallenged affidavit of Ms Stephanie Minter dated 31 May 2018, which sets out how the claim for the lump sum of $6,424.80 (excluding GST) is calculated. That amount comprises counsels’ fees (at the rate of $325 per hour) with respect to the application totalling $3,087.50 and counsels’ estimated fees (at the same rate) to draft submissions in relation to the appropriate costs order totalling $650.00, together with 70 percent of solicitors’ fees incurred on a party-party basis with respect to the application of $2,687.30 (being 70 percent of the solicitors’ fees of $3,839). The affidavit evidence provides a breakdown of the work undertaken by both counsel and the solicitors.

Relevant principles

5. The Court has a wide discretion to award costs under s 98(1) of the Civil Procedure Act 2005 (NSW). Under s 98(4), the Court has power to fix the costs of the successful party as a specified gross sum. That power is broad and may be exercised whenever the circumstances warrant it: Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at [21] (in respect of a predecessor statutory provision); Hamod v State of NSW [2011] NSWCA 375 at [813]; Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [4]-[6].

6. It has been said that it may be appropriate to fix costs in a gross sum in very short and relatively simple matters where the mechanism provides a more convenient alternative to assessment. The rationale is that where the quantum of costs in issue is a very modest sum, it is appropriate that the Court exercise its power to fix costs in a gross sum so as to avoid the potential for unnecessary expense and delay associated with the process of assessment: Bobb v Wombat Securities Pty Ltd (No 2) [2013] NSWSC 863 at [6]; Re Palladium Consulting Pty Ltd [2013] NSWSC 92 at [14]; Monterio v Parole Authority of NSW [2016] NSWSC 903 at [33].

7. As explained by Brereton J in Re Niruzzi Pty Ltd [2012] NSWSC 773 at [5], a case involving proceedings in the Corporations List to set aside a statutory demand:

… it is highly desirable that questions of costs be resolved expeditiously and without recourse to the process of assessment by a costs assessor, incurring, as it does, additional costs and delay.

8. As to quantification of a lump sum costs order, the Court is not required to undertake a line-by-line analysis of the costs claimed (as that would be inconsistent with the rationale behind the lump sum costs order process). Rather, the Court should take a broad-brush approach in a way that may involve an impressionistic discount of the costs actually incurred, which is estimated to take into account the contingencies that would be relevant in any formal costs assessment: Harrison v Schipp at [22]; Re Aquaqueen International Pty Ltd [2015] NSWSC 500 at [19]; Russo v Russo (No 4) [2016] NSWSC 1133 at [5].

Decision

9. Having reviewed the entries in counsel’s fee notes and the solicitor’s time entry report, and considered the hourly rates charged by counsel and the solicitors, I am satisfied that the total quantum of costs claimed is fair, reasonable and proportionate to the level of time and costs involved in opposing the application. Given the absence of any challenge by the applicants to the lump sum costs order sought, it is not necessary to detail the work undertaken.

10. Two matters should be mentioned. The hourly rate charged by counsel (which is near the bottom of the range of the National Guide to Counsel’s Fees for Junior Counsel adopted in the Federal Court) and the hourly rates charged by the solicitors are within the recognised ranges accepted in recent decisions of this Court: Liberty Industrial Pty Ltd v Donald Mcarthy Trading Australia Pty Ltd [2013] NSWSC 279 at [17]; Re Aquaqueen International at [30]; Gupta v Fordham Laboratories Pty Ltd (No 2) [2018] NSWSC 694 at [31]. Further, given the 30 percent discount of the solicitor’s fees, I do not consider it necessary to apply a further discount to the costs claimed to allow for the contingency that some costs might be disallowed on assessment: Hancock v Rinehart (Lump sum costs) [2015] NSWSC 1640 at [57]. I would, however, round the total figure claimed of $6,424.80 down to $6,400.

11. The usual rule in Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.7(2) is that an order for costs in respect of interlocutory proceedings is not payable until the conclusion of the proceedings, unless the Court orders otherwise. The Court’s discretion to order the immediate payment of interlocutory costs is wide and unfettered. Here, the costs order relates to the determination of a discrete question. That is a relevant circumstance in which it may be appropriate to order that costs be payable forthwith: Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1; [2002] NSWSC 432 at [11]-[12] (Barrett J).

12. There may be an argument that UCPR, r 42.7(2) does not apply where the Court makes a lump sum costs order in respect of an interlocutory application because such an order takes the matter outside UCPR, r 42.7(2). For the avoidance of doubt, however, it is appropriate to order that the costs be payable forthwith.

Order

13. For these reasons, the Court makes the following order:

1. That the applicants pay the respondents’ costs of the amended notice of motion filed on 21 May 2018, such costs to be fixed in the sum of $6,400 (net of GST) and are to be payable forthwith.

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Decision last updated: 15 June 2018