Maximus Holdings (NSW) Pty Limited trading as Schreuder Partners Compensation Lawyers (ABN 40 110 829 868) v Sandra Primerano

[2024] NSWSC 321

Supreme Court

New South Wales

Medium Neutral Citation:

Maximus Holdings (NSW) Pty Limited trading as Schreuder Partners Compensation Lawyers (ABN 40 110 829 868) v Sandra Primerano [2024] NSWSC 321

Hearing dates:

18 March 2024

Date of orders:

28 March 2024

Decision date:

28 March 2024

Jurisdiction:

Equity

Before:

Pike J

Decision:

(1)   Order the defendant to pay damages to the plaintiff in the sum of $75,000.

(2)   Order the defendant to pay the plaintiff’s costs of the proceedings in the specified gross sum of $104,140.28.

Catchwords:

CIVIL PROCEDURE – default judgment where no appearance by defendant – damages proved – no need for declaratory relief

CONTRACT – breach of contract – employment contract – misleading or deceptive conduct by former employee – breach of contractual, fiduciary and statutory duties

DAMAGES – assessment – damage to reputation

COSTS – gross sum costs order – where sufficient information before the Court to enable the grant of a gross sum costs order

Legislation Cited:

Competition and Consumer Act 2010 (Cth) - Schedule 2 Australian Consumer Law

Corporations Act 2001 (Cth)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Baltic Shipping Company v Dillon (1993) 176 CLR 344

Bell v Hartnett Lawyers (No 4) [2023] NSWSC 1592

Cryeng Pty Limited v Loyola [2011] FCA 956

FAI General Insurance Co Limited v RAIA Insurance Brokers Limited (1992) 108 ALR 479

Flamingo Park Pty Limited v Dolly Creation Pty Limited (1986) 65 ALR 500

Geneva Laboratories Limited v Prestige Premium Deals Pty Ltd (No 5) (2017) 122 IPR 279; [2017] FCA 63

Obela Fresh Dips and Spreads Pty Ltd v Coetzee [2020] NSWSC 1862

RAIA Insurance Brokers Limited v FAI General Insurance Co Limited (1993) 41 FCR 164

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Maximus Holdings (NSW) Pty Limited trading as Schreuder Partners Compensation Lawyers (ABN 40 110 829 868) (Plaintiff)
Sandra Primerano (Defendant)

Representation:

Counsel: Mr N Furlan (Plaintiff)
Solicitors: Sasphire Legal (Plaintiff)

File Number(s):

2022/00257991

Publication restriction:

Nil

JUDGMENT

Introduction

1. The plaintiff is an incorporated legal practice that trades under the name Schreuders Compensation Lawyers. Since 2010, the plaintiff’s practice has comprised solely of no win/no fee personal injury litigation.

2. During the period from about 25 September 2017 until 11 August 2022, the defendant was employed by the plaintiff as a solicitor. Her title was Senior Solicitor & Quality Assurance Manager.

3. The plaintiff terminated the defendant’s employment on 11 August 2022 upon the discovery by the plaintiff of certain conduct by the defendant, whereby she misled clients of the plaintiff by purporting that the plaintiff was providing legal services to them when it was not.

4. These proceedings were commenced on 30 August 2022 and on 1 September 2022, the Court granted interlocutory injunctions in favour of the plaintiff.

5. The defendant was represented by solicitors in the matter up until 30 January 2023. The defendant failed to file a defence by 11 April 2023 in compliance with an order made by the Court on 14 March 2023. The Court entered default judgment for damages to be assessed on 28 June 2023.

6. The defendant has not taken an active part in the proceedings since about March 2023. She was on notice of the hearing which occurred on 18 March 2024 and there was no appearance when the matter was called outside Court on that day.

7. The plaintiff now moves the Court for the following relief:

1. A declaration that the defendant has engaged in misleading or deceptive conduct or conduct likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law 2010 in Schedule 2 of the Competition and Consumer Act 2010 (Cth) (ACL) by:

1. purporting to provide legal services to individuals on behalf of the plaintiff when she had no authority to do so and without the knowledge and the approval of the plaintiff;

2. falsely representing that she was still an employee of the plaintiff after her employment was terminated summarily for serious misconduct on 11 August 2022;

3. falsely representing to claimants (or prospective claimants) that the plaintiff was providing legal services to them and conducting compensation claims on their behalf when it was not;

4. falsely representing to claimants (or prospective claimants) that steps had been taken to pursue compensation claims on their behalf by her and by the plaintiff that had not been taken;

5. falsely representing to claimants (or prospective claimants) that settlement offers had been made to them that had not been made;

6. falsely representing to claimants (or prospective claimants) that judgments had been given in their favour in respect of their compensation claims when they had not;

7. impersonating the plaintiff's staff members in communications with claimants (or prospective claimants).

2. A declaration that the defendant has breached ss 182(1) and 182(3) of the Corporations Act 2001 (Cth) (Corporations Act).

3. Damages pursuant to s 236 of the ACL or alternatively, compensation pursuant to s 237 of the ACL.

4. Damages for breach of contract.

5. Compensation pursuant to s 1317H of the Corporations Act, including profits made by the defendant resulting from her contraventions of ss 182(1) and 183(1) of the Corporations Act.

8. For the reasons set out below, I am satisfied that the plaintiff is entitled to damages. The sum that I have assessed as appropriate damages is $75,000. I am also satisfied that a gross sum costs order should be made for the defendant to pay the plaintiff’s costs of the proceedings in the sum of $104,140.28. There is no utility in the present case in the Court making any declarations.

Overview of the Facts

9. In the absence of filing a defence, the allegations in the statement of claim filed 31 October 2022 stand as admitted: see Obela Fresh Dips and Spreads Pty Ltd v Coetzee [2020] NSWSC 1862 at [20]; Uniform Civil Procedure Rules 2005 (NSW) r 14.26(1).

10. I set out a summary of those allegations, being the facts against which I determine the appropriate relief. The plaintiff also relied on evidence before me which substantiated the allegations.

11. As set out above, the plaintiff operates an incorporated legal practice, specialising in personal injury compensation claims.

12. The defendant was employed by the plaintiff between the period from 25 September 2017 to 11 August 2022. On or about 4 March 2020, the plaintiff and the defendant entered into a written contract of employment. The express terms of that employment contract included:

1. The defendant was required to be faithful and diligent and actively pursue the best interests of the plaintiff and at all times maintain reasonable ethical, professional and technical standards;

2. The defendant would not conduct herself in a manner, whether during or after work hours, that causes damage or potential damage to the property or reputation of the plaintiff;

3. The defendant would use her best endeavours to protect and promote the best interests of the plaintiff;

4. During and after her employment, the defendant would not, unless required by law, disparage, denigrate or otherwise bring the plaintiff, including its current or former directors or officers, employees, agents, contractors or otherwise into disrepute, including through the publication of any statement which may harm the reputation of these persons or the plaintiff; and

5. The defendant would not interfere with the relationship between the plaintiff and any of its clients, suppliers, employees or prospective clients or suppliers during the periods and within the geographical areas specified in clause 16 of the employment contract.

13. In addition to the express terms of their employment contract, the defendant owed fiduciary duties to the plaintiff, as well as duties under ss 182 and 183 of the Corporations Act.

14. The statement of claim sets out conduct in relation to a number of individuals which may be summarised as follows.

Joseph Xuereb and Lisa Sales

15. From at least January 2018, and without the knowledge or approval of the plaintiff, the defendant represented to Mr Joseph Xuereb and to third parties, by her words and by her conduct, that:

1. She was authorised by the plaintiff to accept instructions to act for Mr Xuereb and/or Ms Lisa Sales on behalf of the plaintiff;

2. She was authorised by the plaintiff to enter into an agreement on behalf of the plaintiff to provide legal services to Mr Xuereb and/or Ms Sales;

3. Mr Xuereb and/or Ms Sales would be a client of the plaintiff;

4. Mr Xuereb and/or Ms Sales was a client of the plaintiff;

5. She was authorised by the plaintiff to provide legal services to Mr Xuereb and/or Ms Sales;

6. The plaintiff would provide legal services through her, to Mr Xuereb and/or Ms Sales; and

7. The plaintiff was providing legal services, through her to Mr Xuereb and/or Ms Sales.

16. This is in circumstances where neither Mr Xuereb nor Ms Sales were ever a client of the plaintiff.

Carmel Kutcher

17. Ms Carmel Kutcher was a client of the plaintiff, although the plaintiff did not authorise the defendant to provide any legal services to Ms Kutcher on its behalf after 12 July 2022.

18. On 11 August 2022 and without the knowledge or approval of the plaintiff, the defendant falsely represented to Ms Kutcher:

1. A settlement conference was to take place on 11 August 2022 in connection with the claim made by Ms Kutcher;

2. A settlement conference was in progress, that she had the “mediator” on the “other line” and that a settlement offer of $45,000 had been made to Ms Kutcher by an insurer; and

3. The defendant would put an offer of compromise on behalf of Ms Kutcher before a “judge” on Monday 15 August 2022.

19. Further, on or about 15 August 2022, and without the knowledge or approval of the plaintiff, the defendant made a telephone call to Ms Kutcher during which she:

1. Identified herself as, and pretended to be, a paralegal employed by the plaintiff named “Jessica”; and

2. Stated that the defendant’s father had died and for that reason she had not been able to appear before the “judge” in Ms Kutcher’s proceedings earlier that morning.

Kathryn Murphy

20. In or about 2022, and without the knowledge or approval of the plaintiff, the defendant falsely represented to Ms Kathryn Murphy that:

1. Proceedings had been commenced on her behalf by the plaintiff;

2. A settlement offer of $970,000 had been made to Ms Murphy by an insurer;

3. A judgment in the sum of $1,450,000 had been given in Ms Murphy’s favour in those proceedings and

4. She would send a copy of the judgment to Ms Murphy.

21. This is in circumstances where Ms Murphy was a client of the plaintiff but at no time did the plaintiff authorise the defendant to provide any legal services to Ms Murphy on its behalf after about July 2021.

22. Further, on or about 15 August 2022, the defendant:

1. Gained access to the work email account of Ms Jessica Lunt, a paralegal employed by the plaintiff; and

2. Sent an email from Ms Lunt’s work email account to Ms Murphy purporting to attach a judgment in her favour, but with no attachment.

Jon Stone

23. In or about August 2022, and after her employment by the plaintiff had ceased and without the knowledge or approval of the plaintiff, the defendant falsely represented to Mr Jon Stone that:

1. She was employed by the plaintiff;

2. She was authorised by the plaintiff to provide legal services to him on its behalf; and

3. She had set up a settlement conference on his behalf and had commenced settlement negotiations with an insurer and that the insurer had made a settlement offer of $135,000, which she described as a “good result”.

24. This is in circumstances where Mr Stone was a client of the plaintiff but at no time did the plaintiff authorise the defendant to provide any legal services to Mr Stone on its behalf in August 2022.

Carol Gould and Robert Gould

25. Mr Robert Gould was a client of the plaintiff to whom it provided services up until about 17 April 2019. Mrs Carol Gould is the grandmother of Mr Gould and conveyed instructions to the plaintiff on behalf of Mr Gould.

26. The plaintiff has not provided legal services to Mr Gould since about 17 April 2019 and at no time did the plaintiff authorise the defendant to provide legal services to Mr Gould on its behalf after 17 April 2019.

27. After 17 April 2019, and without the knowledge or approval of the plaintiff, the defendant falsely represented to Mrs Gould that:

1. The plaintiff was continuing to provide legal services to Mr Gould;

2. The plaintiff was pursuing a public liability claim on behalf of Mr Gould;

3. She was authorised by the plaintiff to provide legal services to Mr Gould on its behalf and to act in relation to Mr Gould’s public liability claim; and

4. An offer of $30,000 to settle Mr Gould’s claim had been made.

Julie Farrell

28. At no time did the plaintiff authorise the defendant to provide legal services to Ms Julie Farrell on its behalf after August 2020.

29. Up until about August 2022, and without the knowledge or approval of the plaintiff, the defendant falsely represented to Ms Farrell that:

1. The plaintiff was still providing legal services to Ms Farrell;

2. The plaintiff had commenced proceedings on behalf of Ms Farrell in the Supreme Court of New South Wales;

3. The plaintiff was conducting a multi-million dollar lawsuit on behalf of Ms Farrell;

4. She was authorised by the plaintiff to provide legal services to Ms Farrell on its behalf; and

5. She was authorised by the plaintiff to conduct Ms Farrell’s lawsuit on its behalf.

30. By reason of the default judgment, I proceed on the basis that the factual allegations set out above are admitted, and that they constitute misleading or deceptive conduct, breaches of the express terms of the employment agreement, fiduciary duties owed by the defendant to the plaintiff, and the duties owed under ss 182 and 183 of the Corporations Act. Evidence was also adduced to establish the allegations and, based on this evidence, I accept that the allegations have been established independently of the deemed admissions.

Evidence of the plaintiff’s reputation

31. The principal financial relief sought by the plaintiff before me was for a sum of money to be awarded for damage to its reputation. The evidence adduced before me established the following matters.

32. The plaintiff has operated its legal practice for nearly 20 years. It has operated exclusively in the field of injury compensation for 14 years. It operates in multiple locations in Australia and employs 20 staff in its Sydney CBD office. The plaintiff has a sizeable practice providing services in approximately 1,500 matters as at 21 December 2023.

33. The plaintiff attracts new business by advertising on television, the internet (Google ads) and social media. The plaintiff has used the services of a professional marketing consultant since about 2019 to promote its business, focussing on digital marketing across paid media campaigns and organic tactics.

34. The plaintiff has acquired a valuable reputation as a specialist firm providing representation to claimants in personal injury compensation matters.

35. The conduct of the defendant in the present case has likely caused some significant damage to the plaintiff’s reputation. The conduct of the defendant in relation to two of the six ‘clients’ set out in the statement of claim amply demonstrates this.

36. First, the defendant led Ms Farrell to believe that the plaintiff was running personal injury litigation on her behalf in the Supreme Court of New South Wales, with trial dates in November 2022. This was false, and no such proceedings were commenced. Also, false claims were made by the defendant to Ms Farrell that a mediation had been arranged and had taken place, during which settlement offers had been made to Ms Farrell in the amounts of $800,000 and $1.8 million.

37. Ms Farrell, then suffering from Stage 4 cancer, came to Sydney expecting to participate in the purported mediation in about April 2022, only to be told by the defendant that the mediator had contracted Covid-19 and that the mediation could not go ahead.

38. In fact, the plaintiff had closed and archived Ms Farrell’s file in June 2020.

39. Ms Farrell passed away in September 2023.

40. In October 2022, “Jules Farrell” left a Google review of the plaintiff in the following terms:

“PLEASE GO ELSEWHERE. I have had Sandra Mitris a solicitor at Schreuders fabricate court dates, mediation, settlement offers for about 4 years. I ended up ringing the Supreme Court myself to check on a trial date which she also fabricated. For two years staff & receptionists took messages from me, passed on messages and emails to solicitor Sandra Mitris and never once did they say "SANDRA NO LONGER WORKS HERE". Not once in two years. The incompetence of this firm from front desk to Senior Partners is deplorable. Still waiting for MARK SCHREUDER to call me in reletion [sic] to this employee. Been waiting over a year now. My dealings with Schreuder's has ended with a crimminal [sic] complaint and a report to the NSW LAW SOCIETY. Please go elsewhere people save yourselves the heartache. If you have had the same experience with this firm please report to Constable Manning - Surry Hills Police Station. As when this particular Law firm is approached for the wrong doings they bury there heads in the sand & don't co - operate.”

41. The plaintiff received a total of 27 Google reviews over the 12 months ending December 2023, only three of which were not five-star reviews. The “Jules Farrell” review has received ten “likes”.

42. This review can only be deleted by the person who posted it. Ms Farrell has now, unfortunately, passed away and accordingly it apparently cannot now be deleted.

43. Secondly, the defendant led Mrs Gould to believe that the plaintiff was acting for Mrs Gould’s grandson, Mr Gould in personal injury proceedings against Campbelltown City Council. Among the falsehoods the defendant told Ms Gould was that a settlement offer had been made to her grandson in the sum of $300,000 in about May or June 2022.

44. In fact, the plaintiff had not conducted any work on behalf of Mr Gould since about 2018, when Mr Gould had lost an appeal in a medical negligence action. His file was closed and archived in 2019.

45. There was evidence before me that, upon learning of these falsehoods, Mrs Gould was, quite understandably, agitated and upset and said that she was “going to the media”.

46. Mr Schreuder, the principal of the plaintiff, gave evidence in relation to his opinion as to the fees that were lost by the plaintiff by reason of the conduct of the defendant. His estimate was that the firm had lost revenue in the order of $650,000 to $1.3 million based on an estimate as to the downturn in the number of new matters and an estimate of revenue per matter. It was not suggested by counsel for the plaintiff that I should order compensation in relation to this so-called lost revenue. Rather, the figures were put forward to reflect the fact that the actions of the defendant have contributed in a real way to reputational damage and quite possibly actual financial losses. It was accepted that it is very difficult to make an assessment as to what would be the financial losses.

Assessment of damages to reputation

47. The plaintiff sought to rely upon a number of authorities in analogous areas to support a claim for the Court to order damages for lost reputation.

48. It is clear that damages for loss of reputation may be awarded for breach of s 18 of the ACL: see, for example, Flamingo Park Pty Limited v Dolly Creation Pty Limited (1986) 65 ALR 500 at [525] (Flamingo Park); Cryeng Pty Limited v Loyola [2011] FCA 956 at [97] – [105] (Cryeng v Loyola); as well as for breach of contract: see, for example, Baltic Shipping Company v Dillon (1993) 176 CLR 344 at [370] per Brennan J.

49. In Flamingo Park, Wilcox J said at [525]:

[525] Any assessment of damages for loss of reputation must necessarily be made with a broad brush; as in a defamation case a court can do no more than fix a sum of money which, in the whole of the circumstances appears to be proportionate to the damage which has been incurred. The greater the reputation, the more vulnerable it is to damage. In the present case the damage was in the area of greatest sensitivity; the applicant’s reputation for excellence and for limitation of output. I think that the damage was likely to have been considerable and that an appropriate sum of money to allow for damage to reputation is $30,000.

50. Flamingo Park was a case decided in 1986.

51. In Cryeng v Loyola, a case of misleading or deceptive conduct and breach of contract, Stone J was prepared to award an amount of $50,000 for loss of reputation “doing the best I can with scanty evidence” (see [105]).

52. Stone J referred to the earlier decision of French J in FAI General Insurance Co Limited v RAIA Insurance Brokers Limited (1992) 108 ALR 479, where French J stated at [509]:

[509] Doing the best I can on what is extremely exiguous material I think it appropriate that I award damages in the sum of $15,000. In arriving at this award I have accepted that it is open to award damages for vindication of commercial reputation under s 82.

53. The decision of French J was upheld on appeal: see RAIA Insurance Brokers Limited v FAI General Insurance Co Limited (1993) 41 FCR 164. On the appeal, Beaumont and Spender JJ said at 179:

In the present kind of matter, it is to be expected that it will be difficult for a party in the position of FAI to lead evidence of any precise measure of its loss because that information will not be readily obtainable. But it does not follow that it is appropriate to award only nominal damages. We are not persuaded that any basis exists for interfering with his Honour's assessment, by way of compensatory damages, of the measure of loss probably suffered by FAI.

54. More recently, in Geneva Laboratories Limited v Prestige Premium Deals Pty Ltd (No 5) (2017) 122 IPR 279; [2017] FCA 63, a claim in relation to the sale of counterfeit goods brought under the Copyright Act1968 (Cth) and Trade Marks Act 1995 (Cth) in passing off and for misleading or deceptive conduct, Bromwich J, in relation to damages for loss of reputation, stated at [73]:

[73] This is not a head of damages which is amenable to precise calculation any more than are damages for individual reputational loss such as in defamation. Nonetheless the Court must do the best that it can on the available evidence. …I consider that the reputational damages sum sought by the applicants was both modest and reasonable in the context of the scale of the illegal conduct and should be recognised in some real way by the Court. Damage to reputation should be recognised and compensated for by the award of reputational damages in the sum of $50,000 as sought by the applicants.

55. In the present case, the plaintiff submitted that using a broad brush approach, an award of reputational damages in the range of $50,000 to $100,000 is justifiable, and unlikely to be disproportionate. I propose to adopt the mid-point of this range, and award $75,000. This is on the basis that, particularly having regard to the “Jules Farrell” Google review, and the fact that Google is one of the main means by which the plaintiff advertises its services, it is indeed likely that the conduct of the defendant, leading to the adverse Google review by “Jules Farrell”, has had, and is continuing to have, a not insignificant impact on the plaintiff’s reputation and thus its business.

56. The Google review obviously means that other potential clients will become aware of the defendant’s conduct, which will likely cause them to think less of the plaintiff as a reputable law firm and they may well choose to go elsewhere and not retain the plaintiff. That review cannot be removed.

57. The allegations in the statement of claim also demonstrate that the defendant’s conduct was not isolated to only one client but extended to a number of clients. There is evidence of at least one other client being upset and dissatisfied and threatening to go “to the media”. I also pay some regard to the evidence of Mr Schreuder as to the reduction in new clients, although this could be due to any number of factors, including the defendant’s conduct.

58. Accepting how difficult the exercise is and that its very nature means that a broad brush approach must necessarily be taken, $75,000 is an appropriate figure.

Declarations

59. The plaintiff also sought certain declarations, as set out at the commencement of these reasons.

60. The plaintiff submitted that declarations of wrongdoing are justified and ought to be made in the matter:

1. As an appropriate means of vindication of plaintiff’s rights;

2. Having regard to the reputational harm caused, and likely to be caused, by the defendant’s actions, and as a means of reducing that harm and the risk of future harm – noting especially that the “Jules Farrell” review apparently cannot now be taken down (as Ms Farrell has passed away);

3. Having regard to the seriousness of the defendant’s conduct and that it was engaged in by a legal practitioner;

4. To deter others from engaging in such conduct; and

5. To lay an appropriate foundation for a costs order.

61. Counsel for the plaintiff conceded at the hearing that the need for declaratory relief was significantly reduced if, as I have found above, an award of compensatory damages for loss of reputation is to be made.

62. In my view, there is no utility in the Court granting any declaratory relief in circumstances where the public availability of these reasons, and the award of compensatory damages, would serve the same purpose as any declaratory relief.

Gross sum costs order

63. The defendant should pay the plaintiff’s costs of the proceedings.

64. The plaintiff also seeks a gross sum costs order.

65. The principles concerning the making of a gross sum costs order were recently discussed by Peden J in Bell v Hartnett Lawyers (No 4) [2023] NSWSC 1592 at [49], as follows:

[49] An application for a gross sum costs order can be made as long as costs have not been referred for assessment. That has not occurred here. In Ahern v Aon Risk Services Australia Ltd (No 2) [2022] NSWCA 39 at [14]–[18], the Court of Appeal, consisting of Meagher, White and Brereton JJA, summarised the operation of the discretion encapsulated in the section:

The principles relevant to the Court’s exercise of discretion under s 98 were set out in Hamod v New South Wales [2011] NSWCA 375 at [813]–[820] (Beazley JA) (Hamod). Her Honour noted at [813]:

[813] The discretion thereby conferred upon the court is not confined and may be exercised whenever the circumstances warrant its exercise, having regard to the scope and purpose of the provision: Harrison v Schipp [2002] NSWCA 213; 54 NSWLR 738 per Giles JA at [21]–[22]. In Harrison v Schipp, Giles JA considered that the discretion in s 98(4) may be exercised where the assessment of costs would be protracted and expensive and, in particular, if it appeared that a party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment. However, his Honour stated, at [22]:

The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available.

The principal purpose of a specified gross sum costs order under s 98(4)(c) is to avoid the expense, delay and aggravation likely to be involved in a contested costs assessment process: Hamod at [816]–[817]. As Basten JA noted in James v Australia and New Zealand Banking Group Ltd [2017] NSWCA 84 at [3]:

The power to make such an order is governed by the obligation of the court to give effect to the overriding purpose of the Act, as identified in Pt 6 of the Civil Procedure Act. The court is to ensure that the issues between the parties are resolved “in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute” (Civil Procedure Act, s 60); that obligation extends to the disposal of disputes as to costs. Although questions of costs undoubtedly play an important practical role in commercial litigation, disputes as to quantification are ancillary to the primary issues in dispute and consequential upon the resolution of the primary issues. Costs provide an opportunity for ongoing litigation about “non-essential issues” which should be resolved with as little technicality and expense as reasonably practicable. [footnotes omitted]

Primary considerations relevant to the exercise of the s 98(4)(c) discretion include “the relative responsibility of the parties for the costs incurred; the degree of any disproportion between the issue litigated and the costs claimed; the complexity of proceedings in relation to their cost; and the capacity of the unsuccessful party to satisfy any costs liability”: Hamod at [816]; see also Kostov v Zhang (No 2) [2016] NSWCA 279 at [22]; eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (No 2) [2015] NSWCA 422 at [30].

The power to award a gross sum should only be exercised when the Court considers that it can do so fairly between the parties and where an appropriate sum can be determined from the available materials: Harrison v Schipp (2002) 54 NSWLR 734 at 743[2002] NSWCA 213 at [22]. The power may be exercised where a party’s conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate to the result of the proceedings: Hamod at [818].

If it considers it appropriate to make the order, the Court may adopt a “broad brush” approach to quantification, as to require the Court to undertake a detailed examination of the kind carried out in a formal costs assessment would defeat the purpose of the order: Harrison v Schipp at 743; Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [7]. The costs ordered should be “based on an informed assessment of the actual costs having regard to the information before the court (for example, by relying on costs estimates or bills)”: Hamod at [820]. Courts have typically applied a discount when assessing costs on a gross sum basis, though the aptness of a discount primarily depends on the accuracy and reliability of the costs evidence available to the Court: Hamod at [814].

66. The plaintiff submits that a gross sum costs order is appropriate for the following reasons:

1. The defendant has not played an active part in the matter since about March 2023;

2. There is no reason to believe the defendant has substantial assets;

3. A costs assessment will likely add to the plaintiff’s legal costs and delay the finalisation of this matter; and

4. There is sufficient information to enable an appropriate gross sum to be ordered.

67. I agree that this is an appropriate case for a gross sum costs order. Indeed, it seems to me to be a paradigm case for the making of such an order, provided there is sufficient information to enable an appropriate gross sum to be ordered. To require the plaintiff to go through an assessment process would be to simply impose further cost and delay on the plaintiff.

68. In terms of quantum, the plaintiff relied upon evidence given by Ms Schreirer-Joffe (the Managing Principal of the firm that acts for the plaintiff in these proceedings). In her affidavit of 7 February 2024, she gave evidence as to the legal costs that have been incurred by the plaintiff up to 31 January 2024. The bills issued by the plaintiff’s lawyers to the plaintiff are annexed to that affidavit and contain detailed narratives. The total professional fees and disbursements (including counsel’s fees) incurred as at 30 January 2024 are (GST exclusive):

1. Professional fees: $95,548.62; and

2. Disbursements: $19,998.00.

69. Ms Schreirer-Joffe gave evidence that, in her professional experience, which runs to approximately 30 years, following a costs assessment a party typically receives 70-80% of their solicitor/client costs.

70. Ms Schreirer-Joffe also made a separate affidavit affirmed on 13 March 2024 in which she provided updated information in relation to costs incurred and likely to be incurred. The further professional fees and disbursements incurred from 1 February 2024 are (GST exclusive):

1. Professional fees: $4,285.00; and

2. Disbursements: $8,815.00.

71. The estimated further legal costs from 1 March 2024 up to and including the final hearing are (GST exclusive):

1. Professional fees: $8,000.00 to $10,000.00; and

2. Disbursements: $5,000.00 to $10,000.00.

72. In view of the foregoing, the plaintiff sought a gross sum costs order comprising (all figures below are GST exclusive):

1. 70% of the total professional fees incurred and to be incurred, being $83,871.87. I have been unable to reconcile this figure to the underlying material. The correct total professional fees, using the midpoint of the estimate further legal costs indicated above, is $76,183.53.

2. Its disbursements (including counsel’s fees) incurred and to be incurred, being $38,813.00. Again, using the midpoint of the estimated disbursements indicated above, the total disbursements is $36,313.00.

73. The plaintiff therefore sought a gross sum costs order of $122,648.87 (even though the correct calculation using the figures sought by the plaintiffs above is actually $122,684.87). Using the figures I have calculated above, the gross sum costs order sought is $112,496.53.

74. I have reviewed the material provided in support of the gross sum costs order, and in particular the narratives set out in the bills sent out by the plaintiff’s lawyers to the plaintiff. The narratives quite clearly identify the work done. Together with the other evidence, they enable a gross sum to be ordered.

75. The bills refer to several matters which are unrelated to the conduct of the proceedings and therefore would not likely be recoverable on an assessment.

76. These matters fall under four broad categories:

1. A complaint made to the Office of the Legal Services Commissioner in relation to the defendant and associated matters – the total sum of the items falling under this category is $8,542.50;

2. Communications with the Law Society of New South Wales in relation to the conduct of the defendant and associated matters – the total of these fees is $2,145.00;

3. Communications with the New South Wales Police regarding the defendant – the fees falling under this category total $955.00; and

4. Work carried out in relation to the Google review and alleged breach of the Privacy Act 1998 (Cth) – the fees falling under this category total $295.00.

77. The total of these matters is $11,937.50.

78. During the course of the hearing on 18 March 2024, I brought these matters to the attention of counsel for the plaintiff. He conceded that it would be appropriate to deduct an amount on account of these matters from the total fees and adjust the lump sum payable accordingly.

79. Doing this I reduce the total amount of professional fees to $96,896.12. Allowing 70% for the purposes of the gross sum costs order calculates to $67,827.28 for professional fees. The additional work which would not be allowed does not impact on the disbursements figure. I therefore include this at $36,313, resulting in a total gross sum costs order of $104,140.28.

80. The orders of the Court are:

1. Order the defendant to pay damages to the plaintiff in the sum of $75,000.

2. Order the defendant to pay the plaintiff’s costs of the proceedings in the specified gross sum of $104,140.28.

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Decision last updated: 28 March 2024