MXS2 v Georges River Grammar School formerly known as St Paul's Choir School

[2024] NSWSC 893

Supreme Court

New South Wales

Medium Neutral Citation:

MXS2 v Georges River Grammar School formerly known as St Paul's Choir School [2024] NSWSC 893

Hearing dates:

23 July 2024

Decision date:

23 July 2024

Jurisdiction:

Common Law

Before:

Faulkner J

Decision:

(1) Pursuant to s 98(4)(c) of the Civil Procedure Act 2005, the Plaintiff to pay the Defendant the specified gross sum of $103,576.41 instead of assessed costs.

(2) The Plaintiff to pay the Defendant's costs of this application in the specified gross sum of $21,400.50.

Catchwords:

COSTS — Costs assessment — specified gross sum costs order – Civil Procedure Act, s 98(4)(c) – specified gross sum costs order made – application for assessed costs rejected — discount applied.

Legislation Cited:

Civil Procedure Act2005 (NSW) ss 67, 98

Felons (Civil Proceedings) Act1981 (NSW) ss 4, 5

Legal Profession Uniform Law 2014 (NSW) s 172(1)

Uniform Civil Procedure Rules 2005 (NSW) rr 2.1, 36.16(3)

Vexatious Proceedings Act2008 (NSW) s 8

Cases Cited:

Bechara (trading as Bechara and Co) v Bates [2016] NSWCA 294

Harrison v Schipp (2002) 54 NSWLR at 742-743; [2002] 738 NSWCA 213

Short v Crawley (No. 45) [2013] NSWSC 1541

Category:

Costs

Parties:

MXS2 (Plaintiff)
Georges River Grammar School formerly known as St Paul's Choir School (Defendant)

Representation:

Counsel:
MXS2 (Plaintiff)
J Sleight (Defendant)

Solicitors:
MXS2 (Plaintiff)
Thompson Cooper Lawyers Pty Ltd (Defendant)

File Number(s):

2022/00152475

JUDGMENT EX TEMPORE

1. By a Notice of Motion filed on 7 March 2024, the Defendant seeks an order pursuant to s 98(4)(c) of the Civil Procedure Act2005 (NSW) that the Plaintiff pay the Defendant a specified gross sum of $124,447.33 instead of assessed costs of these proceedings.

2. These proceedings were commenced by a Statement of Claim filed on 26 May 2022. It is not necessary to go into detail of the allegations made by the Plaintiff. The Plaintiff alleged that at an unknown time, subsequently determined to be about 1987, the Defendant negligently employed a teacher. It is alleged that that teacher sexually and physically abused the Plaintiff as a grade six pupil in 1997. The Plaintiff sought damages including aggravated damages for harm allegedly suffered as a result of the abuse. The causes of action pleaded were breaches of the Defendant’s duty of care to the Plaintiff and the Defendant’s vicarious liability for the conduct of the teacher.

3. The next relevant event in these proceedings occurred in a separate set of proceedings before the Supreme Court. On 18 May 2023, an order was made against the Plaintiff pursuant to s 8(7)(b) of the Vexatious Proceedings Act 2008 (NSW) and he was prohibited from instituting any proceedings in any New South Wales court of tribunal, either in his own name or in the name of any other person or company, other than procedural applications in criminal proceedings, without the prior leave of a judge of the Supreme Court under the Act. Although the order under the Vexatious Proceedings Act was made against the Plaintiff after his Statement of Claim was filed in these proceedings, the Defendant filed a Notice of Motion on 23 June 2022 seeking to have the Statement of Claim struck out or, alternatively, a direction that the Plaintiff seek an order for leave to initiate the proceedings.

4. On 28 June 2022, the Plaintiff filed his own Notice of Motion seeking leave to proceed under s 16 of the Vexatious Proceedings Act. He also sought leave to proceed under ss 4 and 5 of the Felons (Civil Proceedings) Act1981 (NSW), because he was in custody at the time as a result of having been convicted of a serious indictable offence.

5. On 25 August 2022, a judge granted the Plaintiff leave under s 4 of the Felons (Civil Proceedings) Act having expressed satisfaction that the proceedings were not an abuse of process and there is a prima facie ground for the proceedings. At about the same time, the Defendant's application to have the Statement of Claim struck out by virtue of the extant order under the Vexatious Proceedings Act was dismissed.

6. On 17 October 2022, the Defendant filed a further Notice of Motion by which it sought to have the proceedings permanently stayed pursuant to s 67 of the Civil Procedure Act2005 and r 2.1 of the Uniform Civil Procedure Rules 2005. In support of that application, the Defendant filed evidence, the burden of which was that the Plaintiff's grade six teacher had died, as had the man who was the headmaster of the school in 1997. The Defendant had not been able to locate any material records about the Plaintiff's schooling or the circumstances in which the teacher had been chosen for employment in 1987. The Defendant's contention was that it was not possible to have a fair trial.

7. On 1 December 2022, the Plaintiff filed an amended Statement of Claim which clarified the case but did not materially alter the substance of the factual allegations. On 27 March 2023, a defence was filed in which the Defendant largely did not admit the allegations made by the Plaintiff.

8. On 28 April 2023, the Defendant's stay application was heard. On 28 May 2023, the proceedings were permanently stayed, the Court having found that, in the exceptional circumstances of the case, the continuation of proceedings would be entirely unfair to the Defendant and could bring the administration of justice into disrepute.

9. The orders made on 18 May 2023 were:

“[1] The proceedings be permanently stayed,

[2] Unless the parties seek to be heard on costs, in which event they should approach within fourteen days and provide short written submissions, I will make the usual costs order under the Uniform Civil Procedure Rules. Namely, namely that [the Plaintiff] bear [the Defendant's] costs as agreed or assessed.”

10. On 7 March 2024, the Defendant filed a Notice of Motion in which it sought an order in the following terms:

“The Plaintiff pays the Defendant the specified gross sum of $124,447.33 instead of assessed costs, pursuant to section 98(4)(c) of the Civil Procedure Act2005 (NSW).”

11. Assuming the orders made by the Court on 18 May 2023 have been entered, the fact that Order 2 contemplated that a party wishing further to be heard on costs should approach within 14 days does not now preclude the Court from making an order for a specified gross sum costs by virtue of UCPR 36.16(3): Short v Crawley (No. 45) [2013] NSWSC 1541 at [29] (White J).

12. In support of its application, the Defendant relies on an affidavit of Patrick Gordon Thompson affirmed on 5 March 2023 to which it exhibited documentary evidence about the history of the proceedings and the costs and disbursements paid by the Defendant.

13. Section 98 of the Civil Procedure Act provides as follows:

98 Courts powers as to costs

(1) Subject to rules of court and to this or any other Act--

(a) costs are in the discretion of the court, and
(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and
(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

(2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court.

(3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings.

(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--

(a) costs up to, or from, a specified stage of the proceedings, or
(b) a specified proportion of the assessed costs, or
(c) a specified gross sum instead of assessed costs, or
(d) such proportion of the assessed costs as does not exceed a specified amount.

(5) The powers of the court under this section apply in relation to a married woman, whether as party, tutor, relator or otherwise, and this section has effect in addition to, and despite anything in, the Married Persons (Equality of Status) Act 1996 .

(6) In this section, "costs" include--

(a) the costs of the administration of any estate or trust, and
(b) in the case of an appeal to the court, the costs of the proceedings giving rise to the appeal, and
(c) in the case of proceedings transferred or removed into the court, the costs of the proceedings before they were transferred or removed.

14. Subsections 56(1) and 56(2) of the Civil Procedure Act provides:

(1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings

(2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.

15. The principles to be applied when considering whether to make a gross sum costs order are conveniently set out in Bechara (trading as Bechara and Co) v Bates [2016] NSWCA 294 at pars [12] to [15] (Beazley P; Meagher and Payne JA):

“[12] The power to award a lump-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 738; [2002] NSWCA 213 at 742-723 [21]-[22]; Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 123.

[13] The power may also 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 v New South Wales [2011] NSWCA 375 at [818] per Beazley JA (Giles and Whealy JJA agreeing).

[14] A “broad brush” approach is appropriate. To require the same or similar level of detail as in a formal costs assessment would defeat the purpose of the lump sum order: Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1; [1999] FCA 673 at 5 [16]; Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [7].

[15] The courts have typically applied a discount in assessing costs on a gross sum basis: Hamod v New South Wales at [814].”

16. Another important consideration is whether a party who is subject to the costs order will be able to pay the costs and whether that party will be able to pay any costs of the assessment process which will be necessary if a lump sum costs order is not made: see Harrison v Schipp (2002) 54 NSWLR at 742-743; [2002] 738 NSWCA 213 at [21] (Giles JA):

“[21] The power conferred by Pt 52A, r 6(2) is not confined, and may be exercised whenever the circumstances warrant its exercise. It may appropriately be exercised where the assessment of costs would be protracted and expensive, and in particular if it appears that the party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment (Leary v Leary [1987] 1 WLR 72; [1987] 1 All ER 261; Sparnon v Apand Pty Ltd (Federal Court of Australia, von Doussa J, 4 March 1998, unreported); (2002) 54 NSWLR 738 at 743 Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119; Hadid v Lenfest Communications Inc [2000] FCA 628).”

17. In my view, I am able to exercise the power to make a lump sum costs order fairly between the parties. The evidence adduced by the Defendant permits an understanding of the course of the proceedings up until the imposition of the permanent stay on 18 May 2023. The key events such as the hearing of the interlocutory applications and the preparation of the defence can be identified. The evidence includes all the invoices issued to the Defendant for its solicitor's professional fees and for disbursements, most of which were constituted by counsel's fees. Whilst there is no evidence from an expert cost consultant about the likely outcome of an assessment, such evidence is not essential in this case because the amount of costs and disbursements which are claimed are relatively modest compared with many cases in the Supreme Court. Given the objective of making a lump sum costs order of reducing the expenses to which the parties would otherwise be put, it is important not to defeat that objective by imposing a standard of evidence which is out of proportion to the amount of costs and disbursements in issue. This is especially so where the person who is liable to pay the costs may be insolvent. Absent more detailed evidence, the Court is still able, in this case, to determine an appropriate sum which is fair to the Plaintiff by applying the broad-brush approach and a discount more in favour of the Plaintiff than would otherwise be the case.

18. On the evidence, this is not a case where the conduct of either party has necessarily contributed to the costs of the proceedings. Nor is it apparent that the overall costs are disproportionate given the Plaintiff's application for leave under the Vexatious Proceedings Act and the Felons (Civil Proceedings) Act, the investigation which the Defendant undertook about matters which occurred decades ago and an application for the permanent stay. The allegations made by the Plaintiff were grave allegations which the Defendant was entitled to investigate thoroughly and consider carefully in its response to the proceedings.

19. The judgment of the Court in earlier proceedings brought by the Plaintiff against a different Defendant and which was stayed under the Vexatious Proceedings Act records multiple previous proceedings brought by the Plaintiff in an effort to annul his bankruptcy. As referred to above, the Plaintiff is currently in custody. These matters give rise to a reasonable concern the Defendant may not be able to recover the costs which the Plaintiff has been ordered to pay to the Defendant, in which case a process of undertaking an assessment may well require the Defendant to throw good money after bad. This is a compelling reason by the Court as to why the Court should make a gross sum costs order instead of requiring the parties to have the costs assessed.

20. The Plaintiff brings to the Court's attention that his objective in originally bringing the proceedings was not so much to obtain compensation for himself but to receive money he could donate to charity. He also emphasises that offers have been made by him in an endeavour to resolve the current issue. Neither of these matters address the key issue on the application as to the most efficient way to have the costs which the Plaintiff has been ordered to pay to be definitively quantified.

21. Turning to the detail, the evidence demonstrates that the Defendant has incurred professional costs of $66,998.27. There is nothing to suggest that the charge out rates for the time spent on the case by the Defendant's solicitors were anything other than fair and reasonable, as required by s 172(1) of the Legal Profession Uniform Law 2014 (NSW).

22. The Defendant contends that this sum ought to be discounted by, roughly, 8% so that the lump sum costs order allows $61,500 for professional costs. In my view, a greater discount is warranted in the absence of evidence from an expert costs assessor about what costs would likely be recovered by an assessment. A greater discount will also ensure that the order operates fairly in relation to the Plaintiff.

23. Applying a broad brush, I will discount the professional costs actually incurred by 30% with the result that the amount to be allowed for professional costs will be $46,898.79.

24. In addition, the evidence demonstrates that the Defendant has paid $62,975.30 by way of disbursements of which the primary constituent element is counsel's fees. Again, there is nothing to suggest that the rates charged by counsel, or the seniority of counsel retained on behalf of the Defendant, were other than reasonable. The Defendant claims almost 100% of the disbursements, but I will discount it by 10% in the absence of evidence from an expert costs assessor and again to ensure fairness to the Plaintiff. This will result in the amount to be allowed for disbursements of $56,677.62.

25. On the question of costs of this application, to which the Defendant is entitled as costs follow the event, the Defendant has tendered an invoice for the fees to be charged by counsel in an amount of $19,500 (plus GST). The Defendant offers to forego all his costs of the application other than the disbursements constituted by counsel's fees in that amount.

26. Whilst counsel's fees arise from a number of different appearances before the Court, in each case the subsequent appearance was necessitated by an adjournment as a result of the Plaintiff and, in those circumstances, there is nothing to suggest that counsel's fees are other than reasonable especially viewed in the light of the Defendant's willingness to forego all other costs in relation to the application.

Orders

27. In those circumstances, I make the following orders:

1. Pursuant to s 98(4)(c) of the Civil Procedure Act 2005, the Plaintiff to pay the Defendant the specified gross sum of $103,576.41 instead of assessed costs.

2. The Plaintiff to pay the Defendant's costs of this application in the specified gross sum of $21,400.50.

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Decision last updated: 24 July 2024