O'Connor v O'Connor - [Gross Lump Sum Cost Order]

[2022] NSWSC 940

Supreme Court

New South Wales

Medium Neutral Citation:

O’Connor v O’Connor – [Gross Lump Sum Cost Order] [2022] NSWSC 940

Hearing dates:

On the papers

Decision date:

13 July 2022

Jurisdiction:

Equity - Commercial List

Before:

Hammerschlag CJ in Eq

Decision:

Motion for gross sum costs order dismissed

Catchwords:

COSTS – Civil Procedure Act 2005 (NSW) s 98(4)(c) – gross sum costs order in first instance proceedings sought by successful defendant after appeal dismissed – HELD – order refused – no issue of principle.

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Cases Cited:

O’Connor v O’Connor [2021] NSWSC 1056

O’Connor v O’Connor (No 2) [2021] NSWSC 1173

O’Connor v O’Connor [2022] NSWCA 97

Category:

Procedural rulings

Parties:

Morgan Benedict O’Connor - First Plaintiff
Michael Stack - Second Plaintiff
John Joseph O’Connor - Defendant

Representation:

Counsel:
I Chatterjee - Plaintiffs

Solicitors:
Coleman Greig - Plaintiffs
Webb Henderson - Defendant

File Number(s):

2019/236226

JUDGMENT

1. HIS HONOUR:   On 24 August 2021, I gave judgment in the principal proceedings: O’Connor v O’Connor [2021] NSWSC 1056 (the principal judgment).

2. On 15 September 2021, I gave a judgment determining that the plaintiffs are to pay the defendant’s costs on the ordinary, and not an indemnity, basis: O’Connor v O’Connor (No 2) [2021] NSWSC 1173.

3. By notice of motion dated 23 November 2021, the defendant sought a gross sum costs order. I subsequently received written submissions from both parties. The defendant relies on an affidavit of Reaymond Anthony McGuinness, his solicitor, sworn 23 November 2021, an affidavit of Paul Taylor, a solicitor and costs assessor, dated 23 November 2021, an affidavit of Mr McGuinness dated 14 February 2022, and an affidavit of Mr McGuinness dated 23 June 2022. The plaintiffs rely on an affidavit of their solicitor, Mario Rashid-Ring, dated 17 February 2022.

4. As at 21 February 2022, the plaintiffs had appealed to the Court of Appeal and the appeal was pending. On that day, I made the following observations, orders and directions:

The Court has considered the respective position papers and having regard to the interim conclusion to which the Court has come does not consider that an oral hearing is necessary or appropriate.

The Court does not consider that it should exercise its discretion to make a gross sum costs order at this time having regard to the combination of the facts that an application was not made at the time the Court gave the parties an opportunity to articulate the costs orders they sought and that an appeal is pending.

Accordingly,

1. The application is dismissed.

2. However, if the currently pending appeal is dismissed, the defendant has leave on not less than five days written notice to remotivate its application without the necessity for filing a new motion. Such leave must be exercised not later than 7 days after the appeal is dismissed if that occurs.

3. The defendant is to pay the costs of the application if leave is not exercised. If leave is exercised, any question of costs of the application will be dealt with on the application.

5. On 17 June 2022, the Court of Appeal dismissed the appeal with costs: O’Connor v O’Connor [2022] NSWCA 97.

6. The defendant then exercised the leave to re-motivate its application reserved to it on 21 February 2022.

7. The defendant made additional written submissions. The plaintiffs rely on their original ones.

8. Section 98(4)(c) of the Civil Procedure Act 2005 (NSW) gives the Court the discretion to make an order that a party is entitled to a specified gross sum instead of assessed costs.

9. A gross sum costs order is a form of special order as to costs, which can be made when the circumstances warrant departure from the usual position that the beneficiary of a costs order needs to have them assessed, and that such an assessment is subject to review. A gross sum costs order is not warranted simply because a party has a costs order and it will convenience that party not to have their costs subject to the formal process of assessment with the time and expense involved in that process. There must be some good reason to make such an order.

10. Relevant factors may be the likely length and complexity of the assessment process, the possibility that additional costs of formal assessment would disadvantage the winner, that a party has unnecessarily contributed to the costs of the proceedings, especially where the costs are disproportionate to the result, and an expectation, based on prior experience, that further costs assessment is likely to be unduly protracted and unnecessarily add to the costs of the proceedings. The categories of relevant factors are not closed, and each case will turn on its own circumstances.

11. I do not consider that the circumstances of this case warrant departure from the usual position.

12. The proceedings were neither lengthy nor unduly complex. They were a common or garden commercial dispute, perhaps with a little bit of family flavour. The plaintiffs conducted them economically and efficiently, albeit unsuccessfully.

13. There is nothing out of the ordinary about the assessment process that would be required.

14. The proceedings started on 30 July 2019 and were finally disposed of in favour of the defendant on 17 June 2022. No significant, if any, additional aggravation will be caused to the defendant by having to have his costs assessed.

15. There is no lump sum costs order in the appeal. Presumably, he will have to have those costs assessed.

16. In an affidavit by their solicitor dated 17 February 2022, the plaintiffs provide information about their financial position. I am not persuaded that there is evidence of a likely inability on their part to discharge their costs liability, or at least one sufficient to play any meaningful role in the determination of whether the order should be made.

17. The plaintiffs are no doubt aware that ordinarily a gross sum costs order involves a discount, and that formal assessment may involve additional costs which may have to be borne by them. They nevertheless resist the order. After all, the amount of costs claimed by the defendant is very large, exceeding $700,000, including costs of the application and interest. I add that had I considered it appropriate to make a gross sum costs order, this amount would have been significantly discounted. The opportunity still exists for the parties to agree costs.

18. I do not consider that the Court should exercise its discretion to make the order sought.

19. The defendant’s motion filed 23 November 2021 is dismissed.

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Decision last updated: 13 July 2022