Primebroker Securities Ltd v Lomas
[2013] VSC 223
•3 May 2013 and 10 May 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
CORPORATIONS LIST
No. 5325 of 2010
| PRIMEBROKER SECURITIES LTD (ACN 081 178 645) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (IN ADMINISTRATION) | Plaintiff |
| v | |
| DOUGLAS LOMAS (AS TRUSTEE FOR THE CENTRE MANAGEMENT TRUST) | Defendant |
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JUDGE: | JUDD J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 18 April and 3 May 2013 | |
DATE OF JUDGMENT: | 3 May 2013 and 10 May 2013 | |
CASE MAY BE CITED AS: | Primebroker Securities Ltd v Lomas | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 223 | |
PRACTICE AND PROCEDURE – Transfer into Commercial Court – Summons issued prior to transfer – Applications for summary judgment.
COSTS – Application for indemnity costs and to fix a ‘gross sum’.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S Marks SC | Brian Ward & Partners |
| Ms A Kouloubaritsis | ||
| For the Defendant | Mr A Rodbard-Bean | Thomsons Lawyers |
HIS HONOUR:
This proceeding was commenced by Primebroker Securities Ltd (Receivers and Managers Appointed) (in liquidation) by writ filed on 30 September 2010. The defendant is Douglas Lomas, as Trustee for The Centre Management Trust. Mr Lomas had a range of business dealings with Primebroker, its directors and affiliated entities. Primebroker claimed $19,232,916.26, which it alleged was payable under a Master Securities Lending Agreement. Primebroker alleged that Mr Lomas borrowed cash in exchange for securities lent to Primebroker. An event of default occurred and Primebroker called in the cash. Alternate claims are based on different close‑out scenarios.
In his third amended defence and counterclaim, Mr Lomas alleged that in 2005 he entered into a joint venture with two directors of Primebroker, Salvatore Catalano and Ian Pattison, to identify, develop and construct child care centres. The business of the joint venture was to be carried on by a trust known as the Community Infrastructure Development Fund. The trust manager and corporate trustee was Belleraphon Ltd. Mr Lomas alleges that he has a beneficial interest in the trust.
In February 2008, Belleraphon, by its directors Messrs Catalano and Pattison, executed a guarantee and indemnity in favour of the Australia and New Zealand Banking Group Limited to secure Primebroker’s indebtedness. Mr Lomas alleged that the execution of that guarantee was dishonest, fraudulent and in breach of trust, because it was not given for a proper purpose associated with the business of Belleraphon, and resulted in the charging of assets to secure liabilities that had not been incurred for the benefit of the trust. Mr Lomas alleged that Primebroker knowingly assisted in the fraudulent breach of trust.
Mr Lomas claimed three categories of consequential loss and damage. First, he claimed to have suffered loss by reason of the diminution of the value of his units in the trust arising from the sale of the assets of the trust and the application of the proceeds of sale. Second, he claimed loss and damage arising from ‘higher interest charges’. Third, Mr Lomas claimed loss and damage arising from the inability of the trust to proceed with development opportunities. He counterclaimed for an amount in excess of $18 million.
This proceeding was issued in the Commercial and Equity Division, not in the Commercial Court. By summons dated 13 December 2012, Primebroker applied to have the proceeding transferred into this Court for management and trial. A few weeks earlier, on 27 November 2012, Primebroker had issued a summons by which it sought to have the defence and counterclaim dismissed or struck out. The relief sought by Primebroker was based on every conceivable combination and permutation of applicable statutory provisions and rules of court. Primebroker relied on the alleged failure by Mr Lomas to comply with his discovery obligations, his failure to provide proper particulars of loss and damage, his failure to provide a consolidated pleading, and breaches of paramount and overarching obligations imposed by the Civil Procedure Act 2010.
The catalyst for Primebroker’s application was quite obviously an accumulation of perceived defaults that had occurred over a number of years. They were detailed in a lengthy affidavit of Penelope Alice Pengilley sworn on 27 November 2012. In summary, Primebroker complained that Mr Lomas had failed to comply with discovery obligations and related court orders throughout 2011 and 2012 that required him to file a proper and complete affidavit of documents. Primebroker further complained that throughout 2011 and 2012, Mr Lomas failed to provide meaningful particulars of his alleged loss and damage in breach of his obligations under the rules of court. It also complained that Mr Lomas had failed to properly plead a set‑off and failed to provide a consolidated pleading to incorporate all particulars. Primebroker contended that it had been requesting a consolidated pleading since late March 2012. It does not appear that an obligation to file a consolidated pleading was the subject of a court order before 22 February 2013.
Primebroker’s contention that Mr Lomas had breached his paramount and overarching duties included an allegation that he had failed to disclose the existence of documents which Primebroker emotively described as ‘destroyed’; that he misled or deceived Primebroker by failing to inform it of the true position in relation to discoverable documents; and that he failed in his duty to minimise delay by his constant failure to adhere to court orders and repeated requests for extensions to the time in which to respond. Primebroker contended that by his continued delay and failure to comply with court orders, its ability to prosecute the recovery proceedings and defend the counterclaim had been prejudiced.
There can be no doubt that Primebroker and its legal representatives became extremely frustrated with the conduct of Mr Lomas and his legal representatives in their responses to discovery obligations and the delivery of particulars. Nevertheless, by the time this application came on for hearing, all steps required of Mr Lomas had been performed, although Primebroker sought to reserve its position on a number of matters. It contended that the particulars of loss and damage were misconceived, but sought to confine Mr Lomas to those particulars at trial. Primebroker drew attention to what it described as logical flaws in the formulation of the claim for loss and damage. It sought an order that Mr Lomas be compelled to go to trial on the basis of flawed particulars without any opportunity to further amend or restructure his claim for loss and damage. Primebroker also sought to reserve its right to apply for summary dismissal of the counterclaim, and to serve a third party notice.
When the summons came on for hearing, the substantive issue before the court was Primebroker’s claim for indemnity costs of and incidental to the prosecution of its summons, and its costs associated with its pursuit of discovery and particulars of loss and damage. It contended that Mr Lomas had effectively surrendered. It also sought, on an indemnity basis, costs thrown away by reason of the set‑off claim that had by then been abandoned. Primebroker sought to have costs fixed in the sum of $88,183.50 and an order that they be paid within 14 days. It sought a self‑executing order permitting judgment on the claim and dismissal of the counterclaim in the event of default.
Mr Lomas contended in his written submissions that as Primebroker no longer persisted with its substantive application for summary judgement, the summons should be dismissed with an order for costs in his favour. In the circumstances, that was an ambitious contention. During the course of submissions, however, Mr Lomas conceded that he should pay Primebroker’s costs of the summons on the ordinary basis, with assessment and payment to await the conclusion of the trial. He had only recently received the affidavit of Cheryl Chua, a cost consultant engaged by Primebroker. Ms Chua made various cost estimates.
Mr Lomas, not unreasonably, sought an opportunity to consider the assessment and, if so advised, obtain some expert evidence of his own. At the conclusion of argument, the parties were informed that judgement would be given in relation to the claim for indemnity costs on 3 May 2013. The questions of whether costs should be fixed, and if so in what sum, and of the timing of payment were adjourned to 3 May 2013. That would afford Mr Lomas an opportunity to consider the evidence of the cost consultant, and file any responding expert evidence.
The orders sought by Primebroker in its summons were arresting in their scope and severity. The initial breadth of the application and the supporting material left no stone unturned. Having regard to the context in which the proceeding had been managed by the parties, prior to its transfer into this Court, the scope of the summons and the affidavit material in support seemed disproportionate. The affidavits in support exceeded 70 pages, with hundreds of pages of exhibits. There were six affidavits of compliance and explanation filed by or on behalf of Mr Lomas. An application such as this is most unusual in this Court, because case management practices would not have permitted the escalation of a dispute over discovery and particulars into one of such magnitude.
When Primebroker made application to transfer this proceeding into the Commercial Court, it ought to have been required to elect whether to prosecute its summons in the Civil Management List, or have this Court assume control over the future management of the case. Any attempt by a party to unreasonably delay discovery or the provision of particulars would not have been tolerated in this Court. Had the proceeding been initiated in this Court, it would almost certainly have been heard and determined by now. Instead, Primebroker chose a path by which the interlocutory management of the dispute was left to the parties. They determined the pace at which the matter would progress to trial. Litigants in this Court are amenable to active judicial case management from the commencement of the proceeding.
Indemnity costs
Notwithstanding the numerous folders of authorities, legislation and rules provided by the parties, there was no real dispute about the applicable principles when a party applies for indemnity costs.[1] While costs are normally awarded on a party and party basis, indemnity costs may be awarded, in appropriate cases, where the circumstances justify a departure from the ordinary rule. Primebroker’s claim for indemnity costs depended on this Court accepting its characterisation of the conduct of Mr Lomas in relation to discovery, the delivery of particulars, and the set‑off. I accept that characterisation only in relation to the set‑off.
[1]Primebroker filed a lever arch folder containing five extracts of legislation and rules, and 29 reported decisions. Mr Lomas filed a similar sized folder containing 15 reported decisions and some legislation.
Primebroker contended that Mr Lomas had persistently failed to discharge his discovery obligations. In mid‑August 2012, it came to the attention of Primebroker that Mr Lomas may once have had emails held in an account that no longer existed. It was told that enquiries were being made. But it was not until 9 November 2012 that Mr Lomas filed an affidavit in which he deposed to the relevant facts. He said that in September 2011 he had moved business premises in Queensland. A mail server had been replaced. Mr Lomas also mentioned a computer ‘crash’ that occurred in July 2011. He assumed, incorrectly as it transpired, that data had been lost.
Primebroker complained that nothing had been said by Mr Lomas to reveal the loss of data until the telephone conversation between solicitors in mid‑August 2012. It complained that he had not disclosed the fact of ‘destroyed documents’ in an affidavit of documents dated 26 September 2011. On 2 November 2012, solicitors for Primebroker wrote a lengthy letter of complaint outlining a ‘history of your client’s attitude to its discovery obligation’. That letter followed the filing of a further affidavit of documents by Mr Lomas, initially due on 17 August 2012, but filed late, again without any explanation for the ‘destroyed documents’. The author demanded an affidavit by 5.00 pm on 8 November 2012, failing which Primebroker would seek to have the defence and counterclaim dismissed.
It was not until late January 2013 that a computer consultant, Edwin Ashley Luck, filed an affidavit dated 21 January 2013, in which he said, in substance, that while a server had been replaced, no data had been lost. With the revelation that the data described by Primebroker as ‘destroyed’ had been retained, the nature of its complaint changed. Primebroker complained that had Mr Lomas acted earlier to engage Mr Luck, following the first discovery order made by Associate Justice Mukhtar on 4 August 2011, ‘unnecessary cost incurred by (Primebroker) in pursuing Lomas about the inadequacy of his discovery would have been avoided’.
Mr Lomas sought numerous extensions of time and failed to meet some deadlines in relation to his discovery obligations. Perhaps he should not have assumed, after the server had been discarded, that he had lost data. Perhaps he or his solicitors should have been more proactive in contacting Mr Luck at a much earlier time. But whatever might have been done in hindsight, to avoid the communication of a false assumption, the dispute over discovery escalated out of all proportion. The correspondence became hostile. The escalation of this dispute provides an apt example of why modern courts are seeking to restrict the ‘right’ to discovery.
Once Primebroker became aware that data may have been lost following the telephone conversation in August 2012, it is difficult to understand why the matter was not more fully explored between solicitors in an effort to confine and resolve the issue, without hostile exchanges. Primebroker’s real complaint, that Mr Lomas did not seek the assistance of Mr Luck soon enough, depended upon an assessment of whether he or his solicitors ought reasonably to have asked for help from a computer consultant at a much earlier time. Primebroker did not allege dishonesty and the evidence went no higher than to establish human error. In my opinion, there was fault on both sides that escalated this dispute and caused delay.
Primebroker’s claim for indemnity costs in relation to its pursuit of particulars of loss and damage commenced with an order for particulars made by Associate Justice Randall on 29 March 2012. The provision and pursuit of particulars seemed to be plagued by the same leisurely pace for interlocutory steps as for the provision and pursuit of discovery.
Between June and November 2012, Mr Lomas was granted numerous extensions of time within which to provide particulars. He said that he was experiencing difficulty obtaining material to properly instruct forensic accountants. In his affidavit sworn on 25 January 2013, Norman Samuel Fryde deposed to that difficulty. Subpoenae had issued to the ANZ Bank on 12 April 2012 and 13 June 2012. Perhaps these ought to have been issued earlier. Mr Lomas also sought documents from Belleraphon, but it was not until 24 January 2013 that a subpoena issued. The delay is inexplicable.
On 12 April 2013, Mr Lomas filed a consolidated defence and counterclaim in which he particularised his loss and damage under the headings mentioned above. That also brought about a material change to Primebroker’s complaint. At the hearing, Primebroker contended that while the claim for loss and damage was misconceived, Mr Lomas should be confined to his particulars, and not permitted to further adjust them between now and trial. It also sought to reserve its right to apply for summary dismissal of the counterclaim.
The issue concerning the particulars was further complicated by a third party proceeding that has been issued, but not served. The third parties are Belleraphon, and Messrs Catalano and Pattison. There was said to be a ‘standstill’ agreement between Primebroker and the third parties under which the third party notice had not yet been served. Primebroker argued that it should not be expected to decide whether to prosecute the third party notice until Mr Lomas was ‘locked in’ to his particulars of loss and damage by an order of the court confining him to those particulars at trial.
In my view, the position adopted by Primebroker is unrealistic. Primebroker must decide now whether to prosecute its third party claim. Particulars of loss and damage will often undergo some refinement prior to or even during a trial, although Mr Lomas should not assume that any further application for leave to amend will be granted. More to the point, it is not appropriate for this Court to bind the trial judge, should an application be made to further amend particulars in the future.
Unfortunately, the dispute over particulars plumbed new depths of confusion when Mr Lomas informed the Court that he may well seek to amend his particulars of loss and damage, depending upon Primebroker’s ‘reply’ to his particulars as presently formulated. How a ‘reply’ to particulars might have been expected to materialise, otherwise than in complaints of the kind made by Primebroker during the hearing, was uncertain. If Mr Lomas has a further or alternative case for loss and damage to advance at trial, he must particularise that case immediately.
In relation to the dispute over particulars, the Court was confronted by a ‘stand‑off’. On the side, Mr Lomas was waiting for some ‘reply’ from Primebroker to his particulars. On the other, Primebroker contended that the particulars were misconceived, and that his counterclaim fundamentally flawed, but refused to decide whether to apply for summary dismissal of the counterclaim, or to prosecute its third party notice, until absolutely and finally certain of the case for loss and damage that was to be advanced by Mr Lomas at trial. Such a stand‑off will not be permitted, at least in this Court.
Further compounding the problem caused by the stand-off, was uncertainty about the identity of the parties at trial. Such uncertainty would ordinarily make it difficult to fix a date for trial. All parties seem to accept that a trial date should be fixed. Ordinarily, a trial will not be fixed unless all parties are identified. While Primebroker accused Mr Lomas of causing delay, it had engineered a situation in which there was uncertainty about the identification of parties.
Notwithstanding the uncertainty surrounding the identification of parties, I propose to fix this proceeding for trial. If Primebroker wishes to prosecute its third party notice, the interlocutory steps in that part of the proceeding will need to accommodate the trial date. It is not as if the third parties are ignorant of the proceeding.
I am not satisfied that any order for indemnity costs is justified in relation to the disputes over discovery and particulars, and reject the application. There has been unacceptable delay, but the blame does not lie solely at the feet of Mr Lomas. The costs of pleading and then withdrawing the set‑off is in a different category. I accept Primebroker’s submission that the set‑off should never have been pleaded. It was misconceived and properly withdrawn. Insofar as Primebroker has incurred costs and expenses thrown away by reason of the pleading and withdrawal of the set‑off, it is entitled to those costs on an indemnity basis.
I propose to make orders requiring Mr Lomas to file and serve full particulars of his loss and damage, including any alternative basis for a claim not yet pleaded; requiring Primebroker to decide forthwith whether to serve its third party notice; and to fix the proceeding for trial.
I will hear the parties on the three remaining issues: (1) whether a sum should be fixed for Primebroker’s costs of the summons; (2) the amount; and (3) when costs ought to be paid. I then propose to adjourn the proceeding for a short time when directions for trial will be made, including directions in relation to any third party proceeding.
Costs judgment delivered 10 May 2013
On 3 May 2013 I delivered judgment of the application by Primebroker for indemnity costs. That application was refused. Mr Lomas had conceded an obligation to pay party and party costs of and incidental to Primebroker’s summons filed on 27 November 2013. Thus, the remaining issues were whether an order should be made under r 63.07 for a ‘gross sum’; and if so, in what amount; and when such costs ought be paid.
Rule 63.07 of the Supreme Court (General Civil Procedure) Rules 2005 Vic provides:
(1)Subject to this Order, where by or under these Rules or any order of the Court costs are to be paid to a party, that party shall be entitled to taxed costs.
(2)Where the Court orders that costs be paid to a party, the Court may then or thereafter order that as to the whole or any part of the costs specified in the order, instead of taxed costs, that party shall be entitled to—
(a)a portion specified in the order of taxed costs;
(b)taxed costs from or up to a stage of the proceeding specified in the order;
(c)a gross sum specified in the order instead of taxed costs;
(d)a sum in respect of costs to be determined in such manner as the Court directs.
The object of the rule received considered attention in Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3).[2] In his judgment, Croft J said:
[2][2012] VSC 399, [84].
The clear object of rule 63.07 of the Rules is, in my view, similar to the object of the corresponding Federal Court rule, as discussed by Sackville J in Seven Network Limited v News Limited, as follows:[3]
“(i) The purpose of the subrule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation: Beach Petroleum v Johnson (No 2), at 120, per von Doussa J, applying Leary v Leary [1987] 1 All ER 261; Harrison v Schipp (2002) 54 NSWLR 738, at 742 [21] per Giles JA.
(ii) An order that costs be assessed as a gross sum does not envisage that any process similar to that involved in taxation should take place. On the contrary, the Court applies a much broader brush than would be used on a taxation of costs pursuant to O 62: Beach Petroleum v Johnson (No 2), at 120, 124, per von Doussa J; Harrison v Schipp, at 743 [22], per Giles JA.
(iii) The Court should be confident that the approach taken to the estimate of costs is logical, fair and reasonable. The Court should be astute to avoid both overestimating the recoverable costs and underestimating the appropriate amount, for example by applying an arbitrary discount to the amounts claimed: Beach Petroleum v Johnson (No 2), at 123, per von Doussa J.
(iv) Although the power to assess a gross sum for costs involves the exercise of a discretion, it is necessary to bear in mind fundamental principles applicable to an assessment of costs on a party and party basis. These include the principles contained in O 62 r 19 (embodying the ‘necessary or proper’ test) and those stated in Stanley v Phillips (1966) 115 CLR 470, at 478, per Barwick CJ (on a party and party taxation the emphasis is upon obtaining adequate representation to enable justice to be done, not upon the propriety of steps taken to ensure maximum success in the cause): Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1, at 4–5 [12]–[15], per O’Loughlin J; Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629, at [6]–[8], per Mansfield J.
(v) Although the methodology permitted by O 62 r 4(2)(c) initially involves a broader approach than on a normal taxation, the provisions of O 62 and Sch 2 provide assistance in fixing an appropriate gross sum: Charlick Trading Pty Ltd v ANRC, at [10], per Mansfield J.”
[3][2007] FCA 1062, at [25].
The powers of a court in relation to costs in civil proceedings have been expanded by s 65C of the Civil Procedure Act 2010 which provides:
(1)In addition to any other power a court may have in relation to costs, a court may make any order as to costs it considers appropriate to further the overarching purpose.
(2)Without limiting subsection (1), the order may—
(a)make different awards of costs in relation to different parts of a proceeding or up to or from a specified stage of the proceeding;
(b)order that parties bear costs as specified proportions of costs;
(c)award a party costs in a specified sum or amount;
(d)fix or cap recoverable costs in advance.
(3) An order under subsection (1) may be made—
(a)at any time in a proceeding;
(b)in relation to any aspect of a proceeding, including, but not limited to, any interlocutory proceeding.
Primebroker relied upon the expert opinion of Cheryl Chua, a director of Mahlab Costing Pty Ltd, who prepared and filed an affidavit sworn 16 April 2013 exhibiting a report dated 10 April 2013. Ms Chua assessed party and party costs at approximately $74,507.20. Her assessment was not confined to the costs of and incidental to the summons filed 27 November 2012, supporting affidavits and appearances, but included Primebroker’s costs:
(a)Incurred by reason of the Defendant’s failure to comply with his discovery obligation until after the issue of the summons dated 27/11/12.
(b)Incurred by reason of the Defendant’s failure to provide meaningful particulars of Loss and Damage of Counterclaim in compliance with the interlocutory order made by Randall AJ on 29/03/12.
I was informed that in the case of each of the interlocutory orders made by an Associate Justice in the Civil Management List, the costs had been reserved. The estimate prepared by Ms Chua did not purport to incorporate any amount in respect of such costs, although the conduct of Mr Lomas, about which Primebroker complained, included his failure to comply with some orders. Thus, it would be difficult, if not impossible, to differentiate between the conduct of Mr Lomas that might hereafter be relied upon by Primebroker on an application for reserved costs and the conduct referrable to (a) and (b) above. A significant, but unquantifiable, proportion of the costs assessed by Ms Chua represented Primebroker’s costs of pursuing discovery and particulars prior to the issue of their summons. The party and party costs, which excluding counsel’s fees, were estimated in the sum of $23,864.
The vast bulk of the costs estimated by Ms Chua were comprised of counsel’s fees. These costs were itemised and calculated with precision, apparently based on what was in fact paid. The fees for senior counsel were $29,050 and for junior counsel $19,350. It would appear from the report, that only fees relating to the preparation of the summons, affidavits and subsequent attendances were taken into account. I have already expressed the opinion that, in my view, the work undertaken on this application seemed disproportionate. I would make the same observation in relation to counsel’s fees incurred, even though assessed at rates approved under the rules. It would appear that the only difference between the claim for counsel’s fees claimed on an indemnity basis and the assessment on a party and party basis, was the elimination of the item for ‘preparation’.
Mr Lomas engaged Antonella Cambria Terranova, a director of Castra Legal Costing Pty Ltd, to provide an expert report in the form of an affidavit sworn 29 April 2013. She was briefed ‘to provide a response to the affidavit of Ms Chua’. Ms Terranova seemed to confine her assessment to the ‘costs of and incidental to the summons’. Points of difference between the experts were difficult to discern, because they did not itemise their assessments apart from counsel’s fees. Ms Terranova said that she made no allowance for the attendance of solicitors instructing at directions hearings. Ms Terranova also reduced the daily and hourly fee of senior counsel, and only allowed for the attendance of junior counsel at directions hearings. She reduced the number of hours allowed for counsel on some items. Ms Terranova calculated the application costs, on a party and party basis, at $18,340.22 and allowed counsel’s fees of $28,350. The total fees allowed by Ms Terranova on a party and party basis were assessed by her at $46,690.22.
Neither expert was cross‑examined. Consequently, there were difficulties in comparing the assessments, beyond the differences mentioned above. Even though a court may apply ‘a much broader brush’ when costs are assessed as a gross sum, there must be a proper basis upon which the assessment is made. It is accepted, however, that the extent of the evidence and detail required may vary from case to case, depending on such matters as the magnitude of the costs under consideration, the nature and complexity of the work for which costs are sought, and the complexity of the issues involved in the proceeding.
In the present case, the amount of the claim is relatively modest, and the difference between the amounts assessed by the experts even more so. The scope of the assessment is confined, and some differences between the respective positions were explained or evident. These are factors that militate in favour of a lump sum order, avoiding the additional cost of taxation. It is not only the cost burden to the parties that should be taken into account. The burden on court resources is also important.
The basis upon which I am to make an order for a gross sum is party and party. Mr Lomas submitted that the Court should take a mid‑point between the relevant assessments made by the experts. In my opinion that would not be appropriate, as it would not involve an assessment based upon the evidence.
In my opinion, the assessment that is to be made should be one confined to the costs of and incidental to Primebroker’s summons filed 27 November 2012. The costs associated with pre‑summons attempts to compel compliance should be ignored. Thus, insofar as the assessment made by Ms Chua includes items pre‑dating the summons, they should be eliminated. Unfortunately, it is not possible to make that adjustment because of the generality of her estimate. Accordingly, the only evidence of party and party costs confined to the application is the assessment made by Ms Terranova in the sum of $18,240.22.
The view taken by Ms Terranova of counsel’s fees involves a reduction of daily and hourly fees for senior counsel and an adjustment of overall fees for senior and junior counsel to reflect a ‘necessary or proper cost’ basis. The adjustment made by Ms Chua to arrive at a party and party assessment of counsel’s fees resulted in a reduction of senior counsel’s fees from $32,550 to $29,050; and of junior counsel’s fees, from $20,600 to $19,350. Ms Terranova allowed nothing for senior counsel at a directions hearing, but allowed the full fee for junior counsel.
Ms Chua was instructed that junior counsel spent 22 hours, and senior counsel 7.5 hours, settling the principal affidavit of Ms Pengilley sworn 7 November 2012. It was a very lengthy affidavit. In my view it was unnecessarily lengthy and complex. Ms Terranova allowed only 4 hours for senior counsel and 12 hours for junior counsel at a slightly reduced rate for senior counsel. Downward adjustments were also made by Ms Terranova for settling the affidavit of Ms Pengilley sworn 28 March 2012. Ms Terranova allowed the same amount of time for junior and senior counsel, as did Ms Chua, to draw and settle submissions and to consider opposing submissions; although she only allowed one half a daily fee for the appearance at the hearing on 18 April 2013. The hearing extended beyond half a day, and therefore the allowance made by Ms Terranova was inadequate.
I am not persuaded that the assessment of counsel’s fees made by Ms Chua adequately differentiated between costs on an indemnity and party and party basis. In the absence of further clarification and other evidence, I have only the assessment made by Ms Terranova of $28,350, to which I would add a further $4,250, allowing for a full day’s fee for each counsel at the appearance on 18 April 2013. The uncertainty surrounding the basis upon which Ms Chua calculated the ‘application costs’ in the sum of $23,865, so as to include a component referrable to the earlier pursuit of discovery and particulars, leaves me without a satisfactory evidentiary basis other than that advanced by Ms Terranova in the sum of $18,340.22. Accordingly, I would assess the costs of the application, including counsel’s fees, at $50,940.22.
As for costs thrown away by reason of the withdrawal of the set‑off, the basis for both calculations is unclear. I have already found that those costs should be paid on an indemnity basis. Ms Chua assessed those costs at $2,812.70, while Ms Terranova assessed them at $1,853.11. There is nothing to assist the Court to understand the manner of the assessments. While the competing amounts are relatively modest, a court should be astute to avoid overestimation or underestimation. I am in no position to choose between the assessments. One relevant feature of a gross order is that it denies the party against whom it is made an opportunity to have costs taxed in the ordinary way. In the absence of any clear basis on which to choose one assessment over the other, to fix those costs on the basis of the assessment made by Ms Terranova, advanced by Mr Lomas, eliminates that risk. Accordingly, I will fix the costs thrown away by reason of the withdrawal of the set‑off claim at $1,853.11.
Mr Lomas contended that even if costs were to be fixed, payment should be held over until the end of the trial. I take Mr Lomas to mean that, at the end of the trial, this order for costs made could then be taken into account in adjustments made between the parties depending on the outcome of the proceeding, including any final order for costs.
In my view, there is no reason to delay payment of costs once they have been fixed. Rule 63.03 provides:
(1)…
(2)Costs which a party is required to pay under any of these Rules or an order of the Court shall, unless the Court otherwise orders, be paid forthwith.
(2.1)…
(3)Where the Court makes an interlocutory order for costs, the Court may then or thereafter order that if the party liable to pay the costs fails to do so—
(a) if that party is the plaintiff, the proceeding shall be stayed or dismissed;
(b) if that party is a defendant, the defendant’s defence shall be struck out.
(4)…
If payment is not to be deferred until the conclusion of the trial, Mr Lomas has asked for, in effect, a stay of 45 days. Primebroker sought a self‑executing order, which would have the counterclaim dismissed if Mr Lomas failed to pay the costs within 14 days.
The basis upon which Primebroker sought the self‑executing order is not apparent. It is not suggested that Mr Lomas is unable or unwilling to meet a costs order against him. It was not suggested that he had previously failed to meet any order for costs. The application for a self‑executing order of the kind sought was but one example of the disproportionate nature of this application as a whole. A liquidator’s frustration at the delay in this proceeding is no basis upon which to make such an order. As I have said, much of that frustration was self‑induced. I reject the application for a self‑executing order.
I propose to make the following order for costs:
The defendant pay the plaintiff’s costs of and incidental to the summons dated 27 November 2012 fixed in the sum of $52,793.33, such costs to be paid within 28 days of this order.
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