Quach v Horvath (No 2)

[2022] NSWSC 55

Supreme Court

New South Wales

Medium Neutral Citation:

Quach v Horvath (No 2) [2022] NSWSC 55

Hearing dates:

6 October 2021

Date of orders:

4 February 2022

Decision date:

04 February 2022

Jurisdiction:

Common Law

Before:

Harrison AsJ

Decision:

The Court orders:

(1) The plaintiff is to pay the defendant’s costs of the proceedings.

(2) The plaintiff is to pay the defendant the lump sum costs of $11,153.20.

Catchwords:

COSTS – Civil Procedure Act 2005 (NSW) – Ordinary basis – Gross sum costs – Desirable to avoid expense/delay/aggravation/futility of costs assessment – No evidence of financial position

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 98

Criminal Procedure Act 1986 (NSW)

Health Care Complaints Act 1993 (NSW)

Insurance Contract Act 1984 (Cth)

Medical Practices Act 1992 (NSW) s 13

Supreme Court Act 1970 (NSW)

Uniform Civil Procedure Rules 2005 (NSW) rr 42.1, 42.20(1) and 42.26

Cases Cited:

Bechara v Bates (No 4) [2015] NSWSC 1722

Fan v South Eastern Sydney Local Health District (No 3) [2015] NSWSC 1620

Harrison v Schipp (2002) 54 NSWLR 738

Quach v Horvarth [2021] NSWSC 1401

Re JJT; Ex parte Victoria Legal Aid [1998] HCA 44

Sedgwick v Varzonek(No. 2) [2015] NSWSC 1613

Smoothpool v Pickering [2001] SASC 131

Wentworth v Wentworth [1996] NSWCA 552; BC9600215

Category:

Costs

Parties:

Dr Michael Quach (Plaintiff)
Professor John Horvath (Defendant)

Representation:

Counsel:
D. Hume (Defendant)

Solicitors:
Self-represented (Plaintiff)
Makinson d’Apice Lawyers (Defendant)

File Number(s):

2021/123675

Publication restriction:

Nil

Judgment

1. HER HONOUR: On 1 November 2021, I delivered judgment in Quach v Horvarth [2021] NSWSC 1401. I shall refer to Professor Horvarth as Dr Horvarth in this judgment as that is how he was named in the amended statement of claim. I ordered that the amended summons filed 27 May 2021 be dismissed. I also made an order that to minimise costs I would deal with the issue of costs on the papers in chambers.

2. I made the following directions regarding the party’s submissions on costs:

“[92] The timetable for submissions on costs is as follows:

(i) I order that the defendant file and serve any affidavits and submissions on costs within 14 days (15 November 2021).

(ii) The plaintiff is to file and serve any affidavits and submissions on costs within 28 days (29 November 2021)

…”

3. On 15 November 2021, the defendant filed a notice of motion seeking costs in his favour and that a lump sum costs order be made. The defendant’s submissions on costs as well as the affidavit of his solicitor Nicholas Regener (“Mr Regener”) dated 15 November 2021 (“Regener Aff 15/11/21”) were also filed.

4. The plaintiff sought an extension of time to file and serve his submissions, which was granted to 14 January 2022. On 14 January 2022, I received the plaintiff’s submissions in reply. I now have both parties’ submissions.

The appropriate legal principles

5. The starting point in relation to costs is s 98 of the Civil Procedure Act 2005 (NSW) (“CPA”). It relevantly reads:

“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.” [My emphasis added]

6. Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) 42.1, 42.20(1) and 42.26 are also relevant. They read:

“42.1 General rule that costs follow the event

Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.

…

42.20 Dismissal of proceedings etc

(1) If the court makes an order for the dismissal of proceedings, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed.

…

42.26 Order confirming rule as to payment of costs

If a party to proceedings in the court has become liable under these rules to pay any of the costs of the proceedings of any other party, the court may order the party so liable to pay those costs.”

7. An order for a gross costs sum is particularly appropriate where costs have been incurred as it is desirable to avoid the expense, delay and aggravation or futility likely to be involved in a contested or extensive costs assessment. That desirability may arise from the likelihood that the additional costs of formal assessment would disadvantage the successful party because of the potential inability of the unsuccessful party to pay the costs in any event: Harrison v Schipp (2002) 54 NSWLR 738 at 743-4 (“Harrison”).

8. The assessment of any lump sum to be awarded must represent a review of the successful parties costs by reference to the pleadings and complexity of the issues raised on the pleadings, the interlocutory processes, the preparation for final hearing and the final hearing: Smoothpool v Pickering [2001] SASC 131 at [12].

9. 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 that includes sufficient confidence in arriving at an appropriate sum on the materials available: Wentworth v Wentworth [1996] NSWCA 552; BC9600215 at 35-6 (“Wentworth”).

10. The approach taken to estimate costs must be logical, fair and reasonable. Reasonable assessment of the costs incurred and properly recoverable may involve an impressionistic discount of the costs actually incurred or estimated, to take into account the contingencies that would be relevant in any formal costs assessment.

11. 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). It may be necessary, and it is at least desirable, for the costs claimed to involve a degree of particularity about the way in which the total costs have been calculated. This may involve evidence of the nature and amount of the rates involved.

12. However the exercise of its discretion the Court is not required to undertake a detailed examination of the kind that would be appropriate to taxation or to a formal costs assessment: see Harrison at 743. Indeed descending into the level of detail required on taxation or formal costs assessment defeats the purpose of a gross sum order.

13. In Sedgwick v Varzonek (No. 2) [2015] NSWSC 1613, Slattery J relevantly stated at [34]-[36]:

“[34] The applicable principles in relation to the making of specified gross sum costs orders under CPA, s 98(4)(c) may be shortly stated. Although the CPA s 98(4)(c) power has been described as particularly suited to complex litigation, the rule is expressed in general terms and is not limited to cases of that type: Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006 at [3] (Burchett J). The power to award a CPA s 98(4)(c) specified gross sum instead of assessed costs is exercised whenever the circumstances warrant its exercise; the purpose of the rule is to avoid the expense, delay and aggravation arising out of taxation: Beach Petroleum NL v Johnson (No. 2) (1995) 57 FCR 119 (von Doussa J).

[35] Probable inability to pay a costs order will usually provide a proper basis for the making of a s 98(4)(c) order. If the unsuccessful party ordered to pay costs is unlikely to be able to pay the amount of costs ordered then the successful party is further aggravated by having to fund the additional costs of taxation, those costs also being unrecoverable: Harrison v Schipp [2002] NSWCA 213; 54 NSWLR 738 at [21] (Giles JA) and Hadid v Lenfest Communications Inc [2000] FCA 628 (Lehane J).

[36] But there are many other reasons for making such an order. Here there is a pressing need in the interests of a number of parties interested in these proceedings to bring consequential aspects of the proceedings to a rapid conclusion. Marlene died almost four years ago. Mr Sedgwick is in poor health and has pressing financial needs. Marlene’s mother Anna is an elderly pensioner in Poland. She and her daughter, Marlene’s sister, have immediate financial needs. Rapid disposal of costs issues is desirable."

14. In Fan v South Eastern Sydney Local Health District (No 3) [2015] NSWSC 1620, I relevantly stated at [32]-[38]:

“[32] The defendant referred to Hamod v New South Wales [2011] NSWCA 375, where Beazley JA (with whom Giles and Whealy JJA agreed) stated at [816]:

“[816] The terms of s 98(4), together with the more general considerations reflected in the Civil Procedure Act, ss 56(1), 57(1)(d) and 60, suggest the factors that merit particular consideration include: the relative responsibility of the parties for the costs incurred (for example, Harrison v Schipp); 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: Ritchie’s Uniform Civil Procedure NSW at [s 98.45].”

[33] Recently, in Ghougassian v Fairfax Community Newspapers Pty Ltd [2015] NSWCA 307, Emmett JA stated at [62]:

“[62] Under s 98(4)(c) of the Civil Procedure Act, the court may make a costs order as a specified gross sum, rather than assessed costs. The discretion conferred by that provision may be exercised where the assessment of costs may be protracted and expensive and if it appears that a party obliged to pay the costs may not be able to meet a liability to do so. The power may also be exercised where a party’s conduct contributes unnecessarily to the incurring of costs.”

[34] Further, the defendant submitted that this is a case where the assessment of costs will be protracted and expensive and that such expense will be incurred in circumstances where the plaintiff may not be able to meet a liability of the order likely to result from the assessment: see Hamod and MainteckServices Pty Ltd v Stein Heurtey SA (No 2) [2014] NSWCA 214 at [13].

[35] In Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at [22], Giles JA (quoted with approval in Hamod) stated:

“[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.”

…

[37] In Chaina v Presbyterian Church (NSW) Property Trust (No. 26) [2014] NWSC 1009 at [50(c)] and [51], Davies J stated:

“[50] I have taken into account the following matters in concluding that a specified gross sum for costs should be ordered:

…

(c) The fact that the Plaintiffs are unrepresented, and are likely to remain unrepresented through any costs assessment process. The difficulties that attended the hearing of the substantive proceedings when the Plaintiffs were unrepresented were significant. The position would be magnified in any costs assessment process, not the least reason for which would be that the Plaintiffs are unlikely to be able to engage any form of advisor to assist them through the process;

…

[51] When assessing the costs for the purpose of making a gross sum order a broad brush approach may be taken: Zepinic v Chateau Constructions (Aust) Ltd (No. 2) [2014] NSWCA 99 at [31] and [38]; Hamod v New South Wales (No 13) [2009] NSWSC 756 at [31]; see also Hamod at [819]-[820] and Young v Hones (No. 3) [2014] NSWSC 499 at [28]-[30].”

[38] In Chaina at [56(b)] Davies J continued “As a broad rule of thumb, a successful party will recover 70% to 80% of costs assessed on the ordinary basis.”

The defendant’s submissions

15. The defendant’s submissions began by noting that on 1 November 2021 this Court dismissed the plaintiff’s claim on various bases including that:

1. he was either out of time, or the discretion to extend time should not be granted;

2. the defendant was not the correct defendant because the decision he wanted to challenge was that of the NSW Medical Board.

16. The defendant relied on Mr Regener’s affidavit affirmed on 4 June 2021 (“Regener Aff 4/6/21”) and submitted that the evidence it contains demonstrates that the defendant pointed the plaintiff to the deficiencies in his case on 10 May 2021 (Annexure A), 14 May 2021 (Annexure B), and 30 May 2021 (Annexure C) and urged him to discontinue. The defendant noted that the bases on which this Court dismissed the plaintiff’s claim noted above, were raised with the defendant in those emails.

17. The defendant submitted that to the extent that the plaintiff continues to feel aggrieved, one of the purposes of the rule in relation to the award of a gross sum of costs is to avoid aggravation arising out of taxation. Correspondingly the defendant submitted it should not now be taxed by having to proceed with the costs assessment process with a plaintiff who would not accept reasonable arguments put to him in correspondence.

18. Finally the defendant submitted that there is a pressing need in the interests of all parties in these proceedings to bring the consequential (ie the costs) aspects of the proceedings to a rapid conclusion. Correspondingly the matter ought not be permitted to go to a lengthy costs assessment over a relatively small sum with the plaintiffs' own liability to pay costs remaining uncertain.

Legal costs and disbursements incurred by the defendant

19. The defendant relied on Regener Aff 15/11/21. The defendant noted that Mr Regener was admitted as a solicitor on 21 May 2010 (at [3]), and set out the legal costs incurred in the running of the defendant’s case and annexed a number of supporting invoices (Regener Aff 15/11/21 at [8]-[22]; Annexures A-G).

20. The defendant submitted that evidence contained in Regener Aff 15/11/21 demonstrates the reasonableness of the fees charged, while acknowledging the benefits to both parties and that some of the time spent by the solicitors for the defendant may have not been “reasonable”. This is because some additional time was spent researching complex historical legal issues and due to the involvement of 2 insurers. The defendant further submitted that its legal services providers rates are well below commercial value, noting the comments of Adamson J in Bechara v Bates (No 4) [2015] NSWSC 1722 at [13]-[15] that a charge out rate of $400.00 was reasonable.

21. The defendant set out its solicitor’s costs (exclusive of GST) as follows:

For the period 7 May 2021 to 20 May 2021 $3876.00: Regener Aff 15/11/21 at [9]; Annexure A;

For the period 26 May 2021 to 8 June 2021 $950.00: Regener Aff 15/11/21 at [10]; Annexure B;

For the period 26 July 2021 until 27 July 2021 $3050.00: Regener Aff 15/11/21 at [11]; Annexure C;

For the period 16 August 2021 until 1 October 2021 $4610.90: Regener Aff 15/11/21 at [12]; Annexure D;

The total cost incurred by the defendant $12486.90: Regener Aff 15/11/21 at [14].

22. Mr David Hume, the barrister who acted for the defendant in these proceedings and who appeared at the hearing, incurred fees of $4187.50 (exclusive of GST): Regener Aff 15/11/21 at [18]. Annexed to Regener Aff 15/11/21 are two invoices for those fees, the first dated 11 September 2021 for the sum of $1,500 (Annexure E) and the second dated 9 November 2021 for the sum of $2,687.50 (Annexure F).

23. Disbursements of $1,141.00, comprising of a transcript ($293.00) and the filing fees of two notices of motion ($848.00) were also incurred: Regener Aff 15/11/21 at [19]-[21]. All legal costs and disbursements have been paid: Regener Aff 15/11/21 at [24].

24. The total sum of legal costs and disbursements claimed by the defendant is in the sum of in $17815.40: Regener Aff 15/11/21 at [22]. The defendant noted it has reduced his claim for costs to $11,153.20. This reduction is in reflection of a reduction of:

50% of the legal fees charged by the solicitor acting for the defendant ($6,243.45): Regener Aff 15/11/21 at [27](g)

10% of the legal fees charged by the barrister acting for the defendant ($418.75): Regener Aff 15/11/21 at [28](d)-(e)

25. The defendant does not believe there is a reason to discount the disbursements which it submits were all reasonably incurred: Regener Aff 15/11/21 at [29]

The plaintiff’s submissions

26. The plaintiff submitted that he objects to paying the sum of $11,153.20 on the basis that here is no evidence that defendant had incurred any costs. The plaintiff submitted that the amount claimed ($11,153.20) reflects costs incurred by the insurance companies, under the Insurance Contract Act 1984 (Cth).

27. The plaintiff pointed to the Re JJT; Ex parte Victoria Legal Aid [1998] HCA 44 in which it was stated at [41(1)] that:

“There was no power to order costs at common law. The source of the power must therefore be found in legislation”.

28. The plaintiff submitted that he had initiated a private prosecution under the Medical Practices Act 1992 (NSW) as at 19 January 1999 (“MPA”), and as such the “source of power” to make an order for costs is to be found under s 13 of that Act.

29. The plaintiff submitted that as at 19 January 1999 s 13 read:

“13 Tribunal can award costs

(1) The Tribunal may order the complainant, if any, the registered medical practitioner concerned, or any other person entitled to appear (whether as of right or because leave to appear has been granted) at any inquiry or appeal before the Tribunal to pay such costs to such person as the Tribunal may determine.”

30. In reliance on s 13 of the MPA the plaintiff submitted that the CPA has no application in this matter.

31. The plaintiff submitted that pursuant to s 13 of the MPA, the ordinary meaning of “Tribunal can award costs,” means the Medical Tribunal formed under the MPA and does not mean the Supreme Court which the plaintiff noted was formed under the Supreme Court Act 1970 (NSW) (“SCA”). He further submitted that a judicial officer cannot be a party to the proceeding and order costs, where there is no power for the Supreme Court to order Costs under the SCA.

32. The plaintiff further submitted that in s 13 of the MPA it is explicitly expressed that the “Tribunal” may order to “pay such costs to such person”. He correspondingly submitted that the ordinary meaning of “person” does not mean non-parties, such as corporations, insurance companies nor any other persons.

33. The plaintiff continued by submitting that there is no power to order costs at common law to corporations, such as insurance companies like United Medical Protection and iCare.

34. The plaintiff concluded his submissions by stating that there is no source of power for the Supreme Court to order costs in this matter. The respondent’s Notice of Motion should be dismissed, with Costs in favour of the Applicant.

Resolution

35. Before proceedings to my resolution of this matter it should be noted that the earliest version of the MPA which I am able to access on the NSW Legislation Website is at 13 March 2001 (“13 March 01 version”). I note that the solicitor for the defendant deposes he had the same issue in Regener Aff 4/6/21 at [7].

36. Section 13 in the 13 March 01 version deals with the requirement that applicants to the medical profession must be competent and of good character. As noted by Mr Regener in Regener Aff 4/6/21 at [6], on 19 January 1999 the defendant gave notice to the plaintiff that an inquiry was to be held pursuant to ‘Schedule 1 of the MPA’. I note that s 13 of Schedule 1 of the 13 March 01 version deals with the medical practitioner’s entitlement to attend an inquiry.

35. It is unclear whether the section quoted by the plaintiff is indeed the section that was in force in the MPA as at 19 January 1999, however ultimately it does not matter. The plaintiff, as he did at the hearing, submitted that he has the right to commence a private prosecution against the defendant under the MPA. As previously stated in Quach v Horvarth [2021] NSWSC 1401 at [89], the MPA has been repealed and it no longer has any statutory force. In answer, the plaintiff may say that he has a right to commence a private prosecution under the Health Care Complaints Act 1993 (NSW). He does not. A private criminal prosecution can be commenced under the Criminal Procedure Act 1986 (NSW), however, in order to do so there has to be an alleged criminal offence. There has not been one. The plaintiff commenced proceedings in this Court. Therefore, the CPA and the UCPR apply.

36. Costs are discretionary. Normally costs follow the event. As the plaintiff was unsuccessful in these proceedings, and in applying UCPR 42.21 and 42.20, the plaintiff should pay the defendants costs. I make that order.

37. The defendant seeks an order for a lump sum costs order. Dr Horvarth incurred the costs of $17,815.40 defending the plaintiffs claim seeking judicial review. It was agreed by iCare that since the proceeding concerned Dr Horvarth’s position as President of the NSW Medical Board it was appropriate for it to indemnify him. Although costs were incurred by Dr Horvarth, the named defendant, they were paid for by iCare.

38. As previously stated, a gross sum costs order is appropriate in matters where it is desirable to avoid the expense, delay and aggravation or futility likely to be involved in contested or extensive costs assessment. That desirability may arise from the likelihood that the additional costs of formal assessment would disadvantage the successful party: Harrison at 743-4.

39. 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 that includes sufficient confidence in arriving at an appropriate sum on the materials available: Wentworth at 35-6; Harrison. The approach taken to estimate costs must be logical, fair and reasonable.

40. The solicitor for the defendant wrote to the plaintiff on 10 May 2021, 14 May 2021 and 30 May 2021 pointing out the deficiencies in his summons and requested that Dr Quach discontinue the proceedings. He did not do so.

41. I have set out the costs incurred by the defendant earlier in this judgment. Dr Quach has not provided any evidence that he in a financial position to pay these costs. It is desirable to avoid the potential for further expense, delay and aggravation likely to be involved in a contested costs assessment. The award of a gross sum costs order does justice to both parties. In these circumstances, it is my view that an order for a gross costs sum should be made.

42. There is detailed evidence by the defendant’s solicitor of the actual costs and disbursements that have been incurred and paid. The defendant has reduced its claimed costs from $17,815.40 to $11,153.20. I am satisfied that this is a reasonable sum for the defendant’s costs and disbursements. Hence I make an order that the plaintiff pay the defendant’s gross lump sum of $11,153.20 for costs.

The Court orders:

1. The plaintiff is to pay the defendant’s costs of the proceedings.

2. The plaintiff is to pay the defendant the lump sum costs of $11,153.20.

**********

Decision last updated: 04 February 2022