Re Ji Woo International Education Centre Pty Ltd

[2019] NSWSC 338

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Ji Woo International Education Centre Pty Ltd [2019] NSWSC 338

Hearing dates:

Submissions as to costs 15 February, 15 March 2019

Decision date:

29 March 2019

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

Order that the Interested Persons pay the costs of and incidental to the hearing of the Interlocutory Process filed on 13 December 2018, as agreed or as assessed. Gross sum costs order not made.

Catchwords:

COSTS – non-parties – where leave granted to the applicants to be heard in proceedings without becoming a party under r 2.13(2) of the Supreme Court (Corporations) Rules 1999 (NSW) – where applicants were unsuccessful in their application to have examination summonses set aside – where additional costs were incurred by the applicants’ intervention – whether costs should be ordered against the applicants under r 2.13(2) of the Supreme Court (Corporations) Rules 1999 (NSW).

 

COSTS – whether a gross sum costs amount should be ordered against the applicants under s 98(4)(c) of the Civil Procedure Act 2005 (NSW).

  COSTS – costs assessment – whether a gross sum costs amount can be determined or should be referred to assessment.

Legislation Cited:

- Civil Procedure Act 2005 (NSW) s 98(4)(c)
- Supreme Court (Corporations) Rules 1999 (NSW) rr 2.13, 2.13(1), 2.13(2)
- Uniform Civil Procedure Rules 2005 (NSW) Sch 7

Cases Cited:

- Bobb v Wombat Securities Pty Ltd (No 2) [2013] NSWSC 863
- Coshott v Burke (No 3) [2019] FCAFC 23
- Fewin Pty Ltd v Burke (No 3) [2017] FCA 693
- Grocon Constructors Pty Ltd v Kimberley Securities Ltd [2009] NSWSC 691
- Hamod v State of New South Wales [2011] NSWCA 375
- Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 7) [2018] FCA 1217
- Re David Ireland Productions Pty Ltd [2014] NSWSC 1411
- Re DSHE Holdings Ltd (recs and mgrs apptd) (in liq) [2018] NSWSC 275
- Re Ji Woo International Education Centre Pty Ltd [2019] NSWSC 93
- Re Pan Pharmaceuticals Ltd; Selim v McGrath [2004] NSWSC 129; (2004) 48 ACSR 681
- Saba v Plumb [2017] NSWSC 955
Yeo v Australian Securities and Investments Commission, - Re Ji Woo International Education Centre Pty Ltd (No 3) [2018] FCA 1749
- Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2014] NSWCA 99

Category:

Costs

Parties:

Bo Hyun Lee (First Applicant)
Chi Hoon Choi (Second Applicant)
Hye Young Han (Third Applicant)
IBN Global Pty Ltd (Fourth Applicant)
Anthony Elkerton (Respondent)

Representation:

Counsel:
D A Smallbone (21, 25 January), P T Russell (24 January (Applicants)
J Baird (Respondent)

  Solicitors:
H & H Lawyers (Applicants)
Koffels (Respondent)

File Number(s):

2018/297388

Judgment

1. By Interlocutory Process filed on 13 December 2018, the Applicants, Mr Lee, Mr Choi, Ms Han and IBN Global Pty Ltd (“Applicants”) sought a range of relief in respect of liquidator’s examinations which had been set down to take place on 31 January 2019. On that date, I granted leave for the Applicants to be heard in the application under r 2.13 of the Supreme Court (Corporations) Rules 1999 (NSW), without becoming party to the application.

2. After a hearing conducted over three half-days during the Court vacation, I made orders declining an application for an extension of time to bring that application, and determined associated matters. I published my reasons for judgment on 14 February 2019 ([2019] NSWSC 93) (“Primary Judgment”). By order 5 made on 25 January 2018, I granted leave for the liquidator to apply for an order that the Applicants pay its costs of their Interlocutory Process filed 13 December 2018 and for a gross sum costs order, in accordance with a specified procedure. I subsequently extended the time for the Applicants to lead affidavit evidence and make submissions in respect of that application. The liquidator and the Applicants did not require an oral hearing in respect of that application and it was determined on the papers.

Whether the Applicants should pay the liquidator’s costs

3. Rule 2.13(2) of the Corporations Rules relevantly provides that, if the Court considers that the attendance of a person to whom leave has been granted under r 2.13(1) has resulted in additional costs for any party, or the corporation, which should be borne by the person to whom leave was granted, the Court may direct that person to pay those costs.

4. In Re Pan Pharmaceuticals Ltd; Selim v McGrath [2004] NSWSC 129; (2004) 48 ACSR 681 at [18], Barrett J observed that:

“Rule 2.13(2) focuses on “additional costs” incurred by a party by reason of the non-party’s participation in exercise of the leave granted. It contemplates the making of a costs order against the non-party and in favour of the party put to extra expense by the non-party’s decision to become involved. But the order contemplated is one that does no more than cater for incremental expense referable to the non-party’s involvement. Rule 2.13(2) thus reflects an assumption that in some cases a party will incur such incremental costs and, no doubt, that in others it will not. Where there are no “additional costs”, r 2.13(2) cannot support a costs order in favour of the party against the non-party. The rule thus tends to imply that there should not be a costs order against the non-party except with respect to a party’s “additional costs”, at least in the ordinary course of events. There is a clear concern to guard against the award of more than one set of costs except where good reason is shown.”

5. In Grocon Constructors Pty Ltd v Kimberley Securities Ltd [2009] NSWSC 691 at [6], Barrett J summarised the effect of that rule as being that:

“A person who elects to participate in proceedings on the rule 2.13 basis is not susceptible to a costs order in the ordinary course. Such a person could be ordered to pay costs only in the special circumstances (and to the limited extent) referred to in rule 2.13(2) or by reference to the general principles concerning the award of costs against non parties …”

6. In Re David Ireland Productions Pty Ltd [2014] NSWSC 1411, I observed that an applicant for a costs order in respect of “additional costs” under this rule must show that additional costs were in fact incurred as a result of the intervention and that the Court ought to exercise a discretion to order that it be paid those costs. In Re DSHE Holdings Ltd (recs and mgrs apptd) (in liq) [2018] NSWSC 275, persons heard under that rule were required to bear a substantial portion of the other party’s costs of an application.

7. The liquidator relies on the affidavit dated 18 February 2019 of his solicitor, Mr Koffel. Mr Koffel refers to his substantial experience in pursuing and defending claims, including in complex commercial litigation, over many years of practice. Mr Koffel’s evidence is that the additional costs of the hearing arising from intervention by the Applicants included costs of the three half-days of hearings on 21 and 24–25 January 2019 and involved additional work including correspondence with the parties and the Court; drafting and distributing short minutes of order in relation to a proposed timetable; preparing and serving further affidavit evidence and submissions; and preparing for and attending the additional three half-days of hearing. I will refer to his evidence as to the amount of those costs below. In that affidavit, Mr Koffel misunderstood the effect of order 5 made on 25 January 2018, to which I referred above, as having determining that the Applicants should pay the additional costs resulting from their attendance in the application. I had not determined that matter by merely granting leave to bring an application for such an order. Notwithstanding Mr Koffel’s misunderstanding of that matter, the liquidator addressed that question in submissions in this application.

8. Mr Baird, who appears for the liquidator, drew attention to r 2.13(2) of the Corporations Rules to which I have referred above. Mr Baird submitted that the attendance of the Applicants had resulted in additional costs for the liquidator, and pointed to my observations in the Principal Judgment at [18]–[25], [28]–[33] and [35]–[42]. It seems to me self-evident that the Applicants’ attendance resulted in such additional costs since, but for the application which they brought to seek to set aside the examination summonses and to seek associated orders, the steps necessary to prepare for the hearing of the application and the hearing itself would not have been necessary. Mr Baird submits, and I accept, that the costs incurred by the liquidator in successfully defending the application constitute the additional costs incurred by reason of the Applicants’ attendance in the application.

9. Mr Smallbone submits, and I accept, that the “default” position (or, more precisely, the starting point under r 2.13 of the Corporations Rules) is that a person heard under that rule neither receives nor pays costs. He also accepts that the rule allows the Court the power to order payment of “additional costs” that have resulted from the attendance of the relevant persons. Mr Smallbone also points out that the Applicants had sought to become defendants in the proceedings in which the examination summonses were issued, but that application was contested by the liquidator, and they were ultimately joined in this application under r 2.13 of the Corporations Rules. Mr Smallbone also points out, rightly, that there was a forensic advantage for the liquidator in resisting their joinder to the proceedings, where that limited their ability to issue subpoenas in respect of the application to set aside the examination summonses. Mr Smallbone submits that the liquidator should be held to the limitation that position imposes so far as his right to recover costs against the Applicants is concerned. While I accept that proposition, r 2.13(2) of the Corporations Rules nonetheless permits an order for costs against the Applicants in an appropriate case.

10. Mr Smallbone also submits that it was not unreasonable for the Applicants to seek a “seat at the table”, which I assume is a reference to their moving to set aside the examination summonses and seeking associated orders. I accept that the Applicants had an interest in the status of the examination summonses, although their lack of success in the application means that there is plainly room for doubt whether it was reasonable to bring it. Assuming, without deciding, that it was reasonable for the Applicants to bring the application, their lack of success and the additional costs to which they put the liquidator by doing so supports an order for costs against them under r 2.13 of the Corporations Rules. The Applicants also submit that they had to incur costs, to prove that certain material was confidential, and that such costs would not be fairly the subject of an order against them. I do not accept that submission, where an order that the examinations proceed in private could have been sought before the Registrar conducting them, without the need for three half-days of hearing in respect of the application generally.

11. It seems to me that this is a strong case in which to make an order for the Applicants to pay the liquidator’s costs of the application, given those matters, and where all of the costs incurred by the liquidator would not have been incurred but for the intervention of the Applicants in bringing that application. I will make that order.

Whether costs should be payable on a gross sum basis and their quantum

12. The liquidator also seeks a gross sum costs order in respect of these costs. The Court may make a gross or fixed sum costs order under s 98(4)(c) of the Civil Procedure Act 2005 (NSW). Mr Baird refers to Hamod v State of New South Wales [2011] NSWCA 375 at [813]–[820] and Zepinic v Chateau Constructions (Aust) No 2 Pty Ltd [2014] NSWCA 99 at [28]–[29] for the principles applicable to whether a gross sum costs order may be made. I summarised the applicable principles in Saba v Plumb [2017] NSWSC 955 at [23] as follows:

“Section 98(4) of the Civil Procedure Act relevantly provides that the Court may make an order to the effect that a party to whom costs are to be paid is entitled to a specified gross sum instead of assessed costs. That power is commonly exercised where costs have been incurred in a lengthy or complex case although it is not in its terms limited to such a case: Simone Starr-Diamond v Talus Diamond (No 4) [2013] NSWSC 811 at [8]. The power to make a gross sum costs order should only be exercised where the Court considers it can do so fairly between the parties, including achieving an appropriate sum on the materials available to it, and the Court typically applies a discount in assessing costs on a gross sum basis: Ritchie’s Uniform Civil Procedure NSW [s 98.65]; Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23. In Hamod v State of New South Wales [2011] NSWCA 375 at [816]–[817], Beazley JA (with whom Giles and Whealy JJA agreed) summarised factors relevant to the making of a gross sum costs order as follows:

“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 [[2002] NSWCA 213; (2002) 54 NSWLR 738]); 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].

The exercise of the power conferred by s 98(4) is particularly appropriate where the costs have been incurred in lengthy or complex cases and it is desirable to avoid the expense, delay and aggravation likely to be involved in contested costs assessment. This may arise either from the likely length and complexity of the assessment process: Beach Petroleum NL v Johnson (No 2) at 120; Charlick Trading Pty Ltd v Australian National Railways Commission; Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006; or from the likelihood that the additional costs of formal assessment would disadvantage the successful party because of the likely inability of the unsuccessful party to discharge the costs liability in any event: Harrison v Schipp; Sony Entertainment (Aust) Ltd v Smith (2005) 215 ALR 788 at [90], [194]–[195]; Hadid v Lenfest Communications Inc [2000] FCA 628.”

13. Mr Baird also refers to the observations of Gleeson J in Yeo v Australian Securities and Investments Commission, Re Ji Woo International Education Centre Pty Ltd (No 3) [2018] FCA 1749, where a gross sum costs order was made on the application of the liquidator against the same Applicants in associated proceedings. He submits that the applicable principles (which he has drawn from Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 7) [2018] FCA 1217 at [49]–[52]) include:

“(a)   The purpose of the power to make lump sum costs orders is to avoid the expense, delay and aggravation involved in protracted litigation arising out of a taxation. The Court does not apply a process similar to a taxation of costs, but adopts much broader brush;

(b)   The Court must be satisfied that any lump sum costs order is made on the basis of a logical, fair and reasonable estimate of costs and should be astute to avoid both overstating the recoverable costs and underestimating the appropriate account by applying some arbitrary discount to the amounts claimed. The onus is on the moving party to demonstrate that there is a logical, fair and reasonable basis for the order;

(c)   The power to make an order for lump sum costs is appropriate for application in complex cases where a taxation is likely to result in additional time, trouble, aggravation and expense;

(d)   It would be completely pointless if the evidence produced in a lump sum application was the same as the evidence in the taxation process. The object of avoiding the need to adduce all that evidence is to save the time and cost to the parties in the public’s resource.”

14. Mr Smallbone submits, and I accept, that the issues to be considered by a Court in determining an application for a lump sum costs order include whether it is appropriate to order a gross sum and what is the appropriate gross sum in the relevant circumstances: Fewin Pty Ltd v Burke (No 3) [2017] FCA 693 at [19], [48]–[63]. Mr Smallbone submits that the Court should not too readily make a gross sum costs order, rather than leaving the parties to the detailed scheme for costs assessment which provides protection to them: Bobb v Wombat Securities Pty Ltd (No 2) [2013] NSWSC 863.

15. Mr Koffel’s affidavit dated 18 February 2019 identified a claim for solicitor and client professional costs of $34,402.50 plus GST of $3,440.25 comprising a total of $37,842.75. Mr Koffel relied on a copy of a tax invoice issued by his firm dated 18 February 2019 in that amount. That tax invoice attached a memorandum of costs, which recorded attendances and the time spent on them, apparently recorded in 6 minute units in common form, between 13 December 2018 and 29 January 2019. Mr Koffel indicated that his hourly rate was $750 per hour, although he did not indicate whether that was inclusive or exclusive of GST, and he estimated that he was responsible for 10% of the professional costs charged by his firm. A senior associate who worked on the matter, with over 20 years’ experience as a solicitor, was charged at $625 per hour and Mr Koffel estimated that he was responsible for 88% of the professional costs incurred. Mr Koffel’s evidence, by way of bare assertion, was that there was no duplication of instructing solicitors’ time during the 3 half hearing days. Mr Koffel’s affidavit also refers to fees referable to Mr Baird of Counsel in the amount of $15,955.60 and that affidavit annexed tax invoices dated 31 December 2018 and 25 January 2019 issued by Counsel, which recorded the attendances comprised in Counsel’s fees.

16. Mr Koffel calculates the amount of solicitor/client costs, applying a discount of 30% which has often been applied in lump sum costs applications, as $24,081.75 plus GST of $2,408.17 totalling $26,489.92. Mr Koffel’s affidavit did not apply such a discount to Counsel’s fees, consistent with common practice in such applications. The liquidator also sought the costs of preparing the gross sum costs application quantified as $1,200 plus GST of $120, totalling $1,320.

17. By a further affidavit dated 22 March 2019, in response to the affidavit of Ms Drew (to which I refer below), Mr Koffel reduced that claim to $23,247.50 exclusive of GST (part or all of which was not pressed) and also reduced the amount claimed in respect of Mr Baird’s fees by excluding GST. Applying a discount rate of 30%, the liquidator’s claim for solicitor/client costs is reduced to $16,273.25 (exclusive of GST), plus Counsel’s fees of $14,501.49.

18. The Applicants relied on a mark-up of Mr Koffel’s affidavit dated 18 February 2019, which marked up what was described as “some areas of concern” in his fee note. Mr Smallbone indicates, in submissions, that the mark-up of Mr Koffel’s affidavit includes comments inserted by his instructing solicitors, by way of submission, and illustrates areas of concern in the subject matter of the charging. Mr Smallbone submits that the fees claimed as the starting point for the assessment include work that does not properly belong to the subject matter of the application.

19. The matters noted in that mark-up relate to several attendances each charged as 1 unit, for 6 minutes of time, each charged at $57.50 plus GST and an attendance relating, inter alia, to one hour spent in considering submissions and difficulties arising from the deregistration of the Company in the course of the application. Other matters identified in that mark-up are of greater concern, and claims for costs in respect of them were not withdrawn after the Applicants’ evidence and submissions were served. A challenge was made to an attendance relating, inter alia, to research in respect of the ownership of various properties, involving 1 hour 12 minutes, and charged at the amount of $240 plus GST, presumably involving a paralegal. It is not apparent that that attendance relates to this application. Concern was also expressed in respect to the costs of a letter to a third party, apparently funding the proceedings, for which 2 hours’ time was spent, at a cost of $1,250 plus GST, and other communications with that party. There is a real question whether that cost would properly be recoverable in an assessment. An attendance at Court on 18 January 2019 was also claimed, including travelling time, for two and a half hours in the amount of $1,562.50. There is a real question whether travelling time would be allowed, and in what amount, in an assessment. I will return to the significance of these matters below.

14. The Applicants also relied on an affidavit dated 15 March 2019 of Ms Sharon Drew, a legal costs consultant. Ms Drew referred to her experience as a paralegal, solicitor and costs consultant and referred to her previous engagement by one of the Applicants in giving evidence in unsuccessfully opposing an application for a gross sum costs order in the proceedings in the Federal Court of Australia. Ms Drew’s evidence is that she also appeared as an advocate to present oral submissions in that application. Although Ms Drew agreed to be bound by the expert witness code of conduct in Sch 7 of the Uniform Civil Procedure Rules, there is plainly a real question as to whether her evidence had a quality of independence where she had previously appeared as an advocate for one of the Applicants. It is not necessary to resolve that question in order to determine this application. Ms Drew made various submissions as to the scope of costs orders, which do not seem to me to be within the scope of expert evidence that can properly be given by a costs assessor. Ms Drew also led evidence, which also seemed to me to be submission rather than a matter for expert evidence, that the costs of certain work would not be recoverable as costs in respect of these proceedings.

15. Ms Drew expresses the opinion that an amount of professional fees of $2,530 relating to Mr Elkerton’s affidavit sworn 23 January 2019 would be disallowed on assessment, on the basis that that affidavit was not “permitted” into evidence. That, affidavit was not read after I had indicated that, if it were read, the application would be adjourned to allow the Applicants to respond to it (T15). By his affidavit dated 22 March 2019 in reply to Ms Drew’s affidavit, Mr Koffel indicated that the claim for the costs of that affidavit was not pressed.

16. Ms Drew’s evidence is that the hourly rates charged by the liquidator’s solicitors are, in the case of Mr Koffel, at the “high end” of the rate for a senior partner or partner recognised in the Costs Assessments Rules Committee Guidelines, which she considers would likely be applied by a costs assessor. She notes that the rates applied by the senior associate who did much of the work were higher than the rates which would ordinarily be applied in respect of a senior associate, although I also note that he has many years of professional experience. Ms Drew expresses the view, to which I have regard, that a costs assessor would likely apply a reduction of between 11% and 25% to the hourly rate charged for relevant staff, other than Mr Koffel, to bring the hourly rates to the upper limit of the relevant guidelines. Ms Drew also expresses the view that there would be costs assessors who would apply further reductions to hourly rates on the basis that the nature of the issues in dispute in the interlocutory application warranted a mid-range rate rather than the upper limit rate. It seems to me that that approach would be unjustified, where the proceedings involved dealing with an application to set aside liquidator’s examinations, supported by extremely complex submissions made by Mr Smallbone, during the Court vacation. Ms Drew also expresses the view that a costs assessor would reduce costs in a number of other areas, to which I have regard.

17. Ms Drew expresses the opinion that professional fees likely to be recovered on assessment would be approximately $16,600 inclusive of GST, reflecting a number of adjustments. The first adjustment relates to a reduction for work which Ms Drew considers is not related to the interlocutory application. The second reduction relates to work related to Mr Elkerton’s affidavit dated 23 January 2019, a claim for which is no longer pressed. The third relates to a 15% reduction in respect of 6-minute units, travel time, duplication of work and non-recoverable administrative work, although Ms Drew does not explain how she has derived that 15% figure. Ms Drew then applies a 20% reduction in hourly rates, apparently moving from the proposition that a costs assessor might apply such a reduction if he or she determined that a mid-range rate would be fair and reasonable in the circumstances, to the proposition that such a reduction should be applied. I have not accepted that proposition above.

18. Ms Drew rightly recognises that Counsel’s fees are less likely to be reduced on assessment than solicitors’ fees and Counsel’s fees are ordinarily not reduced in dealing with gross sum costs applications. Ms Drew also excludes work related to Mr Elkerton’s affidavit of 23 January 2019 from recoverable Counsel’s fees. Ms Drew also expresses the view that, and I accept, an assessment of costs should take into account any entitlement to an input tax credit on legal costs that would be available to the liquidator. I allowed the parties a further opportunity to make submissions as to whether an input credit would be available to the liquidator in respect of GST. By affidavit dated 22 March 2019 in reply, Mr Koffel indicated the claim for GST was not pressed, or possibly not pressed in part. Mr Smallbone submitted, and I accept, that GST was not recoverable where the liquidator would likely obtain an input tax credit in respect of it.

19. Ms Drew expressed her view that the amount of recoverable costs would be $28,221 exclusive of GST, and $31,000 inclusive of GST, applying a discount of 30% on solicitor/client costs, plus GST. Ms Drew did not address the liquidator’s claim for costs in respect of the gross sum costs application.

20. Mr Smallbone advances submissions as to the quantum of a gross sum costs order that go beyond Ms Drew’s evidence. He submits that it is not reasonable to visit the costs of a reinstatement application which arose in the course of his application upon the Applicants, where the deregistration of the relevant company resulted from the lodgement of an incorrect form by the previous liquidator. He submits that the consequences of that matter include the loss of the hearing date of 18 January 2019 and the need to reschedule the application across other mornings, and there is force in that submission. The Applicants do not seek to quantify any adjustment which should be made to the costs claimed by the liquidator in respect of that matter, whether by expert evidence or otherwise. On the result that I have reached below on other grounds, that will ultimately be a matter for a costs assessor.

21. So far as the quantum of a gross sum costs order is concerned, Mr Smallbone goes further than Ms Drew’s affidavit to submit that a further discount of 50% should be applied to the claim for costs, apparently in addition to the discount which Ms Drew had applied, to reach a result of $14,000. It seems to me that there is no proper basis for that figure in Mr Smallbone’s submissions. Mr Smallbone also submits, and I accept, that the power to make a gross sum costs order should only be exercised where the Court considers that it can do so fairly between the parties, with sufficient confidence to arrive at an appropriate sum on the materials available. Mr Smallbone submits, and I will accept below, that that factor is absent here.

22. It seems to me that several factors would have supported the making of a gross sum costs order in this application. A costs assessment could well involve significant expense, delay and aggravation, which would preferably be avoided, particularly where that expense would have to be incurred by a liquidator at the ultimate expense of the company’s contributories. However, I am ultimately not satisfied that I can fairly make a lump sum costs order in this application, where the costs claimed by Mr Koffel’s affidavit (even after the identification of some claims not pressed in reply) may include costs that do not squarely relate to the application, or may relate to matters that would not be recoverable in an assessment. There is no reason why the liquidator and those representing him could not have, or should not have, excluded claims for those costs if they wished to obtain the benefit of a lump sum costs order. It is not the Court’s role to excise particular attendances in making a lump sum costs order, as though it were a costs assessor, and a global discount to a gross sum costs amount will not necessarily adequately adjust for claims for costs that are not properly made. Where several questionable claims are here included in the application for a gross sum costs order, and not all of these claims are abandoned in reply and the amounts involved may be material, it seems to me the liquidator’s claim for costs must be referred to assessment. For these reasons, I will not make a gross sum costs order in this application.

23. I should, for completeness, address the question of the discount that would apply to solicitors’ and Counsel’s fees had I otherwise been persuaded that a lump sum costs order could be made. Mr Baird submits, by reference to Mr Koffel’s affidavit, that solicitors’ costs should be allowed applying an appropriate percentage discount; Counsel’s fees should be allowed in full, as being within the range of fees that are normally allowed on an assessment; and other disbursements claimed should be allowed in full. In a number of decisions of this Court, a discount of 30% has been applied in making gross sum costs orders, and that discount was also applied by Gleeson J in Yeo v Australian Securities and Investments Commission above. Mr Baird pointed out that the Full Court of the Federal Court of Australia recently applied a lesser discount of 25% in Coshott v Burke (No 3) [2019] FCAFC 23, where a liquidator had been put to additional and unjustified expense. Mr Smallbone responds, and I accept, that that decision reflected circumstances where a failure to comply with Court orders had increased the costs of the proceedings, and it does not seem to me that that matter is present here, although the Applicants’ application, the range of matters that they raised and the complexity of their submissions will have caused the liquidator to incur costs that would otherwise not have been incurred. Although the application of such a discount is always a question of impression, I would here have applied the discount of 30% that has commonly been applied in this Court, having regard to the relatively high hourly rates claimed by the liquidator’s solicitors. Counsel’s fees were charged a rate of $4,500 per day, or $550 per hour, excluding GST and I would have allowed those fees in full had a gross sum costs order otherwise been appropriate.

Orders and costs

30. Accordingly, I order that the Applicants pay the costs of and incidental to the hearing of their Interlocutory Process filed on 13 December 2018, as agreed or as assessed. Each party has had a measure of success in this application, so far as I have made that order but not the gross sum costs order sought by the liquidator. There will be no order as to the costs of this application.

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Decision last updated: 03 April 2019