Riva NSW Pty Ltd (ACN 113 881 815) v Mark a Fraser and Christopher P Clancy t/as Fraser Clancy Lawyers (ABN 27 526 211 743)
[2014] NSWCA 455
•19 December 2014
Court of Appeal
New South Wales
Case Title: Riva NSW Pty Ltd (ACN 113 881 815) v Mark A Fraser & Christopher P Clancy t/as Fraser Clancy Lawyers (ABN 27 526 211 743) Medium Neutral Citation: [2014] NSWCA 455 Hearing Date(s): 29/10/2014 Decision Date: 19 December 2014 Before: Emmett JA Decision: Order that the applicants pay the first respondent $35,000.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords: PROCEDURE - costs - gross sum costs order pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW) - assessment of costs on an indemnity basis - Uniform Civil Procedure Rules 2005 (NSW), r 42.5 Legislation Cited: Civil Procedure Act 2005 (NSW), s 98
Evidence Act 1995 (NSW), s 79
Legal Profession Act 2004 (NSW), s 364
Uniform Civil Procedure Rules 2005 (NSW), rr 18.4, 31.23, 42.5; Sch 7Category: Procedural and other rulings Parties: Riva NSW Pty Ltd (ACN 113 881 815) (First Applicant)
Angelo Ferella (Second Applicant)
Tiziana Ferella (Third Applicant)
Mark A Fraser & Christopher P Clancy t/as Fraser Clancy Lawyers (First Respondent)
District Court of NSW (Second Respondent)Representation - Counsel: Counsel:
G Foster (Applicants)
P Barham (Respondents)- Solicitors: Solicitors:
Zali Burrows Lawyers (from 29 October 2014) (Applicants)
Fraser Clancy Lawyers (Respondents)File Number(s): 2014/273003 Decision Under Appeal - Before: Curtis DCJ - Court File Number(s): 2012/13479 Publication Restriction: Nil
JUDGMENT
EMMETT JA: On 29 October 2014, for reasons that I then gave (see [2014] NSWCA 454), I ordered that a summons filed on behalf of Riva on 16 September 2014 be dismissed. In these reasons, terms and expressions used are as defined in my earlier reasons.
On 29 October 2014, I ordered Riva, Mr Ferella and Ms Ferella to pay the costs of Fraser Clancy of the s 69 Summons and the Dismissal Motion on the indemnity basis and ordered that the costs be paid as a lump sum (pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW)) to be determined by the Court. I directed Fraser Clancy to file and serve, no later than 5 November 2014, any affidavits on which they wished to rely as to the assessment of costs and directed Riva and Mr Ferella and Ms Ferella to file and serve, no later than 12 November 2014, any affidavits on which they wished to rely in opposing the assessment. I indicated that, unless the parties wished to be heard, I would determine the lump sum on the papers on the basis of the material contained in any such affidavits.
On 6 November 2014, Fraser Clancy filed and served an affidavit sworn on 5 November 2014 by Ms Kerrie-Ann Rosati. On 13 November 2014, an affidavit sworn by Ms Sharon Drew on that day was filed. However, that affidavit was apparently not served on Fraser Clancy until 18 November 2014. Ms Drew states in her affidavit that she has been instructed by Riva, Mr Ferella and Ms Ferella "to provide expert opinion in relation to the costs payable" to Fraser Clancy in accordance with the orders made on 29 October 2014. No doubt in response to the comments that I made in my earlier reasons, on 29 October 2014, Riva, Mr Ferella and Ms Ferella filed a notice of appointment of solicitor, notifying the Court that Zali Burrows Lawyers would be acting as their solicitor in these proceedings. However, it appears that that notice of appointment may not have been served on Fraser Clancy.
On 26 November 2011, I invited the parties to supplement their affidavit evidence by exchanging and filing short written submissions to support their contentions by 3 December 2014.
By letter of 3 December 2014, a copy of which was apparently sent to the other parties by email and by mail, Fraser Clancy submitted that, having regard to the failure to comply with the directions given on 29 October 2014, I should not have regard to the affidavit of Ms Drew. In its letter, Fraser Clancy said that, if the Court intends to have regard to the affidavit of Ms Drew, it wished to rely on a further affidavit sworn by Mr Clancy on 3 December 2014, which responds to factual issues raised by Ms Drew's affidavit and makes further submissions in relation to the question of costs.
In his affidavit of 3 December 2014, Mr Clancy complains that Ms Drew does not say who provided her with instructions for her affidavit and provides little or no reasoning or explanation for the opinions expressed, as required by s 79 of the Evidence Act 1995 (NSW) and the Expert Witness Code of Conduct (see r 31.23 and Sch 7 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR)) if her opinion evidence is to be admissible. There is considerable substance in Mr Clancy's complaint. Nevertheless, I have had regard to Ms Drew's affidavit.
Ms Rosati and Ms Drew essentially agree on the relevant principles to be applied in making an assessment of party/party costs. Section 364(1) of the Legal Profession Act 2004 (NSW) sets out the criteria to be applied by a costs assessor when determining a reasonable amount for party/party costs. Thus, the costs assessor must consider:
·whether or not it was reasonable to carry out the work to which the costs related;
·whether or not the work was carried out in a reasonable manner; and,
·what is a fair and reasonable amount of costs for the work concerned.
In considering what is a fair and reasonable amount of legal costs, a costs assessor may have regard to any or all of several matters specified in s 364(2), including the skill, labour and responsibility displayed by the practitioner responsible; the complexity, novelty or difficulty of the matter; the quality of the work done; the time within which the work was required to be done; and the outcome of the matter.
Where party/party costs have been ordered to be paid on an indemnity basis, the costs assessor must take into account the provisions of r 42.5 of the UCPR. Rule 42.5 provides, relevantly, that in such a case, all costs are to be allowed other than those that appear to have been unreasonably incurred or appear to be of an unreasonable amount. The onus of establishing unreasonableness lies with the party charged with the payment under the order.
Each of Ms Rosati and Ms Drew has examined Fraser Clancy's time sheet for the matter from 22 September 2014 to 3 November 2014. The time sheet shows a total amount for unbilled time of $22,322.50. Both have also examined fee notes from counsel totalling $13,895.50. In relation to unbilled disbursements, Fraser Clancy claims $1,547.45, including office expenses and a filing fee. Ms Rosati, however, refers to a figure of $1,151.55, which does not appear to correspond with the data in the time sheet provided. Ms Rosati's fees for work to date amount to $1,680 and she estimates that further costs of $1,350 are likely to be incurred by Fraser Clancy. The aggregate of all of those amounts (using the figure of $1,547.45 for disbursements) is $40,795.45.
Ms Rosati has expressed the opinion that the rates actually charged by Fraser Clancy as the solicitors for Riva, Mr Ferella and Ms Ferella would be allowed as incurred on an assessment of the party/party costs on an indemnity basis. However, she considers that a reduction should be made to the incurred costs for work performed to account for the difference between costs charged on a solicitor/client basis and those that would be allowed as between party and party on an indemnity basis. Ms Rosati concludes that it would be appropriate to apply a reduction at the lowest end of the range of typical reductions of not more than 10% of the costs actually incurred for the work done in the Court of Appeal. Thus, her estimate of a reasonable amount for party/party costs on an indemnity basis would be 90% of $22,322.50, which, rounded to the nearest dollar and exclusive of GST, amounts to $20,090.
Ms Rosati considers that it is appropriate to reduce counsel's fees by 5%, being the lowest end of the usual range to account for costs that might be considered to be unreasonably incurred or of an unreasonable amount. She therefore considers that a reasonable amount for counsel's fees would be 95% of $13,895.50, which, rounded to the nearest dollar and exclusive of GST, amounts to $13,201.
Ms Rosati considers that all of the disbursements of $1,151.55 would be allowed. She has rounded that figure to $1,151, exclusive of GST. As I have said, however, that figure does not appear to correspond with the data in the time sheet provided.
Ms Drew disagrees with a number of the opinions expressed by Ms Rosati. First, she takes issue with Ms Rosati's opinion concerning the reasonableness of the amount for professional costs. She suggests that work shown in the time sheet includes internal conferences, excessive claims for filing and delivery of documents and locating, collating and copying documents, travel time, administrative attendances, likely duplication of work and artificial inflation of costs resulting from the use of 6-minute units. She observes that Ms Rosati does not address those issues in her opinion, but that they are all grounds on which costs claimed are likely to be disallowed or reduced on assessment.
Ms Drew also refers to the fact that, because the Dismissal Motion was not served in accordance with r 18.4 of the UCPR (which provides that a notice of motion must be served at least three days before the date fixed for the motion), the hearing of the Dismissal Motion could not proceed on 20 October 2014. Ms Drew is therefore of the opinion that the costs for preparation and attending on 20 October 2014 should not be allowed on assessment. In his affidavit of 3 December 2014, however, Mr Clancy disputes that r 18.4 was not complied with and refers to an affidavit of service of Ms Chloe Hindle sworn on 20 October 2014, which states that the Dismissal Motion was served on 14 October 2014.
On 28 October 2014, the matter was mentioned briefly and then stood out of the list until 3.30 pm and was concluded at 4.15 pm. Ms Drew considers that, in those circumstances, it would be unreasonable for both the instructing solicitor and counsel to charge for a full day. Ms Drew also expresses the opinion that neither the attendance of more than one solicitor or travel time would be allowed in respect of the hearing of the motion on 29 October 2014. Mr Clancy, in his affidavit of 3 December 2014, responds by stating that, after the proceedings were called at 10 am on 28 October 2014, Riva was allowed further time to provide evidence and to file notices of appearance. The parties were informed that the matter would be dealt with at the conclusion of another set of proceedings (also involving Riva) that was being heard in the same courtroom. Mr Clancy says that Fraser Clancy's counsel remained in the Supreme Court for the majority of the day in order to appear immediately when the other proceedings had concluded, and that he himself had several discussions with Riva's counsel at the Court during the day.
Ms Drew also refers to an amount of $2,149.38 claimed for work performed on or after 29 October 2014 that relates solely to the quantification of costs, in addition to the amount of $1,680 for the work of Ms Rosati. Ms Drew accepts that it would be open for the Court, when making a determination of a lump sum in accordance with the order made on 29 October 2014, to order that each party pay its own costs of that determination or to order that costs be payable by Riva, either on the ordinary basis or on an indemnity basis.
Ms Drew also expresses the opinion that facsimile charges and telephone, postage and sundry disbursements are not reasonable and are not likely to be allowed on assessment. It is her experience that such charges are likely to be considered as an administrative overhead. Ms Drew also considers that the claim made for photocopying is likely to be reduced.
The fees charged by counsel include two attendances prior to the filing of the s 69 Summons on 16 September 2014. Ms Drew considers that those attendances would not fall within the scope of the order made on 29 October 2014. In addition, the fees for counsel include work associated with the adjourned hearing on 20 October 2014 and Ms Drew considers that they would not be allowed on assessment.
In dealing with the hourly rates claimed by Fraser Clancy, Ms Drew draws attention to the fact that the rates claimed are higher than the hourly rates claimed in related proceedings. The explanation for that increase, which ranges from 26.5% in the case of one lawyer, to 36.4% in the case of another lawyer, is not given. Ms Drew also draws attention to the fact that the hourly rates of Fraser Clancy's counsel (but not his daily rate) are 5.3% higher than the hourly rates claimed in related proceedings.
Ms Drew considers that a reduction in professional fees in the order of 20% is a more accurate reflection than the reduction of 10% proposed by Ms Rosati. In addition, Ms Drew considers that there should be a further reduction given the unexplained increase in hourly rates referred to above. She considers that a further reduction of 25% is likely to be made on account of the unexplained increase in hourly rates.
On the basis of Ms Drew's analysis of the materials, she considers that the reasonable amount for professional fees, rounded to the nearest dollar and exclusive of GST, is $11,040. She also considers that it is likely that the brief on hearing fees would be reduced to half a day for each of 28 October 2014 and 29 October 2014, being $1,500 for each appearance. She also considers that there would be further reduction by reason of the difference in rates charged in related proceedings and the fact that certain of the attendances relate to work done prior to the filing of the s 69 Summons on 16 September 2014. Ms Drew estimates that a reasonable amount for counsel's fees would be $6,565.35.
In relation to the period after 29 October 2014, where costs relate to the assessment, Ms Drew estimates that a total of $3,636 would be allowed for assessment of party/party costs on an indemnity basis as follows:
Professional costs
Ms Rosati's costs
$ 906
$1,680
Future professional costs $1,050 TOTAL $3,636
The costs of assessing the costs up to and including 29 October 2014 would not have been incurred at all but for the filing of the summons by Riva. In those circumstances, I consider that those costs should be assessed on the same basis.
In the result, there are two conflicting opinions as to the costs likely to be assessed on an indemnity basis. Ms Drew's estimate is $21,979.25. On the other hand, Ms Rosati's total estimate is $37,472. The substantial difference between the two opinions is the result of differing views as to the discount rate for professional fees.
The mere fact that charges may have been made at a different rate in relation to related proceedings does not of itself indicate that the rate presently claimed is excessive. On the other hand, Mr Clancy himself acknowledged that a discount rate of something like 20% for indemnity costs was not unreasonable.
The purpose of ordering a lump sum for costs is to avoid unnecessary costs in assessment. Further, it is not the function of the Court when making such an order to engage in a detailed taxation exercise. I am not persuaded that the evidence of Ms Drew satisfies the onus of establishing that any of the costs described by Ms Rosati in her total of $37,472 appear to have been unreasonably incurred or to be of an unreasonable amount. In all of the circumstances, I consider that the appropriate lump sum that should be paid is $35,000. I propose to order that Riva, Mr Ferella and Ms Ferella pay that sum to Fraser Clancy in respect of their costs of the s 69 Summons and the Dismissal Motion.
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