SAB Closed 1 Pty Ltd v Bees & Honey Pty Ltd; Bees & Honey Pty Ltd v SAB Closed 1 Pty Ltd

[2015] NSWSC 1162

Supreme Court

New South Wales

Medium Neutral Citation:	SAB Closed 1 Pty Ltd v Bees & Honey Pty Ltd; Bees & Honey Pty Ltd v SAB Closed 1 Pty Ltd [2015] NSWSC 1162
Hearing dates:	11 August 2015
Decision date:	12 August 2015
Jurisdiction:	Equity Division - Commercial List
Before:	Stevenson J
Decision:	(1) The summons and cross-summons are dismissed. (2) Plaintiff to pay 80 per cent of the defendant’s costs less $7,293.61.
Catchwords:	COSTS – assessment – defendant successful overall but unsuccessful on some issues – whether costs order should reflect partial success – whether defendant has adduced sufficient evidence to warrant a gross sum costs order under s 98(4)(c) of the Civil Procedure Act 2005 (NSW) – whether defendant should pay travel costs of a witness who was ultimately not required for cross-examination
Legislation Cited:	Civil Procedure Act 2005 (NSW)
Cases Cited:	Colquhoun v District Court of New South Wales (No 2) [2015] NSWCA 54 Hamod v State of New South Wales [2011] NSWCA 375 Harrison v Schipp [2002] NSWCA 213 SAB Closed 1 Pty Ltd v Bees & Honey Pty Ltd; Bees & Honey Pty Ltd v SAB Closed 1 Pty Ltd [2015] NSWSC 1019 Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2011] NSWSC 11 Walker Charlotte Street v Rio Tinto Services [2014] NSWSC 535
Category:	Costs
Parties:	SAB Closed 1 Pty Ltd as trustee for The Sabbaba Newtown Unit Trust (Plaintiff/Cross-Defendant) Bees & Honey Pty Ltd as trustee for Bees and Honey Unit Trust (Defendant/Cross-Claimant)
Representation:	Counsel: E A J Hyde (Plaintiff/Cross-Defendant) A Blank (Defendant/Cross-Claimant)   Solicitors: Norton Rose Fulbright (Plaintiff/Cross-Defendant) SLG Lawyers (Defendant/Cross-Claimant)
File Number(s):	SC 2015/140430

EX TEMPORE Judgment (REVISED)

Introduction

1. I gave judgment in these proceedings on 28 July 2015: SAB Closed 1 Pty Ltd v Bees & Honey Pty Ltd; Bees & Honey Pty Ltd v SAB Closed 1 Pty Ltd [2015] NSWSC 1019. I will use the same abbreviations in these reasons as I did in that judgment.

2. In my judgment of 28 July 2015, I found that the defendant purchaser was entitled to terminate the Agreement, and that accordingly the plaintiff vendor was not entitled to the damages it sought. Nonetheless, I found that the defendant was not entitled to a return of the deposit.

3. It follows that the summons and cross-summons should be dismissed.

Costs

4. There is a remaining dispute as to costs.

5. Neither party achieved the success it sought. However, in my opinion, the substance of the matter is that, overall, the defendant has been successful. It established that the Completion Date had not been extended, that the condition precedent referred to in cl 6.1(a) of the Agreement had not been satisfied by the Completion Date in relation to the Met Centre, and that it was entitled to terminate the Agreement.

6. The defendant, as cross-claimant, failed to establish that it was entitled to the return of the deposit. But that issue took up little time of the hearing and involved a question of construction of the proviso to cl 6.4 of the Agreement. The defendant also failed to make out a number of other matters agitated in its cross-claim that I have dealt with under the heading “Other issues raised by the defendant” at [87] to [95] of my 28 July 2015 judgment. Other issues agitated in the cross-claim did not need to be decided in light of the defendant’s success on the issues to which I have referred.

7. In my opinion, it would be productive of undue cost and expense in the assessment process were I to endeavour to make costs orders in respect of each issue won or lost by the parties. The more appropriate course, which in my opinion reflects the result of the proceedings, is to order that the plaintiff pay 80 per cent of the defendant’s costs.

Gross sum costs order?

8. The defendant seeks a gross sum costs order under s 98(4)(c) of the Civil Procedure Act 2005 (NSW). I am not prepared to make any such order. The power in s 98(4)(c) may 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”: Harrison v Schipp [2002] NSWCA 213 at [22]; see further Hamod v State of New South Wales [2011] NSWCA 375 at [813] and Colquhoun v District Court of New South Wales (No 2) [2015] NSWCA 54 at [6].

9. In this case, leaving aside any other reasons why a gross sum costs order should not be made, the material adduced as to the quantum of the costs sought is not sufficient to warrant the making of the order.

10. Here, the evidence of the costs incurred by the defendant is an affidavit sworn by the defendant’s solicitor on the record, Mr Eric Shmilovits. There was not, as would usually be required, objective arm’s length evidence from a costs assessor (for example see Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2011] NSWSC 11 at [26] per Barrett J). Mr Shmilovits does no more than annex to his affidavit the short form tax invoices of his firm, SLG Lawyers, addressed to the defendant. Those invoices contain no adequate detail of the work done, no statement of the hours worked, and no statement of the hourly rate charged. The invoices refer to the quantum of counsel’s fees incurred but do not provide any details of those fees.

11. Mr Shmilovits also annexed a letter from his predecessor, KWS Legal, addressed to the defendant, which contains statements as to the amounts of invoices and counsels fees incurred by that firm. The actual invoices and counsels fees are not in evidence. It is clear from KWS Legal’s letter that some of the work for which that firm charged related to advising the defendant concerning the Agreement itself, rather than work done in the course of this litigation. The fee notes from counsel referred to in the letter include one for counsel who, according to the Court’s records, has not appeared in these proceedings.

12. Further, the amount sought in the gross sum order is $120,000; only $2,634 less than the total of all Mr Shmilovits’s fee notes and those of KWS Legal. The adoption of that figure would have the effect of an order more generous to the defendant than an indemnity costs order. Mr Blank, who appeared for the defendant, suggested that I could “discount” that figure as appropriate. But that is not my function. It was for the defendant to propose a reasonable figure, properly supported by appropriate evidence.

13. For those reasons, I will not make a gross sum costs order.

Costs incurred in respect of Mr Shields

14. The plaintiff seeks a special order in respect of the costs it incurred in arranging for Mr Philip Shields, who resides in France, to travel to Australia to give evidence. At the relevant time, Mr Shields was the executive director of the plaintiff’s parent company, Sumo Group Australia Pty Ltd. The costs incurred in arranging for Mr Shields to travel to Australia were $7,293.61.

15. On 29 June 2015, the plaintiff’s solicitors sent an email to the defendant’s solicitors asking which of the plaintiff’s witnesses would be required for cross-examination. The email pointed out that Mr Shields lived in Paris and would have to travel to Australia for the hearing. On 1 July 2015, the defendant’s solicitors responded stating that all witnesses that the plaintiff wished to call were required to attend for cross-examination.

16. Mr Shields travelled to Australia for the hearing. In the course of the hearing, the defendant’s counsel informed the plaintiff’s counsel that Mr Shields was no longer required for cross-examination.

17. Mr Shields’s affidavit was sworn on 3 June 2015. In large part Mr Shields simply annexed documents to his affidavit. Otherwise, his evidence was not challenged by any evidence adduced on behalf of the defendant. On the face of it, his evidence was uncontroversial. In those circumstances, it was incumbent on the defendant’s legal advisers to give close attention to the need to cause Mr Shields to travel across the globe to attend for cross-examination. It was, in my opinion, unsatisfactory and unreasonable for those advisers to postpone the decision until Mr Shields had arrived.

18. Mr Blank submitted that because of “the urgent nature of the proceedings and its fast tracking in the Commercial List, the defendant had very little time to conduct an in depth forensic analysis of the evidence”. I do not accept that submission. It is true that the case was brought on for hearing quickly; a little over two months after commencement. However, as I have said, Mr Shields’s affidavit was sworn on 3 June 2015 and I infer served shortly after that. And despite the fact that the case took four hearing days before me, the issues arising in it were not, properly analysed, complex.

19. Certainly, the question of the significance of Mr Shields’s evidence, and thus the question of whether he should be required to travel to Australia for cross-examination, was one that could easily have been made in advance of the hearing. Counsel who practice in this list are expected to apply their skills and experience, and if necessary conduct such “in depth forensic analysis of the evidence” to accommodate the “fast tracking” that this list offers commercial parties.

20. Mr Blank pointed out, however, that it was open to the plaintiff to suggest that Mr Shields’s evidence be taken by audio-visual link. Mr Blank submitted that it was likely that the defendant would have consented to such a course. Mr Blank pointed to the fact that the defendant did consent to the evidence of Ms Leigh Dunn, who lives in Melbourne, being given by telephone (although ultimately she too was not required for cross-examination). Of course, it was also open to the defendant to suggest Mr Shields’s evidence be taken by audio-visual link.

21. In that regard, Mr Hyde, who appeared for the plaintiff, drew my attention to a decision of McDougall J in Walker Charlotte Street v Rio Tinto Services [2014] NSWSC 535. Mr Hyde did not have a copy of that decision in Court during argument yesterday. I have now read that decision and do not see his Honour’s observations as seeking to lay down any principles governing applications for leave to adduce evidence by audio-visual link. Rather, on the facts of that case, his Honour concluded that leave should not be granted because the witness in question was “of some significance” whose credit was in issue and whose cross-examination was likely to “range over many topics and involve there being put to him numerous documents” (at [12] and [13]).

22. Those factors often suggest that the taking of evidence by audio-visual link is not appropriate. I do not understand that any of those factors are at play in this case. It appears to me very likely that in this case the Court would have made an order for cross-examination by audio-visual link no matter what attitude the defendant took.

23. Had an order for evidence by audio-visual link been made, some costs would of course have been incurred, and thus thrown away, by the defendant’s last minute decision not to cross-examine Mr Shields. Mr Hyde submitted that the cost of audio-visual evidence taken in Sydney from Paris or London was still less than the cost of a business class airfare from Europe to Australia. However, there is no evidence that this is so.

24. What is clear is that, in circumstances where neither side suggested an alternative, Mr Shields travelled to Australia unnecessarily. The defendant’s legal advisers should, in my opinion, have given more thought to the need for cross-examining Mr Shields before he departed France. The defendant should pay the costs thereby thrown away.

25. I therefore make the following orders to finalise the proceedings:

1. The summons and cross-summons are dismissed.

2. I order that the plaintiff pay 80 per cent of the defendant’s costs less $7,293.61.

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Decision last updated: 17 August 2015