Salmon v Albarran (No 2)

[2025] NSWCA 115

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Salmon v Albarran (No 2) [2025] NSWCA 115

Hearing dates:

On the papers

Decision date:

28 May 2025

Before:

Ward ACJ; Leeming JA; Ball JA

Decision:

1. Order that the costs of the First, Second, and Fourth to Eighth Respondents of the Appeal are assessed in the amount of $135,000.

2. Order that the amount of $35,000 held in Court as security for the costs of the First, Second, and Fourth to Eighth Respondents of the Appeal be released forthwith to the trust account of their solicitors and applied in partial discharge of the costs the subject of order 1.

3. In order to avoid doubt, order that the stay made by order 7 on 9 May 2024 is lifted.

Catchwords:

COSTS – gross sum assessment – where unsuccessful appellant likely unable to meet costs – where costs of appeal increased by appellant’s conduct – appropriate to make gross sum assessment – consideration of amount of gross sum order

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 60

Cases Cited:

Gabrielle v Abood (No 4) [2023] NSWCA 100

Hamod v New South Wales [2011] NSWCA 375

Hartnett v Bell (No 2) (2023) 113 NSWLR 381;

Salmon v Albarran (No 2) [2024] NSWCA 99

Salmon v Albarran [2024] NSWCA 3

Salmon v Albarran [2025] NSWCA 42

Category:

Costs

Parties:

Owen Salmon (First Appellant/First Respondent)
TCBS Group Holdings Pty Ltd (Second Appellant/Second Respondent)
Richard Albarran (First Respondent/First Applicant)
Geoffrey McDonald (Second Respondent/Second Applicant)
Steven John Brown (Third Respondent)
Robert Elliott, Drew Townsend, David Kenney, Luigino Malacco and Paul Leroy (Fourth, Fifth, Sixth, Seventh and Eighth Respondents; Third, Fourth, Fifth, Sixth and Seventh Applicants)

Representation:

Counsel:
M Elliott SC and N Simone (Applicants on motion)
O Salmon (solicitor), (First and Second Respondents on motion)

Solicitors:
Hall & Wilcox (Applicants on motion)

File Number(s):

2023/356626

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Equity

Citation:

[2023] NSWSC 1238

Date of Decision:

19 October 2023

Before:

Nixon J

File Number(s):

2016/373218

JUDGMENT

1. THE COURT: This Court dismissed an appeal brought by Mr Salmon and his company TCBS Group Holdings Pty Ltd on 21 March 2025: Salmon v Albarran [2025] NSWCA 42 (the company played no separate role in the litigation and in what follows, references to Mr Salmon are references to both him and his company). Order 3 of the orders made on that day was an order: “Appellants to pay the respondents’ costs in this Court”. The respondents were separately represented, with one firm of solicitors retaining senior and junior counsel to appear for the first, second, fourth, fifth, sixth, seventh and eighth respondents, and a separate firm retaining separate counsel to appear for the third respondent. By notice of motion filed on 4 April 2025, the first, second, fourth, fifth, sixth, seventh and eighth respondents applied for a gross sum costs assessment of the order for costs insofar as it is in their favour. They seek $180,000 or such other amount as this Court determines.

2. The application is supported by an affidavit of a solicitor with carriage of the matter. The methodology adopted is as follows: (a) costs actually incurred are said to be $224,858.97 excluding GST, comprising $104,559 professional costs, $120,015.44 counsel fees and $1,572.53 disbursements; (b) from the professional costs of approximately $105,000, 20% is deducted, on the basis that party/party costs are usually “reduced on assessment to around 70%-80% of the incurred solicitor/client costs”, (c) rounding downwards, that leaves total costs at some $200,000, and (d) a further 10% discount is applied on the basis that “an assessment will not occur and the paying party may do better on assessment than is usually the case”. The solicitor gives evidence that in her opinion “it is unlikely that the Appellants would be found liable to pay less than this on an assessment, if one was to occur”. The calculations do not include GST (presumably on the basis that the amounts of GST paid by the client resulted in input tax credits); we shall proceed on the same basis.

3. The motion also seeks the release of $35,000 paid by way of security for costs pursuant to orders made more than a year ago: Salmon v Albarran (No 2) [2024] NSWCA 99, and the lifting of a stay, to the extent that is necessary, put in place at the same time, preventing some aspects of the enforcement of the costs ordered in the applicants’ favour at trial.

4. There has ensued an exchange of submissions filed on 24 April 2025, 7 May 2025 and 9 May 2025. All of the orders are opposed, but the gross sum costs assessment is the main issue in dispute.

Submissions concerning whether a gross sum costs assessment should occur

5. The applicants say that their costs at first instance, following an 8 day trial, were some $1.022 million excluding GST, in respect of which they have to date received payment of $80,000, pursuant to orders made on 20 September 2021 and 15 February 2022. A notice of appeal was filed slightly out of time and was the subject of interim orders extending the time on 17 January 2024 followed by an order dismissing the application for an extension of time, with costs, on 25 January 2024, in circumstances more fully described in Salmon v Albarran [2024] NSWCA 3. On the same day, a notice of appeal containing 72 grounds, one of which contained 96 sub-grounds, was filed. In May 2024, the present applicants’ application for security for costs came before this Court constituted by Stern JA. Her Honour’s reasons for judgment record at [11] that the applicants sought security for costs in the sum of $150,000 - $200,000. Her Honour ordered security in the amount of $35,000. Her Honour also ordered that Mr Salmon pay the costs of the motion for security for costs.

6. The hearing and determination of the appeal involved four points which are presently relevant. First, the notice of appeal was amended but nevertheless remained prolix. In the form it took by the time the appeal was heard, it contained 42 grounds, but ground 23 contained 84 separate findings of fact which were challenged. Secondly, Mr Salmon’s written submissions were affected by the same prolixity. His written submissions in chief were 140 pages, in small typeface, comprising 510 dense paragraphs and 617 footnotes. He advanced a view of the Registrar’s directions, and the rules concerning the length and content of submissions, which are difficult to justify. Thirdly, Mr Salmon made submissions alleging serious misconduct by legal practitioners which lacked a proper foundation, and which caused the Court to give serious regard to whether the matter should be referred to the Legal Services Commissioner, although ultimately it determined not to do so. Fourthly, Mr Salmon also moved on a motion to adduce fresh evidence. The application was unsuccessful, but required work, and attention to what occurred at trial, different in nature from the task of drafting submissions and otherwise responding to the appeal.

7. It is easy to see that the process of assessment of costs is apt to be unusually fraught, and time-consuming. Further, there are as the applicants observe real doubts about the ability of Mr Salmon or his company to meet any amount so assessed; the questionable solvency of Mr Salmon and his company was at the forefront of the application for security for costs, and may have been one reason why the appeal took so long to be heard. Those considerations favour the exercise of the discretion to order a gross sum assessment of costs, just as they did in Hartnett v Bell (No 2) (2023) 113 NSWLR 381; [2023] NSWCA 311.

8. In opposition to such an order, Mr Salmon observes, correctly, that no order for indemnity costs was made, although we would note that none was sought and for that reason no party was heard as to whether one should be made.

9. Next, Mr Salmon asserts “No order was made as to costs in the fresh evidence motion specifically and it is arguable the current orders do not cover that motion”. That assertion was left undeveloped. It is true that no specific order was made, but it is not true that an order that “Appellants to pay the respondents’ costs in this Court” does not extend to the respondents’ costs of the appellant’s motion to adduce fresh evidence which was dismissed. It is clear beyond argument that “the respondents’ costs in this Court” include the respondents’ costs of and occasioned by the appellants’ motion to adduce fresh evidence filed in and determined by this Court. The fact that Mr Salmon could advance the contrary as a possibility is confirmatory of the prospect that an assessment of costs would be contested and apt to be more time-consuming than would ordinarily be the case.

10. Mr Salmon asserts that $180,000 is not fair and reasonable, and says that “any other amount would be simply speculative for the court to make”. He also says that the applicants have failed to provide any costs agreements, without which they would fail to obtain any costs on assessment. Those submissions are inconsistent with this Court being “entitled to apply a broad-brush approach by reviewing the tax invoices of the solicitors and counsel and determining what is fair between the parties”, as was said in Hartnett at [48]. The hourly and daily rates for all solicitors and barristers are reasonable; we shall return to the total amounts charged below.

11. Nothing in what Mr Salmon has put forward stands in the way of the appropriateness of this Court ordering a gross sum costs assessment, and indeed those submissions tend to confirm its appropriateness.

12. The applicable principles are uncontroversial. They were stated in Hamod v State of New South Wales [2011] NSWCA 375 at [813]-[820], and have regularly been applied. In Gabrielle v Abood (No 4) [2023] NSWCA 100 at [6] this Court encapsulated them as follows:

The power to make a gross sum costs order provided by s 98(4)(c) of the Civil Procedure Act 2005 (NSW) is discretionary. Authority establishes that the discretion is not confined and may be exercised whenever the circumstances warrant its exercise; it should only be exercised when the Court considers that it can do so fairly between the parties, and that includes having sufficient confidence in arriving at an appropriate sum on the materials available; courts have typically applied a discount in assessing costs on a gross sum basis; and the court is not required to undertake a detailed examination of the kind that would be appropriate to taxation or formal costs assessment: see Hamod v New South Wales [2011] NSWCA 375 at [813]-[820] and authority there cited.

13. This is in our view a clear case for the making of a gross sum order. In particular, the question mark over Mr Salmon’s ability to meet any substantial sum coupled with his demonstrated capacity to engage in excessive disputation make the order appropriate.

Submissions concerning the amount of the costs assessed

14. There is also a clear case for there being a substantial discount upon the costs which have been put forward. The incurred costs of $224,000, in order to respond to a two day appeal, are on their face excessive. It is to be borne steadily in mind that the task for a respondent is to determine whether to file a cross appeal or notice of contention, determine whether further materials should be supplied in the appeal books, and attend to the preparation of written and oral submissions, with the latter ordinarily consuming the most time, and, where counsel are briefed, ordinarily that work is most efficiently done by counsel. But in the present case, the law firm says that it has incurred some $104,000 in costs.

15. We approach the evaluation of the evidence bearing the following in mind. Not least in light of the allegations made, it was appropriate for senior and junior counsel to be briefed. Further, there are aspects of this litigation which were unusual and which would have increased the applicants’ costs, including their solicitors’ costs. There were seven hearings before the Registrar. There were hearings at the commencement of proceedings, when the appellant commenced slightly out of time. There was also an application to adduce fresh evidence, which was apt to require additional consideration by the respondents. The matters mentioned above concerning the prolixity of the notice of appeal and submissions will have directly increased the costs of responding to them.

16. Bearing those matters in mind, there remain difficulties with the applicants’ estimate of costs. Mostly this comes about by the opaque way in which those costs have been presented.

17. The fee notes supplied by barristers indicate a date, a time period and a summary of the work done. In contrast, there is no indication as to what was done by any solicitor. Instead, the applicants rely on global amounts reflecting work done by a partner, or a senior associate, or a more junior lawyer, in relation to six components of the appeal: (a) the extension of time motion, (b) the security motion, (c) the stay motion, (d) the notice to produce motion, (e) the fresh evidence motion and (f) the substantive appeal. That is to say, what is disclosed is the total amount of time spent by each class of fee-earner for each of those six components, but not what was done or when it was done or by which particular individual it was done.

18. The second largest component of costs relates to the security for costs motion. That was heard and determined simultaneously with two other components (the stay motion and the notice to produce motion). It is said that the costs incurred in respect of the application for security for costs (where the applicants gained a favourable costs order) were $46,029.18, while the costs of the stay motion and the motion seeking to set aside a notice to produce (where no order was made as to costs) were $1,352 and $1,956 respectively. There is no way of testing how that apportionment – whereby 93% of the costs of the three motions determined on the same day was allocated to the only motion in respect of which a favourable costs order was obtained – reflects the work actually done.

19. Moreover, such limited material as has been adduced by the applicants suggests that the apportionment contains errors. The entirety of junior counsel’s fees of $12,789 for the security motion, the stay motion and the motion to set aside the notice to produce have been allocated to the security motion. Yet counsel’s fee notes include a single amount of $2,800 for the day of the motion, which has been wholly allocated to one of the motions heard on that day. Further, particular amounts referable to particular motions (including 5/04/24 “Draft short submissions regarding Salmon NTP motion; confer with M Elliott SC re same” and 22/04/24 “Review Salmon NTP submissions; attendances on N Curry re same”) are, on their face, attributable to the motion to set aside the notice to produce, and not to the security for costs motion. Yet it appears that they have not been allocated to those motions.

20. That may reflect a view that the order made on 9 May 2024 that “There shall be no order for costs on the appellants’ motions filed 12 March 2024 and 26 March 2024” did not stand in the way of those costs being included in the favourable order when the appeal was determined. That is not self-evident; an alternative, which is far from improbable, is that the intent was that the parties bear their own costs of the motion concerning the notice to produce, which was withdrawn at the hearing and not ultimately ruled upon: see Salmon v Albarran (No 2) [2024] NSWCA 99 at [3(1)].

21. It is impossible to determine the specific work done by members of the law firm, because no individual items have been supplied in evidence.

22. The latter point was advanced by Mr Salmon in submissions. It is true, as the applicants say in reply, that the process is necessarily broad brush, because to do otherwise would be to defeat the purpose of a gross sum costs assessment. Even so, in a case such as the present where on its face there seem to be errors in the allocation of costs, and where the ability to supply further evidence lies exclusively in the applicants’ camp, the Court is entitled to view with a measure of scepticism the improbable allocation which has been supplied.

23. It is not necessary to carry to their ultimate conclusion the points concerning the apportionment of costs of the security motion, the stay motion and the notice to produce motion (which, we reiterate, are some 21% of the total costs, and by far the largest component save for the appeal itself), because there is a separate problem of an entirely different nature. The applicants succeeded in obtaining an order that the appellants pay $35,000 by way of security for their costs of the appeal. But according to the applicants, the costs incurred of obtaining that order were $46,029.18. That is to say, the applicants would have been $10,000 better off not seeking and obtaining security.

24. One matter which contributed to the costs of the applicants’ motion for security for costs is that 8.7 hours were done by lawyers, 16.7 hours by associates, 17 hours by senior associates and 41.8 hours by partners. The fact that more time was spent by more senior practitioners on a prima facie straightforward interlocutory application is the reversal of the usual order; where possible, most work should be done by more junior practitioners. It is difficult to see that on assessment anything like 41.8 hours of a partner’s time at a partner’s hourly rate would be regarded as recoverable. Nothing has been put forward by the applicants who seek to avoid the process of assessment to explain why so much of the time of one or more partners was devoted to the application for security for costs.

25. Section 60 of the Civil Procedure Act 2005 (NSW) provides that “the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute”. We are conscious that the applicants obtained a favourable costs order on their application for security for costs. However, it is far from clear that there has been compliance with s 60, and we think it is likely that on assessment, a costs assessor would be entitled to have regard to the fact that the costs incurred were entirely needless, in the sense that the applicants would have been in a better financial position had they not made any such application.

26. We also note that while the evidence is that a law firm’s costs will ordinarily be reduced on assessment by 20%-30%, the approach adopted by the applicants is to reduce those costs by 20%.

27. A broad-brush approach is required, and it is also necessary to ensure that the benefit of a lump sum costs assessment does not penalise the party against whom costs have been ordered. Doing the best we can, and in particular bearing in mind the absence of any tangible benefit to the applicants in their successful application for security for costs, we would proceed as follows.

28. First, we start with the professional costs of $104,559. Noting that almost half were attributed to the security for costs motion, which achieved no useful end, and making a 25% discount reflecting that the assessment of party/party costs is less than a full indemnity, and applying a broad-brush approach, we would determine $50,000.

29. Secondly, we turn to disbursements of $121,587.97. We would apply a discount of 10%, once again reflecting that the assessment of party/party costs is less than a full indemnity, and we also bear in mind that some (at least $12,789, perhaps slightly more) of those costs were attributable to the security for costs motion. We determine an amount of $100,000.

14. Thirdly, as the applicants acknowledge, a further discount is required, to reflect the fact that there will be no assessment, and Mr Salmon is losing the opportunity of doing better on assessment than on the gross sum costs assessed by this Court. Another way of putting this is that the approach of this Court is not to do the best it can to determine the likely outcome of a costs assessment, but instead to determine an amount of which it can be said with a measure of confidence that any assessment would yield a greater amount. To that end, we apply a further 10% discount.

15. The result is 90% x ($50,000 + $100,000) = $135,000. That is some 60% of the total costs incurred. That may well be less than would be recoverable on assessment, but that reflects (a) the fact that the applicants seek a relatively large amount of costs for a two day appeal without disclosing details concerning aspects, especially the application for security for costs, which are prima facie problematic, and (b) any party seeking to obtain a gross sum costs assessment should not expect to recover as much as might be recovered on an assessment, since the purpose of the Court’s order is to avoid the burdensome aspects of assessment.

16. We order that the costs of the First, Second, and Fourth to Eighth Respondents of the Appeal be assessed in the amount of $135,000.

Other orders

33. Mr Salmon opposes the making of other orders pending the filing of an application for special leave and its determination. The applicants submit, and so far as we are aware the submission is correct, that no application for special leave has been filed. If one is ultimately filed it will be out of time. In any event, we do not regard the possibility of an application for special leave being filed as relevantly bearing on any aspect of the motion.

34. Separately, Mr Salmon says that until there has been some determination of the amount of costs, the security should not be released. That submission is wholly without merit. The assessable costs of the appeal very comfortably exceed $35,000 (counsel’s fees alone are more than triple the security ordered). In any event, the submission does not survive the order for a gross sum costs assessment.

35. The applicants seek an order in the form of a mandatory injunction, that the appellants pay $180,000 within 28 days. That is inappropriate. The effect of this Court’s order is that the judgment for costs may be executed in the same way as any other money judgment of the Court (by way of bankruptcy notice, statutory demand, garnishee, writ or other process of execution). However, non-compliance does not sound in contempt.

36. In addition to the gross sum costs assessment, the applicants seek an order that Mr Salmon and his company pay their costs of the motion. That order is antithetical to the very purpose of the application. It would create a fresh source of disputation, of precisely the same nature as that which has favoured the bringing of this application. We also bear in mind that, for the reasons given above, while the applicants have succeeded in obtaining a gross sum costs assessment, it is less than what was sought and there is much to be said for the parties bearing their own costs of the application. The gross sum assessed by this judgment is for the entirety of the applicants’ costs of the appeal.

37. Finally, the applicants seek an order that the stay granted by Stern JA in relation to orders made by the primary judge be lifted. The stay of some steps to enforce the order for costs at first instance was an order made in support of the appeal. Her Honour said as much expressly in [3(2)] of her reasons, which are available to construe the effect of the order. Nevertheless, it is as well that there be no scope for disputation about this, and so out of an abundance of caution, that order will be made.

38. The Court’s orders are:

1. Order that the costs of the First, Second, and Fourth to Eighth Respondents of the Appeal are assessed in the amount of $135,000.

2. Order that the amount of $35,000 held in Court as security for the costs of the First, Second, and Fourth to Eighth Respondents of the Appeal be released forthwith to the trust account of their solicitors and applied in partial discharge of the costs the subject of order 1.

3. In order to avoid doubt, order that the stay made by order 7 on 9 May 2024 is lifted.

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Decision last updated: 28 May 2025