Sweeten v Haggerty (No 2)

[2025] NSWSC 897

Supreme Court

New South Wales

Medium Neutral Citation:

Sweeten v Haggerty (No 2) [2025] NSWSC 897

Hearing dates:

On the papers

Date of orders:

12 August 2025

Decision date:

12 August 2025

Jurisdiction:

Common Law

Before:

Payne JA

Decision:

(1)   Set aside order 2 made on 27 June 2025 and in lieu thereof order:

(a)   the plaintiffs pay the Trustees costs of the application for leave to appeal:

(i)   incurred on or before 7 April 2025 on the ordinary basis; and

(ii)   from 8 April 2025 on an indemnity basis.

(2) Order pursuant to s 98(4) of the Civil Procedure Act2005 (NSW) that the plaintiffs pay the Trustees costs of the application for leave to appeal, as ordered on 27 June 2025, in the gross sum of $50,000.

(3) Order pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW) that the plaintiffs pay the Trustees costs of the Notice of Motion, filed 10 July 2025, in the gross sum of $8,000.

Catchwords:

COSTS — special costs order — offer of compromise by defendants not accepted — Uniform Civil Procedure Rules 2005 (NSW) r 20.26

COSTS — costs of appeal — consequence of offer of compromise made prior to proceedings — indemnity costs — Uniform Civil Procedure Rules r 42.15A

COSTS — costs of appeal and notice of motion — ordered on a gross sum basis — Civil Procedure Act 2005 (NSW) s 98(4)(c)

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Legal Profession Uniform Law Application Act 2014 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1

Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119

Beau Timothy John Hartnett trading as Hartnett Lawyers v Anthony Robert Bell as Executor of the Estate of the late Mabel Dawn Deakin-Bell (No 2) [2023] NSWCA 311

Chalik v Chalik [2025] NSWCA 136

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225

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

Hamod v New South Wales [2011] NSWCA 375

Hancock v Rinehart (Lump sum costs) [2015] NSWSC 1640

Harrison v Schipp (2002) 54 NSWLR 734 at 743; [2002] NSWCA 213

Kostov v Zhang (No 2) [2016] NSWCA 279

Leach v Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391

Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121

Snowy Mountains Grammar School Ltd v Adventurer AWD Pty Ltd [2022] NSWSC 53

Sweeten v Haggerty [2025] NSWSC 673

Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2014] NSWCA 99

Category:

Costs

Parties:

Benjamin Michael Sweeten (First Plaintiff)
Varvara Angelique Sellies (Second Plaintiff)
Margaret Haggerty (First Defendant)
Patricia Anne Hume (Second Defendant)
Francis William Johnson (Third Defendant)

Representation:

Counsel:
Self-represented (Plaintiffs)
M Castle (Defendants)

Solicitors:
Self-represented (Plaintiffs)
Fahey Rosenblum Lawyers & Mediators (Defendants)

File Number(s):

2025/00094379

Publication restriction:

None

 Decision under appeal 

Court or tribunal:

Review Panel under s 82 of the Legal Profession Uniform Law Application Act 2014 (NSW)

Date of Decision:

13 November 2024

JUDGMENT

1. This is a case about the costs of an unsuccessful challenge to decisions of a Review Panel about an assessment of costs by a costs assessor. On 27 June 2025, I delivered judgment in Sweeten v Haggerty [2025] NSWSC 673. In what follows, familiarity with that judgment is assumed. I will continue to refer to Mr Sweeten and Ms Sellies as the plaintiffs, and to the defendants in that case as the Trustees. The orders I made on 27 June 2025 were:

1. Leave to appeal out of time under s 89(1) of the Legal Profession Uniform Law Application Act 2014 (NSW) refused.

2. Plaintiffs to pay the defendants costs of the applications for leave to appeal.

2. Without rehashing all of the relevant history, in 2023 a costs order was made by Rothman J in the Common Law Division in proceedings between the Trustees and the plaintiffs. On 18 May 2024, those costs were assessed by a costs assessor. On 13 November 2024, a Review Panel affirmed the determination of the Costs Assessor and found that $185,225.28 was payable by the plaintiffs to the Trustees. On 10 March 2025, almost four months after the decision of the Review Panel was delivered, the plaintiffs filed a summons in this Court. On 17 June 2025, I heard the summons and on 27 June 2025 I delivered my reasons refusing the plaintiffs leave to appeal out of time.

3. On 10 July 2025, a Notice of Motion pursuant to UCPR r 36.16 was filed by the Trustees seeking the following orders:

(1)   ORDER THAT, order 2 made by the Court on 27 June 2025, that the plaintiffs to pay the defendants costs of the applications for leave to appeal, be set aside.

(2)   [ORDER] THAT, in lieu of order 2 made by the Court on 27 June 2025, the plaintiffs pay the defendants costs of the applications for leave to appeal on the ordinary basis to 7 April 2025, and on the indemnity basis thereafter.

(3) ORDER THAT, pursuant to section 98(4)(c) of the Civil Procedure Act 2005 (NSW), instead of an assessment of the costs order referred to in prayer 2 above, there be specified a gross sum of $57,320.06 or such other amount as to this Honourable Court may seem fit.

(4)   ORDER THAT the plaintiffs pay the defendants' costs of and incidental to this notice of motion.

(5) ORDER THAT, pursuant to section 98(4)(c) of the Civil Procedure Act 2005 (NSW), instead of an assessment of the costs order referred to in prayer 4 above, there be specified a gross sum of $10,432.00 or such other amount as to this Honourable Court may seem fit.

(6)   Such further or other order as to this Honourable Court may seem fit.

4. The following evidence was filed by the Trustees in support of the Notice of Motion:

1. Affidavit of Charlotte Morson dated 8 July 2025;

2. Affidavit of Murray Fahey dated 9 July 2025; and

3. First and second affidavits of Kathy Dufty both dated 5 August 2025.

5. Evidence filed by the plaintiffs comprised:

1. An undated affidavit apparently jointly authored by Mr Sweeten and Ms Sellies which was sent via email to my associate and the Trustees on 30 July 2025.

6. I have taken all of that evidence into account.

Findings based on the evidence

7. I find that on 7 April 2025, the Trustees made an Offer of Compromise pursuant to UCPR r 20.26 as follows:

DATE OF OFFER

Date made 7 April 2025

TERMS OF OFFER

To the Plaintiffs,

TAKE NOTICE that the Defendants offer to compromise the whole of this proceeding as follows:

1. The Plaintiffs pay the Defendants the sum of $150,000.

2. There be no order for costs, with the intent that each party bear their own costs in the proceedings.

THIS OFFER is served in accordance with Order 20.26 of the Uniform Civil Procedure Rules 2005 and remains open for a period of 28 days after service of this notice.

8. The offer provided for payment of $150,000 to settle the proceedings and with no order as to costs. It will be recalled that unless set aside, the effect of the Review Panel’s decision was that the plaintiffs would be liable to pay the Trustees $185,225.28 plus costs. That offer remained open for 28 days following service. I find that the plaintiffs did not accept the offer.

9. I accept, in general terms, the evidence of Ms Morson about the relevant costs incurred by the Trustees. I note the various calculations and deductions made by Ms Morson in identifying the appropriate figure of $57,320.06 for the costs of the trial and $10,432 for the costs of the Notice of Motion. Ms Morson’s approach was thorough and professional. I intend no criticism of Ms Morson in not ultimately adopting her figures when identifying an award of gross sum costs. This is because I have applied the appropriate “broad brush” assessment approach warranted in cases such as these. There is and can be no “line-by-line” review in a case such as the present. It is relevant and I take into account that the plaintiffs are, at present, self-represented. Considerable caution is warranted in such a case in accepting essentially unchallenged evidence about the likely amount of a costs award following an assessment.

10. I accept Ms Morson’s evidence that the amount actually spent by the Trustees on the trial before me was $61,831.77. I accept that in an assessment of costs it is likely that the hourly rates charged by barristers and solicitors to the Trustees would not be reduced as they fall within the Cost Assessment Rules Committee Guidelines.

11. I accept Ms Morson’s evidence that in an assessment in relation to costs awarded on an indemnity basis, Professional Fees are typically reduced by a total of approximately 5% to 15%, and Counsel Fees are typically reduced by approximately 0% to 10%. Whilst Ms Morson has helpfully calculated the indemnity costs submitted to be payable based upon an assumption about the appropriate overall reduction (5% for each of Professional Fees and Counsel Fees), the amount of an overall reduction is a matter for me and I do not accept that 5% for each of Professional Fees and Counsel Fees is an appropriate figure for a reduction of each of those fees when fixing a gross sum costs order on an indemnity basis in this case.

12. As to the costs of the gross sum costs application, I generally accept Ms Morson’s evidence that the costs incurred by the Trustees in making the application for indemnity costs and a gross sum costs order were likely to be $10,432. This figure was adopted into the proposed orders sought by the Trustees. The amount of an overall reduction to this figure when fixing a gross sum costs order, and whether it is on an indemnity basis in this case, is a matter for me.

13. I accept the evidence in the Dufty affidavits of 4 August 2025 that the actual costs incurred by the Trustees were slightly more than the estimates provided by Ms Morson and note the Trustees have not sought to increase the amount of the claim. I find that the actual cost of Ms Morson’s report was $3,432.

14. As to the unsworn “affidavit” filed by the plaintiffs, most is essentially in the form of a submission, which I will address below. It may be correct that the plaintiffs sent an offer to the Trustees in December 2024 but there is no evidence of the terms of that offer or any conditions it contained. Even if made, it was said to have been for an amount less than the plaintiffs have been ordered to pay and is thus irrelevant. I reject the plaintiffs’ assertion (if it is intended to be evidence) that the Trustees “did not make any efforts to reach a compromise” before filing this Notice of Motion. The assertion is falsified by the Trustees’ 7 April 2025 offer.

15. I reject the assertion that an unidentified number of “senior counsel” told the plaintiffs that the Trustees’ solicitors had engaged in unidentified “fraudulent activity”. No matter how strongly a litigant feels about their case, it is never appropriate to make completely unsupported allegations of fraud.

16. As to the alleged terms of the emails set out in the affidavit, both are almost certainly privileged and inadmissible in the same way as the email relied upon by the plaintiffs in the principal proceedings. In any event, even if admissible I do not conclude from the supposed terms of either email that any matter of relevance to the present applications was discussed. I reject the interpretation offered by the plaintiffs of those emails as somehow conveying impropriety. I reject the suggestion that there is any evidence that the Trustees or their solicitor have acted for an ulterior purpose related to other proceedings.

17. I reject the claim that $10,000 was claimed for Ms Morson’s report or that the work she performed in preparing her report was unnecessary. As I have found, the actual cost to the Trustees of Ms Morson’s report was $3,432. That report was, as I have said, very helpful in assisting the Court to determine this application.

Submissions

18. The Trustees submitted that on the basis of the plaintiff’s rejection of the offer of compromise issued on 7 April 2025 an award of indemnity costs from 8 April 2025 should be made. It was submitted that there was no reason for the Court to otherwise order. The plaintiffs submitted that the 7 April 2025 offer was not an offer of compromise within the meaning of UCPR r 20.26 as it was not “a genuine compromise directed to the issues in dispute at the time”. In addition, the plaintiffs submitted that no basis to award indemnity costs had been shown. Indemnity costs, it was submitted, require conduct that is “improper or unreasonable”, referring to Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801.

19. As to a gross sum costs order, the Trustees submitted that in accordance with the relevant legal principles this is a case where the Court should exercise its undoubted discretion under s 98(4)(c) of the Civil Procedure Act 2005 (NSW). The Trustees submitted that a gross sum costs award should also be made for the costs of the Notice of Motion. As to quantum, the Trustees relied upon the evidence of Ms Morson in claiming $57,320.06 for the costs of the trial and $10,432 for the costs of the motion.

20. The plaintiffs, who were self-represented on this application, submitted:

The Defendants' application for indemnity costs be dismissed;

No gross sum costs order should be made;

The amount claimed for Ms Charlotte Morson be wholly disallowed;

Alternatively, costs be reserved or referred to assessment under the Legal Profession Uniform Law Application Act 2014 (NSW).

21. The plaintiffs again referred to assertions, for which no evidence was offered, of alleged impropriety on the part of the Trustees’ solicitors. The plaintiffs also referred to “advice” allegedly given by unidentified senior counsel that they should persist in conducting their case rather than accept the Trustees’ offer of settlement.

22. The plaintiffs submitted that “there is a serious dispute as to the necessity and propriety of specific disbursements (e.g. Morson)”. The plaintiffs submitted that the application they submitted was neither unreasonable nor vexatious and did not warrant an order for indemnity costs.

Consideration – Indemnity costs

23. The Offer of Compromise was properly made under r 20.26 of the UCPR and was a genuine compromise. It is not correct that an award of indemnity costs always requires conduct that is improper or unreasonable of the kind addressed in Colgate-Palmolive Co v Cussons Pty Ltd. As in this case, rejection of an offer of compromise properly made under r 20.26 the UCPR may also have that consequence.

24. At the time the offer was made, the Trustees had already succeeded before a costs assessor and a Review Panel. The actual amount to which the Trustees would be entitled if successful had been identified. The plaintiffs were at that time legally represented and I infer that they were aware that the Trustees had already incurred significant costs in preparing for the hearing. The Trustees were agreeing to forego an amount of substance, not to mention the additional costs that the Trustees would incur for the duration of the offer. In the present case, the Offer of Compromise constituted a genuine compromise.

25. Rule 42.15A of the UCPR provides that, where a defendant’s formal offer of compromise is unreasonably rejected by the plaintiff, and the defendant obtains judgment which is no less favourable than the terms of the offer, then, “unless the court orders otherwise”, the defendant is entitled to: (i) costs on the ordinary basis up to the time that the offer was made; and (ii) costs on an indemnity basis thereafter. Satisfaction of the elements in UCPR r 42.15A therefore creates a “prima facie entitlement to indemnity costs” from the date of the offer: Leach v Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [40]; Houghton v Potts (No 3) [2023] NSWSC 69 at [16]; Chalik v Chalik [2025] NSWCA 136 at [136]. The unsuccessful party bears the onus of persuading the Court that indemnity costs should not be ordered: Leach at [29]; Snowy Mountains Grammar School Ltd v Adventurer AWD Pty Ltd [2022] NSWSC 53 at [4].

26. I reject the plaintiffs’ submission that an order for indemnity costs should not be made here. It is not correct that the offer was somehow deficient in being limited to “a financial claim only”. This was only ever a case about costs. The fact that the plaintiffs sought to re-open the determination and have another determination made did not alter the nature of the case. It was only ever a case about a financial claim. The offer dated 7 April 2025 was an offer to resolve that financial claim. It is not to the point that the plaintiffs sought in the litigation, however misguidedly, to request more time and to have a re-opened costs application determined. What is relevant is that, as a result of the Court’s decision, the plaintiffs would have been much better off if they had accepted the Trustees’ offer which was much more favourable than the outcome they achieved.

27. The present offer attracts the operation of r 42.15A and there is no reason to “order otherwise”. The Trustees are entitled to an award of indemnity costs as and from 8 April 2025.

Consideration – Gross sum costs order

28. The relevant provision of the Civil Procedure Act affording the court power to make a specified gross sum in lieu of assessed costs is s 98(4):

98   Courts powers as to costs

[…]

(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.

29. A lump sum costs order can be made any time before costs are referred for assessment. Section 98 confers a wide discretion on the Court. The principles were stated by Beazley JA (as her Excellency then was) in Hamod v New South Wales [2011] NSWCA 375 at [813]-[820], see also Gabrielle v Abood(No 4) [2023] NSWCA 100 at [6] per Bell CJ, Kirk JA, and Adamson JA.

30. In Hamod, Beazley JA at [813] identified some of the factors which merit particular consideration, including the relative responsibility of the parties for the costs incurred, 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.

31. The power to award a lump sum should only be exercised when the Court considers that it can do so fairly between the parties and where an appropriate sum can be determined from the available materials: Harrison v Schipp (2002) 54 NSWLR 734 at 743; [2002] NSWCA 213 at [21]-[22] per Giles JA; Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 123; [1995] FCA 350 per Hogan J; Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2014] NSWCA 99 at [28]-[29] per Basten, Gleeson, and Leeming JJA.

32. A “broad brush” approach is appropriate when lump sum costs are ordered. To require the same or similar level of detail as in a formal costs assessment would defeat the purpose of the lump sum order: Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1 at 5; [1999] FCA 673 per O’Loughlin J; Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [7] per JC Campbell AJA.

33. The present case is an appropriate case for the making of a gross sum costs order. It is overwhelmingly in the interests of justice that disputes about the assessment of costs between these parties be brought to an end. Protracted litigation about costs such as in this case attracts the exercise of judicial discretion under s 98(4)(c) of the Civil Procedure Act where it is desirable to avoid the expense, delay and aggravation likely to be involved in further contested costs assessments.

34. Requiring the Trustees to spend time and money on a further costs assessment, in circumstances where the subject of the dispute that incurred these costs was itself a costs assessment (and decision of a Review Panel and application to this Court), would almost certainly invite further delay, disruption, and further expenses incurred by both sides. It is in exactly this kind of case that the discretion granted by s 98(4)(c) should be exercised. The plaintiffs’ suggested course of a further costs assessment (and inevitable review) is antithetical to the overriding purpose in Part 6 of the Civil Procedure Act.

29. The courts have typically applied a discount in assessing costs on a gross sum basis: Hamod v New South Wales at [814], see also Beau Timothy John Hartnett trading as Hartnett Lawyers v Anthony Robert Bell as Executor of the Estate of the late Mabel Dawn Deakin-Bell (No 2) [2023] NSWCA 311 at [47]-[48] per Bell CJ and Adamson JA, but it is also a matter of discretion with consideration paid to the attendant circumstances, including whether those costs are awarded on an ordinary or indemnity basis: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 165; [1995] FCA 350 and Hancock v Rinehart [2015] NSWSC 1640 per Brereton J.

30. I have accepted Ms Morson’s evidence that in the present case no invoiced items were out of the scope of the relevant cost order, the rates charged are unlikely to be reduced, and that there is only a very limited amount of overlap between legal practitioners employed by the Trustees. I reject the plaintiffs’ submission that any of the work completed by Mr Fahey on behalf of the Trustees was not properly conducted or was duplicated, much less do I accept any of the intemperate and unproven allegations of fraud. No evidence in support of these assertions was led.

31. Having made all of these findings, however, does not lead me to accept the amount suggested by the Trustees as the appropriate amount of a gross sum costs order. As the Court of Appeal said in Kostov v Zhang (No 2) [2016] NSWCA 279:

[40]   That is not to say, however, that in adopting a “broad bush” approach, the Court will necessarily adopt all of the evidence of likely quantum of recovery following assessment, even where that evidence is not directly challenged. This is even more so when the party liable to pay the costs is unrepresented. (emphasis added)

38. The same “broad brush” approach is appropriate here. I propose to apply a global reduction of 15% for Professional Fees and 10% for Counsel Fees, being the top of the range identified by Ms Morson. In addition, and applying the relevant “broad brush” approach which is appropriate, even more so when the party liable to pay the costs is unrepresented, I propose to apply a further global deduction in favour of the plaintiffs in fixing the amount of the gross sum costs order.

39. As such, I would make an order for a gross cost sum, on the basis that costs are awarded on an indemnity basis from 8 April 2025, of $50,000.

Consideration – Costs of this Notice of Motion

40. For essentially the same reasons, a gross sum cost order should be made for the costs of the Notice of Motion. Given the regrettable history of these proceedings, any further costs assessment would almost certainly invite further delay, disruption, and further unnecessary expenses incurred by both sides.

41. I reject the plaintiffs’ submission that the fees incurred in relation to Ms Morson’s report are not recoverable as they were not properly incurred because “the involvement of a cost consultant to validate previously incurred legal fee is neither novel nor necessary”. As I have said, the actual cost to the Trustees of Ms Morson’s report was $3,432. That report was, as I have concluded, very helpful in assisting the Court to determine this application and I will allow it as a necessary disbursement in full.

42. As to the amount of the order, the amount sought in the Notice of Motion by the Trustees is slightly lower than the costs they actually incurred. I note, however, that no discount at all has been applied to the $10,432 figure sought. That is, indemnity costs are sought both for the indemnity costs application and the gross sum costs application. I am prepared to calculate the gross sum order on an indemnity basis to the extent that it covers the application for indemnity costs but not to the extent that it comprises a gross sum costs application. The costs of a gross sum costs application are not a necessary consequence of the order for indemnity costs based on the Offer of Compromise I have made, and I would “otherwise order” in relation to those costs.

43. Doing the best that I can, given that it is unclear how much of Counsel Fees and Professional Fees should be apportioned between the claim for indemnity costs and the application for a gross sum costs order, and applying the appropriate “broad-brush” approach identified in Kostov v Zhang (No 2), I award a gross lump sum of $8,000 for costs incurred in this Notice of Motion.

Conclusion and Orders

44. For the foregoing reasons I make the following orders:

1. Set aside order 2 made on 27 June 2025 and in lieu thereof order:

1. the plaintiffs pay the Trustees costs of the applications for leave to appeal:

1. incurred on or before 7 April 2025 on the ordinary basis; and

2. from 8 April 2025 on an indemnity basis.

2. Order pursuant to s 98(4) of the Civil Procedure Act2005 (NSW) that the plaintiffs pay the Trustees costs of the application for leave to appeal, as ordered on 27 June 2025, in the gross sum of $50,000.

3. Order pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW) that the plaintiffs pay the Trustees costs of the Notice of Motion, filed 10 July 2025, in the gross sum of $8,000.

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Decision last updated: 12 August 2025