Tam v Super Season Pty Ltd (No.2)

[2023] NSWSC 460

Supreme Court

New South Wales

Medium Neutral Citation:

Tam v Super Season Pty Ltd (No.2) [2023] NSWSC 460

Hearing dates:

27 April 2023

Date of orders:

05 May 2023

Decision date:

05 May 2023

Jurisdiction:

Common Law

Before:

Garling J

Decision:

See [47]

Catchwords:

COSTS — Civil Procedure Act 2005, s 98(4)(c) — application by plaintiff and first defendant for gross sum costs orders against the second defendant — where indemnity costs order had been previously been made against the second defendant — whether appropriate to make gross sum costs order — where second defendant did not oppose the making of a gross sum costs order but sought a discount on the claimed costs — gross sum costs order made — no discount applied on the claimed costs — order against the second defendant for costs of the motion seeking the gross sum costs order also made

Legislation Cited:

Civil Procedure Act 2005

Cases Cited:

Bell v Hartnett Lawyers (No.2) [2021] NSWSC 1270

Bobb v Wombat Securities Pty Ltd (No.2) [2013] NSWSC 863

Cabo Concepts Ltd v MGA Entertaining (UK) Ltd [2022] EWHC 2024 (Pat)

Coshott v Barry & Board [2017] NSWSC 1435

Hamod v State of NSW [2011] NSWCA 375

Hancock v Rinehart [2015] NSWSC 1640

Harrison & Anor v Shipp [2002] NSWCA 213

James v Australia & New Zealand Banking Group Ltd [2017] NSWCA 84

Tam v Super Season Pty Ltd [2022] NSWSC 1366

Texts Cited:

Not Applicable

Category:

Procedural rulings

Parties:

Ching Tam (P)
Super Season Pty Ltd (D1)
Victoria WorkCover Authority (D2)

Representation:

Counsel:
J McEnaney (P/Applicant)
M Hamdan (D1/Applicant)
I Griscti (D2/Respondent)

Solicitors:
Shanahan Tudhope Lawyers (P/Applicant)
Holman Webb Lawyers (D1/Applicant)
Landers (D2/Respondent)

File Number(s):

2020/56877

Publication restriction:

Not Applicable

JUDGMENT

1. In 2020, Ching Tam, the plaintiff, who resides in Malaysia, commenced proceedings for damages for negligence arising out of an accident which occurred on 13 July 2017 whilst he was picking fruit at an orchard owned and operated by Super Season Pty Ltd, the first defendant (“Super Season”).

2. The plaintiff sustained serious injuries in the accident and was rendered a C5 quadriplegic with a total loss of lower and upper limb function.

3. At the time of the accident, the plaintiff was employed to work for a labour hire company known as “Mr Handy Professor Pty Ltd”. By the time proceedings were commenced, that company had been deregistered. As a consequence of that deregistration, on 2 November 2020, the plaintiff’s Statement of Claim was amended by an order of this Court so as to add the Victorian WorkCover Authority (the “VWA”) as the second defendant. That was because the VWA held a workers compensation insurance policy for Mr Handy Professor Pty Ltd.

4. The plaintiff’s claim was fixed for a hearing to commence on 10 October 2022 with estimate of two weeks.

5. On 11 October 2022, for the reasons which I then gave, I adjourned the proceedings and vacated the 10-day hearing which had been fixed to commence at that time: see Tam v Super Season Pty Ltd [2022] NSWSC 1366.

6. I made an order that the VWA pay the costs of the plaintiff and Super Season “…of and occasioned by the adjournment” on an indemnity basis.

7. In that judgment at [23], in holding that the cause of the hearing not being able to proceed was the conduct of the VWA in two respects, I said:

“As a result of that application and the consequential steps taken by the plaintiff, which were reasonable, two days have been completely wasted, the balance of the days set aside have been lost, and the costs of preparation for this hearing at this time have been wasted.”

Notices of Motion

8. On 21 November 2022, Super Season filed a Notice of Motion in which it sought the following orders:

“(1)   In addition to the costs order made by Garling J on 11 October 2022:

(a) Pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW), the Second Defendant to pay the First Defendant the gross sum of $87,189.08 in satisfaction of the costs order made in favour of the First Defendant on 11 October 2022 (Gross Costs);

(b)   The Gross Costs are payable forthwith.

(2)    The Second Defendant pay the First Defendants costs of this motion.

(3)    Such other order or orders as the Court thinks fit.”

9. On 24 January 2023, the plaintiff filed a Notice of Motion which was to a similar effect as that of Super Season. It sought orders in identical terms save that the sum of money sought as the gross sum of costs was $207,421.30.

10. The two Motions came on for hearing and were heard by me together. The parties accepted that the evidence with respect to each Motion should be evidence in both Motions.

Evidence

11. The evidence for Super Season came from its solicitor, Mr Jan van de Poll. He swore three affidavits which addressed various factual matters. On 26 October 2022, Mr van de Poll sent an email to the solicitor for the VWA, which identified the amount of costs and disbursements incurred by his client and which he said were thrown away as a consequence of the adjournment.

12. By the time he came to swear his first affidavit of 21 November 2022, Mr van de Poll had reviewed those costs and had decided that one fee that was charged by counsel could be attributed to both the adjourned hearing and to a substantive issue which had arisen in the proceedings. Accordingly, he deducted the sum of $2,100 from the claim made by email. The resulting sum for costs and disbursements is that which was sought in the Motion.

13. Mr van de Poll described the costs in considerable detail in the annexures to his affidavit. The professional costs were those associated with:

1. issuing subpoenas;

2. the preparation of Court Books which will ultimately need to be updated with further information, repaginated and reprinted;

3. perusing, considering and preparing submissions and chronologies and damages schedules, all of which would now need to be prepared again;

4. appearing at each of the days of the hearing; and

5. providing his client with advice about the adjournment together with ensuring that all witnesses who had been retained were fully informed.

14. He also included sums by way of disbursements for counsel’s fees, witness travel and accommodation, printing and filing fees.

15. He said in his affidavit that these were all costs which were thrown away and that they had been paid by his client.

16. Mr van de Poll was not cross-examined about the contents of this affidavit, nor was any evidence led by the VWA to contradict it.

17. In an affidavit sworn shortly before the proceedings, Mr van de Poll set out details with respect to the costs of the Notice of Motion which were being claimed.

18. The plaintiff’s evidence comprised three affidavits by Mr Iain Miller, the solicitor acting for him. I also note that Mr Miller was not required for cross-examination and no evidence was led by the VWA to contradict anything which Mr Miller said.

19. Mr Miller had also sent an email to the solicitor for the VWA identifying the costs of and occasioned by the adjournment. Attached to that email was an itemised account for all of the work which had been done by him and his associates in the preparation of the plaintiff’s matter for hearing. The detail provided set out various hourly rates for the items which had been claimed. As well, he annexed copies of various invoices and the like which he had received with respect to disbursements.

20. He had not received a response to that email by the time he filed the Notice of Motion.

21. At that stage, the total of the costs and disbursements was $207,421.30 (inclusive of GST).

22. In a later affidavit, Mr Williams also set out the costs incurred in bringing the Motion.

Submissions

23. Super Season drew attention to the provisions of s 98(4)(c) of the Civil Procedure Act 2005 and noted that the Court has a discretion (at any time before costs are referred for assessment) to order that there be a specified gross sum for costs instead of ordering that the costs be assessed.

24. Super Season, by reference to Hamod v State of New South Wales and Anor [2011] NSWCA 375 at [793], submitted that the touchstone of an award of gross costs required that the Court be confident that the estimate of costs provided was logical, fair and reasonable. It further submitted that an assessment of gross sum costs by the Court does not envisage a process similar to a traditional assessment of costs but, rather, is an attempt by the Court to fix a sum broadly having regard to the information before it.

25. Super Season drew attention to Harrison & Anor v Shipp [2002] NSWCA 213 at [21] and submitted, correctly, that the Court’s discretion was not confined and could be exercised whenever the circumstances warranted it. I note that in James v Australia & New Zealand Banking Group Ltd [2017] NSWCA 84 at [3], Basten JA pointed out that the quantification of any costs, particularly with respect to the type of costs with which this Court is being asked to deal, are ancillary to the primary issues in dispute and, accordingly, should be resolved with as little technicality and expense as reasonably practicable.

26. In particular, Super Season drew attention to the judgment of Brereton J (as his Honour then was) in Hancock v Rinehart [2015] NSWSC 1640 (“Rinehart”) at [57]ff where his Honour dealt with the issue of whether, whilst attempting to approach the matter in a broad-brush way, a discount would ordinarily be applied. He said:

“57   While it is undoubtedly the usual practice of the court when making a lump sum costs order to apply a discount for the reasons mentioned, that does not mean that the Court must apply a percentage discount to the sum sought by the successful party, and the Court "must be astute not to cause an injustice to the successful party" by applying "an arbitrary 'fail safe' discount on the costs estimate submitted to the court". Thus if the court can be confident that there is little risk that the sum includes costs that might be disallowed on assessment, the case for a discount is seriously undermined.

58   Where a gross sum is assessed on an indemnity basis, and there is no evidence of unreasonableness, it may be inappropriate to apply any discount, although one may nevertheless be appropriate if there is evidence that the successful party “errs on the side of excessiveness [as in excessive use of legal services]”.” (emphasis added) (citations omitted)

27. Super Season submitted that in the absence of any evidence at all about the lack of reasonableness of any costs a part of the sum claimed, then the Court should make a costs order in accordance with the sum claimed.

28. The plaintiff adopted the submissions of Super Season and noted that it was largely in the same position as Super Season.

29. The plaintiff drew attention to the fact that there was no requirement upon a party seeking a gross sum costs order to produce or rely upon expert evidence: see Bell v Hartnett Lawyers (No.2) [2021] NSWSC 1270 at [101].

30. The plaintiff further submitted that the Court was entitled to take into account its own observations of the proceedings which had led to the gross sum costs order and the Judge’s own experience as to what was a fair and reasonable sum to be awarded: see Bobb v Wombat Securities Pty Ltd (No.2) [2013] NSWSC 863. The plaintiff also drew attention to a decision of Fagan J where indemnity costs had been ordered and no discount had been made to account for the risk of costs being disallowed during an assessment process: see Coshott v Barry & Board [2017] NSWSC 1435.

31. In the course of written and oral submissions, the plaintiff, correctly in my view, abandoned any claim to recover as part of the gross sum any amount representing cancellation fees which had been charged by both senior and junior counsel. The plaintiff noted that senior counsel no longer pressed a claim for cancellation fees and although the plaintiff’s counsel initially, in oral submissions, pressed junior counsel’s cancellation fees, that claim was abandoned in the course of exchanges between the Bench and the Bar table.

32. The VWA, in submissions handed up on the morning of the proceedings, did not oppose the Court making a gross sum costs order and further did not oppose an order that the costs should be payable forthwith.

33. For various reasons, which can be shortly summarised, the VWA contended that whilst the hourly rates charged by solicitors and counsel, and the disbursements incurred by third party providers, were of themselves reasonable, the Court should conclude that on the probabilities that not all of the costs claimed were wasted and that, accordingly, depending on when the costs were incurred, should apply a varying discount of between 30% and 50%.

34. Counsel sought to illustrate the force of such submission by reference to a decision of the United Kingdom High Court in Cabo Concepts Ltd v MGA Entertaining (UK) Ltd [2022] EWHC 2024 (Pat) (“Cabo”), where a deduction of 45% had been made for costs wasted by a late adjournment of a hearing. Counsel submitted that Cabo was authority for the proposition that a deduction of that percentage amount was appropriate, even where indemnity costs had been awarded, to protect against overestimating what costs were in fact thrown away.

35. I note that that decision included remarks which the plaintiff and first defendant drew attention to in their replies.

36. Broadly speaking, the VWA submitted that the Court should take notice of the fact that not all costs would be wasted and that, accordingly, a broad‑brush discount should be applied.

Discernment

37. I reject the submissions of the VWA for these reasons. First, this is an application with respect to the assessment of gross sum costs in circumstances where the relevant costs order is one that requires the VWA to pay costs on an indemnity basis. Secondly, the VWA has put on no evidence at all to suggest that the costs charged by either Super Season or the plaintiff were unreasonable. Thirdly, after inspecting the invoices for the costs ultimately charged, the Court was satisfied that those costs were on their face reasonable and referred to items which would need to be replicated when the matter was again fixed for hearing. Fourthly, two experienced litigation solicitors swore that the costs were thrown away, or wasted, and their opinions were not challenged in any way, either by cross‑examination or by evidence. And, fifthly, in the Court’s own knowledge and experience, it was evident there were particular factors in this case suggesting that significant steps in preparation for the (ultimately vacated) hearing would have taken place, and that those steps would need to be replicated for any future hearing. Those factors were that the hearing was fixed for a relatively lengthy period of 10 days and involved some difficult issues of the law of negligence and of the law relating to damages, and that the plaintiff resided overseas and was seriously injured.

38. I am also unpersuaded that Cabo is an authority for any legal principle which may apply in the circumstances here. First, it deals with a different costs order and costs regime. Costs of an adjournment had been ordered to be paid on an indemnity basis. The order sought was that the claimant, Cabo “… be entitled to an order for costs on account in relation to its costs thrown away by reason of the adjournment and, if so, at what level”. This procedure enabled the Court to assess, and order, that a sum be paid, on account, in advance of a final determination by the costs assessment process, of the actual costs owed. Secondly, the Court was not making a summary determination of the amount of costs thrown away, which is, in substance, the issue being determined here. Thirdly, the Court found that it did not have a “… genuine or realistic estimate … as to the level of costs that have been wasted by reason of the adjournment of the trial”. Fourthly, her Honour approached her determination by accepting that she was estimating the appropriate costs sum, and by accepting that she was obliged by authority to allow an appropriate margin for error to avoid, amongst other things, any difficulties the paying party would have in recovery in the event of an overpayment. Fifthly, her Honour specifically noted that she had “little doubt” that the actual sum for wasted costs would “… exceed, probably to a significant extent, …” the figure she ordered to be paid.

39. This decision is of no relevance at all to the exercise of my discretion in this case. As is obvious, in this Court, the fixing of a gross sum costs order is not a provisional exercise which is subject to a final determination in due course. Rather, it is a final determination. As well, I have evidence of a kind which Mrs Justice Joanna Smith in Cabo did not have, namely a careful assessment of the costs actually thrown away. I note again that this evidence was unchallenged.

40. Finally, even if it was an entirely comparable exercise of discretion (which it was not), the deduction of 45% would be inconsistent with the principled approach set out by Brereton J in Rinehart.

41. Ultimately, counsel for the VWA accepted that the proposed percentage deductions which he proposed were not based on any evidence or any established principle in NSW which was binding upon me. Rather, they were figures that were advanced based on “general experience”. To me, they seemed to be figures simply plucked out of the air.

42. I am wholly unpersuaded that any deduction whatsoever ought be made from the sums which I have concluded are properly claimed by the plaintiff and first defendant.

43. Accordingly, I will allow the sums claimed, namely:

1. First defendant - $87,189.08;

2. Plaintiff - $149,781.30.

Costs of the Motion(s)

44. The defendant did not submit that the plaintiffs should not have their costs of the Motions.

45. This is a good example of where the Court should exercise its discretion to order a gross sum costs order of the costs of the Motion and to order that it be payable forthwith.

46. The sums claimed by the first defendant and plaintiff were reasonable. Accordingly, I allow their claims in full. Those sums are:

1. First defendant - $8,226.50;

2. Plaintiff - $8,965.00

Orders

47. I make the following orders:

1. Order that the Victorian WorkCover Authority pay the following sums by way of gross sum costs to Super Season Pty Ltd:

1. In respect to the adjournment of the proceedings: $87,189.08; and

2. In respect of the Notice of Motion filed 21 November 2022: $8,226.50.

2. Order that the Victorian Workcover Authority pay the following sums by way of gross sum costs to Ching Tam:

1. In respect of the adjournment of the proceedings: $149,781.30; and

2. In respect of the Notice of Motion filed 24 January 2023: $8,965.00.

3. Order that the costs set out in Orders 1 and 2 be payable forthwith.

4. Liberty to apply.

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Decision last updated: 26 June 2023