The Owners - Strata Plan 84778 v Modern Construction Group Pty Ltd

[2021] NSWSC 539

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

The Owners - Strata Plan 84778 v Modern Construction Group Pty Ltd [2021] NSWSC 539

Hearing dates:

On the papers

Date of orders:

11 May 2021

Decision date:

17 May 2021

Jurisdiction:

Common Law

Before:

Stevenson J

Decision:

Defendants’ costs specified as gross sums for the purpose of the orders made on 30 April 2021 as $30,000 for the first and third defendants and $28,000 for the second defendant

Catchwords:

COSTS – Costs assessment – Determination – Order for costs to be paid forthwith and specified as a gross sum – Determination of the gross sum

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Cases Cited:

Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1; [1999] FCA 673

Beach Petroleum NL v Johnson (1995) 57 FCR 119

Hadid v Lenfest Communications Inc [2000] FCA 628

Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213

Hamod v New South Wales [2011] NSWCA 375

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

Category:

Costs

Parties:

The Owners – Strata Plan 84778 (Plaintiff)
Modern Construction Group Pty Ltd (First Defendant)
Dragonwin (Aust) Investments Group Pty Ltd (Second Defendant)
Modern Construction and Development Pty Ltd (Third Defendant)
Advanced Weather Proofing Pty Ltd (Fourth Defendant)
Rezcon Pty Ltd (Fifth Defendant)
CME Building Services Design Pty Ltd (Sixth Defendant)
Lion Plumbing Pty Ltd (Seventh Defendant)

Representation:

Counsel:
J J Young with Parrish (Plaintiff)
A M Hochroth (First and Third Defendants)
F P Hicks SC (Second Defendant)

Solicitors:
Sparke Helmore (Plaintiff)
Colin Biggers & Paisley Pty Ltd (First and Third Defendants)
Hicksons Lawyers (Second Defendant)

File Number(s):

2020/339784

Judgment

1. On 30 April 2021, I heard three Notices of Motion. The first was the plaintiff’s Notice of Motion of 26 March 2021 seeking leave to amend its Technology & Construction List Statement in accordance with a document circulated to the parties earlier that month. The other two motions, both filed on 29 March 2021, were the first and third defendants’, and the second defendant’s motions to have the proceedings dismissed or, alternatively, the current pleadings struck out.

2. I refused to grant the plaintiff leave to amend its List Statement in the form proposed and made directions for the plaintiff to circulate a further proposed form of List Statement.

3. I did not otherwise deal with the defendants’ notices of motion.

4. I ordered that the plaintiff pay the defendants’ costs of their motions to date and that those costs be payable forthwith and specified as a gross sum under s 98(4) of the Civil Procedure Act 2005 (NSW).

5. I made directions for the exchange of submissions and evidence on that question.

6. As Mr Hochroth, for the first and third defendants, pointed out, in cases such as this:

1. the Court may “apply a much broader brush than would be applied on taxation”; [1]

2. a gross sum costs order is intended to be an alternative to assessed costs and it is not necessary that a meticulous item by item examination be engaged in; [2] and

3. the approach taken to estimate the costs should be “logical, fair and reasonable”. [3]

   1. Hadid v Lenfast Communications Inc [2000] FCA 628 at [35] (Lehane J), cited in Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at [22] (Giles JA).

   2. Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [7] (JC Campbell AJA); see also Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1; [1999] FCA 673 at 5 (O’Loughlin J).

   3. Beach Petroleum NL v Johnson (1995) 57 FCR 119 at p 123 (von Doussa J), cited in Hamod v New South Wales [2011] NSWCA 375 at [793] (Beazley JA; Giles and Whealy JJ agreeing).

7. The cost estimates that I have received from the defendants include all the costs they have actually incurred since filing their motions of 29 March 2021.

8. They include costs incurred before 29 March 2021 and after the date of the hearing before me. To that extent they should not be taken into account on this exercise.

9. Further, the costs the defendants have incurred on their motions to date, which focus on the adequacy of the plaintiff’s currently pleaded case, also necessarily related to the amendment the plaintiff proposed to make to its pleading.

10. Therefore, adopting the “impressionistic” approach required in cases like this, [4] some reduction of the actual costs incurred between 29 March 2021 and 30 April 2021 is required to confine the costs, the subject of the gross sum, to those attributable only to the defendants’ notice of motion.

    4. For example, see Hamod v NSW at [820] (Beazley JA; Giles and Whealy JJ agreeing).

11. A further reduction is required to reflect the fact that, as no special order for costs has been made, the costs will be on a party-party basis.

12. Against that background, I turn to consider the costs sought by the defendants.

First and third defendants

13. The first and third defendants sought solicitor-client costs in the order of $66,000 together with Mr Hochroth’s fees of $15,675.

14. These are the actual costs incurred by the first and third defendants.

15. The first and third defendants submitted that there should be no discount to take account of the difference between solicitor-client and party-party costs because they had, in correspondence, foreshadowed the problems with the plaintiff’s proposed pleadings that I identified during argument. However, I have not ordered indemnity costs and am unable to see what relevance this matter has to what order should be made in relation to party-party costs.

16. Of the first and third defendants’ solicitor-client costs of some $66,000, only $40,000 represents the costs incurred by the first and third defendants for work done since 29 March 2021.

17. That figure should be reduced by a factor to reflect that the gross sum costs order will be on a party-party basis and also to reflect the costs that the first and third defendants have incurred which are attributable to the plaintiff’s Notice of Motion, rather than their Notice of Motion.

18. Adopting the broad-brush approach called for, I propose to discount the figure of $40,000 by 50% to $20,000.

19. Of Mr Hochroth’s costs, around 1/3 were in relation to work prior to 29 March 2021.

20. Taking all those matters into consideration I propose to make a gross sum costs order of $30,000.

The second defendant

21. The second defendant’s solicitor has estimated that the second defendant’s actual costs to date are in the order $36,000. Some $12,000 of that represents costs incurred before 29 March 2021, or after 30 April 2021, and should be excluded, leaving a figure of some $24,000.

22. The second defendant’s solicitor accepted that a discount of 25% was appropriate to reflect the fact that the costs order is to be on a party-party basis. The application of that percentage leaves an amount in the order of $18,000 for its costs.

23. The second defendant has incurred senior counsel’s fees in the order of $15,000. I do not think it would be reasonable to the plaintiff to include all those fees on an interlocutory motion such as this and propose to allow $10,000 for counsel’s fees.

24. In those circumstances I propose to allow the second defendant’s costs at $28,000.

25. I order that for the purpose of orders 4 and 5 made on 30 April 2021:

1. the costs of the first and third defendants be specified as a gross sum of $30,000; and

2. the costs of the second defendant be specified as a gross sum of $28,000.

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Endnotes

Amendments

24 May 2021 - Typographical error corrected.

Decision last updated: 24 May 2021