Wilden v Jennings (no 3)

[2022] NSWDC 343

District Court

New South Wales

Medium Neutral Citation:

Wilden v Jennings (no 3) [2022] NSWDC 343

Hearing dates:

On the papers.

Date of orders:

12 August 2022

Decision date:

12 August 2022

Jurisdiction:

Civil

Before:

Wilson SC DCJ

Decision:

At [20]

Catchwords:

COSTS - defendant’s application to vary freezing order - where principal judgement stayed - where parties are waiting outcome of appeal. Lump sum gross costs order made.

Legislation Cited:

Civil Procedure Act 2005

Uniform Civil Procedure Rules 2005

Cases Cited:

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

Maylord Equity Management Pty Ltd v Nauer (No 2) [2017] NSWSC 1467

Category:

Costs

Parties:

Ms Kirra Wilden
Mr Michael Jennings

Representation:

Counsel:
Ms L Beange (Plaintiff/Respondent)
Mr J Sleight (Defendant/ Applicant)

Solicitors:
Ms M de Luca-Leonard (Plaintiff)
Mr G Azzi (Defendant)

File Number(s):

2020/00059460

Publication restriction:

None

Judgment

1. An application was made by the defendant to vary the terms of a Penal Notice issued in the context of a freezing order. There were two parts to the application. First, the defendant sought to increase the amount in respect of which he could become indebted for the purposes of legal costs from $125,000.00 to $150,000.00 plus GST. Secondly, the defendant sought to vary the order to permit him to encumber his assets up to $150,000.00 plus GST for the payment of reasonable legal costs, expenses and disbursements.

2. The first order was readily made by consent when the matter was first listed when the order was clarified and varied.

3. The real dispute was whether the defendant ought to have been allowed to further encumber assets for his legal costs. This dispute occupied time on 1, 7 and 14 June 2022.

4. Upon making a decision and entering orders on 28 June 2022 I ordered that the defendant was to pay the plaintiff’s costs of the application. I gave the defendant liberty to apply in the event that he wished to be heard on that question. That opportunity was taken up resulting in submissions dated 6 July 2022 being filed on behalf of the defendant. The plaintiff filed her submissions dated 13 July 2022 and not only sought to maintain the costs order but sought an order under section 94(4) of the Civil Procedure Act 2005 for a gross sum costs order. The defendant was given an opportunity to reply which was done by way of submissions dated 24 July 2022.

5. The defendant attempts to resist a costs order on the following bases:

1. that it was necessary for the application to be made;

2. that the first hearing day and preparation largely related to the first part of the application to which the plaintiff ultimately consented;

3. that the application for the variation of the Penal Notice was inextricably linked to the prosecution of the appeal and that the question of costs of the application be determined by the outcome of the appeal; and

4. that a costs order made at this time could result in the defendant going into bankruptcy.

6. I do not consider any of these grounds to warrant reversing the order previously made that the defendant pay the plaintiff’s costs.

7. The fact that it was necessary to make the application is not, of itself, sufficient to warrant not making a costs order. This is the second occasion upon which an application has been made to vary the extent to which the defendant can become indebted for the benefit of legal expenses. It would appear that it was only following, and perhaps as a result of, changing lawyers that it became necessary to make the second application. Further, the second variation sought was always going to be contentious as it sought to permit the defendant to further encumber his assets where there was, on the defendant’s evidence, a real question as to whether he has a net asset position sufficient to meet the judgment made in the plaintiff’s favour.

8. As for the second ground, following Counsel for the defendant varying the order sought, and upon me asking Counsel for the plaintiff in the course of hearing the application whether the plaintiff consented to the defendant becoming further indebted for the purpose of obtaining legal advice and assistance, consent was instantly given. It was always plain that the real contention related to the further encumbrance of the defendant’s assets. Even had the plaintiff given her consent to the first variation prior to the application being made, the application would still have been necessary in respect of the second aspect of the relief sought.

9. As for the third ground, the only connection between the application and the appeal is that the application was to obtain relief in order to fund the appeal. The appeal will not resolve the question of what order for costs ought to be made in respect of the application.

10. The plaintiff opposed the defendant’s approach to costs in submissions dated 13 July 2022. It was submitted that, on any view, the defendant lost his application to vary the freezing order and that under Uniform Civil Procedure Rules 2005, rule 42.1 costs should follow the event. This is so especially in circumstances where there was no conduct on the part of the plaintiff which made the application necessary or unduly extended the costs incurred in dealing with the application.

11. It was submitted for the plaintiff that the application first foreshadowed by the defendants on 27 May 2022 was for permission to incur fees and encumber his assets in the amount of $261,073.85. That was not varied until about 4:00 PM on 31 May 2022, the day before the first listing of the application. Counsel for the plaintiff submitted that it was only in the course of submissions on 1 June 2022 that Counsel for the defendant agreed to remove the words “from today’s date” in the variation. The significance of this is that it changed the application from seeking indebtedness and encumbrance of $150,000.00 from that date to $150,000.00 plus GST in respect of the appeal generally. Upon this variation occurring the consent of the plaintiff in respect of the indebtedness question was given.

12. It was then submitted for the plaintiff that the application stands entirely apart from the appeal. For the reasons already given, I accept that submission and its consequences. That is, there is no need to await the outcome of the appeal to determine the question of costs.

13. In support of the application for a gross sum costs order, the plaintiff has provided invoices which indicate the following:

1. solicitor costs of $3,025.00;

2. senior counsel fees of $2,383.34. This was for consulting with and advising junior counsel on the application on various occasions; and

3. junior counsel fees of $9,710.25 which included preparation, consulting with senior counsel and appearances on 3 occasions.

14. That is a total of $15,118.59. The amount sought is 80% of that sum.

15. I have carefully examined the invoices which have been provided. In my opinion the work done was both reasonable and necessary in order to resist the defendant’s application. I acknowledge the purpose of the rule allowing for such orders is to avoid the expense, delay and aggravation arising out of taxation (Beach Petroleum NL and Another v Johnson and Others (No 2) (1995) 57 FCR 119 (von Doussa J); Maylord Equity Management Pty Ltd v Nauer (No 2) [2017] NSWSC 1467 [59]-[64])

16. In order to avoid the additional and unnecessary costs of engaging in a cost assessment process, I am prepared to make a gross sum costs order. I would, however, reduce the total sum by 30% in order to more closely align the order with what might be regarded as party/party costs. That is the sum of $10,583.01.

17. It was submitted for the defendant that there was no evidence to support the plaintiffs estimate of costs. I do not agree. The evidence provided is sufficiently detailed to determine the reasonableness of both the work undertaken and fees charged. The costs were incurred on a discrete issue in what has been protracted litigation in this Court. In my view it is both fair and logical to make the orders sought.

18. The defendant further submitted that if the plaintiff sought to enforce this costs order it may cause the defendant to go into bankruptcy. The plaintiff submitted that this conclusion necessarily involves an assumption that the defendant does not have access to funds to pay the costs. Accepting the defendant’s submission in this regard would be inconsistent with the findings which I made in the principal judgment on the application to vary the freezing order. The application was refused principally on the basis that I did not accept that the defendant did not have access to monies which had been paid to Ms Harris.

19. In my opinion, the defendant should pay the plaintiff’s costs in the amount of $10,583.01 and, in the circumstances, I refuse a stay in respect of that amount.

Order

20. I vary the order in respect of costs made 28 June 2022 from “the defendant is to pay the plaintiff’s costs of this application” to “the defendant is to pay the plaintiff’s costs of the application assessed on a gross lump sum basis in the amount of $10,583.01, forthwith”.

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Decision last updated: 16 August 2022