Supreme Court New South Wales Medium Neutral Citation: The Owners – Strata Plan No 93543 v Zhang (No 2) [2021] NSWSC 360 Hearing dates: 22 to 25 March 2021; written submissions 30 & 31 March 2021 and 8 April 2021 Date of orders: 9 April 2021 Decision date: 09 April 2021 Jurisdiction: Equity - Technology and Construction List Before: Stevenson J Decision: Costs thrown away by adjournment specified as a gross sum at $17,600 Catchwords: COSTS – costs thrown away by the adjournment – whether such costs confined to costs incurred prior to the adjournment – whether such costs include costs not yet incurred but which would not have been incurred but for the adjournment Legislation Cited: Civil Procedure Act 2005 (NSW) Cases Cited: Brookvista Pty Ltd v Meloni [2009] WASCA 180 Edelman v Badower [2010] VSC 427 The Fashion Warehouse Pty Ltd v Pola [1984] 1 Qd R 251 Ziliotto v Dr Hakim (No 2) [2012] NSWSC 1079 Category: Costs Parties: The Owners – Strata Plan No 93543 (Plaintiff) Hui Zhang (Defendant) Representation: Counsel: A G Rogers (Plaintiff) P Moorehouse with J Tsang (Defendant) Solicitors: Alexander Richards Lawyers (Plaintiff) MPM Legal (Defendant) File Number(s): 2018/382960 Judgment 1. On the fourth day of the hearing, 25 March 2021, I acceded to the defendant's application to adjourn the proceedings. The adjournment was sought to enable the defendant's expert, Mr Nakhla, to conclude his conclave with the plaintiff's expert, Mr Verinder, to enable Mr Nakhla and Mr Verinder to give concurrent evidence thereafter and for final submissions. 2. I also ordered that the defendant pay the plaintiff's costs thrown away by the adjournment, that such costs be assessed as a gross sum pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW), and that the defendant pay such costs within 14 days of publication of these reasons. 3. These reasons are concerned with what costs of the plaintiff have been "thrown away" by the adjournment. 4. The reason that it was necessary for the defendant to seek the adjournment was the late service of Mr Nakhla's report dealing with the matters in contest with Mr Verinder. 5. During 2020, the defendant failed to comply with a number of orders concerning the service of his expert evidence. 6. Ultimately, on 19 August 2020, the defendant served an earlier report of Mr Nakhla several days after the time set in a guillotine order made by Hammerschlag J on 19 June 2020. 7. On 28 August 2020, Hammerschlag J gave the defendant leave to rely upon Mr Nakhla's report but stated: "His Honour considers that in the circumstances, the Court should give the defendant leave to rely on the expert report of Stephen Nakhla dated 19 August 2020. His Honour does not consider that it is appropriate at this time to extend the time for the defendant to serve any further expert evidence. Any application to do so should be made once the evidence is served, noting that the longer the defendant takes to serve it, the less likely it is leave will be given." 1. His Honour then set the matter down for hearing for five days commencing on 22 March 2021. 2. Mr Nakhla's further report was served after hours on 11 March 2021; six working days before the hearing. The report comprises over 300 pages. 3. The explanation given for the delay in serving Mr Nakhla's second report needs only to be stated to reveal its inadequacy. 4. That explanation was: 1. Mr Nakhla insisted on being paid in advance for his supplementary report; 2. The defendant's solicitor, Mr Marando, told the defendant on 9 September 2020 that he would need to provide $40,000 on account for Mr Nakhla's further report; 3. The defendant said he could not make such funds available until around December 2020; 4. The defendant did not make such funds available in December 2020, or at all; 5. On 31 January 2021, Mr Marando paid Mr Nakhla's fee; 6. Mr Marando then told Mr Nakhla that he "required his confirmation that the report will be ready by 8 March 2021". 1. Why Mr Marando thought it would be adequate for Mr Nakhla's report to be made available only on 8 March 2021, some two weeks before the hearing, was not explained. 2. The result of the late service of Mr Nakhla's second report was that Mr Nakhla was not able to conclave with Mr Verinder in relation to this report and was thus unable to participate in concurrent evidence during the period set down for hearing. 3. It was in those circumstances that, rather than refusing to grant the defendant leave to rely upon Mr Nakhla's second report, I granted the adjournment. 4. It would have been necessary to adjourn the proceedings in any event for final submissions because, assuming Mr Nakhla had been able to conclave and give concurrent evidence during the time allocated for hearing, it was clear that no time would be available within that period for submissions. 5. However, as things stand now, the matter must not only be adjourned for one day for final submissions, but for a further day or two prior to the day set for final submissions to accommodate the concurrent evidence. 6. I have since allocated 19 and 20 May 2021 for the concurrent evidence of Mr Nakhla and Mr Verinder and 24 May 2021 for final submissions. 7. In that context, I invited submissions from counsel as to the quantum of the fees that I should determine to be paid as a gross sum under s 98(4) of the Civil Procedure Act. 8. For the plaintiff, Mr Rogers submitted that I should allow the following amounts which are specified in an affidavit sworn by the plaintiff's solicitor, Mr Asfour: 1. $6,000 for counsel's fees for 26 March 2021; 2. $8,750 for Mr Verinder's fees for participating in the conclave with Mr Nakhla and completing a joint report following that conclave; 3. Mr Rogers' and Mr Asfour's fees for perusing the new joint report of $2,850; and 4. Mr Rogers' and Mr Asfour's fees for the hearing of further concurrent evidence [1] $4,400, assuming half a day was needed. 1. The total of these figures is $22,000. 2. For the defendant, Mr Moorehouse accepted that the first of these figures, $6,000 counsel fees for 26 March 2021, represents costs thrown away by reason of the adjournment. 3. As to the fees Mr Verinder will charge for participating in the conclave and writing his report, and the fees Mr Rogers and Mr Asfour will charge for perusing the further report, Mr Rogers submitted that "[h]ad the proceedings not been adjourned there would have been no further conclave and no requirement for either preparation of a further report or a need to peruse it" and that these costs "arise only because of the adjournment". 4. I infer from this submission that these fees of Messrs Verinder, Rogers and Asfour are extra fees, over and above those that would have been charged during the week allocated for the hearing. Thus, these are extra costs caused by the adjournment which would not have been incurred but for the adjournment. 5. As to the legal fees to be incurred for the further concurrent evidence, although I have allocated two further days, Mr Rogers' submissions assume only half a day of "additional time in Court" will be needed for this. 6. Had Mr Nakhla been in a position to engage in concurrent evidence during the week commencing 22 May 2021, this could have occurred on the afternoon of Thursday 25 March 2021 and on Friday 26 March 2021. As it was, the proceedings were adjourned shortly after lunch on Thursday 25 March 2021. But the plaintiff will have incurred the costs of that day in any event and will be compensated for the costs of Friday 26 March 201 by the order to which the defendant consents. 7. In those circumstances, I do not see the figure at [19(d)] as being, as Mr Rogers submitted, "additional to any cost lost on 26 March 2021". 8. As I have said, the extra day now needed for final submissions would have been required in any event as, even if Mr Nakhla's report had been served in time for it to be dealt with during the week allocated for the hearing, submissions could not then have proceeded. 9. Thus, my conclusion is that the extra costs caused to the plaintiff by the adjournment, and which the plaintiff would not incur but for the adjournment, is $17,600. 10. However, Mr Moorehouse submitted that, other than the $6,000 referred to at [19(a)], these costs were not "thrown away" by the adjournment because they were not costs reasonably incurred before the adjournment which can now be said to be wasted. 11. This submission invites attention to what is meant by an order that a party pay the "costs thrown away" by (in this case) an adjournment of the proceedings. 12. Professor Dal Pont deals with the matter in his work Law of Costs [2] and states that the beneficiary of an order for "costs thrown away": " … receives the costs reasonably incurred that relate to work done but wasted as a result of the other party's error or failure to comply with the applicable procedure or direction". (My emphasis) 1. The authority that Professor Dal Pont cites for this proposition is that of Williams J in The Fashion Warehouse Pty Ltd v Pola [3] where his Honour said [4] after having reviewed authority: "All that those cases establish is that, for costs to be allowed as "costs thrown away", they must have been, in the opinion of the Taxing Officer, reasonably incurred and relate to work done which has become wasted in the circumstances." (My emphasis) 1. Williams J's observations were cited with approval by the Western Australian Court of Appeal in Brookvista Pty Ltd v Meloni. [5] 2. In Edelman v Badower, [6] Mukhtar AsJ said: [7] "Despite its widespread usage, the term "costs thrown away" is not to be found in the rules. An order for costs thrown away is regarded as compensation for work already done but wasted as a result of the other party's error or failure to comply with the procedure set by the rules." (My emphasis) 1. In the passages I have emphasised, these authorities refer to "costs thrown away" as being costs already incurred at the time of the order. 2. Indeed, in Ziliotto v Dr Hakim (No 2), [8] Davies J said: [9] "The enquiry must be directed to what costs were expended which would not have been expended had it not been for the adjournment and what prompted the need for the adjournment. I agree with Mukhtar AsJ's analysis that "costs thrown away" is looking to past costs – compensation for work already done and wasted because of the adjournment, or amendment or error. It does not refer to costs which have not yet been incurred even though they would not have been incurred but for the adjournment." (My emphasis) 1. No doubt in most cases the costs that are "thrown away" by an adjournment are costs in respect of "work done". 2. However, in my opinion, the question of what costs are "thrown away" by an adjournment in a particular case will depend upon the circumstances of that case. 3. I am not able to agree that "costs thrown away" can never include costs not yet incurred. That is especially so if, as is the case here, those future costs are incurred by reason of the adjournment and would not have been incurred but for the adjournment. 4. In this case, the substance of the matter is that the adjournment I granted was by reason of the late service of Mr Nakhla's report. It is that late service, and the concomitant adjournment, that will now cause the plaintiff extra costs that it would not otherwise have incurred. I can see no reason why these costs should not be characterised as "costs thrown away" by the adjournment. 5. Accordingly, pursuant to s 98(4) of the Civil Procedure Act, I specify as a gross sum the costs thrown away by the adjournment of these proceedings on 24 March 2021 as $17,600. 6. By reason of my orders of 25 March 2021, those costs are payable within 14 days of today. Endnotes 1. Mr Asfour referred to the "conduct of the court conclave" but I assume this was intended to be a reference to the hearing of the concurrent evidence; as there would be no call for Mr Rogers and Mr Asfour to participate in the conclave. 2. 4th Edition, LexisNexis Butterworths, Australia 2018 at 1.23. 3. [1984] 1 Qd R 251. 4. At [254]. 5. [2009] WASCA 180; Buss and Newnes JJA at [28]. 6. [2010] VSC 427. 7. At [31]. 8. [2012] NSWSC 1079. 9. At [47]. 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