Supreme Court New South Wales Medium Neutral Citation: Secure Logic Pty Limited v Paul William Noble (No.5) [2021] NSWSC 1394 Hearing dates: Heard on the papers. Date of orders: 2 November 2021 Decision date: 02 November 2021 Jurisdiction: Equity Before: Slattery J Decision: See paragraph [13]. Catchwords: JUDGMENTS AND ORDERS – Amending, varying and setting aside – Correction under slip rule – Uniform Civil Procedure Rule 2005, r 36.17 – first and second defendants apply to amend the orders entered on 5 October 2021 under the slip rule – whether the proposed amendment is an accidental slip or omission which may be corrected under the slip rule. Legislation Cited: Civil Procedure Act 2005, s 98(4)(c) Uniform Civil Procedure Rules 2005, r 36.17 Cases Cited: Secure Logic Pty Ltd v Paul William Noble [2019] NSWSC 991 Secure Logic Pty Ltd v Paul Noble (No. 2) [2019] NSWSC 1057 Secure Logic Pty Limited v Paul William Noble (No. 3) [2021] NSWSC 675 Secure Logic Pty Limited v Paul William Noble (No.4) [2021] NSWSC 1250 Storey & Keers Pty Ltd & Anor v Johnstone (1987) 9 NSWLR 446 Zepinic v Chateau Constructions Aust Limited (No. 2) [2014] NSWCA 99 Category: Procedural rulings Parties: First Plaintiff/Cross-Defendant: Secure Logic Pty Limited (ACN 154 505 030) Second Plaintiff/ Cross-Defendant: Secure Logic Technologies Pty Ltd Third Plaintiff/ Cross-Defendant: Secure Logic Pte Ltd Fourth Plaintiff/ Cross-Defendant: Plush Hosting Pty Ltd First Defendant/Cross-Claimant: Paul William Noble Second Defendant/Cross-Claimant: Peach Tree Bay Pty Limited (ACN 132 097 647) Third Defendant/Cross-Claimant: John Russell Pankhurst Representation: Counsel: Plaintiffs: M.R. Elliott SC First & Second Defendants: B. DeBuse Solicitors: Plaintiffs: Andrew Lacey, McCabes Lawyers Pty Ltd First & Second Defendants: John Mark Laxon, Laxon Lex Lawyers Third Defendant: John Russell Pankhurst – in person File Number(s): 2016/182584 Publication restriction: No Judgment 1. This is the Court's fifth judgment in these proceedings. The Court's previous judgments are identified in the Court's fourth judgment given on 5 October 2021: Secure Logic Pty Limited v Paul William Noble (No.4) [2021] NSWSC 1250 ("the fourth judgment"). This judgment should be read with the Court's previous judgments, particularly the fourth judgment. Events, matters and persons are referred to in this judgment in the same way as they are in the previous judgments. 2. In the Court's fourth judgment, the Court settled the final form of the orders and made costs orders in the proceedings, which included the fixing of a specified gross sum instead of assessed costs under Civil Procedure Act 2005, s 98(4)(c). Orders (18) and (19) of those orders provided that the first and second defendants, Mr Noble and Peach Tree Bay, are respectively liable to pay 70% of the plaintiffs' costs of the proceedings (including the First Cross-Claim) and that the amount payable by those two defendants in respect of such costs is $1,240,563.37, a sum fixed under s 98(4)(c). From that the offsetting figure of $166,299.11 on Mr Noble's Cross-Claim is deducted to leave a net judgment against the first and second defendant of $1,074,264.26. 3. On 26 October 2021, the first and second defendants forwarded to the Court short written submissions questioning the basis of the Court's calculations of costs in the fourth judgment. The relevant text of the first and second defendant's submissions was brief and is set out below: "4. After determining an apportionment of 70% in relation the First and Second Defendants ' costs liability, the Court at [105] referred to Secure Logic's s 98(4)(c) claim, and then identified the "starting point [as] Secure Logic's total claim for costs of $2,049,888.27 exclusive of GST". 5. However, Secure Logic did not claim that amount of costs. That figure represented its total costs of the proceedings, but the total costs it claimed (including with respect to costs with respect to the dispute over final orders) was a gross sum of $1,425,164.75 excluding GST (see Mr Lacey's affidavit of 22 June 2021 at [54]). 6. Mr Lacey noted at [57] pf his affidavit that the gross sum claimed had been calculated on the basis of Secure Logic receiving 100% of its disbursements, and 55% of its solicitors' fees. 7. Given the Court's reference to the "total claim for costs", it appears that the figure of $1,425,164.75 excluding GST was intended to be the Court's starting point. 8. The amendments sought to [105] of the judgment are based upon a starting point of $1,425,164.75 excluding GST. No adjustments have been made to the disbursement calculations (because the gross sum claimed by Secure Logic involved claiming those sums at 100%), but consequent adjustments have been made to the Court's calculations of McCabes' costs using the amount claimed for those costs in Mr Lacey's affidavit. 9. If the starting point is adjusted, then it follows that the consequent calculations in the judgment would be adjusted too. The balance of the adjustments sought in the schedule are as a consequence of the adjustment to the starting point." 1. On 29 October 2021, Secure Logic took the opportunity to advance the following submissions in reply: "In the plaintiff's submission, it is abundantly clear from the reasons for decision of the Court dated 5 October 2021 that the objective intention of the Court was to use the figure of $2,049,888.27 exclusive of GST, being the plaintiffs' total costs of the proceedings, as its starting point in calculating the defendants' liability for costs. The Affidavit of Andrew Lacey dated 22 June 2021 indicated the total amount the plaintiffs claimed for costs on a compromise basis if the Court was minded to award a specified gross sum under s 98(4)(c) rather than assessed costs, and set out the method of calculation of that amount ($1,425,1647.75 excluding GST). It is clear from the Court's reasons dated 5 October 2021 that the Court determined to calculate the defendants' liability for costs adopting an entirely different methodology to that set out in Mr Lacey's affidavit (to arrive at its own figure of $1,240,563.37 in the exercise of its jurisdiction under s 98(4)(c): at [106]). In those circumstances, is illogical that the Court would use as its starting point the amount of $1,425,1647.75. Rather it is clear that the objective intention of the Court was to use the plaintiffs' total costs of the proceedings ($2,049,888.27) as its starting point." 1. The Court has power to correct a clerical mistake or an error arising from an accidental slip or omission in a judgment or order and may correct the mistake on the application of a party or on its own motion: Uniform Civil Procedure Rules 2005, r 36.17. An omission or mistake should not be treated as accidental if the proposed amendment requires the exercise of independent discretion or is a matter upon which a real difference of opinion might exist: Storey & Keers Pty Ltd & Anor v Johnstone (1987) 9 NSWLR 446. 2. There is no occasion for the application of the slip rule here. The judgment entered against Mr Noble and Peach Tree Bay for $1,240,563.37 correctly gives effect to the Court's intent. Mr Noble and Peach Tree Bay do not seek to point to a mistake or other error in the Court's mathematical reasoning. The point that Mr Noble and Peach Tree Bay wish to take is really a challenge to the Court's reasoning, which if pursued, can only properly be pursued on appeal. 3. Mr Noble and Peach Tree Bay criticised the Court's choice of starting point for its reasoning, as Secure Logic's total costs of $2,049,888.27 exclusive of GST. Mr Noble and Peach Tree Bay say that the starting point for Secure Logic's claim for costs should be the gross sum of $1,425,164.75 exclusive of GST referred to in Mr Lacey's affidavit of 22 June 2021. 4. If the Court were to start at $1,425,164.75, that would contradict the methodology adopted by the Court. Secure Logic's figure of $1,425,164.75 (exclusive of GST) represented a compromise to take account of several factors. Mr Lacey's affidavit of 22 June 2021 explained that this figure was reached on the basis that a costs assessment on the ordinary basis usually results in a costs determination of 60 – 80% of the professional fees incurred and 100% of disbursements including counsels' fees. The gross sum amount, calculated by Mr Lacey, represented 55% of McCabes' professional fees and 100% of disbursements on counsel, expert disbursements and other disbursements. 5. But the 55% discount in professional fees that Secure Logic proposed was not just to create a discount for the purposes of reaching a specified gross sum award, such a discount being a common, and indeed an invariable feature of such awards: Zepinic v Chateau Constructions Aust Limited (No. 2) [2014] NSWCA 99 at [38] ("Zepinic"). Rather, its 55% discount on professional fees was designed to encompass a range of potential costs outcomes, including that Mr Noble might be required to pay all the plaintiffs' costs or that he may be required only to pay some lesser proportion of the plaintiffs' costs on account of his partial success on the Cross-Claim. 6. The Court rejected the approach of a single all-inclusive discount encompassing these various potential costs outcomes to fix a specified gross sum. Instead the Court decided to fix a specified gross sum in two steps: first to work out what proportion of Secure Logic's costs would not be recovered on an assessment of costs on account of Mr Noble's success on his Cross-Claim; and then, and only then, to fix a final gross sum costs order including applying whatever discounts were appropriate to the making of such an order: cf the fourth judgment, at [99] – [102] and [104] – [108]. 7. It would have been logically unfair to Secure Logic for the Court to commence its two step analysis at Secure Logic's figure of $1,425,164.75, as that figure already included Secure Logic's own discount for both of the first and second steps that the Court was about to consider. To start at $1,425,164.75 would in effect have meant discounting Secure Logic's costs twice for the same factors. 8. Mr Noble's present criticism also fails to give proper recognition to the first step of the Court's alternative methodology which reduced Secure Logics' claim for costs by 30% to reach a figure of $1,434,921.79. This figure is surprisingly close to (indeed within $10,000) of the "starting point" that Mr Noble is urging the Court to adopt. The Court then applied a discount of 20% to the professional fees component of that figure of $1,434,921.79 and otherwise allowed disbursements to reach the final figure of $1,240,563.37. The Court's 20% discount at this second stage took proper account of the general requirement, in accordance with authority such as Zepinic, to apply a discount when making a specified gross sum order. 9. Mr Noble's and Peach Tree Bay's application to engage the slip rule here is dismissed. No fresh orders for costs will be made in respect of this application, which only involved submissions of one page of text from each side. ********** Amendments 04 November 2021 - Coversheet - "s" added to "Rules" DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 November 2021