Supreme Court New South Wales Medium Neutral Citation: In the matter of Allscope Concrete & Pumping Pty Ltd (in liq) [2024] NSWSC 1680 Hearing dates: Last submissions as to costs 14 November 2024 Date of orders: 30 December 2024 Decision date: 30 December 2024 Jurisdiction: Equity - Corporations List Before: Black J Decision: Orders for costs made on an indemnity and gross sum basis Catchwords: COSTS – Whether costs should be made on an indemnity and gross sum basis Legislation Cited: - Civil Procedure Act 2005 (NSW), s 98(1) - Uniform Civil Procedure Rules 2005 (NSW) Corporations Act 2001 (Cth), s 588FDA Cases Cited: - Brown v Stables Perisher Management Pty Ltd (No 2) [2022] NSWSC 902 - Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 - Hamod v State of New South Wales (2002) 188 ALR 659; [2002] FCAFC 97 - Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) (2008) 65 ACSR 324; [2008] NSWSC 199 - Leichhardt Municipal Council v Green [2004] NSWCA 341 - Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 - Re Allscope Concrete & Pumping Pty Ltd (in liq) [2024] NSWSC 1476 - Re Beverage Freight Services Pty Ltd [2020] NSWSC 797 - Saba v Plumb [2017] NSWSC 955 Category: Costs Parties: Stephen John Michell (as liquidator of AllScope Concrete & Pumping Pty Ltd (in liq)) (Plaintiff) Ali Youssef (First Defendant) Commonwealth Bank of Australia (Second Defendant) Representation: Counsel: K Kelly (Solicitor) (Plaintiff) Solicitors: Hilton Bradley Lawyers (Plaintiff) File Number(s): 2024/358811 Judgment Nature of the application and evidence 1. On 5 November 2024, I delivered my judgment in this matter ([2024] NSWSC 1476) ("Primary Judgment") and held that a transfer of funds of Allscope Concrete & Pumping Pty Ltd (in liq) ("Company") by the First Defendant, Mr Youssef, to his personal account contravened s 588FDA of the Corporations Act 2001 (Cth). I ordered that the Second Defendant, which had placed a hold on those funds in Mr Youssef's account, transfer those funds to Mr Michell as liquidator ("Liquidator") of the Company. I also made an order for costs against Mr Youssef and, at the Liquidator's request, reserved his ability to apply for further orders as to costs including an order for costs on a gross sum basis. 2. The Liquidator now seeks orders for costs on an indemnity basis, quantified as a gross sum of $25,000 plus GST. The Liquidator relies on his affidavit dated 26 September 2024, as read at the hearing. I summarised that affidavit in the Primary Judgment and do not repeat that summary. The Liquidator also relies on the further affidavit dated 14 November 2024 of his solicitor, Mr Kelly. Mr Kelly there sets out his experience as a solicitor and the work undertaken in relation the proceedings including steps taken to effect service of the Originating Process on the Defendants including Mr Youssef and the costs incurred in respect of two listings of the matter and the final hearing of the matter. That affidavit also includes a schedule setting information as to the work done by the Liquidator's solicitors and a tax invoice recording disbursements charged to the Liquidator. Mr Kelly also refers to the likely costs of an assessment, and I accept there is a significant risk that those costs would likely be disproportionate to the amount claimed in the proceedings and the costs now claimed and would be wasted if Mr Youssef was later unable to meet a judgment for costs against him. 3. Although Mr Youssef did not appear and did not make submissions at the substantive hearing, I afforded him a further opportunity to respond to the Liquidator's affidavit evidence and submissions as to costs. By email dated 19 December 2024, he replied that he had not received "any prior information" and had not been given any "time or allowance to cover any information requested" and "was on holidays and would return on 6 February 2025". I am satisfied that that Mr Youssef had prior notice of the costs application and had a sufficient time to lead any evidence and make any submissions in response to it, where the fact that the Liquidator sought a gross sum costs order was recorded in the Primary Judgment and that judgment, and subsequently the Liquidator's affidavit evidence and submissions as to costs, were both sent to Mr Youssef at the email address from which his email was sent to the Court. Applicable principles and submissions 1. The applicable principles are well established. The Court has power to make an order for costs under s 98(1) of the Civil Procedure Act 2005 (NSW) and r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"). A successful party in proceedings has a "reasonable expectation" of being awarded costs against an unsuccessful party, unless there is good reason for that presumption to be displaced: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11. 2. Section 98(1)(c) of the CPA permits the Court to order costs on an ordinary or an indemnity basis. Rule 42.2 of the UCPR provides that, unless the Court orders otherwise or the rules otherwise provide, costs payable are to be assessed on an ordinary basis. Rule 42.5 deals with an order for costs on an indemnity basis. Costs are awarded on an ordinary basis unless there are exceptional circumstances: Leichhardt Municipal Council v Green [2004] NSWCA 341. An order for indemnity costs is not made to punish an unsuccessful plaintiff for persisting with a case that fails, but to compensate a successful defendant fully for costs incurred, when the Court takes the view that it was unreasonable for the plaintiff to have subjected that party to the expenditure of costs: Hamod v State of New South Wales (2002) 188 ALR 659; [2002] FCAFC 97 at [20]. In Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) (2008) 65 ACSR 324; [2008] NSWSC 199, McDougall J observed (at [24]) that there must usually be some special or unusual feature to justify departure from the ordinary rule as to costs, and that delinquency is not necessary for an order for indemnity costs, but is relevant to whether it should be made. The relevant principles were also considered by the Court of Appeal in Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 at [6], where the Court observed that an order for indemnity costs may be made where a party's conduct in proceedings is plainly unreasonable or involves an element of delinquency, and by Bell CJ in Brown v Stables Perisher Management Pty Ltd (No 2) [2022] NSWSC 902. 3. By submissions dated 14 November 2024, Mr Kelly outlined the history of the proceedings and refers to his earlier attempts made to resolve the proceedings with Mr Youssef; he notes, uncontroversially, that costs generally follow the event, which was the outcome indicated in the Principal Judgment; and he refers to the principles applicable to making an indemnity costs order. Mr Kelly submits that an indemnity costs order is warranted where the Liquidator had made substantial attempts to resolve the matter with Mr Youssef before commencing the proceedings; as the Primary Judgment indicated, Mr Youssef had, or at least disclosed, no defence to the proceedings and the Liquidator was wholly successful in his application; and the Liquidator was put to the costs of a hearing at which Mr Youssef did not appear. I accept these matters warrant an order for costs against Mr Youssef on an indemnity basis. 4. I have previously summarised the applicable principles in respect of a gross sum costs order in Saba v Plumb [2017] NSWSC 955 at [23] as follows: "Section 98(4) of the Civil Procedure Act relevantly provides that the Court may make an order to the effect that a party to whom costs are to be paid is entitled to a specified gross sum instead of assessed costs. That power is commonly exercised where costs have been incurred in a lengthy or complex case although it is not in its terms limited to such a case … The power to make a gross sum costs order should only be exercised where the Court considers it can do so fairly between the parties, including achieving an appropriate sum on the materials available to it, and the Court typically applies a discount in assessing costs on a gross sum basis. [citations omitted]" 1. I again summarised those principles in Re Beverage Freight Services Pty Ltd [2020] NSWSC 797 at [19], as follows. "As I noted in the Earlier Judgment [in that case], s 98(4) of the Civil Procedure Act 2005 (NSW) relevantly provides that the Court may make an order to the effect that a party to whom costs are to be paid is entitled to a specified gross sum instead of assessed costs. … that power is commonly exercised where costs have been incurred in a lengthy or complex case, but it is not limited to such a case: Simone Starr-Diamond v Talus Diamond (No 4) [2013] NSWSC 811 at [8]. … the power to make a gross sum costs order should only be exercised where the Court considers it can do so fairly between the parties, including achieving an appropriate sum on the materials available to it, and the Court typically applies a discount in assessing costs on a gross sum basis: Ritchie's Uniform Civil Procedure NSW [s 98.65]; Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 . A gross sum costs order may also be made to avoid the expense, delay and aggregation involved in litigation arising out of an assessment: Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738. Where a gross costs order is to be made, the Court is not required to undertake a detailed examination of the kind which would be undertaken in a cost assessment, in determining a gross sum payable, and will apply "a broad brush" approach: Hadid v Lenfest Communications Inc [2000] FCA 628 at [35]; Harrison v Schipp above at [22]." 1. By submissions dated 14 November 2024, Mr Kelly also addressed the circumstances in which a gross sum costs order can be made and the nature of the evidence that might ordinarily be led in respect of such an order. Mr Kelly submits that a gross sum costs order should here be made where the amount sought by the Liquidator in the gross sum costs order is reasonable, based on the work undertaken on his behalf; there is a real risk that Mr Youssef will not engage in any costs assessment process, where he has not appeared in the proceedings to date and the costs of that process would be wasted; an assessment of costs would likely prolong matters and increase the Liquidator's costs; and an order for gross sum costs will not put Mr Youssef in a worse position than if the costs are assessed. I would add that, as I noted above, the costs of an assessment would likely be disproportionate both to the amount claimed in the proceedings and to the amount of the costs that are claimed in respect of them. I accept that these matters provide a sufficient basis for making an order for costs on a gross sum basis against Mr Youssef. 2. The liquidator seeks an order for gross sum costs order in the amount of $25,000 plus GST, which reflects a reasonable discount to the costs he has actually incurred. Such a discount is commonly although not invariably applied in making a gross sum costs order, to address the possibility that costs could have been reduced by a more detailed review in an assessment. I am comfortably satisfied that the amount of costs claimed by the Liquidator on this basis would not exceed the costs likely to be recovered on an assessment and costs are properly ordered in that amount. Orders 1. For these reasons, I make the following orders: 1 The First Defendant pay the Plaintiff's costs and disbursements of the proceedings. 2 The Plaintiff's costs be quantified as a gross sum of $25,000 plus GST. ********** 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: 30 December 2024