District Court New South Wales Medium Neutral Citation: Fairfax Radio Network Pty Ltd v Printlane Pty Ltd (No. 2) [2011] NSWDC 121 Hearing dates: 26 August 2011 Decision date: 26 August 2011 Jurisdiction: Civil Before: Gibson DCJ Decision: (1) Note the defendants have been called three times at 10:15am - No appearance. (2) Grant leave to the plaintiff to file in court the Affidavit of Mr Quartermain sworn 23 August 2011. (3) Vary order (5) of Gibson DCJ's orders of 18 August 2011 to provide that the defendants pay the plaintiff's costs on an indemnity basis from 7 July 2011 pursuant to UCPR r 42.14. (4) An order pursuant to s 98(1) Civil Procedure Act 2005 (NSW) that the costs referred to in paragraph 5 of my orders of 18 August 2011 and order (3) above be paid by way of a lump sum, in the amount of $40,797.50. Catchwords: COSTS - application for lump sum costs order pursuant to s 98(4) Civil Procedure Act 2005 (NSW) Legislation Cited: Civil Procedure Act 2005 (NSW), ss 56, 60 and 98 Federal Court Rules, O 62 r 4(2)(c) Legal Profession Act 2004 (NSW), s 347 Uniform Civil Procedure Rules 2005 (NSW), rr 7.29(2) and 42.14 Cases Cited: Beach Petroleum NL v Johnson (1995) 57 FCR 119 Hadid v Lenfest Communications Inc [2000] FCA 628 Hamod v State of New South Wales (No 13) [2009] NSWSC 756 Harrison v Schipp (2002) 54 NSWLR 738 Idoport Pty Ltd v National Australia Bank Ltd [2005] NSWSC 1273 Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 Lorenzato v Lorenzato (No 2) [2011] NSWSC 790 Tim Barr Pty Ltd v Naurui Gold Coast Pty Ltd [2011] NSWSC 11 Texts Cited: --- Category: Costs Parties: Plaintiff: Fairfax Radio Network Pty Ltd First Defendant: Printlane Pty Ltd Second Defendant: Yuri Szilasi Representation: Plaintiff: Mr S Coleman Plaintiff: Hudson Lawyers File Number(s): 2010/342798 Publication restriction: Judgment 1These proceedings were listed for hearing on 18 August 2011. The defendants, despite filing a defence and being legally represented when the matter was set down for hearing, did not appear, and the plaintiff's applications for summary judgment or, in the alternative, judgment on the claim, was heard in the defendants' absence. 2The defence filed on 22 November 2010 was amended on 23 February 2011 when the solicitors who filed an Appearance on 10 December 2010, Dooley & Associates, sent this document to the court for filing. No certification was provided by the solicitor who drafted this document (s 347 Legal Profession Act 2004 (NSW)), which failed to identify proper grounds for denial of liability and to particularise the facts and matters relied upon in relation to either liability or quantum. These solicitors also filed (without leave) a Notice of Ceasing to Act on 15 August 2011, three days before the hearing, contrary to r 7.29(2) Uniform Civil Procedure Rules 2005 (NSW). 3As is set out in my judgment of 18 August, I granted the plaintiff's application for summary judgment and made the following orders: (1)Defendants called three times at 10.05am - No appearance. (2)Grant leave to the plaintiff to amend paragraph 3 of the Amended Statement of Claim to replace the word "plaintiff" with "first defendant". (3)Defendants called three times at 10.45am - No appearance. (4)Judgment for the plaintiff for the sum of $201,168.55. (5)Defendants pay plaintiff's costs. (6)Exhibits retained for 28 days. (7)The plaintiff is to notify the defendants of the proposed application to seek a lump sum costs order in lieu of assessed costs, such notification is to be sent by 5.00pm today by facsimile or email and the return date of any such application is to be Friday 26 August 2011 at 10:00am. 4The defendants were again called outside the court three times this morning, and there has again been no appearance. I am satisfied from the affidavit evidence that the defendants have been made aware of today's hearing and the orders sought. Accordingly, the plaintiff's application for payment of lump sum costs pursuant to s 98(4) Civil Procedure Act 2005 (NSW) has been heard in their absence. 5The provisions of s 98(4) are as follows: " (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount. " 6The assessment of costs by a costs assessor is a time-honoured process, and the circumstances in which courts will depart from this procedure are rare. In Harrison v Schipp (2002) 54 NSWLR 738 at [21] - [22] Giles JA explained the circumstances in which the court will consider a lump sum order as a alternative to the assessment of costs in the usual way as follows: "[21] The power conferred by r 6(2) is not confined, and may be exercised whenever the circumstances warrant its exercise. It may appropriately be exercised where the assessment of costs would be protracted and expensive, and in particular if it appears that the party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment ( Leary v Leary (1987) 1 WLR 72; Sparnon v Apand Pty Ltd (von Doussa J, 4 March 1998, unreported); Beach Petroleum NL v Johnson (1995) 57 FCR 119; Hadid v Lenfest Communications Inc [2000] FCA 628). [22] Of its nature, specification of a gross sum is not the result of a process of taxation or assessment of costs. As was said in Beach Petroleum NL v Johnson at 124, the gross sum "can only be fixed broadly having regard to the information before the Court"; in Hadid v Lenfest Communications Inc at [35] it was said that the evidence enabled fixing a gross sum "only if I apply a much broader brush than would be applied on taxation, but that ... is what the rule contemplates". The approach taken to estimate costs must be logical, fair and reasonable ( Beach Petroleum NL v Johnson at 123; Hadid v Lenfest Communications Inc at [27]). The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available ( Wentworth v Wentworth (CA, 21 February 1996, unreported, per Clarke JA)." 7The cautious response of the courts to applications of this kind has generally been because of lack of appropriate evidence rather than any real disagreement as to principle, as counsel for the plaintiff points out in the introduction to his helpful written outline. Circumstances in which courts have considered it appropriate to make such orders include: (a)Where assessment of costs would be protracted and expensive, particularly where the party obliged to pay the costs would not be able to meet the assessment: Harrison v Schipp at [21], citing decisions under previous legislation such as Hadid v Lenfest Communications Inc [2000] FCA 628 ( Federal Court Rules , O 62 r 4(2)(c)); (b)Where the litigation is protracted or complex or has some other special feature which warrants a departure from the usual rule: Idoport Pty Ltd v National Australia Bank Ltd [2005] NSWSC 1273. Einstein J at [9] specifically noted that the discretion to award a gross sum is "not confined and may be exercised where the circumstances warrant its exercise"; (c)Where the proceedings have been completed or are otherwise at a stage where the making of such an order would not stultify the party against whom such an order is made ( Tim Barr Pty Ltd v Naurui Gold Coast Pty Ltd [2011] NSWSC 11; Lorenzato v Lorenzato (No 2) [2011] NSWSC 790); and (d)Where the court can have "sufficient confidence" ( Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 at [9]) in arriving at an appropriate sum on the materials available, including appropriate evidence of an expert nature as to the assessment of these costs: Beach Petroleum NL v Johnson (1995) 57 FCR 119. 8This brings me to a consideration of the evidence in these proceedings. An affidavit of Stephen Edward Quartermain, solicitor, attaching an itemised account of the costs in question, deals with these issues, as do the written submissions provided on behalf of the plaintiff. I have been supplied with charging sheets and information about assessment by Mr Quartermain (a solicitor with 27 years experience, principally in commercial litigation) of the following matters: (a)The factors a court would take into account when making a gross sum order have been taken into account, including the likelihood that a lesser sum would be ordered than would be likely on assessment (paragraphs 6 - 7); (b)Rates of discount for a party-party costs order of 65 - 70% (paragraph 8); (c)The actual costs up to the date of the Offer of Compromise (paragraphs 9 and 10 and Schedule A); (d)The basis upon which the indemnity costs order was sought, namely that the judgment was for an amount greater than the Offer of Compromise (paragraphs 15 - 16); (e)The costs to which any indemnity costs order is applicable (paragraph 17); (f)Evidence of typical indemnity costs rates on assessment (90% - 95%) (paragraph 18); (g)A proposal for a midpoint rate (paragraph 19) together with a full list of disbursements (paragraph 20 and Schedule D); and (h)Detailed information confirming that not only have the defendants been notified of the orders made concerning today's hearing on the lump sum application, but that the information had been confirmed directly with the defendant in person against whom the guarantee claim is made. 9The orders I made on 18 August were designed to give the defendants the opportunity to make full submissions today on these issues, in accordance with the procedure identified by Barrett J in Tim Barr Pty Ltd v Naurui Gold Coast Pty Ltd, supra . That procedure was explained by his Honour at [19]-[22] as follows: "[19] Given the financial circumstances of the parties liable for costs, as just described, it is relevant to quote the following passage in the judgment of Lehane J in Hadid v Lenfest Communications Inc [2000] FCA 628 at [25]: How, then, does evidence of the financial position of a party liable under a costs order fit into that picture? In my view it does so substantially in the way suggested by the sixth respondent. Where the amount of costs likely to be payable is very substantial and where, in any event, taxation is likely to be drawn-out, burdensome and expensive, the burden borne by the successful party is aggravated if it appears that, in any event, the party obliged to pay costs may not be able to meet a liability of the order likely to be involved. For that reason, in my view, in a case where the liability for costs may be expected to be large and a taxation complex and expensive the financial position of the party liable is a matter relevant to be taken into account in exercising the discretion. [20] For two related reasons, therefore - the size and complexity of the assessment task and the financial disabilities of the parties liable for costs - this is an appropriate case for a gross sum costs order, provided that the court has at its disposal the means of doing justice between the parties by fixing a proper sum. As to that, it is necessary to bear in mind what was said by von Doussa J in Beach Petroleum NL v Johnson (1995) 57 FCR 119 at 123: [B]efore exercising the power to fix a gross fee, the Court should be confident that the approach taken to estimate costs is logical, fair and reasonable. On the one hand the Court must be astute to prevent prejudice to the respondents by overestimating the costs, and on the other hand must be astute not to cause an injustice to the successful party by an arbitrary "fail safe" discount on the cost estimates submitted to the Court. [21] Although the court, upon an application of this kind, does not attempt to emulate a costs assessor or taxing master and applies "a broader brush" than would be applied on assessment, it must be confident that the material before it enables it to make a sufficiently reliable calculation or estimate of an appropriate costs sum. And a decision as to what is an appropriate sum will depend to a large extent on reaching some kind of view of what the outcome on assessment might be. [22] It is on the question of the sufficiency of the material placed before the court that the main submissions in opposition to NGG's application were made by Mr Dawson. His submissions in that respect were adopted by Mr Lazarus. " 10The defendants have elected not to attend or to provide any submissions in reply. 11As well as the factors set out at [7]-[9] above, there are two additional matters which I should consider. An issue which troubled Barrett J in Tim Barr Pty Ltd v Naurui Gold Coast Pty Ltd (at [26] - [29]) was that the evidence before him came from the solicitor acting for the moving party. It was "by no means decisive" (at [29]) in the decision to reject the application, which was made on other grounds, but it was nevertheless a matter which was of concern. 12In Hamod v State of New South Wales (No 13) [2009] NSWSC 756 Harrison J made a gross sum costs order on the basis of evidence given by solicitors who had been involved in the proceedings. These solicitors, being employed by the Crown Solicitors' Office, had no financial interest in the result (and one of them had previously practised as a costs consultant). 13The real question, in my view, must be the quality of the material provided, which in the present circumstances is of a very high standard. I am satisfied that the careful analysis of costs by Mr Quartermain provides me with a proper basis to enable me to make an order for lump sum costs. 14The second issue is the difference between the factual circumstances in these proceedings and those in Tim Barr Pty Ltd v Naurui Gold Coast Pty Ltd and the other cases set out above, in that these proceedings are neither lengthy nor complex. The sum sought ($40,797.50) is itself indicative of this. Should lump sum orders be made in proceedings which lack the length and/or complexity of litigation such as Tim Barr Pty Ltd v Naurui Gold Coast Pty Ltd (where the costs sought were estimated at $1.85 million)? 15Factors which in my view warrant the awarding of a lump sum costs order in this case are as follows. The first is that the defence filed in these proceedings was hopeless, despite two attempts, and the plaintiff's summary judgment application was successful. The second is that neither the original defence prepared by the defendants, nor the amended defence prepared by the solicitors for the defendants, contained the certification necessary for defences to be placed on the record. As such conduct may be grounds for an application for indemnity costs, it seems to me appropriate that a party seeking a lump sum costs order should be able to rely upon such conduct in support of the application. 16Further, the need for justice to be "just, quick and cheap" (s 56 Civil Procedure Act 2005 (NSW)) and for costs to be proportionate (s 60) was noted in Hamod v State of New South Wales (No 13) , where Harrison J stated at [18]: "[18] The first defendant submitted that the making of a specified gross sum costs order in all of the circumstances would be in accordance with the overriding purpose expressed in s 56 of Act. For example, Palmer J in Hall v Poolman [2007] NSWSC 1330 at [392] said the following: [392] In applying the wide discretion conferred by CPA s 98 the Court must have regard to the principle that the purpose of the Act and the Rules is to promote the just, quick and cheap resolution of the real issues in proceedings in such a way that the cost to the parties is in proportion to the importance and complexity of the matter in dispute: CPA s 56 (1), (2), s 60 ..." 17These are additional grounds upon which it is my view that orders for lump sum costs may be made, in appropriate cases where there is sufficient information to enable the court to be satisfied as to quantum. 18I am satisfied, by reason of the analysis of costs set out in the affidavit of Mr Quartermain, that I can have "sufficient confidence" ( Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 at [9]) that the lump sum estimated is appropriate, and that in the circumstances of this case such an award is appropriate. Orders 19I make the following orders: (1) Note the defendants have been called three times at 10:15am - No appearance. (2) Grant leave to the plaintiff to file in court the Affidavit of Mr Quartermain sworn 23 August 2011. (3) Vary order (5) of Gibson DCJ's orders of 18 August 2011 to provide that the defendants pay the plaintiff's costs on an indemnity basis from 7 July 2011 pursuant to UCPR r 42.14. (4) An order pursuant to s 98(1) Civil Procedure Act 2005 (NSW) that the costs referred to in paragraph 5 of my orders of 18 August 2011 and order (3) above be paid by way of a lump sum, in the amount of $40,797.50. ****** 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: 07 September 2011