Supreme Court New South Wales Medium Neutral Citation: Levy v Bablis [2012] NSWSC 661 Hearing dates: 11 May 2012 Decision date: 15 June 2012 Jurisdiction: Equity Division - Commercial List Before: Stevenson J Decision: 1. That pursuant to s 98 of the Civil Procedure Act 2005 the plaintiff pay the first defendant $563,299.82 in respect of the costs required to be paid pursuant to the order of Slattery J of 19 May 2011; and 2. That the plaintiff pay the costs of the first defendant's Notice of Motion of 25 January 2012. Catchwords: PROCEDURE - costs - application for gross sum costs order - whether abuse of process Legislation Cited: Civil Procedure Act 2005 Supreme Court Rules 1970 Cases Cited: Harrison v Schipp (2002) 54 NSWLR 738 Hamod v State of New South Wales [2011] NSWSCA 375 Category: Interlocutory applications Parties: Julian Emmanuel Levy (plaintiff/respondent) Peter Bablis (first defendant/applicant) Representation: Counsel: P Menzies QC with B Nolan (plaintiff/respondent) M Condon (first defendant/applicant) Solicitors: Tsolakis Solicitors (plaintiff/respondent) Minter Ellison Lawyers (first defendant/applicant) File Number(s): SC 2006/260173 Publication restriction: Nil Judgment 1This matter was heard by Slattery J over 16 days between 27 July 2009 and 30 April 2010. 2On 19 May 2011 his Honour delivered judgment dismissing the plaintiff's claim against the first defendant. His Honour ordered that the plaintiff pay the first defendant's costs of the proceedings. 3On 25 January 2012 the first defendant filed a Notice of Motion seeking a gross sum costs order pursuant to s 98 of the Civil Procedure Act 2005 ("the Act"). The first defendant seeks an order that the plaintiff pay the sum of $563,299.82 in respect of the costs order. 4I heard the Notice of Motion on 11 May 2012. 5Mr Condon appeared for the first defendant (the applicant). Mr Menzies QC appeared with Ms Nolan for the plaintiff (the respondent). 6Judgment was reserved on the basis that the plaintiff file further material and submissions within a specified time. There was some delay in the provision of that material and, once it was provided, Mr Condon was granted time to respond. 7On 31 May 2012 the matter was listed for mention. Mr Menzies foreshadowed that he wished to adduce further evidence but that an issue of confidentiality existed in relation to that evidence. I agreed to delay giving judgment for a short time to enable Mr Menzies to seek to adduce the further evidence. 8Having heard no further, on 8 June 2012 I directed my Associate to inform counsel that I proposed to deliver judgment today, and that any application to adduce further evidence should be made by 5.00 pm on 13 June 2012. 9I received no material by that time. 10Some material was sent to my chambers by fax at around 2.00 pm on 14 June 2012. I refer to it below. 11The following outline of the background to the dispute derives substantially from Mr Condon's very helpful written submissions. 12The first defendant's application for a gross sum costs order was supported by a detailed report prepared by Ms Deborah Vine-Hall ("Ms Vine-Hall") dated 24 February 2012. 13Ms Vine-Hall's unchallenged evidence is that: - (a)it would take her 150 hours to prepare an itemised bill of costs; (b)this process would take six weeks, spread over that time; (c)the likely cost to the first defendant would be $37,500 plus GST; and (d)assessment by a costs assessor would take at least 12 months, and any review from that assessment would likely take a further year. 14Ms Vine-Hall is an experienced costs assessor. She has practised as a costs consultant since 1993. 15For the purpose of her report, Ms Vine-Hall has read all the invoices issued to the first defendant, the pleadings in their various iterations, the affidavits, the submissions made by the parties to Slattery J, the transcript of proceedings before his Honour, and his Honour's judgment. 16Ms Vine-Hall has considered the charge out rates of the legal representatives retained by or on behalf of the first defendant, and has found that their fees were within the range of rates charged by comparable practitioners. She has made an assessment as to whether partners, solicitors and counsel were appropriately employed, and has found that they were. She has considered whether counsel were over employed or not, and has found that they were not. She has also reviewed in detail the disbursements charged and has reduced these by reference to her experience. In doing so she has attempted a "conservative" estimate of the first defendant's costs. 17Ms Vine-Hall's conclusion is that the first defendant's reasonable costs on a party-party basis would be the figure sought, $563,299.82. 18Mr Condon submits that Ms Vine-Hall has taken a logical, fair and reasonable approach to the calculation of this amount. 19I accept that submission. 20Mr Menzies did not seek to cross-examine Ms Vine-Hall. 21In argument, Mr Menzies stated that he did not dispute that Ms Vine-Hall's figure was reasonable. 22There is no dispute that the plaintiff is impecunious. Mr Menzies said: - "Your Honour, no, there is no issue that the plaintiff is indigent and has no funds available presently and in the foreseeable future". 23In Harrison v Schipp (2002) 54 NSWLR 738, Giles JA considered the relevant principals (in the context of the forerunner to s 98, Supreme Court Rules 1970 part 52A rule 6). His Honour said at [21] and [22]: - "The power conferred by Pt 52A, 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; [1987] 1 All ER 261; Sparnon v Apand Pty Ltd (Federal Court of Australia, von Doussa J, 4 March 1998, unreported); Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119; Hadid v Lenfest Communications Inc [2000] FCA 628). 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 (Court of Appeal, 21 February 1996, unreported) per Clarke JA." 24The relevant principals have been further considered in Hamod v State of New South Wales [2011] NSWSCA 375 especially per Beazley JA at [813] - [820]. 25On the face of it, this is an archetypal case for the making of a gross sum costs order. 26Assessment of costs will be protracted and expensive. The plaintiff does not have the means to meet the liability likely to result from the assessment. 27Further, detailed credible expert evidence has been adduced as to the likely outcome of the assessment process. 28In substance, the only matter put by Mr Menzies to oppose the order being made relates to the appeal now being prosecuted by the plaintiff in the Court of Appeal against Slattery J's judgment. 29Mr Menzies submits that the first defendant's object, in bringing the application for a gross sum costs order, is to thwart the appeal and that the application is, for that reason, an abuse of process and should be dismissed. 30In support of his submission, Mr Menzies points to the vigour with which the first defendant has resisted the progress of the plaintiff's appeal, and points to the following procedural history of the appeal: - (a)the Notice of Appeal was filed on 18 August 2011; (b)on 17 November 2011 the first defendant filed a Notice of Motion seeking an order that the appeal be set aside or, alternatively, that the plaintiff pay security in the sum of $150,000; (c)on 12 December 2011 Giles JA ordered that the plaintiff provide security for the appeal in the sum of $125,000, to be paid in two tranches of $30,000 and $95,000. His Honour ordered that the appeal be stayed pending payment into Court of the first amount of $30,000, and that the further sum of $95,000 be paid if the appeal survived the first defendant's application to dismiss it (which application was adjourned until 31 January 2012); (d)by Notice of Motion dated 14 February 2012 the plaintiff sought expedition of the appeal; (e)on 28 February 2012 Young JA dismissed the first defendant's application to dismiss the appeal, expedited the appeal; ordered that the $95,000 security be paid by 2 April 2012, failing which the appeal was to be dismissed. His Honour also made directions for the plaintiff's application to adduce further evidence and fixed 29 May 2012 as the date for the hearing of that application; (f)on 2 April 2012 Young JA heard an application by the plaintiff challenging the self executing order his Honour made concerning the $95,000 security; (g)on 5 April 2012 Young JA dismissed that application and extended the self executing order until 10 April 2012; (h)on 10 April 2012 Young JA extended the self executing order until 24 April 2012 and referred the matter to a court of three on that day; (i)on 8 May 2012 Whealy, Meagher and Barrett JJA dismissed the plaintiff's application and extended the time for payment of the $95,000 security until 15 May 2012; and (j)on 15 May 2012 the plaintiff paid to the Court the balance of the money required for security. 31I accept that the first defendant has robustly sought to protect his interests in relation to the plaintiff's appeal, in respect of his application for security, and otherwise. 32But I cannot infer, from that history, that the first defendant's motivation in making this application (commenced on 25 January 2012) and prosecuting it is to stifle the appeal. 33In view of the admitted impecuniosity of the plaintiff, it is not at all surprising that the first defendant would wish to be placed in a secure position concerning the costs of the appeal. 34Mr Menzies also points to the fact that on 10 May 2012 (the day before the hearing before me), the plaintiff offered to consent to the gross sum costs order provided the first defendant undertook to not enforce such order until the appeal and any subsequent new trial had been finally determined. That offer was rejected. 35Mr Menzies submits that: - "One is driven ineluctably to the conclusion that the only basis for the application is to enable the defendant by the process of enforcement, by bankruptcy or otherwise, to thwart the plaintiff and thereby stultify the appeal. That is an abuse of process". 36I do not accept this submission. I see no basis upon which to conclude that there has been any abuse of process. 37In my opinion, there is no reason to think that the first defendant has brought this application for any reason other than to avoid the expense and inconvenience of a lengthy assessment of costs. 38I do not think it was unreasonable of the first defendant to reject the offer made. The offer did not merely posit a stay pending the appeal, but pending any subsequent trial. 39As Mr Condon submitted: - "If the defendant is entitled to a measure of protection pending the prosecution of his appeal, then this Court or the Court of Appeal would no doubt grant a stay in favour of the defendant". 40That may very well be, but I doubt the Court, at least at this stage, would entertain a stay beyond the disposition of the appeal. 41The material forwarded to my chambers on 14 June 2012 comprised a document called "Settlement Deed" dated 18 October 2011 to which the first defendant and others, but not the plaintiff, are parties, together with an affidavit sworn in the Court of Appeal proceedings by a private investigator. 42The documents were unaccompanied by any submission as to their relevance, save for an assertion, made by the plaintiff's solicitor, that the documents demonstrated "a collateral purpose, namely the stultification of the appeal, by whatever means was available". 43I am unable to see how the documents provide support for that assertion, and unassisted by any further submission, I cannot see how they take the matter any further. 44I make the following orders: - (1)pursuant to s 98 of the Civil Procedure Act 2005 the plaintiff pay the first defendant $563,299.82 in respect of the costs required to be paid pursuant to the order of Slattery J of 19 May 2011; and (2)the plaintiff pay the costs of the first defendant's Notice of Motion of 25 January 2012. ********** 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: 18 June 2012