Supreme Court New South Wales Medium Neutral Citation: Short v Crawley (No. 44) [2013] NSWSC 250 Hearing dates: 15 March 2013 Decision date: 15 March 2013 Jurisdiction: Equity Division Before: White J Decision: Order that the first and sixth defendants' notice of motion filed on 21 November 2012 be dismissed. Order that those defendants pay the plaintiffs' costs of the notice of motion. Catchwords: PROCEDURE - Supreme Court Procedure - New South Wales - application for access to files to aid application for gross sum costs pursuant to s 98(4)(c) of the Civil Procedure Act 2005 - Practice Note SCEQ 11 - purpose of gross sum costs order being to avoid delay and cost - no line by line consideration of documents - potential for sampling documents to assess reasonableness of costs Legislation Cited: Civil Procedure Act 2005 Cases Cited: Idoport Pty Limited v National Australia Bank Limited [2007] NSWSC 23 Category: Interlocutory applications Parties: Roslyn Short as Executrix of the estate of the late Warwick Gordon Short (1st Plaintiff) Nabatu Pty Ltd (2nd Plaintiff) Christopher Crawley (1st Defendant) Judith Kiralyhidi Crawley (6th Defendant) Representation: Counsel: T M Thawley SC with C Botsman (Plaintiffs) A Ogborne (1st and 6th Defendants) Solicitors: Bridges Lawyers (Plaintiffs) Bruce & Stewart Lawyers (Defendants) File Number(s): 1998/29427 Judgment 1HIS HONOUR: On 26 October 2012, the plaintiffs filed a notice of motion seeking a variation of costs orders made on various dates in these proceedings. The variation sought is that instead of assessed costs, the defendants pay a gross sum as determined by the Court pursuant to s 98(4)(c) of the Civil Procedure Act 2005. I am not today dealing with that application, but with an application filed on 21 November 2012 by the first and sixth defendants for access to the plaintiffs' files. 2In the course of his opening, counsel for the first and sixth defendants handed up a proposed short minute of order that represents the relief now pressed by the first and sixth defendants in relation to their having access to documents. In effect, this was an amendment of the notice of motion and can be treated accordingly. 3Those defendants seek orders that the plaintiffs produce for inspection by the first and sixth defendants the documents maintained in their solicitors' files, including cost disclosures, cost agreements, time records, documents describing legal services performed, letters, facsimiles, emails, and internal and other memoranda and correspondence (whether held electronically or in hard copy format) relating to these proceedings. They also seek production of all documents or things which record or evidence instructions received from the plaintiffs or the cross-defendants, or which record advice given to or work performed on behalf of those parties. 4Excluded from the request are final or draft pleadings, notices of motion or other interlocutory applications, final affidavits and experts reports, the documents contained in the bundles that were tendered during the hearings, final or draft lists of discovered documents, and the discovered documents themselves, final and draft subpoenas and the documents produced in answer to the subpoenas, transcripts, tax invoices and final and draft written submissions. 5The proposed short minute of orders also excludes from the documents sought draft affidavits and draft expert reports. But I understand that as a result of evidence given by Mr Calabria, the solicitor for the plaintiffs, to the effect that the work done in preparing such affidavits or experts reports is likely to be evidenced not only by separate file notes, but by amendments to and notes made on drafts of affidavits or reports, that the first and sixth defendant seek access to such documents as well. 6The first and sixth defendants seek an order that the documents be made available for inspection either by making and serving duplicate copies of the documents or, in the case of electronic documents, by duplicate copies on CD or DVD Rom or other electronic media, or else by making the documents available for inspection at a place in the Sydney CBD. 7The plaintiffs oppose the application. They say that the purpose of a proceeding for the determination of a specified gross sum to be ordered instead of assessed costs is to avoid detailed line by line methods of taxation or assessment, which seems to be inherent in the defendants' request for production of the plaintiffs' solicitors' and counsels' work product. 8Where a court is asked to make a lump sum costs order, there will be a question as to whether the materials available to the court are adequate for the making of such an order. It has been said that on such applications the court takes a broad-brush approach to the assessment of cost, and a lump sum can be ordered provided that the assessment is logical, fair and reasonable. 9The plaintiffs' application has not proceeded far. It is supported by an affidavit of Mr Calabria of 20 September 2012. In addition, a report has been served by a cost assessor, Ms Vine-Hall, in support of the plaintiffs' proposal for a lump sum determination. No evidence has yet been served by the defendants. 10Practice note SCEQ 11 is engaged. Paragraph 5 of that practice note provides that: "There will be no order for disclosure in any proceedings in the Equity Division unless it is necessary for the resolution of the real issues in dispute in the proceedings." 11Paragraph 4 provides that: "The Court will not make an order for disclosure of documents until the parties to the proceedings have served their evidence, unless there are exceptional circumstances necessitating disclosure." 12The defendants' application is supported by an affidavit of their solicitor, Mr Robert Gorczyca. He deposes that it would not be possible for any person to undertake either an assessment of costs the subject of the "Gross Sum Motion", nor for the Court to determine the Gross Sum Motion without there first being an analysis of the reasonableness of the underlying work and the costs charged for the work that have been the subject of invoices and credit notes which have been provided, and which are an exhibit to Mr Calabria's affidavit of 20 September 2012. 13Mr Gorczyca says that for anyone to be in a position to fairly and properly consider whether or not the gross sum sought by the plaintiffs is appropriate, the defendants must first have access to the files which record the work performed which led to the generation of the invoices. He says that it is only then that the defendants can assess whether the rates at which the costs are being claimed are fair and reasonable, whether the costs contained in the invoices fall within the scope of the costs orders, and whether the costs claimed on a solicitor and client basis are fair and reasonable. He gives evidence in respect of some particular entries as to why he says that it would be contended that particular items are not fair and reasonable. 14If, on the hearing of the plaintiffs' application, the Court is satisfied that there is the material available upon which a lump sum order could properly be made and the order is otherwise appropriate, the question of what lump sum should be ordered will be addressed having regard to what amount might be allowed on an assessment, but recognising that the purpose of the procedures under s 98(4)(c) is to avoid the delay and cost which would be associated with a detailed assessment of costs. 15On the determination of a lump sum, assuming that there would be adequate material available to make such a determination, no doubt the Court would have to consider the reasonableness of the amounts charged by lawyers, experts and counsel, including the reasonableness of the hourly rates charged. At least if there is an issue raised about it, the Court would have to be satisfied that the amount determined fairly reflected what was reasonable and proper to charge, and that any discount of what was charged made appropriate allowance for any work that might have been done in excess of what was reasonable in the circumstances. 16The costs orders made in these proceedings provide different bases for the assessment of costs in relation to different applications. There is a number of interlocutory applications for which separate costs orders were made. Some orders were made in favour of the plaintiffs, and some in favour of the first to sixth defendants. A separate costs order was made in relation to the cross-claims in favour of the cross-defendants. Those costs were ordered on the indemnity basis. 17As to the general costs of the proceedings, an order was made that the relevant defendants pay two thirds of the plaintiffs' costs. Accordingly, the plaintiffs in their application for a lump sum costs order seek to differentiate the work that was done into different categories so that the appropriate allowance is made in respect of the different categories. 18The question then is whether or not disclosure of the plaintiffs' files is necessary for that determination to be fairly made, and if so whether it is necessary at this stage of the proceeding. 19In his submissions counsel for the first and sixth defendants said that those defendants do not seek access to the files of the plaintiffs' solicitors in order to attempt a detailed examination of the type that would be appropriate to assessment. Rather, they seek access to the files in order to be in a position to obtain the opinion of an expert costs consultant who is to be given access to those files, and who could undertake an analysis of the costs invoiced by the plaintiffs' solicitors by means of methodical sampling and testing of the costs charged by the plaintiffs' solicitors by reference to the underlying documents on the files. 20It appears from Idoport Pty Limited v National Australia Bank Limited [2007] NSWSC 23 at [39] that in that case, the primary judge made orders for the production of materials from the bank's solicitor's files as a sampling exercise. 21The first and sixth defendants' notice of motion does not seek a sample of the relevant documents. Rather it seeks access to the entire range of documents, with the exclusions I have mentioned. 22I am not satisfied that such disclosure of documents is warranted. I am not satisfied that that order would be consistent with the cheap and quick resolution of the remaining issues in the proceedings. Nor do I think such access is necessary in order for there to be a just resolution of the plaintiffs' claim for a lump sum costs order, once it is appreciated that the application under s 98(4)(c) is not to be addressed as if it were an assessment of costs involving a consideration of line by line items. 23That is not to say that it might not be appropriate at some point to require the production of a sample of documents in order to test whether the costs claimed by the plaintiffs to fall within particular categories do fall within those categories, or to test whether there are costs of interlocutory applications, where an order was made in favour of the defendants, which may have been included in the category of the general costs of the proceedings for which the plaintiffs are entitled to recover two thirds of their ordinary costs, or to determine whether, to put it colloquially, the plaintiffs may have been over-serviced in their conduct of the litigation. 24No such application has yet been made. If such an application were made, the Court would be assisted by the views of cost consultants on both sides, (assuming that the defendants retain a cost consultant in this application), as to the kind of documents which might be sought in such an exercise, and the type of sample which it might be appropriate to take. For example, a sample as to particular work done, such as the conduct of a particular interlocutory application, or a sample by reference to time, for example a period of the litigation. 25Mr Gorczyca does not say why, in his view, all of the documents of the kinds he says are necessary would be required for such a sampling exercise as that proposed by counsel for the first and sixth defendants in his submissions. Mr Gorczyca refers to some particular entries in invoices which he says raise questions which would need to be answered before it could be decided whether the costs claimed in the invoices were reasonable, or unreasonable and hence irrecoverable. 26Those are not reasons for requiring the production of all of the documents sought by the defendants. The overall reasonableness of the plaintiffs' costs might be capable of being assessed in other ways, including by reference to the number of persons engaged in the litigation on the plaintiffs' side, and whether that is more or less than what would ordinarily be expected in litigation of this size and complexity, and the level of charges made by the lawyers and experts involved. Prima facie the costs incurred by the defendants in the litigation would also be relevant to a broad-brush assessment of the reasonableness of the plaintiffs' costs. 27I am not satisfied that the disclosure of all of the documents sought is necessary for the resolution of the real issues in dispute in the proceedings. In any event, there are not exceptional circumstances necessitating disclosure before the defendants have served their evidence. To the contrary, I think it is only after the defendants have served their evidence that the Court could properly assess whether some more limited disclosure of the plaintiffs' documents would be required for the resolution of the real issues. 28For these reasons, I order that the first and sixth defendants' notice of motion filed on 21 November 2012 be dismissed. I order that those defendants pay the plaintiffs' costs of the notice of motion. 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: 26 March 2013