Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 3) [2018] NSWCA 50 Hearing dates: On the papers Date of orders: 21 March 2018 Decision date: 21 March 2018 Before: Payne JA Decision: Probuild Constructions (Aust) Pty Ltd to pay Shade Systems Pty Ltd costs of the two motions filed on 15 February 2018 a specified gross sum of $21,000 (ex GST) pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW) Catchwords: COSTS – gross sum costs order pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW) – no issue of principle Legislation Cited: Civil Procedure Act 2005 (NSW) Cases Cited: Bechara v Bates [2016] NSWCA 294 Wilkie v Brown [2016] NSWCA 128 Texts Cited: None Category: Costs Parties: Shade Systems Pty Ltd Probuild Constructions (Aust) Pty Ltd Doron Rivlin (Second Respondent) G A Atkins (Third Respondent) G T Connellan (Fourth Respondent) J Cooper (Fifth Respondent) L Gardner (Sixth Respondent) S C Harris (Seventh Respondent) M J Huckerby (Eighth Respondent) M J Lee (Ninth Respondent) P McCarthy (Tenth Respondent) R McKenna (Eleventh Respondent) S G O'Sullivan (Twelfth Respondent) M A Pitt (Thirteenth Respondent) P W Utiger (Fourteenth Respondent) S Wallace (Fifteenth Respondent) C A Williams (Sixteenth Respondent) Representation: Counsel: M Christie SC / D Hume (Shade Systems Pty Ltd) S Robertson (Probuild Constructions (Aust) Pty Ltd) Solicitors: Moray & Agnew (Shade Systems Pty Ltd) Maddocks (Probuild Constructions (Aust) Pty Ltd) Moray & Agnew (Third to sixteenth respondents) File Number(s): 2016/205479 Publication restriction: None [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. PAYNE JA: On 26 February 2018 I heard two motions, one brought by each of the parties to this proceeding, in the referrals list. On 28 February 2018 I handed down judgment: Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2018] NSWCA 33. This judgment addresses an application for a gross sum costs order foreshadowed by Shade Systems, the successful party on the motions. In the principal judgment, I made the following relevant orders: (1) … (2) Probuild Constructions (Aust) Pty Ltd must pay the costs of the 15 February 2018 motion filed by Shade Systems Pty Ltd. (3) The 15 February 2018 motion filed by Probuild Constructions (Aust) Pty Ltd is dismissed with costs. (4) In relation to the whether the costs of either motion dated 15 February should be ordered to be paid on a lump sum basis, direct that: (a) Shade Systems Pty Ltd and the Third to Sixteenth Respondents to file any further evidence or submissions (limited to five pages) by 4pm on 2 March 2018; (b) Probuild Constructions (Aust) Pty Ltd to file any further evidence or submissions (limited to five pages) by 4pm on 9 March 2018; (c) Shade Systems Pty Ltd and the Third to Sixteenth Respondents to file submissions in reply (limited to 2 pages) by 4pm on 12 March; and (d) the question of costs be determined on the papers. (5) … 1. The general discretion and particular power I have to order that the costs of the motions dated 15 February 2018 should be ordered to be paid on a gross sum basis is found in ss 98(1) and (4) of the Civil Procedure Act 2005 (NSW) which provides: "98 COURTS POWERS AS TO COSTS (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. … (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. …" 1. Shade Systems filed submissions dated 2 March 2018 and an affidavit of Mr Patrick Kaluski sworn on 2 March 2018. Probuild filed submissions dated 9 March 2018 and an affidavit of Mr Mathew Phillip Stulic sworn on 9 March 2018. 2. The appropriate principles for the award of a gross sum costs order were not in dispute. Those principles were summarised by this Court in Wilkie v Brown [2016] NSWCA 128 at [50]-[51]. 3. Shade Systems sought a gross sum costs order in a specified amount, namely $30,500 (ex GST). This submission was supported by the affidavit of Mr Kaluski, solicitor for Shade Systems, dated 2 March 2018. This affidavit outlined the fees incurred in relation to this matter which totalled $32,722.25 (ex GST). 4. Shade Systems submitted that the matters relevant to the exercise of the discretion include: 1. sections 56, 57 and 60 of the Civil Procedure Act; 2. the degree of any disproportion between the issue litigated and the costs claimed; 3. the complexity of the proceedings in relation to their cost; 4. the capacity of the unsuccessful party to satisfy any costs liability; 5. whether costs have been incurred in lengthy or complex cases and it is desirable to avoid the expense, delay and aggravation likely to be involved in a contested costs assessment; and 6. whether a party's conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate to the result of the proceedings. 1. Shade Systems submitted that it is appropriate for the Court to make a gross sum costs order in this case in light of these considerations. It submitted that the costs were incurred "…in connection with proceedings involving multiple affidavits, two contested motions, detailed written submissions, oral argument on the motions which took up the better part of a day, an oral application for a stay and then further written submissions and evidence on costs". 2. Probuild did not oppose the Court making an order that costs payable to Shade Systems be paid as a specified gross sum. However, as Probuild correctly submitted, this Court made clear, most recently in Bechara v Bates [2016] NSWCA 294, that the power to award a gross sum costs order under s 98(4) of the Civil Procedure Act should only be exercised where an appropriate sum can be determined from the available materials. 3. No such figure could be discerned with sufficient clarity from the evidence filed by Shade Systems. While the total amount of costs incurred was identified and was not in dispute, Shade Systems' evidence did not demonstrate with sufficient clarity the extent to which the costs actually incurred would likely be allowed on a party-party assessment of costs. 4. But for the evidence filed by Probuild from Mr Stulic, in his affidavit dated 9 March 2018, I would have concluded that the power to award a gross sum costs order was not enlivened here as the appropriate sum could not be determined from the available materials. Mr Stulic opined that: "It is my opinion, based on my experience, on a costs assessment, the likely recoverable party-party costs (based on the material in the Kaluski Affidavit) would be no more than $21,000 to $25,000 (excluding GST)." 1. I am persuaded by Mr Stulic's affidavit that in an assessment of costs an award in the range of $21,000 to $25,000 (ex GST) would likely be made. Whilst Shade Systems in its submissions in reply filed on 13 March 2018 pressed its initial claim, it accepted, in the alternative, a gross sum award of costs in the range of $21,000 to $25,000 (ex GST), the range posited by Mr Stulic. 2. The issues of the two motions filed on 15 February 2018 were intertwined and approached by both parties on that basis. It is therefore appropriate that there be a single specified gross sum in respect of both motions. 3. These proceedings need to be brought to an end. They have occupied a judge of the Equity Division, a five member bench of this Court and the High Court of Australia. There is, on the evidence, likely to be delay and aggravation (including additional costs) in what would otherwise no doubt be a contested costs assessment. It is in the interests of the efficient dispatch of this litigious dispute and in accordance with s 56 of the Civil Procedure Act that an award of costs on a gross sum basis be made now. 4. I am not conducting a detailed assessment of costs. An award of costs on a gross sum basis is usually made on the basis of a discount on the costs which would otherwise be assessed: Wilkie v Brown at [53]. 5. Whilst I accept that the costs incurred by Shade Systems were properly incurred and that the matter did occupy most of a day in the referrals list before me, the claim for $30,500 (ex GST) is excessive and not supported by the evidence before me. I have earlier accepted that in an assessment of costs an award of costs in the range of $21,000 to $25,000 (ex GST) would likely be made. In accordance with principle, and in the exercise of my discretion, I regard a figure at the bottom of that range as appropriate. Applying the broad brush approach as indicated in the authorities, I have determined that Shade Systems should be awarded a gross sum for costs of the motions of $21,000 (ex GST). 6. Accordingly, I make the following order: 1. Probuild Constructions (Aust) Pty Ltd to pay Shade Systems Pty Ltd costs of the two motions filed on 15 February 2018 a specified gross sum of $21,000 (ex GST) pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW). 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: 21 March 2018