Leamey v Evatt (No 3) [2018] NSWSC 1215

Supreme Court New South Wales

Medium Neutral Citation: Leamey v Evatt (No 3) [2018] NSWSC 1215 Hearing dates: On the papers Decision date: 06 August 2018 Jurisdiction: Equity Before: Robb J Decision: The parties are directed to agree short minutes of order to give effect to these reasons for judgment and to deliver them to the associate to Robb J within 14 days Catchwords: COSTS — Interpleader proceedings —Gross sum costs orders — further consideration of original costs judgment — Calderbank offer — Jointly made Calderbank offer ineffective in the present case Cases Cited: Leamey v Evatt [2018] NSWSC 498 Leamey v Evatt (No 2) [2018] NSWSC 840 London Scottish Benefit Society v Chorley (1884) 13 QBD 872 Category: Costs Parties: David Leamey (Plaintiff) Clive Evatt (First Defendant) Roger Rasmussen (Second Defendant) Christopher Dibb (Third Defendant) Representation: Counsel: J T Johnson (First and Second Defendants) E Graham (Third Defendant)

Solicitors: David Leamey Solicitor and Barrister (Plaintiff) Sanford Legal (First and Second Defendants) File Number(s): 2017/290080

Judgment 1. This matter started out life as an interpleader summons by the plaintiff in respect of the amount of $21,000. 2. The defendants are three barristers, who had earlier made conflicting claims as to their entitlements to share in the $21,000. 3. Following a hearing on 13 April 2018, I gave judgment on the interpleader summons on 27 April 2018: Leamey v Evatt [2018] NSWSC 498. 4. I will use the same terms in this judgment where relevant, as I used in the primary judgment. 5. In the primary judgment I found in favour of Mr Dibb, the third defendant. 6. At [96] of the primary judgment, I said that I would hear from the claimants concerning what costs order should be made in respect of Mr Leamey's costs, and the costs as between the claimants. I said that all of the applications concerning cost should be made in writing provided to my associate, and final orders would be made in chambers. 7. I did not specify deadlines concerning the submissions that the parties may wish to make concerning costs. I assumed that as all of the parties were lawyers, they would respond promptly. As it turns out, that was an erroneous assumption. 8. Mr Leamey delivered written submissions to the Court on 9 May 2018. As noted at [18] of the original costs judgment, Mr Leamey's submissions appeared to have been sent to the solicitor for Mr Evatt and Mr Rasmussen. Mr Dibb delivered his submissions to the Court on 10 May 2018. 9. Having heard nothing from Mr Evatt and Mr Rasmussen, the Court published a judgment on the outstanding costs issues on 6 June 2018: Leamey v Evatt (No 2) [2018] NSWSC 840. 10. In essence, Mr Leamey sought a gross sum cost order in respect of the earlier notice of motion in the amount of $1400, and a gross sum cost order for the balance of the interpleader of $6218. I had earlier ordered Mr Evatt to pay Mr Leamey's cost of the notice of motion. I found that Mr Leamey was entitled to a gross sum cost order in respect of the balance of the interpleader, but held that, in the circumstances, the costs should not be paid out of the $21,000 that had been paid into court, but should be paid by Mr Evatt and Mr Rasmussen. 11. I also found that Mr Dibb should be paid the limited amount of the costs claimed by him by Mr Evatt and Mr Rasmussen. I found at [27] that the costs of $7562 claimed on behalf of Mr Dibb were reasonable. 12. Finally, I asked counsel for Mr Dibb to prepare appropriate short minutes of order, and then submit them to the other parties and my associate. I invited Mr Dibb's counsel to add her time cost for this process at her standard rate to the amount of the costs order to be made in favour of Mr Dibb. I asked that these matters be attended to within the next 14 days. 13. Low and behold, Mr Dibb's compliance with this request prompted Mr Evatt and Mr Rasmussen (or their lawyers) to awake from their slumbers and, notwithstanding the delivery of the cost judgment on 6 June 2018, to request that the Court receive written submissions from Mr Evatt and Mr Rasmussen. 14. Remembering that the amount at issue was $21,000, the Court has now delivered two judgments, and is in the process of writing a third one. The Court has written submissions from Mr Evatt and Mr Rasmussen dated 10 June 2018, a response from Mr Leamey dated 13 June 2008, and a response from Mr Dibb dated 14 June 2018. 15. As the Court has not yet formally made any cost orders, and given that I did not think it necessary to impose deadlines in relation to the delivery of submissions on costs, I will entertain the submissions that have now been delivered on behalf of Mr Evatt and Mr Rasmussen. Of course, those gentlemen take a risk as to further costs in taking the course that they have taken. 16. Before I deal with the substance of the submissions made by Mr Evatt and Mr Rasmussen, it will be necessary to mention a further matter that arises in respect of the court costs incurred by Mr Leamey. 17. As mentioned at [13] of the first costs judgment, there was an uncertainty in relation to Mr Leamey's cost claim, in that he had advised that he had not yet received an invoice from the Court for the hearing fee for the hearing on 13 April 2018. Mr Leamey sought an order that any hearing fee be paid by Mr Evatt and Mr Rasmussen to the Court directly, and that he not be required to pay the hearing fee. I responded, at [14], with the conclusion that it would be most efficient if Mr Leamey, as the party primarily liable to pay any hearing fee, made an immediate application to the Registry to determine whether or not such a fee will be imposed upon him, and if it will be imposed, what the amount will be. That information was to be conveyed to my associate so that final orders could be made to complete this matter. 18. On 12 June 2018, my associate received an email from Mr Leamey to which he attached what he described as the Court's Tax Invoice for the hearing in the sum of $2197. He asked that the amount be added to the existing application for costs, or that Mr Evatt and Mr Rasmussen be ordered to pay the amount directly to the Court. He submitted that the hearing fee and the filing fee (the latter already having been paid by Mr Leamey) should be paid in priority to other costs, and to the extent possible, be payable from the surplus amount in his trust account (which I assume is a reference to the $21,000 the subject of the interpleader). 19. Unfortunately, the document attached to Mr Leamey's email was a Receipt/Tax Invoice for $1101, which Mr Leamey has apparently paid. It is the invoice for the filing fee for the summons. It is not the tax invoice for the hearing fee of $2197. 20. However, Mr Leamey attached to his 13 June 2018 submission a copy of the Court's Tax Invoice dated 8 June 2018 in respect of the hearing fee of $2197. 21. Mr Leamey then apparently had further thoughts, and on 14 June 2018 sent another email to persons interested in this matter and also my associate. In effect, Mr Leamey sought an additional formal order (making the necessary corrections to the manner in which the order was formulated) that Mr Evatt and Mr Rasmussen be directed to pay the sum of $2197 to the Court as a partial payment of Mr Leamey's costs of the proceedings, and any surplus from the amount payable by Mr Evatt and Mr Rasmussen to be paid to Mr Leamey. 22. I will now turn to the submissions made on behalf of Mr Evatt and Mr Rasmussen. 23. First, in par 2, they submit that a judge of the Court (as opposed to the Registrar) does not have power to waive or vary the identity of the person liable to pay relevant court fees under the provisions of the Civil Procedure Regulation 2017. I do not need to deal with that submission, because as indicated in the first costs judgment, I do not intend to make such an order. 24. Now that the total amount of the court fees payable by Mr Leamey has been established, I will order the unsuccessful defendants, being Mr Evatt and Mr Rasmussen, jointly to pay to Mr Leamey the full amount necessary to indemnify him against his liability to the Court. 25. The second issue raised by Mr Evatt and Mr Rasmussen concerns how the GST component of any costs incurred by Mr Leamey or Mr Dibb should be dealt with. They submitted in pars 4 and 26 that the final amount of any costs ordered to be paid to each of those parties should be discounted by 1/11 of the total payable. 26. The submissions do not explain, as a matter of principle or authority by reference to the provisions of the A New Tax System (Goods and Services Tax) Act 1999, why it is that the amount of the costs ordered to be paid should be discounted in this way. 27. All that is said in par 4, is that as the amount of costs claimed is inclusive of GST: "It is submitted in circumstances where the claimant is clearly seeking reimbursement of his fees as ordered and presumptively entitled to any input credit in respect of any GST obligation, the inclusion of GST in any calculation of cost is inappropriate and should be disregarded." 28. In the circumstances I do not think that the Court is obliged to enter upon a technical analysis of the obligations under the GST Act. 29. As I understand it, Mr Leamey's costs claim is to reimburse him for his professional time expended in dealing with this matter, on the principle in London Scottish Benefit Society v Chorley (1884) 13 QBD 872. I suspect that Mr Leamey's efforts that have led to him making the costs claim would be a taxable supply in respect of which he would have to pay GST in respect of any costs ordered to be paid to him. If Mr Evatt and Mr Rasmussen are ordered to pay Mr Leamey's costs, they may be entitled to receive a tax invoice from him, so that they could claim an input tax credit in respect of the GST payable by Mr Leamey. If for some unexplained reason, Mr Leamey has not made a taxable supply, then GST would be irrelevant. 30. I am not sure whether or not in fact the costs claim made by Mr Leamey is inclusive of GST. The matter was not addressed at the hearing. 31. Accordingly, notwithstanding the submissions made by Mr Evatt and Mr Rasmussen, I do not propose to alter in principle the order that I foreshadowed in the original costs judgment in relation to Mr Leamey's claim. 32. The position should be different with Mr Dibb. He is only claiming for his counsel's fees. Mr Dibb should have been entitled to claim an input tax credit in respect of the GST component of any tax invoice given to him by his counsel. 33. Mr Dibb conceded in his written submissions that his application for lump sum costs for counsel's fees should be exclusive of GST. Mr Dibb has accordingly made an adjustment to the quantification of the amount of costs that he has claimed. 34. The third submission made by Mr Evatt and Mr Rasmussen (par 21) is that Mr Leamey's application ought to be refused, because at the present time it is inappropriate to determine any amount of lump sum costs, "in the absence of there being any clear articulation of the amount of fees payable in terms of the Civil Procedure Regulation 2017". For the reasons I have explained above, this difficulty has now been cured by Mr Leamey serving on the parties and the Court the correct tax invoice dealing with the hearing fee. 35. The next submission made is in relation to the order that the Court has already made concerning the costs of the notice of motion that has already been dismissed. It is pointed out that only Mr Evatt was ordered to pay the costs of that notice of motion, and the order does not operate against Mr Rasmussen. If as between themselves, Mr Evatt and Mr Rasmussen do not take the view that the costs of the dismissal of the notice of motion should be shared between them (given that the intent of the notice of motion would have benefited both), so be it. When the final orders are made, the order for the payment of the costs of Mr Leamey of the notice of motion should only be made against Mr Evatt. 36. Then, the written submissions contain a detailed argument as to the legal principles that are applicable in cases where the Court proposes to make a gross sum costs order. I agree in principle with the submissions that have been made. 37. Those submissions lead to an argument that any lump sum costs order made in favour of Mr Leamey or Mr Dibb should be discounted by various percentages. The discount claimed is 30% in the case of Mr Leamey (par 23), and 20% in the case of Mr Dibb (par 29). 38. However, as Mr Evatt's and Mr Rasmussen's submissions properly acknowledged, there will be cases in which it may be inappropriate to apply any discount (see pars 16 and 17). 39. I do not propose to make any discount from the lump sum awarded in favour of Mr Leamey, as Mr Leamey was forced to initiate an interpleader in respect of a sum as small as $21,000, because three experienced barristers could not come to a sensible agreement as to how the money should be split between them. As noted at [12] of the first costs judgment, prima facie Mr Leamey, as an interpleader, should have a complete indemnity for his costs. The only real issue was whether he should be indemnified out of the sum the subject of the interpleader, or by the unsuccessful parties. 40. I also do not think it is appropriate for the Court to discount the lump sum that will be ordered to be paid to Mr Dibb. Mr Dibb did not seek to claim any amount for his personal professional time, which is likely to have been substantial, given his evidence that he acted in the matter for himself for a considerable period. In the circumstances it would be churlish for the Court to order that Mr Dibb's counsel's fees be discounted, when he has clearly been required to pay them. The initial proceedings at least were relatively straightforward, and the Court can be satisfied that the amounts invoiced by counsel were reasonable in the circumstances, and I have so found. 41. The final submission made by Mr Evatt and Mr Rasmussen was based upon a letter dated 21 November 2017, in which a Calderbank offer was made to both Mr Leamey and Mr Dibb. The offer was open to 12 midday on Wednesday, 28 November 2017 and was in the following terms: 1. The Court orders Leamey to pay $6000 to Dibb. 2. The Court orders Leamey to pay $15000 to Evatt. 3. The Summons be dismissed. 4. Each party (including the interpleader Leamey) pays their own costs. 1. The submission was that, as between Mr Rasmussen and Mr Dibb, there ought to be no order as to costs, because (par 28): "The result as ordered by the Court is less than that offered so far as it related to the Second Defendant". 2. The basis of this submission appears to be that a Calderbank offer was made on the acceptance of which $6000 would be paid to Mr Dibb, $15,000 would be paid to Mr Evatt, and nothing would be paid to Mr Rasmussen. In the event, the court ordered that $675 should be paid to Mr Rasmussen, which means that Mr Rasmussen achieved a result that was better than the Calderbank offer. 3. I reject this argument, and accept the submission made on behalf of Mr Dibb that the Calderbank principle does not apply in this case, because the offer made on 21 November 2017 was made jointly on behalf of Mr Evatt and Mr Rasmussen, and was not capable of being accepted by Mr Dibb solely in relation to one of them. Overall, Mr Dibb clearly has done much better than the offer would have given him, because the Court has ordered that he should be paid $18,638, rather than the $6000 that he would have received under the so-called Calderbank offer. 4. Finally, Mr Evatt and Mr Rasmussen should be ordered to pay, as part of the lump sum costs, the additional costs incurred by Mr Leamey and Mr Dibb in responding to their late submissions. 5. As I understand it, Mr Leamey has not quantified any additional cost claim. If he wishes to make such a claim, he should submit evidence to the other parties and my associate within 7 days of these reasons being delivered. I would counsel Mr Leamey to be conservative in relation to his claim. 6. Mr Dibb has provided evidence in the form of his counsel's tax invoice for $990 (excluding the GST of $99, for reasons mentioned above) of the additional costs of responding to Mr Evatt's and Mr Rasmussen's submissions. 7. In conformity with the request made in the first costs judgment, counsel for Mr Dibb has included in her submissions an explanation of the calculations of the amount of the lump sum costs that should be ordered to be paid. 8. Quite properly, counsel has not commented upon the issue of whether the amount payable to Mr Leamey should be reduced to exclude GST, and she has undertaken the calculations on the basis of the full amount of Mr Leamey's claim. 9. Counsel has calculated Mr Dibb's claim on the basis only of the amounts invoiced to Mr Dibb by her, reduced by the amounts of GST, but including her latest tax invoice in relation to the last round of submissions. 10. Counsel has set out in par 22 of her submissions the orders that Mr Dibb proposes that the Court should make. 11. The proposed orders do not deal with any additional claim by Mr Leamey, or the proposition that the costs of the notice of motion that was dismissed should be payable by Mr Evatt alone. 12. Mr Leamey should be given leave to relist the matter if he is not promptly paid the amount that will be ordered to be paid to him so that he becomes embarrassed in relation to the payment of the hearing fee to the Court. 13. I will give the parties one more opportunity to come to a sensible agreement about the precise orders to be made. I do not propose to entertain an infinite regression of disputation about the final costs orders. 14. I expect that my associate will be provided with a final form of the short minutes of order necessary to give effect to the three judgments that I have now made, within 14 days of the delivery of these reasons.