Supreme Court New South Wales Medium Neutral Citation: UTSG Pty Ltd v Gwynvill Properties Pty Ltd [2018] NSWSC 1376 Hearing dates: On the papers Date of orders: 06 September 2018 Decision date: 06 September 2018 Jurisdiction: Equity Before: Darke J Decision: Costs to be paid by the plaintiff to the defendant in the specified gross sum of $88,421.29 within 28 days, failing which the proceedings will be stayed. Catchwords: COSTS – application for costs to be awarded in a specified gross sum – costs order in a specified gross sum appropriate where party unnecessarily contributed to the costs of the proceedings – plaintiff's conduct sufficiently egregious to justify costs order in a specified gross sum – plaintiff applied to vacate hearing one month prior to trial despite proceedings being on foot for over two years – unjust to require defendant to participate in ordinary costs assessment process – order that, if payment of costs not made, proceedings be stayed until payment is made Legislation Cited: Civil Procedure Act 2005 (NSW), s 98 Cases Cited: Hamod v State of New South Wales [2011] NSWCA 375 The Berry Rural Co-Operative Society Ltd v Sepak Industries Pty Ltd [2018] NSWSC 298 Category: Costs Parties: UTSG Pty Ltd (Plaintiff) Gwynvill Properties Pty Ltd (Defendant) Representation: Counsel: Mr P Newton (Plaintiff) Mr J A C Potts SC with Mr J C Conde (Defendant) Solicitors: Mills Oakley Lawyers (Plaintiff) Atkinson Vinden (Defendant) File Number(s): 2016/107784 Publication restriction: None Judgment Introduction 1. By a Notice of Motion filed on 25 May 2018 the defendant, Gwynvill Properties Pty Ltd, seeks an order that the plaintiff, UTSG Pty Ltd, pays certain costs in a specified gross sum pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW), and an order that the proceedings be stayed if payment is not made within 28 days. On 6 July 2018 the Court indicated that the application would be dealt with on the papers, and the parties have filed affidavits and written submissions to that end. 2. At all material times the defendant was the registered proprietor of the land contained in Folio Identifier 2/509677, situated at 40 Park Street Sydney ("the Premises"). In March 2013 the defendant granted a lease of the Premises to UTSG Consortium Pty Ltd, an entity related to the plaintiff. In January 2014 UTSG Consortium Pty Ltd assigned its interest in the lease to the plaintiff. The plaintiff operates a medical centre from the Premises. 3. On 5 November 2015 the defendant served on the plaintiff a notice alleging various breaches of the lease, and demanding that the alleged breaches be rectified by the plaintiff. On 17 November 2015 the defendant took possession of the Premises and denied the plaintiff entry. Possession of the Premises was returned to the plaintiff the following day. By a Statement of Claim filed on 8 April 2016 the plaintiff seeks damages said to arise from the allegedly wrongful re-taking of possession, and seeks associated declaratory relief. 4. The parties' evidence in chief was complete by January 2017. The plaintiff's evidence included an expert accounting report by Mr Brett Goodyer, dated 4 November 2016. The progress of the proceedings was hampered for a time by various interlocutory disputes. On 27 October 2017 the plaintiff informed the Court that its evidence was complete and that it did not intend to serve any evidence in reply. On 10 November 2017 the matter was set down for hearing for five days, commencing on 12 June 2018. 5. On 16 February 2018 the plaintiff was ordered to give discovery to the defendant by 16 March 2018. The time for compliance with the order was later extended to 6 April 2018, and then again to 8 May 2018. Unsatisfied with the manner in which discovery was eventually given, the defendant filed a Notice of Motion on 11 May 2018 seeking dismissal of the proceedings pursuant to s 61 of the Civil Procedure Act. 6. On 15 May 2018 the plaintiff filed a motion seeking an order that the hearing, by then only four weeks away, be vacated. In an affidavit in support of that motion Mr Damian Ward, solicitor for the plaintiff, deposed as follows: I have formed the view that this case is not ready for hearing. I have not received all of the documents relevant to the proceedings. In order to ensure the proper preparation of this case for hearing, further evidence is required. 1. In his affidavit Mr Ward also referred to the need to locate and confer with third party witnesses. 2. Both applications were heard on 16 May 2018. In the course of its submissions the plaintiff indicated that it no longer wished to rely on the report of Mr Goodyer. 3. On that day the Court made the following orders: The Court: 1. Vacates the final hearing of these proceedings listed to commence on 12 June 2018 with an estimate of 5 days; 2. Orders that the plaintiff pay the defendant's costs thrown away by reason of the vacation of the hearing dates; 3. Orders that the plaintiff pay the defendant's costs in respect of the defendant's response to the report of My Goodyer; 4. Orders that the plaintiff pay the defendant's costs of the defendant's Notice of Motion filed on 11 May 2018 and the plaintiff's Notice of Motion filed on 15 May 2018; 5. Orders that all costs orders made today be on an indemnity basis and such costs are payable forthwith; 6. Grants leave to the defendant to make an application for such costs to be assessed on a gross sum basis pursuant to s 98(4)(c) of the Civil Procedure Act 2005; 7. Directs that by no later than Noon on 24 May 2018 the plaintiff notify the defendant of the directions the plaintiff proposes be made by the Court on 25 May 2018; 8. Stands the matter over for directions in the Real Property List on 25 May 2018. Contentions of the Parties 1. The defendant submits that it is appropriate for costs to be awarded in a specified gross sum because of the plaintiff's delinquency in prosecuting its case. In particular, the defendant points to the failure of the plaintiff to get its case ready for hearing, the lateness of the application to vacate the hearing, the lack of any reasonable excuse for the failure to get its case ready for hearing, and the lateness of the plaintiff's indication that it would not rely on the report of Mr Goodyer. 2. The defendant relied on the decision of Stevenson J in The Berry Rural Co-Operative Society Ltd v Sepak Industries Pty Ltd [2018] NSWSC 298. In that case his Honour ordered that the Co-Operative pay an appropriate portion of Sepak Industries' costs of the proceedings forthwith, assessed on the indemnity basis and awarded in a gross sum, as a condition of acceding to the Co-Operative's very late application to rely on new evidence following an order that it could not rely on new evidence beyond a certain date without leave. His Honour relied on what he described as the Co-Operative's "disgraceful" conduct in the litigation when imposing those conditions. 3. The plaintiff submits that it would be inappropriate to award costs in a gross sum because the defendant has not established that the process of costs assessment would in the present circumstances be unusually arduous, time consuming, or expensive. The plaintiff also submits that there is no evidence that it would be unable to meet any costs order made against it. Determination 1. In my opinion, it is appropriate that the costs payable by the plaintiff to the defendant forthwith, pursuant to orders 2 – 5 made on 16 May 2018, and the costs of the motion presently before the Court, be made payable in a specified gross sum. The power contained in s 98(4)(c) may be exercised where a party's conduct has unnecessarily contributed to the costs of the proceedings (Hamod v State of New South Wales [2011] NSWCA 375 at [818]). I am satisfied that the plaintiff's conduct in the litigation has been sufficiently egregious to justify such an order. The plaintiff has not provided any satisfactory explanation as to why it did not get its case ready in time for the hearing due to commence on 12 June 2018, particularly when regard is had to the fact that the proceedings were commenced more than two years prior to the filing of its motion to vacate the hearing. There was also no explanation advanced for why the plaintiff waited until just four weeks before the hearing to advise the defendant and the Court that it was not ready for the matter to be heard. In those circumstances the defendant should not be put to the further trouble and expense of engaging in the costs assessment process. That process would also entail at least some undesirable further delay, which can be avoided if a specified gross sum costs order is made. 2. I turn now to the quantum to be awarded. The defendant relies on an affidavit of Cameron Giles, solicitor, who sets out the costs he believes the defendant has incurred by reason of the vacation of the hearing dates, the costs incurred in responding to the report of Mr Goodyer, and the costs incurred in dealing with the Notices of Motion filed on 11 May 2018 and 15 May 2018. An amount has also been included for the costs associated with the present motion. The defendant submits that a 15% discount should be applied to reflect the position that would likely be reached following an ordinary costs assessment on the indemnity basis. The total amount of costs and disbursements claimed by the defendant, less a 15% discount on its costs, is $90,726.92. 3. The plaintiff does not dispute those costs and disbursements, save for the hourly rates charged, which it says are excessive. The plaintiff submits that the appropriate figure to be awarded is $80,437.68, which also incorporates a 15% discount on the costs incurred by the defendant. The plaintiff seems to accept that if a gross sum costs order is made, that discount should apply, even to the costs of the present motion. That is appropriate given the circumstances in which the motion was brought. 4. A table outlining the hourly rates charged by the defendant's solicitors is annexed to Mr Giles' affidavit, and appears as follows: Solicitor Position Hourly rate (ex. GST) Date of admission Experience • 4 years 7 months' experience as a Solicitor Thomas Howard Senior Associate $550 5 December 2008 • 2 years' experience as an Associate • 2 years 4 months' experience as a Senior Associate • 6 years 2 months' experience as a Solicitor Caitlin Watson Senior Associate $550 15 May 2009 • 1 year's experience as an Associate • 2 years' experience as a Senior Associate Cameron Giles Solicitor $360 14 February 2014 • 3.5 years' experience as a Solicitor • 7 months' experience as an employment relations advisor Kristyn Winner Solicitor $325 5 September 2016 • 2 years 2 months' experience as a Paralegal • 1 year 9 months' experience as a Solicitor Shue Yin Lo Senior Paralegal $325 Not admitted in NSW • 1 year 5 months' experience as a Senior Paralegal Claudia Veitch Litigation Assistant $250 Not admitted in NSW • 10 months' experience as a Litigation Assistant 1. The plaintiff relies on two affidavits of Mr Ward to support its contention that the hourly rates charged by the defendant's solicitors are excessive. Mr Ward deposes to his belief that, given his experience as a commercial litigator, the hourly rates charged by the defendant's solicitors are unreasonably high, and sets out what he believes are more reasonable hourly rates for the purpose of an award of costs ($425 per hour for Mr Howard, $450 per hour for Ms Watson, $300 per hour for Mr Giles, $225 per hour for Ms Winner, $150 per hour for Ms Lo, and $75 per hour for Ms Veitch). 2. Mr Ward refers to and relies upon a document prepared by the Costs Assessment Rules Committee titled "Guideline: Costs Payable Between Parties Under Court Orders", published in March 2016. The document sets out the following hourly rates that the Committee indicated were reasonable: Service provider Range ($) Senior partner/partner/specialist (10+ years) (hourly) 450 - 750 Senior associate (5 years plus) (hourly) 300 – 500 Employed solicitor / junior associate (1 – 4 years) (hourly) 200 – 400 Paralegals (hourly) 120 – 250 Clerks/secretaries (hourly) 75 - 150 1. The defendant disputes the relevance of the document because it was expressly intended to "apply to assessments on the ordinary (not the indemnity) basis", and because it is more than two years old. The defendant submits that a better indicator of ordinary market rates for legal services would be Mr Ward's own firm's charge-out rates, which Mr Ward does not refer to. The defendant invites the Court to draw an inference that Mr Ward's own firm's rates would not assist his client's case. 2. I am not satisfied that the hourly rates charged by the defendant's solicitors are unreasonable. Taking into account that the hourly rates contained in the document relied on by Mr Ward are at best an indication of acceptable market rates some two and a half years ago, it seems to me that the hourly rates charged by the defendant's solicitors are likely a reflection of current market rates. 3. It appears to me, however, that the hourly rates charged for Ms Lo's and Ms Veitch's time are excessive. Neither is admitted as a solicitor in New South Wales, and there is no evidence that they possess any legal qualifications. In my opinion, it would be appropriate to allow half of the amounts charged for work performed by Ms Lo and Ms Veitch. Of the gross costs claimed by the defendant, $2,600 was charged for work performed by Ms Lo and $2,825 was charged for work performed by Ms Veitch. Half of this amount, less a 15% discount, is $2,305.63. That amount should be deducted from the amount claimed by the defendant. 4. It follows that the defendant should be awarded costs in the amount it seeks less $2,305.63; that is the sum of $88,421.29. 5. As referred to above, the defendant seeks an additional order that the proceedings be stayed if the plaintiff does not pay the costs due to the defendant within 28 days. The plaintiff has not made any submissions against such an order. The defendant submits that such an order is appropriate because of an outstanding costs liability that the plaintiff has failed to meet. 6. The outstanding costs liability arises from an order made on 1 June 2017 that the plaintiff pay the defendant's costs of the defendant's unsuccessful application to have the proceedings dismissed for want of prosecution. In January 2018 the defendant's costs of the application were assessed at $17,594. The defendant sent a letter of demand to the plaintiff's solicitors on 14 March 2018, but the outstanding costs were not paid. The Court then entered judgment on 9 April 2018 for the outstanding costs. The evidence shows that those costs had not been paid by 28 June 2018. There is no indication that they have been paid since then. 7. In my view, it is appropriate to make an order that the proceedings be stayed if the plaintiff does not pay the specified gross sum within 28 days. In circumstances where the plaintiff has displayed an unwillingness, or perhaps inability, to meet costs orders made against it in the past, the defendant should not be put to any additional expense until the plaintiff compensates it for those largely wasted costs. Conclusion 1. The Court will order, pursuant to s 98(4)(c) of the Civil Procedure Act, that the costs referred to in orders 2 – 4 of the Court's orders on 16 May 2018, and the costs of the Notice of Motion filed on 25 May 2018, are to be paid by the plaintiff to the defendant in the specified gross sum of $88,421.29 within 28 days, failing which the proceedings will be stayed. ********** 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: 06 September 2018