Supreme Court New South Wales Medium Neutral Citation: Perera v Genworth Financial Mortgage Insurance Pty Ltd (No.2) [2018] NSWSC 1577 Hearing dates: 26 April 2018; 1 June 2018; Written Submissions 14 June 2018 Date of orders: 19 October 2018 Decision date: 19 October 2018 Jurisdiction: Common Law Before: Garling J Decision: (1) Pursuant to s 98(4)(c) of the Civil Procedure Act 2005, order that the plaintiff pay the defendant's costs of the proceedings in the sum of $45,000. Catchwords: COSTS — specified gross sum costs order sought by defendant instead of assessed costs — Civil Procedure Act 2005, s 98(4)(c) — where cost and delay of assessment would not be warranted — reasonable amount sought — gross sum costs order made Legislation Cited: Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005 Cases Cited: Auspine Ltd v Australian Newsprint Mills Ltd [1999] FCA 673; (1999) 93 FCR 1 Hadid v Lenfest Communications Inc [2000] FCA 628 Hamod v State of New South Wales & Anor [2011] NSWCA 375 Harrison & Anor v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738 Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 Leary v Leary [1987] 1 All ER 261 Mahmoud v State of New South Wales [2014] NSWSC 722 Perera v Genworth Financial Mortgage Insurance Pty Ltd [2018] NSWSC 448 Savage v Australian Unity Fund Management Ltd [2011] NSWCA 270 Texts Cited: Not Applicable Category: Procedural and other rulings Parties: Madura Perera (P) Genworth Financial Mortgage Insurance Pty Ltd (D) Representation: Counsel: Self-represented (P) R Mansted / J Burnett (D) Solicitors: Self-represented (P) Hicksons Lawyers (D) File Number(s): 2017/295462 Publication restriction: Not Applicable Judgment 1. On 10 April 2018, for the reasons which were expressed, I summarily dismissed the proceedings brought by Mr Perera, the plaintiff, which were constituted by an Amended Statement of Claim filed 26 October 2017: Perera v Genworth Financial Mortgage Insurance Pty Ltd [2018] NSWSC 448 ("the first judgment"). At that time I ordered Mr Perera to pay the defendant's costs. 2. Because there was a possibility that the defendant ("Genworth") would seek a different order, having regard to the course of the proceedings, I made the following orders with respect to costs: "3. Grant leave to the defendant to file and serve any further Notice of Motion seeking further orders for costs on or before 5pm Tuesday 17 April 2018… 4. Order the plaintiff to file and serve any material upon which he proposes to rely, including submissions in opposition to such an order, by 5pm 1 May 2018… 5. Reserve judgement on any such application, and order that it be disposed of on the papers unless the Court restores the matter to the list." Notice of Motion 1. On 17 April 2018, Genworth filed a Notice of Motion which sought the following orders: "1. An order pursuant to s 98(4)(c) of the Civil Procedure Act 2005 assessing the defendant's costs of the proceedings in the gross sum of $45,000. 2. Such further or other orders as the court considers appropriate." 1. In support of that Motion, Genworth filed an affidavit of its solicitor Mr Roderick Stewart Cameron sworn 17 April 2018. 2. That affidavit annexed to it five tax invoices which had been sent by Mr Cameron's firm, Hicksons, to Genworth for payment. Considerable material within those invoices had been redacted. 3. Having received that material, together with the submissions in support of it, the matter was listed by the Court for directions on 26 April 2018. 4. As a consequence of the discussion between the parties, I made further orders which were not opposed by Mr Perera. Those orders were: "1. Grant leave to the defendant to serve all further affidavits or other material upon which it relies in support of an application for a gross sum costs order by 4pm on Friday 4 May 2018. 2. Order that the plaintiff serve all affidavit and other material upon which he proposes to rely in opposition to the application by 4pm on Friday 25 May 2018. 3. List matter for directions at 9:30am on Friday 1 June 2018." 1. Consequent upon those further orders, Genworth filed a further affidavit of its solicitor Mr Cameron sworn 2 May 2018. 2. The matter was listed for directions on 1 June 2018. The purpose of that hearing was to ensure that the Court was adequately informed of all of the material upon which the parties wish to rely for the purposes of the Notice of Motion. 3. At that hearing Mr Perera, who has throughout the proceedings appeared for himself, identified the affidavits upon which he wished to rely in opposition to the Notice of Motion and was granted an extension of time within which to serve submissions to 5pm on 8 June 2018. 4. Genworth was given an opportunity, if it was necessary, for it to file the further submissions in reply by Friday 16 June 2018. Genworth's solicitors informed the Court by email on 14 June 2018, that it did not propose to file any submissions in reply. The Court then reserved its decision. Genworth's Claim 1. The evidence filed by Genworth establishes that Mr Cameron, who was acting for it in these proceedings, was admitted as a solicitor in July 1983. Since that time he has largely conducted his practice, first as an employed solicitor and then as a partner, in the area of litigation. In his affidavit of 17 April 2018, he deposes to the fact that in the period of 34 years since commencing practice he has conducted many hundreds of litigation matters and that: "… well over 100 of those matters have required assessment of costs of one of the parties pursuant to a costs order." 1. Mr Cameron expressed the opinion that, based on his training and experience, when a party's costs are being assessed on an ordinary basis, assuming they have not been unreasonably incurred, they are likely to be reduced in respect of solicitor's fees in the order of 25% - 33%. He opined that counsel's fees are typically reduced in the order of 5% - 10% and that disbursements may be reduced by up to 10%. 2. Genworth's evidence described the fact that counsel was briefed with respect to the proceedings and that the defendant paid, or was obliged to pay in the period between 2 October 2017 and 17 April 2018, a total of $66,487.59. 3. That total comprised the following: 1. $53,863 for solicitor's fees; 2. $10,290 for counsel's fees 3. $1,402.59 for sundry disbursements; 4. $932 for the filing fee for the Notice of Motion 1. Mr Cameron expressed an opinion, consistently with the range of reductions to which I have referred above, that upon an assessment of costs and disbursements it would be likely that the defendant would recover between $47,450 and $52,500 (these are slightly rounded figures). 2. Although submissions were made by Mr Perera, to which it will be necessary to come, there was no evidence placed before the Court to contradict this evidence relating to the sums of money paid by the defendant to its lawyers, and the opinion expressed by Mr Cameron as to the likely recovery in the event of an assessment. Genworth's Submissions 1. Genworth submitted that the basis for the gross sum costs order in the amount of $45,000 which it was claiming, was as follows: 1. that the cost of any assessment would be likely to be a not insignificant proportion of the total amount of costs awarded. In light of the submission that the plaintiff did not have any substantial asset base to finance a costs order without a gross sum costs order, the defendant would be in the position of having to spend money in the hope that it might recover the costs after assessment; 2. a gross sum costs order would avoid the "expense, delay and aggravation" of an assessment; 3. the defendant noted the history of litigious complaints brought by the plaintiff against the defendant as a basis for submitting that it was unlikely that agreement could be reached on an amount by way of costs and that any assessment process would likely be protracted and expensive. 1. The defendant further submitted that the costs sought were in proportion to the complexity and importance of the matter in dispute, particularly given that serious allegations made against the defendant and that the plaintiff had sought a substantial sum ($1.675M) in damages. 2. Finally, the defendants submitted that the quantum of the costs order sought, $45,000, was well below the costs actually incurred by the defendant - being in excess of $66,000, and further, that having regard to the opinion of Mr Cameron, was a lower sum than that likely to be recovered after an assessment. Mr Perera's Submissions 1. Mr Perera first submitted that the evidence before the Court demonstrated that he had sufficient assets to meet any costs order. In that regard he put before the Court in his affidavit, statements for two bank accounts. They seem to show that Mr Perera, as at the date of those statements, respectively 30 April 2018, had the capacity to increase his borrowings by about $23,000. 2. However, an expert valuation report relied upon by Mr Perera is said to demonstrate considerable assets which he holds, in real estate. 3. This valuation is to be considered together with the evidence of Mr Perera that he has no borrowings over and above those set out in the two bank accounts referred to above. Taking those borrowings into account, Mr Perera has demonstrated on the evidence that he has more than sufficient assets to enable him to pay the costs of Genworth of the proceedings. 4. He next submitted that the history of the litigation between Genworth and him, or else a company with which he is associated, Hodder Rook & Associates Pty Ltd ("Hodder Rook"), was in significant part the result of conduct by Genworth rather than just him alone. 5. He further submitted that, as a consequence of Genworth filing a Notice of Discontinuance in other proceedings, it is liable to pay him costs, and as yet none have been paid. It seems that the plaintiff is submitting that if those costs were assessed he would be entitled to set those costs off against the current costs claim by Genworth. 6. Further, Mr Perera submitted that the costs claimed ought be assessed by an independent assessor because some of the costs claimed were unreasonable, and would be so held on an assessment. 7. Mr Perera put his submission in this way: "The plaintiff further submits that without a formal assessment of the costs, there will be injustice to the plaintiff if a Gross Sum Costs order was awarded and the actual costs are far less. The costs incurred certainly does not mean they were reasonably incurred or should be paid by the losing party. There is the real prospect that an account rendered will be reduced very substantially by an independent assessor (sic)." Relevant Legislation and Legal Principles 1. Section 98 of the Civil Procedure Act 2005 provides that: "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. The provisions of s 98 of the Civil Procedure Act, which are set out above, demonstrate that the Court has an ample discretion to award costs. The discretion is not confined and which may be exercised whenever the circumstances warrant it: Harrison & Anor v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738 at [21]-[22]. In particular, the power to make a gross sum order may be exercised where the assessment of costs would be protracted and expensive, and as well, if it appears that a party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment. 2. However, as Giles JA noted in Harrison at [22], the power to make a gross sum order should only be exercised if a court can do so fairly, and in particular, if the Court has sufficient confidence, having regard to the materials available, that an appropriate sum can be reached. 3. When dealing with gross sum costs orders in Hamod v State of New South Wales & Anor [2011] NSWCA 375, Beazley JA, with whom Giles and Whealy JJA agreed, said at [816]: "The terms of s 98(4), together with the more general considerations reflected in the Civil Procedure Act ..., suggest that factors that merit particular consideration include: the relative responsibility of the parties for the costs incurred ...; the degree of any disproportion between the issue litigated and the costs claimed; the complexity of proceedings in relation to their cost; and the capacity of the unsuccessful party to satisfy any costs liability ..." 1. The exercise of the power under s 98(4) of the Civil Procedure Act may be appropriate where the Court considers that it is desirable to avoid the expense, delay and aggravation likely to be involved in a contested costs assessment. This may arise from the likely length and complexity of the assessment process, or from the likelihood that the additional costs of formal assessment would disadvantage the successful party because of the likely inability of the unsuccessful party to discharge the costs liability in any event: see Hamod at [817]; Harrison at [21]. 2. If it decides to make a gross sum costs order, the Court is not required to undertake a detailed examination of the kind that would be appropriate to a taxation or a formal costs assessment: Harrison at [39]; Hadid v Lenfest Communications Inc [2000] FCA 628 at [35]; Auspine Ltd v Australian Newsprint Mills Ltd [1999] FCA 673; (1999) 93 FCR 1 at [16], [49], [79] and [84]; Hamod at [819]. Rather, the approach to a gross costs order must be, although an estimate, a process which is logical, fair and reasonable, and may involve an impressionistic discount of the costs actually incurred or estimated in order to take into account the contingencies that would be relevant in any formal costs assessment: Hamod at [820]. 3. In exercising the power to award a gross sum for costs, the Court needs to be astute to prevent prejudice to the respondent on the one hand, by over-estimating the costs, and on the other hand, not to cause an injustice to the successful party by applying some form of failsafe discount on the costs estimate submitted: Leary v Leary [1987] 1 All ER 261 at 265; Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 at [9]; Savage v Australian Unity Fund Management Ltd [2011] NSWCA 270 at [31]-[33]; Hamod at [794]. 4. It is also important to note that a litigant does not have an underlying entitlement to an assessment of costs. Rather it is a matter for the Court in the exercise of its discretion to consider whether to make a costs order, and if so whether to make a gross sum costs order: see Mahmoud v State of New South Wales [2014] NSWSC 722 at [16]; Hamod at [821]. Discernment 1. On the evidence tendered, I am satisfied that Mr Perera has sufficient assets to meet any costs order of the kind involved in this case. Whilst those assets are not liquid, and may not be able to be realised promptly, there is no reason to think that he does not have the capacity to borrow any moneys necessary to pay any order for costs, whether it be a gross sum costs order or, alternatively, a sum which is assessed. 2. I am also satisfied that the sum claimed in the Notice of Motion of $45,000 is a reasonable one. I have examined the invoices, and I am satisfied that the entries therein refer to and only relate to the proceedings the subject of the first judgment. There is no prejudice to either party in fixing upon this figure as being reasonable. 3. The reduction between the sum charged to Genworth and the amount claimed in the gross sum costs order is more than adequate to reflect the difference between solicitor/client costs and party/party costs, and is more than adequate to make allowance for any item which is submitted by Mr Perera as being unreasonable. It is unnecessary for the Court to determine whether or not such items are reasonable, because I am satisfied that the sum claimed makes more than adequate allowance for any such claims. 4. The claim by Mr Perera that there are sums which ought be set-off against these orders for costs is irrelevant to a determination of this Notice of Motion, and ought to be put to one side. First, the orders for costs or the entitlement to costs to which he refers have not yet crystallised into any particular sum. If he is entitled to the costs, as he puts in his submissions, then it is a matter for him to take steps to have those costs assessed. There is no material before me which indicates that he has taken any such steps. 5. Secondly, it would be open to Mr Perera in the event that enforcement proceedings are taken with respect to any costs order in this matter, to claim in those proceedings an appropriate set-off, if any entitlement exists. Naturally any entitlement would need to be established in such proceedings. 6. Thirdly, any entitlement to a set-off will exist regardless of whether the determination of the amount of costs payable pursuant to the Court's order in the first judgment is fixed by a gross sum costs order or else after an assessment. 7. The history of litigation between the parties is relevant to reaching a conclusion as to whether a costs assessment process may be expensive or protracted. It does not seem to me to be necessary to determine if one or other party has caused the previous litigation to be complex or hard fought. The question rather is whether the history points to a conclusion about the likely course of any costs assessment. 8. In 2008, Genworth commenced proceedings against Hodder Rook, a company closely associated with Mr Perera, and for which Mr Perera appeared from time to time with leave of the Court. Those proceedings were ultimately discontinued in 2017 by Genworth upon leave being granted by Black J and involved previous hearings before Einstein J and the Court of Appeal. 9. In 2014, Mr Perera personally commenced proceedings against Genworth, claiming damages for two separate causes of action in negligence and defamation. Slattery J struck out the claim. After a grant of leave to appeal, the Court of Appeal allowed the claim in defamation to continue in the District Court, but refused to allow Mr Perera's claim in negligence to proceed. 10. These proceedings, determined by the first judgment, were commenced by Mr Perera in 2017, and claimed damages for malicious prosecution by Genworth. In the first judgment, I concluded that the claim was ill-conceived and disclosed no reasonable cause of action. I concluded that the continuation of the proceedings would be frivolous or vexatious and that the proceedings should be summarily dismissed. 11. Having regard to the history of the litigation between both parties, it is clear that there is a real risk that any assessment of costs is likely to be unnecessarily hard fought, protracted and expensive and will occupy a significant period of time. The time has arrived for the parties to these proceedings to be put in a position where there is a reduction as far as possible in opportunities for any further dispute. This is consistent with the overriding purpose of s 56 of the Civil Procedure Act. As well, having regard to the nature of these proceedings and the issues canvassed in the principal judgment, I am satisfied that any additional expense of an assessment of costs is not warranted, particularly in circumstances where the Court has more than sufficient material to make a gross sum costs order. 12. For this reason I am satisfied that I should exercise the undoubted discretion which the Court has to make a gross sum costs order. 13. It will be made in the sum claimed of $45,000. Order 1. I make the following order: 1. Pursuant to s 98(4)(c) of the Civil Procedure Act 2005, order that the plaintiff pay the defendant's costs of the proceedings in the sum of $45,000. ********** 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: 13 November 2018