Supreme Court New South Wales Medium Neutral Citation: Turvey v Crotti (No 3) [2020] NSWSC 346 Hearing dates: 4 March 2020 Date of orders: 08 April 2020 Decision date: 08 April 2020 Jurisdiction: Equity Before: Emmett AJA Decision: Order that the defendant pay the plaintiff's costs of the proceedings in the gross sum of $300,500 and that there be no further order as to the costs of the motion. Catchwords: COSTS — Costs assessment — Determination — Power to disallow certain costs — Whether legal costs claimed are fair and reasonable — Entitlement to a specified gross sum instead of assessed costs Legislation Cited: Civil Procedure Act 2005 (NSW), ss 60, 98(4)(c) Conveyancing Act 1919 (NSW), s 88K Evidence Act 1995 (NSW), s 79 Legal Profession Uniform Law (NSW), ss 76, 172 Legal Profession Uniform Law Application Act 2014 (NSW) Cases Cited: eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (2015) 90 NSWLR 451; [2015] NSWCA 284 Category: Costs Parties: Marjory Nola Turvey (Plaintiff) Kayleen Sybil Crotti (Defendant) Representation: Counsel: M Galvin (Defendant) Solicitors: Owen Hodge Lawyers (Plaintiff) Dentons Australia Pty Ltd (Defendant) File Number(s): 2016/314439 Judgment 1. On 18 December 2018, I published my reasons (the Liability Reasons) for concluding that the plaintiff, Ms Marjory Turvey, was entitled to damages for nuisance from the defendant, Ms Kayleen Crotti. [1] On 16 April 2019, I published my reasons (the Costs Reasons) for ordering that Ms Crotti pay Ms Turvey's costs of the proceedings. [2] However, in the Costs Reasons, I reserved liberty to Ms Crotti to apply in the event that, after a bill of costs had been prepared, she wished to pursue a contention that the costs claimed on behalf of Ms Turvey were excessive or incurred unreasonably. [3] I indicated that that may ultimately be a matter for a taxing officer and that liberty should be invoked only if there is an issue of principle in the taxing of a bill of costs produced on behalf of Ms Turvey. 2. On 5 September 2019, Ms Turvey's solicitors provided to Ms Crotti's solicitors an assessment of costs (the Assessment) claiming a total amount of $428,551.33, including the sum of $11,000 for preparing the Assessment. On 25 October 2019, Ms Crotti applied, by notice of motion, for an order that she pay Ms Turvey's costs of the proceedings as a gross sum pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW) (the Civil Procedure Act). In the alternative, Ms Crotti sought an order that she pay Ms Turvey's costs as a specified proportion of Ms Turvey's assessed costs pursuant to s 98(4)(b) of the Civil Procedure Act. As a second alternative, she sought an order that she pay Ms Turvey's costs as determined by the Court pursuant to s 60 of the Civil Procedure Act. 3. Under s 98 of the Civil Procedure Act, costs are in the discretion of the Court and the Court has full power to determine by whom, to whom and to what extent costs are to be paid. A party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the Court. An order as to costs may be made by the Court at any stage of the proceedings or after the conclusion of the proceedings. Specifically, under s 98(4), at any time before costs are referred for assessment, the Court may make an order to the effect that the party to whom the costs are to be paid is to be entitled to: (b) a specified proportion of the assessed costs; or (c) a specified gross sum instead of assessed costs. 1. In the Assessment the total claim of $428,551.33 was made up as follows: Professional fees: $209,560.85 Counsel's fees: $186,518.03 Disbursements: $32,472.45 1. Ms Crotti relies, amongst other affidavits, on an affidavit sworn by Ms Toni Mossman on 28 October 2019. Ms Mossman is a senior solicitor employed by DGT Costs Lawyers, an incorporated legal practice that specialises in the provision of legal costing services to the legal profession. There is no challenge to the expertise of Ms Mossman and her affidavit was read without objection, although it may well be that it contains opinion evidence that, had objection been taken, might have been rejected on the basis that it did not satisfy s 79 of the Evidence Act 1995 (NSW). That observation is not intended as criticism of the parties or their counsel. 2. Ms Mossman was given instructions, by a letter of 8 October 2019 from Ms Crotti's solicitors, to review the Assessment and prepare a report. Relevantly, she was asked to assume that all of the work undertaken on behalf of Ms Turvey and set out in the Assessment was necessary for the matter to proceed to hearing and resolution of the dispute and to give her opinion as to an appropriate amount of costs payable to Ms Turvey by Ms Crotti. In her affidavit, Ms Mossman concluded that, on the assumption that all of the work carried out on behalf of Ms Turvey was relevant and necessary, the reasonable costs to be fixed as a gross sum was the sum of $198,134.80. 3. In the alternative, Ms Mossman was asked to give her opinion as to an appropriate amount of costs payable to Ms Turvey by Ms Crotti for the work undertaken in the proceedings on the assumption that some 18 affidavits served on behalf of Ms Turvey were unnecessary or irrelevant to the issues in dispute, having regard to the manner in which the proceedings were conducted. At the end of her affidavit, Ms Mossman expressed her opinion on that assumption. On that basis, she concluded that the amount of the Assessment should be reduced by the sum of $86,960.15 to $341,591.18. She would have reduced that amount to the sum of $106,186.46. 4. No submissions were advanced on the hearing of the motion in support of the rejection of the specified affidavits. Accordingly, without expressing any view as to whether those affidavits were necessary or irrelevant, I indicated to the parties that I did not propose to have regard to Ms Mossman's opinion on that alternative assumption. 5. The essence of Ms Crotti's complaint is that the amount of the Assessment is not proportionate to the importance and complexity of the subject matter in dispute. Ms Crotti relied on the provisions of s 60 of the Civil Procedure Act and s 172 of the Legal Profession Uniform Law (NSW) as justifying this application pursuant to the leave that I reserved. 6. Section 60 relevantly provides that, in any proceedings, the practice and procedure of the Court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject matter in dispute. Section 60 is directed to the control of the proportionality of costs of litigation by the Court in which the litigation is conducted. The requirement of proportionality is not tied to the quantum or value of the subject matter of the litigation. Rather, it is tied to the importance and complexity of the subject matter in dispute. Litigation that involves relatively small amounts of monetary value may nevertheless be important and highly complex. [4] 7. It may well be that if, in the course of management of these proceedings, the attention of the Court had been drawn to the extent of the work being undertaken on behalf of Ms Turvey, appropriate directions could have been given pursuant to s 60 on the basis some of the work was not proportionate to the importance and complexity of the subject matter in dispute. However, I do not consider that s 60 authorises the making of an order as sought by Ms Crotti in the present circumstances. 8. Ms Crotti also relies s 172 of the Legal Profession Uniform Law (NSW), which relevantly provides that a law practice must, in charging legal costs, charge costs that are no more than fair and reasonable in all the circumstances and that in particular are: * proportionately and reasonably incurred; and * proportionate and reasonable in amount. However, having regard to s 172(4), I do not consider that s 172 has direct application in the assessment of costs as between the parties. Under s 172(4), a costs agreement is prima facie evidence that legal costs disclosed in the agreement are fair and reasonable if: * the provisions of Div 3 of the Legal Profession Uniform Law relating to costs disclosure have been complied with; and * the costs agreement does not contravene and was not entered into in contravention of any provision of Div 4. Thus, s 172 does not in terms apply to ordered costs as between party and party. 1. However, s 76 of the Legal Profession Uniform Law Application Act 2014 (NSW) makes s 172 relevant. Under s 76(1), when conducting an assessment of ordered costs, the cost assessor must determine what is a fair and reasonable amount of costs for the work concerned. Section 76(2) relevantly provides that, in considering what is a fair and reasonable amount of costs for the work concerned, the cost assessor may have regard to the factors in ss 172(1) and 172(2) as if that section also applied to ordered costs. Accordingly, s 172 applies with any necessary modifications. Thus, it would be necessary for a cost assessor, in assessing the Assessment, to have regard to whether the costs claimed on behalf of Ms Turvey were proportionately and reasonably incurred and are proportionate and reasonable in amount. 2. In the circumstances, I consider that orders limiting the extent of recovery are appropriate. Accordingly, it is necessary to have regard to Ms Mossman's affidavit in which she concluded that, on the assumption that all of the affidavits filed on behalf of Ms Turvey were relevant and necessary, the reasonable costs to be fixed as a gross sum was the sum of $198,134.80. 3. Mr Southwell-Keely responded to the observations by Ms Mossman, suggesting that Ms Mossman had failed to take into account the following matters and work that he said was necessary: 1. In her defence to the Statement of Claim filed on 29 March 2017, Ms Crotti stated that there was no registered easement appurtenant to Ms Turvey's land, that there was no registered easement burdening the Access Road, and that there was no express reference to an easement in Conveyance Book 25 No 995; 2. In her affidavit of 13 November 2017, Ms Crotti asserted that Ms Turvey's land was accessible by an unsealed road and a surveyor retained by Ms Crotti claimed in his report that there was an alternative access route available to Ms Turvey; 3. That there were at least 14 directions hearings and five hearings for return of subpoenas; and 4. That 23 affidavits were necessarily prepared in support of Ms Turvey's case. 1. There is considerable merit in that part of Mr Southwell-Keely's response, especially given that the suggestion on behalf of Ms Crotti, that an alternative route was available for access to Ms Turvey's land, was found to be insupportable because of the physical terrain. [5] Further, the denial by Ms Crotti of the right-of-way over the Access Road was also insupportable. [6] 2. Ms Mossman's affidavit refers to several claims made by Ms Turvey in which she was either unsuccessful or only partially successful. She expresses the opinion that there was work carried out for which a charge is made on the Assessment that did not progress her claim or did not appear to be necessarily relevant to the claims prosecuted by her. Ms Mossman provided several examples. Mr Southwell-Keely responded to some of those matters in his affidavit. 3. First, Ms Mossman said, counsel charged fees for preparing a "common exhibit" for all witnesses, which was not in fact used. Counsel included a charge to "go through exhibit … resolve not to use". Mr Southwell-Keely asserted that as the necessary work in the case was clarified it was legitimate for counsel to change his view on the way in which the evidence supporting Ms Turvey's case should be presented. Whether or not it was reasonable as between counsel and Ms Turvey for such a change to occur, the absence of an explanation as to why the change was occasioned by the conduct of Ms Crotti indicates that the amount would not be recoverable. 4. Next, Ms Mossman identified work done and discussions by counsel as to the possibility of "dedication" of the Access Road as a public road. Mr Southwell-Keely asserted that the investigation of whether the Access Road could be a public road was necessary as it would have avoided having to prove the right-of-way. All of that work, however, should be included in the items that I have previously indicated were taken into account in assessing damages. 5. Ms Mossman refers to claims in relation to work carried out in the event that an injunction application was to be made, which in the event did not occur because a right-of-way was recorded on the title. Mr Southwell-Keely responded by saying that the right-of-way was recorded on Ms Turvey's title in November 2016 so that an injunction application was not made. It would be inappropriate for Ms Crotti to bear costs for proceedings that were contemplated but never actually commenced. 6. Next, Ms Mossman referred to charges made by counsel for considering strategy and other aspects of the matter and avenues of conduct that were not proceeded with. Thus, there are charges for work in relation to evidence of Ms Turvey's health, a claim in respect of which she was unsuccessful and there are charges made for discussions on strategy as to claims for damages. Those charges appear to be outside the scope of the costs order. 7. There are charges for discussions as to a possible application under s 88K of the Conveyancing Act 1919 (NSW). Mr Southwell-Keely responded that no application under s 88K was made because the burden of Ms Turvey's right-of-way was recorded on the title to the Access Road by the Registrar-General. That does not appear to be appropriate as costs incurred in the conduct of the proceedings. 8. Next, Ms Mossman referred to a notice to produce served on behalf of Ms Turvey that was withdrawn. There are charges in connection with the costs associated with Mr Southwell-Keely's affidavit relating to the costs argument and in relation to the value of Ms Turvey's property and potential loss in respect of the failure to sell, matters that do not appear to have been proceeded with. Mr Southwell-Keely did not respond to Ms Mossman's comments. 9. Finally, Ms Mossman referred to continued research carried out in relation to the title and right-of-way issues in circumstances where the right-of-way was recorded on Ms Turvey's title in November 2016. Mr Southwell-Keely responded by saying that the entry on the register was legally unclear. That matter, however, related to the clarification of the title and was not an issue in the proceedings. 10. Ms Mossman referred to costs totalling $84,925.13 charged for work done prior to the commencement of proceedings. She also referred to costs charged by former solicitors, which are not included in the Assessment. Ms Mossman accepted that a proportion of such pre-proceedings costs would relate to the preparation of the initiating process and pleadings, but also that a significant amount of the costs related to investigations as to title to the right-of-way, suggesting that there may need to be consideration of the fact that Ms Turvey's right-of-way was recognised and registered as at 9 November 2016. Mr Southwell-Keely responded that none of the charges included in the Assessment relate to the recording of the benefit of the right-of-way in November 2016. 11. Ms Mossman observed that, on 5 September 2018, Ms Crotti's solicitors wrote to Ms Turvey's solicitors confirming that both parties had a registered right-of-way and that Ms Crotti had provided an unconditional undertaking not to erect any gates or other structures that could prevent access to Ms Turvey's property by the Access Road. Ms Mossman calculated the costs charged in the Assessment after that date at $113,284.75. Mr Southwell-Keely responded that, as at 5 September 2018, the recording of the benefit of the right-of-way on the certificate of title was not a correct recognition of Ms Turvey's entitlement because of an asserted ambiguity as to the description of the land burdened by the right-of-way. He asserts that that ambiguity was not cured by Ms Crotti's undertaking given to the Court on 23 October 2018. That rather indicates that the question was related to a dispute with the Registrar-General as to the recording on the register, rather than costs of the proceedings. 12. Ms Mossman said in her affidavit that she had compared many of the charges in the Assessment with the relevant material on the file and considered that a number of the charges were excessive for the nature of the work undertaken. She itemised some 18 examples. Mr Southwell-Keely responded to only one of those examples. 13. Ms Mossman considered that there appears to have been heavy reliance on counsel throughout the conduct of proceedings, even when the work was being carried out at the level of senior lawyer within the solicitors' firm. She considered that, in many instances counsel was directing the day-to-day conduct of the proceedings rather than providing expertise in aspects of the matter as required and where reasonable. Ms Mossman considered that there was a significant degree of duplication of work as between counsel and solicitors which was likely to be considered unreasonable in an assessment, where the senior lawyer with carriage of the matter had significant seniority and experience. Ms Mossman considered that it might be considered unreasonable to claim attendances for both counsel and solicitors at many directions hearings. She expressed the opinion that some of the charges for preparing for directions hearings were unreasonable. Mr Southwell-Keely responded that the charges in relation to preparation for directions hearings was justified by the conduct of Ms Crotti in relation to proposed amendments of Ms Turvey's pleadings. He gave no more specific response. 14. Ms Mossman expressed the opinion that Ms Turvey's claim was not necessarily novel or overly complex although there was some complexity or at least difficulty in establishing the ownership of the Access Road and the historical origins of the grant of the right-of-way. Considerable time was spent investigating those issues. However, Ms Mossman considered that there was significant duplication of the work in circumstances where very few tasks were undertaken by the solicitors without significant and lengthy consultation with counsel. Ms Mossman considered that the extent of the reliance on and involvement of counsel in the matter was unusual and that an adjustment should be made to the charges to recognise those circumstances. Ms Mossman considered that there was significant duplication of work as between counsel and solicitor particularly with respect to the drafting of pleadings and affidavits, conferring with witnesses and in considering strategy and discussions as to the evidence over the course of proceedings. Mr Southwell-Keely did not respond to those matters raised by Ms Mossman. 15. Ms Mossman then addressed the question of disbursements and observed that significant amounts related to title and other searches. She accepted the majority of the fees would be allowed on assessment except in relation to those concerning Ms Turvey's medical condition. Mr Southwell-Keely accepted the latter question and accepted that the disbursements should be limited to $30,516.48. 16. Ms Mossman expressed the opinion that it is rare for 100% of costs actually incurred on a solicitor and client basis to be recovered on a party/party basis. In her experience a typical reduction for party/party costs on the ordinary basis is somewhere between 15% and 40% of the costs charged by a solicitor to client, equating to a recovery of a range of between 60% and 85% of the costs claimed. Mr Southwell-Keely did not challenge those opinions. 17. Ms Mossman expressed the opinion that, having regard to the manner in which the work was carried out and the matters outlined above, the rate of reduction for the solicitors' fees would be much higher than in a typical assessment. She expressed the opinion that the rate of reduction would be likely to be up to 55% of the fees incurred. Mr Southwell-Keely responded that such a reduction was not fair or reasonable and would lead to an assessment being disproportionate and unreasonable in relation to the work done. He was not more specific. 18. In dealing with the quantum of counsel's fees, Ms Mossman observed that, while the briefing of counsel was not disputed, the reasonableness of the work that counsel was briefed to carry out is put in issue, suggesting duplication of work as between solicitors and counsel. Ms Mossman considered that a large amount of the work undertaken on behalf of Ms Turvey by counsel consisted of extensive considerations as to strategy, review of material and discussions with solicitors, discussions as to how the matter might proceed and the steps that might be taken, as well as extensive review and consideration of the evidence. Ms Mossman considered that it was unreasonable to claim all such costs on a party/party basis when many of the issues and aspects investigated or pleaded were not ultimately successful or prosecuted. Ms Mossman expressed the opinion that the charges made for counsel were not reasonable or proportionate having regard to the manner in which the work was carried out and that it was likely that a reduction would be made of up to 60% of the fees charged. Mr Southwell-Keely responded by reiterating the matters already outlined above. He disputed that a reduction of counsel's fees of up to 60% suggested by Ms Mossman would be fair or reasonable. 19. Mr Southwell-Keely made some concessions as to the amounts claimed in the Assessment, which resulted in the following claim: Solicitor's fees: $187,022.59 Counsel's fees: $164,798.65 Disbursements: $30,516.48 Total: $382,337.72 Ms Mossman opinion was that a reasonable gross sum would be as follows: Solicitor's fees: $94,302.38 Counsel's Fees: $74,607.21 Disbursements: $29,225.21 Total: $198,134.80 1. Ms Turvey opposes the making of any order as sought in Ms Crotti's motion. Rather, she says, it should be left to cost assessors. I accept that it is not the function of the Court to undertake the task that would be undertaken by cost assessors. However, having indicated to the parties my concern as to the quantum of costs that have been incurred by both Ms Turvey and Ms Crotti in the conduct of this litigation, I consider that it is desirable that the dispute be brought to an end without further costs being incurred in the undertaking of a cost assessment, a possible appeal to an appeal panel and the prospect of an appeal to the District Court and possible judicial review by the Court of Appeal. I therefore consider that it is appropriate to make an order that Ms Crotti be entitled to a specified gross sum instead of assessed costs. I do not consider that it would be appropriate to limit her entitlement to a specified proportion of the assessed costs. 2. Taking into account all of the considerations outlined above, and having regard to the issues involved in the proceedings, I consider that an appropriate gross sum instead of assessed costs would be $300,500 made up as follows: Solicitor's fees: $150,000 Counsel's fees: $120,000 Disbursements: $30,500 1. I therefore propose to order that Ms Crotti pay Ms Turvey costs of the proceedings in the gross sum of $300,500. There should be no further order as to the costs of the motion. ********** Endnotes 1. [2018] NSWSC 1959 ("Liability Reasons"). 2. [2019] NSWSC 399 ("Costs Reasons"). 3. Costs Reasons at [47]. 4. See eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (2015) 90 NSWLR 451; [2015] NSWCA 284 at [6]-[7], [63]-[64] and [103]-[104]. 5. See [21] of the Principal Reasons. 6. See [40]]of the Principal Reasons. 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: 08 April 2020