In Clutch & Brake Australia Pty Ltd v Khamis  NSWSC 777 (Clutch), the Court considered the implications of Part G of Practice Notice: Civil Civ 1. The decision reminds practitioners to consider and advise their clients in relation to the capped costs provisions in the General Division of the Local Court. This is especially important for clients who are likely to be awarded judgment of less than $20,000.00 or their proceedings have been transferred from the Small Claims Division to the General Division of the Local Court of New South Wales.
Clutch & Brake Australia Pty Ltd commenced proceedings in 2015 in the Local Court General Division as a result of a motor vehicle property damage claim.
The proceedings settled pursuant to short minutes of order between the parties. On 31 October 2016, the following orders were entered by the Court:
- Judgment for the plaintiff as against the first defendant in the sum of $6,800 plus interest in the sum of $500.
- Judgement for the plaintiff as against the second and third defendants in the sum of $6,800 plus interest in the sum of $500.
- The first defendant is to pay 50% of the plaintiff’s costs as agreed or assessed on the ordinary basis.
- The second & third defendants are to pay 50% of the plaintiff’s costs as agreed or assessed on the ordinary basis.
The plaintiff had its costs assessed. The costs assessor determined that the plaintiff’s costs should be capped at a maximum 25% of the amount claimed pursuant to Part G of the Practice Notice: Civil Civ 1 (Practice Note). The plaintiff sought that this decision be reviewed. On 29 September 2017, the costs review panel dismissed the plaintiff’s appeal.
The plaintiff appealed the decision of the costs review panel to the Supreme Court of New South Wales.
Counsel for the plaintiff argued that the Practice Note provided guidance as to the costs orders that should be made.
Justice Harrison determined that the main issue was whether the costs orders in the short minutes of order made by the Local Court were subject to a maximum costs cap as per the Practice Note.
Justice Harrison noted that the Practice Note must be read in conjunction with the Uniform Civil Procedure Rules, as it governs the way in which proceedings are expected to be administered. Nonetheless, if a party does not wish for the Practice Note to apply, there is a specific provision in the Practice Note that allows the party to seek an “otherwise” costs order from the Court, allowing for the costs not to be capped.
Justice Harrison dismissed the plaintiff’s appeal.
The Supreme Court of New South Wales helpfully reminded practitioners that if they do not wish for their client to be bound by the costs caps that are set out in Part G – 38.2 of the Practice Note, they should consider filing a notice of motion and affidavit in support providing an explanation for the reasons to vary the maximum costs order available to be awarded to their client under the Practice Note.