NSW Supreme Court considers lump sum costs orders in recent decision – Eliezer v The Council of St Andrew’s Cathedral School (No 2) [2021] NSWCA 227

Key facts

We recently covered circumstances whereby NSW courts will consider making a gross sum costs order in lieu of a traditional costs order made on an ordinary basis.

The Supreme Court recently turned its mind to these issues in the matter of Eliezer v The Council of St Andrew’s Cathedral School (No 2) [2021] NSWCA 227

The proceedings were commenced using amended summons, which was dismissed with costs on 3 August 2021. 

The day before the hearing of the matter, the first respondent, The Council of St Andrew’s Cathedral School (the School), filed two documents, one being “Written Submissions in Relation to Costs” and a supporting affidavit sworn by its instructing solicitor. The submissions included the following:

This submission is done in the event that the [School] is successful against the Applicant[s] at the hearing on 9 July 2021 both on the Applicants’ Notice of Motion filed 5 July 2021 and on their summons for review of decision under s 69 of the Supreme Court Act 1970 (NSW), in order that the Court may consider awarding a lump sum cost order in favour of the [School] pursuant to section 98(4) of the Civil Procedure Act 2005 (NSW).

The affidavit provided for an estimate of the costs that would be incurred at the hearing of the application, a deducted 20% from that figure, as the gross sum sought for costs.

Following the dismissal of the amended summons, the applicant was directed to serve submissions as to the gross sum costs order sought. 

Those submissions referred to the observations of Leeming LA in Riva NSW Pty Ltd v Mark A Fraser and Christopher P Clancy t/as Fraser Clancy Lawyers (No 4)[1], to the effect that an application for a gross sum costs order could only be made when seeking to vary or set aside an existing costs order (and could not be a new order in and of itself).

Further, the applicant submitted that any application determined under r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) could not be entertained unless made by way of motion filed within 14 days of the costs order being made.

The School filed a motion in response seeking orders under rule 36.16 of the UCPR that the order made on 3 August 2021 be varied by adding an additional order concerning the gross sum costs order; however, that motion was found to be “inapt”, noting that particular rule is to vary a judgment or order and not “reasons for judgment” [at 14].

The Court declined to make a determination on the point of whether an application for a gross sum costs order represents an application to set aside or vary an original costs order, so as to enliven UCPR r 36.16 [at 17], noting that the matter can be determined without resolving the differences in the various authorities (citing Riva and Livers v Legal Services Commissioner (No 2)[2]).

Proceeding on the assumption that the School’s application could be dealt with under UCPR r 36.16(3A), the Court invoked its authority to dispense with the requirement that the application for a gross sum costs order is made by way of motion in the appropriate timeframe (as is required by r18.1 of the UCPR) pursuant to s14 of the Civil Procedure Act 2005 (NSW) (CPA), noting that: 

(a) The application for a gross sum costs order had been notified informally within the 14 day period (citing Aukuso v Tahan (No 2) [2018] NSWCA 302 at [45] (Simpson AJA; Macfarlan JA agreeing); and

(b) It was appropriate to do so for the purpose of s14 of the CPA.

The substance of the School’s application was otherwise accepted by the Court, applying the “broad brush approach” that is called for in considering gross sum cost order applications (citing Bechara (t/as Bechara and Co) v Bates [2016] NSWCA 294 at [14]). 

The School’s solicitors had provided a detailed and itemised estimate of their anticipated costs of resisting the amended summons, including counsel’s projected fees, and sought a 20% discount as the basis for the lump sum. 

The Court considered this reasonable in all of the circumstances, noting at [26-27] that the Court can have “confidence in arriving at an appropriate sum on the materials available”, and considering the “degree of any disproportion between the issue litigated and the costs claimed” (citing Hamod v State of New South Wales [2011] NSWCA 375 at [813-816]).

Key takeaways

The case confirms that the Court will consider invoking its power under s98(4)(c) of the CPA when dealing with an application for a gross sum costs order when an order for costs has previously been made, as long as that application has been foreshadowed and a satisfactory estimate and explanation provided.

We’re here to help

Should you require further information about how costs can be recoverable in litigation conducted within NSW, please do not hesitate to contact our office for a consultation.

  [1] [2018] NSWCA 327.

[2]  [2021] NSWCA 164 at [5] to [7].