In a decision on 29 July 2016, Keira Holdings Pty Ltd -v- Broadcast Australia Pty Ltd [2016] NSWSC 1140, Hammerschlag J made a lump sum costs order in favour of the defendant in the amount of $700,000,  relying on the power conferred by section 98(4)(c)  of the Civil Procedure Act 2005 (NSW) to make an order that the party to whom costs are to be paid is entitled to a specified gross sum instead of assessed costs.

In Keira, there was evidence from costs assessors that the defendants could expect to receive on an assessment on the indemnity basis (which was the relevant order the court at previously made)  of  $901,315.94. In circumstances where the defendant was only seeking $700,000, his Honour was prepared to make such an order.

At [6] his Honour held that he was satisfied that:

“… this is an appropriate case for a lump sum costs order to be made and that the sum of $700,000 is more than a fair assessment of the amount which the defendant would be expected to receive were there to be some other assessment.”

These orders are becoming more frequent –  particularly in commercial cases.

Another recent example is the order made by Davies J in Stankovic v State of NSW (No. 2) [2016] NSWSC 335, decided on 7 April 2016.

In Stankovic, Davies J made a lump-sum order in the sum of $18,122,  following the summary dismissal the plaintiff’s proceedings.

At [8]  his Honour noted the submission of the defendants that:

“…the purpose of the Rule was to avoid expense, delay and the aggravation of a costs assessment process. The probable inability of a party to pay a costs order is an important consideration for the making of a lump sum costs order so that the other party is not put to wasted time and expense of the costs assessment process.”

At [11]  his Honour referred to Harrison & Anor v Schipp [2002] NSWCA 213 (decided under an earlier equivalent provision to section 98(4)) where Giles JA held at [21]and [22]:

“…The power conferred … is not confined, and may be exercised whenever the circumstances warrant its exercise. It may appropriately be exercised where the assessment of costs would be protracted and expensive, and in particular if it appears that the party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment.

Of its nature, specification of a gross sum is not the result of a process of taxation or assessment of costs. As was said in Beach Petroleum NL v Johnson at 124, the gross sum “can only be fixed broadly having regard to the information before the Court”; in Hadid v Lenfest Communications Inc at [35] it was said that the evidence enabled fixing a gross sum “only if I apply a much broader brush than would be applied on taxation, but that … is what the rule contemplates”. The approach taken to estimate costs must be logical, fair and reasonable (Beach Petroleum NL v Johnson at 123; Hadid v Lenfest Communications Inc at [27]). The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available (Wentworth v Wentworth (CA, 21 February 1996, unreported, per Clarke JA).”

His Honour applied a discount of 20% to the total costs incurred by the defendants: [17]

Such an order should be considered in an appropriate case.