Edward Moses Obeid Snr v David Ipp (Costs)  NSWSC 1329
Edward Moses Obeid Snr – First Plaintiff
Moses Edward Obeid – Second Plaintiff
Paul Edward Obeid – Third Plaintiff
Edward Joseph Obeid Jnr – Fourth Plaintiff
David Andrew Ipp – First Defendant
Geoffrey Maurice Watson – Second Defendant
Grant Lockley – Third Defendant
Paul Anthony Grainger – Fourth Defendant
The Independent Commission Against Corruption – Seventh Defendant
Introduction to the case – Gross Sum Costs Order
The case of Edward Moses Obeid Snr & Ors v David Andrew Ipp & Ors that was heard before NSW Supreme Court Justice Hammerschlag saw former NSW minister Edward Obeid and three of his sons seeking damages from the Independent Commission Against Corruption (“ICAC”), the Commissioner, counsel assisting the Commission, and two ICAC officers who executed the search warrant for the tort of misfeasance in public office.
The Obeids commenced proceedings following an investigation known as Operation Jasper by ICAC into the grant of a coal exploration license by the then Minister for Primary Industries and Minister for Mineral Resources, the Hon Ian Macdonald MLC, resulting in a finding by ICAC that each of Macdonald, Edward Obeid Snr and Moses Obeid engaged in corrupt conduct. The Obeids alleged that they were ‘denied procedural fairness’, throughout the investigations.
Justice Hammerschlag dismissed the Obeids’ lawsuit against all defendants on 27 September 2016.
After dismissing the proceedings in September 2016, Justice Hammerschlag determined the defendants’ applications for costs orders on 20 March 2017.
His Honour ordered the plaintiffs to pay the first defendant’s costs on the indemnity basis, and the remaining defendants’ costs on the ordinary basis.
An order for indemnity costs means that all costs other than those unreasonably incurred or of an unreasonable amount are payable by the opposing party – the recoverable costs are usually higher than costs payable on the ordinary basis. Indemnity costs orders are made in particular circumstances, including where there has been unreasonable, inappropriate or otherwise unjustifiable behaviour of significance in connection with the conduct of proceedings.
Gross Sum Costs Application
Following an unsuccessful appeal to the NSW Court of Appeal and an application to the High Court of Australia for special leave to appeal by the Obeids, the defendants applied to the Court for a gross sum costs order under s 98(4)(c) of the Civil Procedure Act 2005 (NSW).
Both parties agreed that the Court should make a gross sum costs order and the Court should fix the amount. The Court’s determination was done on the papers, with the benefit of written submissions and expert evidence from two experienced costs consultants: Sharon Drew (from Blue Ribbon Legal) for the defendants, and Ian Ramsey-Stewart for the Obeids.
Ms Drew’s assessment identified the following range of the costs likely recoverable by each defendant on assessment:
|Fourth, Fifth, Sixth Defendants||$697,000||$745,000|
In Mr Ramsey-Stewart’s opinion, the likely costs recoverable by the defendants totalled $3,800,830 plus GST.
Both experts examined the costs incurred on a line-by-line basis and then applied a percentage discount after examining factors which would cause a costs assessor to reduce costs. However, Mr Ramsey-Stewart then applied a further reduction.
Justice Hammerschlag preferred Ms Drew’s approach, stating “I think her low range figure is closer to that which would be recoverable on assessment in this jurisdiction, especially given the complexity of the case. Her approach is logical, fair, and reasonable”.
Based on his own observations during trial, his Honour considered that on assessment there might be a further reduction because of duplication, and accordingly a further reduction of 5% on Ms Drew’s assessment was appropriate.
The plaintiffs were ordered to pay the defendants’ legal costs totalling $5,071,475.
Costs recoverable by each defendant was calculated as follows:
|Fourth, Fifth, Sixth Defendants||$662,000|
Certain defendants are also entitled to interest on costs, in accordance with the March 2017 costs judgment. With interest, the total amount payable by the Obeids will exceed $6,000,000.
Not only did the lawsuit cost the Obeids the legal costs payable to the defendants, but they also incurred their own legal costs.
The second defendant, Mr Geoffrey Watson, told the Australian Financial Review that ‘this was an awful waste of public money and judicial resources on a misconceived claim … it should never have been started’.
Edward Moses Obeid Snr v David Andrew Ipp  NSWSC 1376
Edward Moses Obeid Snr v David Andrew Ipp  NSWSC 271
Edward Moses Obeid Snr v David Andrew Ipp (Costs)  NSWSC 1329
Civil Procedure Act 2005 (NSW)
Pelly, Michael, ‘Obeid ordered to pay $5m in legal costs’, Australian Financial Review