Adams v Groegor (No. 2)
[2012] NSWDC 30
•28 March 2012
District Court
New South Wales
Medium Neutral Citation: Adams v Groegor (No. 2) [2012] NSWDC 30 Hearing dates: 14 February and 9 March 2012 Decision date: 28 March 2012 Jurisdiction: Civil Before: Gibson DCJ Decision: (1) Defendant's application for indemnity costs for the hearing of the claim brought by the plaintiff dismissed.
(2) The plaintiff's application for indemnity costs in relation to the defendant's cross-claim dismissed.
(3) Each party bear his own costs of their respective applications.
(4) Costs orders (2) and (4) made on 23 December 2011 confirmed in all respects, save for the costs of relisting the matter before Balla DCJ on 22 July 2011, for which the defendant is to pay the plaintiff's costs occasioned by the relisting of the matter due to the defendant's non-compliance with the timetable.
Catchwords: COSTS - application by both the plaintiff and defendant for indemnity costs in proceedings where both the claim and the cross-claim failed - whether the claims were "hopeless" - whether the plaintiff could rely upon, and sever, a term in an offer of compromise to settle the cross-claim on the basis of each party paying his own costs. Legislation Cited: Civil Procedure Act 2005 (NSW), ss 3 and 56
Defamation Act 2005 (NSW), s 40
District Court Rules 1970 (NSW), Pt 39A r 25(6)
Trade Practices Act 1974 (Cth), ss 45D and 52
Uniform Civil Procedure Rules 2005 (NSW), rr 20.26, 42.1 and 42.6Cases Cited: Adams v Groegor [2011] NSWDC 213
Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12
Calderbank v Calderbank [1975] 3 All ER 333
Dean v Stockland Property Management Pty Ltd (No 2) [2011] NSWCA 141
Facton Ltd (formerly G-Star Raw Denim KFT) v Seo [2011] FCA 344
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Limited (1988) 81 ALR 397
Fowdh v Fowdh [1993] NSWCA 100
G M Holden Ltd v Paine (No 3) [2011] FCA 693
Grbavac v Hart [1997] 1 VR 154
Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19
J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers, WA Branch (No 2) (1993) 46 IR 301
John Goss Projects Pty Ltd v Thiess Watkins White Constructions Ltd (in liq) [1995] 2 Qd R 591
Kemp v Ryan [2012] ACTCA 12
Liverpool City Council v Estephan [2009] NSWCA 161
LVMH Watch & Jewellery Australia Pty Ltd v Lassanah (Costs) [2011] NSWCA 407
M T Associates Pty Ltd v Aqua-Max Pty Ltd (No 3) [2000] VSC 163
Magenta Nominees Pty Ltd v Richard Ellis (Western Australia) Pty Ltd (Federal Court of Australia, Spender, French and Lee JJ, 29 August 1995)
Mahony v Watson [2003] NSWCA 259
Mizikovsky v Queensland Television Ltd (No 3) [2011] QSC 375
Old v McInnes [2011] NSWCA 410
Perry v Comcare [2006] 150 FCR 319
Tickell v Trifleska Pty Ltd (1990) 25 NSWLR 353
Trustee for the Salvation Army (NSW) Property Trust t/as Salvation Army v Becker (No 2) [2007] NSWCA 194
Yorke v Lucas (1985) 158 CLR 661Texts Cited: - Category: Costs Parties: Plaintiff: Kurt Raymond Adams
Defendant: Peter Franz Joachim GroegorRepresentation: Plaintiff: Mr T Tancred (solicitor)
Defendant: Dr J Bishop
Plaintiff: Whiteley Ironside & Shillington
Defendant: Benjamin & Khoury
File Number(s): 2010/267799 Publication restriction: None
Judgment
Both parties to these proceedings bring applications to vary the costs orders I made in my judgment dated 23 December 2011 (Adams v Groegor [2011] NSWDC 213). These were proceedings for damages for breach of contract, pleaded in the alternative as a claim for misleading and deceptive conduct. A cross-claim brought by the defendant was abandoned during the trial.
On 23 December 2011 I made orders as follows:
(1) Judgment for the defendant.
(2) Plaintiff pay defendant's costs.
(3) Defendant's cross-claim dismissed.
(4) Defendant to pay the plaintiff's costs of the cross-claim.
(5) Liberty to restore, concerning costs, on 7 days' notice.
(6) Exhibits retained for 28 days.
The plaintiff and defendant are both farmers living in a remote part of New South Wales. They have limited means. The cost of this litigation has hit each of them hard.
The applications before me are:
(a) the defendant's application for indemnity costs for the successful defence of the plaintiff's statement of claim;
(b) the plaintiff's application for indemnity costs in relation to the cross-claim, and
(c) the plaintiff's application for an order in his favour for costs of a directions hearing before Balla DCJ on 22 July 2011.
The defendant's application for indemnity costs of the proceedings
The defendant seeks an order for indemnity costs for these proceedings (excluding the cross-claim) from the date of the filing of the statement of claim (12 August 2010), on the basis that these proceedings are what French J (as French CJ then was) defined as amounting to a "hopeless case": J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers, WA Branch (No 2) (1993) 46 IR 301 at 303, referring to the test in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Limited (1988) 81 ALR 397.
The defendant's argument is as follows. The central point of the plaintiff's case was the parties made an oral contract containing terms which the defendant successfully argued at trial were unrealistic and impossible to perform. The defendant agreed he would agist the plaintiff's sheep on his property, for the modest sum of 50 cents per ewe per week (and nothing for the lambs until they reached the age of six months), and provide adequate fencing, food and water for them. However, the plaintiff's case was that, for no addition to this small sum, the defendant also volunteered to travel over the 28 square miles of his property, either once a day or twice a week, to locate and personally inspect all of the plaintiff's 2,778 sheep for diseases, lambing or predator problems, even though all responsibility for maintaining the health of these animals was agreed to be the plaintiff's, and to advise all treatment they required. The plaintiff also claimed the defendant volunteered to report all his findings to the plaintiff, on the same regular basis. In my judgment I described these tasks as a physical impossibility (at [30]) and held that the plaintiff's claim that the defendant volunteered to perform these onerous duties was "completely implausible" (at [43]). I rejected the plaintiff's claim that the defendant was responsible for the loss of sheep during this period, which the plaintiff claimed on the basis that the defendant's failure to perform these tasks meant their deaths were the result of the defendant's failure to perform these tasks.
The defendant also relies upon the conduct of the case, the failure of the plaintiff to succeed on any aspect of the case (paragraphs 6 - 8 of the outline of submissions), and the plaintiff's failure in relation to causation issues, namely the lack of evidence that the number of sheep lost resulted from the defendant's negligence. Two veterinarians called in the defendant's case provided reports stating that the sheep loss, for the sheep agisted on the defendant's property, was well within the accepted level of sheep loss to be expected in farming in this part of New South Wales. Their evidence was not the subject of any reply by the plaintiff's expert, Mr Cullinane, whose reports dealt only with the value of the sheep and percentage of live lambs born, neither of which were contested issues.
The matters relied upon by Dr Bishop may therefore be summarised as follows:
(a) the findings in favour of the defendant on the issue of credit (judgment at [23]-[29]);
(b) the implausibility of the plaintiff's claim as to the terms of the contract ([43]);
(c) the likelihood that the agistment contract was in terms similar to a pro forma contract which the defendant showed to the plaintiff ([49]);
(d) the finding that the legal arrangement between the plaintiff and defendant was a licence and not a bailment ([67]);
(e) the plaintiff's failure on the issue of causation ([95]);
(f) the inapplicability of the fair trading legislation ([104]);
(g) the findings as to the plaintiff's failure to mitigate ([115]); and
(h) the plaintiff's failure to establish any of quantum of loss ([119]-[126]).
The principles relevant to an award of indemnity costs
In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd at 400-401 Woodward J noted that indemnity costs may be awarded in appropriate cases where there was some "special or unusual feature in the case to justify the court exercising its discretion in that way" where the action has been commenced or continued in circumstances where that party, "properly advised, should have known that [it] had no chance of success".
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd was a claim brought under s 52 Trade Practices Act 1974 (Cth), as is the case here. As noted by Woodward J at 400, the hopelessness of the case, if not apparent from the facts beforehand (which consisted of a blanket denial by the opponents), became evident after the High Court handed down Yorke v Lucas (1985) 158 CLR 661. From the date of this decision becoming publicly available, the hopelessness of the claim was apparent. It was on that basis that indemnity costs were awarded.
In J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (No 2), French J explained that the principles set out in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd at 303 meant that it was not necessary to show that the case was commenced or continued for some ulterior motive, or in wilful disregard of the known facts or clearly established law. It was sufficient that a party "persists in what should on proper consideration be seen to be a hopeless case".
In J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (No 2), unlike Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd, the case actually proceeded to trial. However, the losing case was, in French J's words, "paper thin", and the necessary ingredients to justify proceedings for a contravention of s 45D Trade Practices Act could never existed on the limited evidence available. It was for that reason that the indemnity costs order was made. Dr Bishop submits that the matters listed at [8] of this judgment, separately or in combination, are similarly sufficient to demonstrate the hopelessness of this case.
The facts in this case, while insufficient to amount to grounds for success, cannot be described as "paper thin". More than 20% of the plaintiff's sheep died while agisted on the defendant's property; the question was whether or not the terms of the oral contract entered into by the parties ascribed duties to the defendant (and if so, what they were) in relation to the care of the sheep belonging to the plaintiff while they remained on his property, whether the contract was a mere licence or a bailment, and whether the defendant had breached any duties owed to the plaintiff. These were issues of fact upon which evidence, including expert evidence, was required.
Mr Tancred, for the plaintiff, submitted that there had been strong evidence in support of his client's claim, and referred in particular to the expert reports of Mr Cullinane, a stock and station agent. However, as Dr Bishop pointed out in his submissions in reply, Mr Cullinane's reports did not answer any of the research or other factual evidence in the defendant's expert reports concerning the rate of sheep deaths, the speed with which predators devour carcasses, the high percentage of maternal rejection of lambs by merino ewes, or the death rates commonly found for sheep in this part of New South Wales. Mr Cullinane's report was of such little assistance on these issues that it was not referred to in the plaintiff's submissions on liability, as Dr Bishop pointed out. Nor were the observations of the relatives and friends of the plaintiff who attended the defendant's premises on one or more occasions, in relation to lack of evidence of carcasses from predators, a sufficient answer to the evidence of these expert witnesses.
The failure of the plaintiff's case come from insufficient evidence, and in particular lack of expert evidence in reply, rather than from the hopelessness of the claim. This was a case where the loss, including the extent of the loss, was not in doubt. The question was how it had occurred, and who (if anyone) was responsible.
Woodward J described the facts in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd as "a borderline case" (at 401) for the awarding of indemnity costs. The significant change of approach to civil procedure since that time, with increased emphasis upon the administration of justice being "just, quick and cheap" (s 56 Civil Procedure Act 2005 (NSW)), may mean that the constraints felt by Woodward J may no longer apply.
This was not a claim which was hopeless at its outset. It was a claim the weakness of which became apparent during the trial, but that weakness never extended to amounting to hopelessness of the kind described by French J in J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (No 2). Accordingly, the defendant's application for indemnity costs in these proceedings is refused.
The plaintiff has sought indemnity costs in relation to the cross-claim, and it is to this issue which I now turn.
The plaintiff's application for indemnity costs in relation to the cross-claim
The plaintiff's application for indemnity costs is brought on two bases. The first is that the cross-claim was so hopeless that it was withdrawn during the trial, after the defendant gave evidence in relation to the cross-claim, but was unable to provide evidence in support. The second reason is that an offer of compromise was made to settle the cross-claim.
I shall first deal with the offer of compromise which was served in these proceedings.
The terms of the offer of compromise which was served on 15 March 2011 (Affidavit of Tobias Julian Tancred dated 3 February 2012, Annexure TJT 3), were as follows:
"The plaintiff offers to compromise this claim on the following terms:
1. Verdict and Judgment for the Plaintiff against the Defendant in the amount of $45,000.00
2. Defendant to pay the Plaintiff's costs of the proceedings
3. Verdict and Judgment for the Cross Defendant on the Cross Claim with an order that each party pay its own costs.
4. This offer of compromise is open for acceptance for a period of 28 days from the date of this offer.
5. This offer of compromise is made in accordance with rule 20.26 of the Uniform Civil Procedure Rules 2005." (Affidavit of Tobias Julian Tancred dated 3 February 2012, Annexure TJT 4)
When the matter was before me for argument on 14 February, I directed Mr Tancred's attention to Old v McInnes [2011] NSWCA 410, and also to the question of whether or not the offer was an offer to settle the proceedings entirely, or whether the portion relating to the cross-claim was in some way severable. I have not received any submissions from Mr Tancred, in his undated submissions on costs, as to Old v McInnes, although I note that he states in paragraph 1 that it is "beyond dispute" that the offer of compromise was validly made, and that as much had been "conceded" by the defendant. That is not in fact correct, as the defendant has relied upon Old v McInnes (see the defendant's supplementary submissions on costs dated 28 February 2012) in submitting that the offer of compromise is invalid in its entirety by reason of the invalidity of the offer to settle the principal proceedings, which offer contains a provision as to payment of costs.
The issues for determination are:
(a) Is the whole of the offer of compromise tainted by reason of the provision as to costs in relation to the offer from the plaintiff in relation to the claim he brings against the defendant?
(b) Whether or not the offer in relation to the proceedings brought by the plaintiff against the defendant is invalid for the reasons explained by the Court of Appeal in Old v McInnes, can the offer in relation to the cross-claim be severed?
(c) Can the offer, whether valid or not, and whether severable or not, be considered as a form of Calderbank offer?
I shall deal with each of these in turn.
(a) Is the offer of compromise valid?
Rule 20.26(2) Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") clearly permits the making of an offer for a discontinuance on the basis that each party should bear their own costs. Is this otherwise valid offer to settle the cross-claim fatally tainted by the accompanying provision of the offer of compromise for $45,000 (for the claim brought by the plaintiff), for provision of payment of costs by the defendant?
The defendant submits that an offer of compromise must be "exclusive of costs", so that the relevant costs orders contemplated by Part 42 can be put into effect: Old v McInnes [2011] NSWCA 410 at [105]. The defendant acknowledges while the wording of the offer of compromise in relation to the cross-claim ("pay its own costs") may be inappropriate, the meaning is clear (Liverpool City Council v Estephan [2009] NSWCA 161 at [75]) and the word "defendant", as defined by s 3 of the Civil Procedure Act clearly identifies the cross-defendant, no objection is taken to these minor inconsistencies. However, the principal complaint of the defendant, and it is a sound one, is that the offer of compromise opens with the words "[t]he plaintiff offers to compromise this claim" (emphasis added) on the basis of the offer set out in the offer of compromise, which must mean the whole of the claim.
A "claim for relief" as defined in s 3 of the Civil Procedure Act includes "a claim for the recovery of damages or other money". What then do the words "this claim" mean? It must be intended to refer to all five of the paragraphs that follow. The word "claim" is therefore being used as a general description of the whole proceedings, namely the claim and the cross-claim. The offer is intended to resolve the whole of the proceedings and bring them to an end. Thus the offer of compromise must relate to the whole of the litigation.
In Dean v Stockland Property Management Pty Ltd (No 2) [2011] NSWCA 141 at [34] the Court of Appeal stated:
"A party receiving an offer of compromise apparently made under the rules should be entitled to decide whether or not to accept it according to the offer of compromise regime in the rules, including deciding whether or not it is an effective offer of compromise."
Since Dean v Stockland Property Management Pty Ltd (No 2) was handed down, parties have been aware of the need for precision in relation to the form of offers of compromise. The offer of compromise for $45,000 is ineffective by reason of the costs provision in paragraph 2.
I accept the first submission of the defendant that the offer of compromise is invalid for the reasons explained by the Court of Appeal in Old v McInnes.
Was the offer of compromise a genuine compromise?
An additional ground upon which it is asserted that the offer of compromise in relation to the cross-claim, even if valid, would not be effective, is that it is not a genuine attempt to reach a negotiated settlement of the dispute: Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12 at [19]; Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19 at [23].
The cross-claim was filed on 25 February 2011 and the offer of compromise was made just over two weeks later, on 15 March 2011. There was no evidence filed, no request for particulars, no defence and no information as to the basis upon which the cross-claim would be opposed. It is submitted that the offer as to the cross-claim was merely to trigger the costs sanction under the Rule (Tickell v Trifleska Pty Ltd (1990) 25 NSWLR 353 at 355E), and not a genuine attempt to negotiate a settlement.
The time at which an offer of compromise is made is a factor which the courts may take into account. At the time the offer was made, the defendant knew nothing of what the defence would be. An offer made at such an early stage of the bringing of the claim is open to attack on the basis that it is an attempt to trigger the provisions of the Rules rather than a genuine offer of compromise, and the offer of compromise in relation to the cross-claim would also fail for this reason.
However, the principal issue for determination is whether an offer which formed part only of the offer of compromise can be severed, so as to form either an offer of compromise, or a Calderbank offer (Calderbank v Calderbank [1975] 3 All ER 333).
(b) Is the offer to settle the cross-claim severable from the offer of compromise for the plaintiff's claim?
Whether or not the offer of compromise, insofar as it relates to the cross-claim, is tainted by the failure of the offer of compromise to comply with the Rules, the question remains whether the parts of the offer of compromise relating to the cross claim are capable of operating separately from the offer to settle the proceedings between the plaintiff and the defendant.
The plaintiff submits that Magenta Nominees Pty Ltd v Richard Ellis (Western Australia) Pty Ltd (Federal Court of Australia, Spender, French and Lee JJ, 29 August 1995) is authority for the proposition that offers of compromise may be separated out into their component elements.
The offer in Magenta Nominees Pty Ltd v Richard Ellis (Western Australia) Pty Ltd was not an offer of compromise, but a global offer to settle all claims on the basis, inter alia, of a payment of $90,000 into court in settlement of the whole of the litigation, which included claims on which the offeror ultimately failed at the trial. The terms of the offer of compromise were challenged before trial, on the basis that the offer did not split up the proposed settlement sum into amounts for each of the causes of action; following this challenge, the offer was withdrawn. The trial judge considered that the offer would have promoted the finality of litigation, and varied the costs order accordingly.
However, the sum offered in Magenta Nominees Pty Ltd v Richard Ellis (Western Australia) Pty Ltd was in excess of the amount of the judgment, including interest, which the offeror ultimately obtained from the court in relation to those claims which succeeded. This was the reason for the trial judge making the orders that he did, even though some of the claims had failed. In the present case, the offer of compromise, considered in the same global way, fails to represent a figure anywhere near the verdict for the defendant in the main cause of action.
I am aware of only one case where an offer of compromise has been asserted to contain "severable" components. In Mahony v Watson [2003] NSWCA 259 at [57]-[62], the Court of Appeal held that the rejection by the trial judge of three offers of compromise, two of which exceeded the amount recovered, amounted to an erroneous exercise of discretion. These offers included a specific, and limited, lump sum provision for costs which had been described by the trial judge as "manifestly inadequate" (at [58]); one of the reasons for the rejection at first instance of the application for indemnity costs, pursuant to Pt 39A r 25(6) District Court Rules 1970 (NSW), had been the unsatisfactory nature of limitations put on the costs components of these offers of compromise. (The principal reason was that the case at trial was different to the case as pleaded (see Fowdh v Fowdh [1993] NSWCA 100 at 10-11), which the Court of Appeal considered impermissible).
The offers of compromise in Mahony v Watson would now be most unlikely to be regarded as complying with the Rules. The first reason is that the offers of compromise in Mahony v Watson committed what Old v McInnes now describes as a fatal error, namely they each made very specific provision for costs. Secondly, these offers went much further than that, in that the offers of compromise all proposed specific, limited costs orders for "manifestly inadequate" amounts of legal costs.
The importance of Mahony v Watson is that Sheller JA comments at [58] that a submission was made to the trial judge that "those costs orders were severable and there could have been a rejection of that portion of the offer", an argument that the trial judge rejected. The rejection of this submission by the trial judge was part of the reason for the court's finding of the erroneous exercise of discretion. While their Honours did not ultimately rule upon the question of whether or not the costs were severable, it was clearly not a proposal that the court was prepared to reject out of hand. However, since the Court of Appeal in Mahony v Watson did not make such an order, these remarks should be viewed with caution.
There are, in my view, two reasons why the terms of an offer of compromise are not capable of being severed in this fashion. The first is based on basic principles of contract law, namely that the terms of any offer, including a settlement offer, must be sufficiently clear for the offer must be capable of being accepted, thereby creating a binding contract. This is particularly the case with an offer to settle legal proceedings: Kemp v Ryan [2012] ACTCA 12 at [12]-[13] per Penfold, Burns and Marshall JJ. While the Court of Appeal in Kemp v Ryan was considering a Calderbank offer, the same must be the case for an offer of compromise. An offer of compromise is an offer which must be capable of acceptance, not a document requiring parsing and analysing.
The ACT Court of Appeal in Kemp v Ryan referred to a number of decisions to this effect of the Federal Court (Perry v Comcare [2006] 150 FCR 319 at 55-57; Facton Ltd (formerly G-Star Raw Denim KFT) v Seo [2011] FCA 344; G M Holden Ltd v Paine (No 3) [2011] FCA 693), as well as to authority of long standing in Queensland (John Goss Projects Pty Ltd v Thiess Watkins White Constructions Ltd (in liq) [1995] 2 Qd R 591 at 595) and in Victoria (Grbavac v Hart [1997] 1 VR 154 at 160; M T Associates Pty Ltd v Aqua-Max Pty Ltd (No 3) [2000] VSC 163 at [56]). An offer to accept only part of an offer of compromise, or a Calderbank offer, would not be an offer at all, but at best a counter offer.
The second reason why the offer is not capable of acceptance is because the terms of the offer give no indication of severability. There is nothing in the offer of compromise (or in any Calderbank offer based on the offer of compromise) indicating any willingness to accept a partial acceptance of the proposed offer in relation to the principal proceedings or the cross-claim. In other words, there is no offer to settle part only of the proceedings.
(c) Is the offer of compromise capable of being construed as a Calderbank offer?
No express statement to this effect was made in the offer of compromise (cf Trustee for the Salvation Army (NSW) Property Trust t/as Salvation Army v Becker (No 2) [2007] NSWCA 194). As the Court of Appeal notes in Dean v Stockland Property Management Pty Ltd (No 2) at [19], the making of an invalid offer of compromise does not consequentially entitle a party to treat it as a Calderbank offer. Even if it did, the offer to settle the cross-claim is not severable, and would fail to be capable of acceptance, for the reasons explained by the ACT Court of Appeal in Kemp v Ryan.
The asserted hopelessness of the cross-claim
The plaintiff further submits that costs for the cross-claim should be awarded on an indemnity basis, as the cross-claim was hopeless and was abandoned during the trial.
It is not in dispute that a number of the plaintiff's sheep (it may have been as many as 40) are still on the property. The defendant gave evidence of being unable to obtain subsequent agistment contracts, by reason of the continued presence on the property of the remaining sheep which the plaintiff never came to collect. He was not, however, able to provide corroborative evidence of this, and withdrew the claim. The affidavit of Mr Khoury has provided particulars of the evidence which was hoped to be led but which was unable to be led.
The defendant has failed on the cross-claim, and Dr Bishop concedes that the ordinary rule under r 42.1 UCPR, namely that costs follow the event, should apply. However, the cross-claim was not sufficiently hopeless for the test set out in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Limited to be satisfied.
An additional basis upon which the plaintiff claimed indemnity costs was that r 42.6 UCPR refers to amendment without leave of pleadings. It is submitted that the defendant's failure to file the cross-claim or the second amended cross-claim without leave are circumstances triggering the indemnity costs rule.
Independently of any question as to whether or not leave was in fact required, the correct step for a party to take, in relation to the filing of documents without leave, is to raise this matter at the time, and not to raise issues of this nature solely when issues as to costs arise: LVMH Watch & Jewellery Australia Pty Ltd v Lassanah (Costs) [2011] NSWCA 407 at [22]. I also note that the "fresh step" rule requires parties to take objection promptly to asserted failures to comply with the Rules. I also reject the claim for indemnity costs brought on this basis.
I finally note the plaintiff's submission that the defendant never made an offer, including any offer under r 20.26 UCPR to "walk away", which it is asserted, it should have done if the case was indeed a hopeless case.
I am not aware of any cases indicating that failure to make an offer amounts to grounds for an award for indemnity costs, other than for actions for defamation, where there is a specific provision to this effect (s 40 Defamation Act 2005 (NSW)). In the absence of a specific provision in the Rules to a similar effect, I am not prepared to make such a finding.
In addition, a defendant who is likely to win a case can obtain little assistance from the offer of compromise system, as Dalton J in Mizikovsky v Queensland Television Ltd (No 3) [2011] QSC 375 at [93] notes.
Directions hearing on 22 July 2011: Costs
The costs of a direction hearing before Balla DCJ on 22 July 2011 were reserved. The plaintiff had the matter relisted because of delays in provision of the defendant's affidavits. There had been a history of delay, in terms of compliance with the timetables by both parties, which is hardly surprising given that both parties were calling country witnesses. After the plaintiff had the matter relisted, but prior to the directions hearing, Mr Khoury informed the plaintiff's solicitors that he would have all of the defendant's evidence served the day before the return date, and that in fact occurred. When the parties attended court, the court was advised that the outstanding affidavits had been provided.
The orders that Balla DCJ made were:
(1) By consent, the plaintiff to serve evidence in reply to the Defendant's evidence by 19 August 2011.
(2) Confirm the hearing date of 12 September 2011.
(3) Reserve the costs of today to the trial judge.
Although the defendant had provided the affidavits in question the day before the matter was listed, it was still necessary for there to be a timetable put in place for evidence in reply by the plaintiff. It was also necessary for the parties to ensure that everything had been filed prior to the imminent hearing date. The delay by the defendant had put successful compliance with the timetable prior to the hearing date at risk.
The reason given by the defendant for non-compliance, according to the transcript, as also been conceded to be incorrect.
It was necessary for the matter to be relisted for a fresh timetable for affidavits in reply, and the delay by the defendant was considerable. At the time that the affidavits in question were provided (the day before the mention date) the costs of relisting the matter had already been incurred. In those circumstances, it is appropriate that the costs of 22 July 2011 be borne by the defendant.
Orders
Neither party was successful in its principal application. It is appropriate that each party should pay his own costs of this application.
(1) Defendant's application for indemnity costs for the hearing of the claim brought by the plaintiff dismissed.
(2) The plaintiff's application for indemnity costs in relation to the defendant's cross-claim dismissed.
(3) Each party bear his own costs of their respective applications.
(4) Costs orders (2) and (4) made on 23 December 2011 confirmed in all respects, save for the costs of relisting the matter before Balla DCJ on 22 July 2011, for which the defendant is to pay the plaintiff's costs occasioned by the relisting of the matter due to the defendant's non-compliance with the timetable.
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Decision last updated: 30 March 2012
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