Alceon Group Pty Ltd v Rose (No 2)

[2015] NSWSC 1325

Supreme Court

New South Wales

Medium Neutral Citation:	Alceon Group Pty Ltd v Rose (No 2) [2015] NSWSC 1325
Hearing dates:	On the papers
Decision date:	11 September 2015
Jurisdiction:	Common Law
Before:	Simpson J
Decision:	(1) The first defendant pay the costs of the plaintiff assessed on the ordinary basis;  (2) The plaintiff pay the costs of the second defendant.
Catchwords:	COSTS - where offer of compromise made by plaintiff and not accepted, Uniform Civil Procedure Rules 2005 (NSW) 20.26 - offer only capable of acceptance by defendants acting jointly - second defendant successful at trial - offer not more favourable than result - first defendant to pay costs of plaintiff on ordinary basis   COSTS - where partial success of second defendant - failed defences not argued at trial - failed defences identical to those of first defendant - costs of preparation coextensive with those regarding first defendant - order in favour of plaintiff would enable duplicate recovery - plaintiff to pay costs of second defendant
Legislation Cited:	Contracts Review Act 1980 (NSW) Uniform Civil Procedure Rules 2005 (NSW) 20.26, 42.12
Cases Cited:	Alceon Group Pty Ltd v Rose [2015] NSWSC 868 Calderbank v Calderbank [1975] 3 All ER 333 Garcia v National Australia Bank Ltd [1998] HCA 48; 194 CLR 395
Category:	Costs
Parties:	Alceon Group Pty Ltd (Plaintiff/First Cross-defendant/Second Cross-defendant) Peter Francis Rose (First Defendant/Second Cross-defendant) Betty Nola Rose (Second Defendant/First Cross-claimant)
Representation:	Counsel: S B Docker (Plaintiff/First Cross-Defendant/Second Cross-Defendant) S Mattiussi (First Defendant/Second Cross-Defendant) N J Kidd SC (Second Defendant/First Cross-Claimant)   Solicitors: Kemp Strang (Plaintiff/First Cross-Defendant/Second Cross-Defendant) Russells (First Defendant/Second Cross-Defendant) ClarkeKann Lawyers (Second Defendant/First Cross-Claimant)
File Number(s):	2013/206976

Judgment

1. HER HONOUR: On 3 July 2015 I gave judgment in proceedings brought by the plaintiff (Alceon Group Pty Ltd) (“Alceon”) against Mr Peter Francis Rose and Mrs Betty Nola Rose: Alceon Group Pty Ltd v Rose [2015] NSWSC 868.

2. The proceedings were commenced by a Statement of Claim in which Alceon claimed against Mr and Mrs Rose judgment in the sum of $2 million, and possession of land which was subject to a mortgage in favour of Alceon to secure the debts of Quadwest Developments Pty Ltd.

3. Although, it seems, initially Mr and Mrs Rose filed a joint defence to the claim, as the case proceeded to trial, they relied on separate defences. Mr Rose raised a number of defences, all of which failed. Mrs Rose pleaded the same defences; she adduced no evidence and addressed no argument in support of them, and, in her case, they also failed. However, Mrs Rose pleaded, additionally, a defence under the principles stated in Garcia v National Australia Bank Ltd [1998] HCA 48; 194 CLR 395, and a defence under the Contracts Review Act 1980 (NSW). Those defences succeeded. Accordingly, the following orders were made:

“1  Judgment for the plaintiff against the first defendant in the sum of $2,275,397.25 plus $328.76 per day from 18 July 2015 until the date of this judgment.

2  Judgment for the plaintiff on the cross-claim filed by the first defendant.

3  A declaration that the mortgage dated 3 August 2011 registered no. AG466305 (Mortgage) has full force and effect as against the interest of the first defendant in the [property at Clontarf] in respect of all moneys outstanding under this judgment.

…

8  A declaration that the Mortgage and the guarantee and indemnity dated 3 August 2011 given by the first and second defendants to the plaintiff (Guarantee) are void as against the second defendant.

9  An order setting aside the Guarantee as against the second defendant without prejudice to the plaintiff’s rights against the first defendant.

10  An order setting aside the Mortgage as against the interest of the second defendant without prejudice to the plaintiff’s rights against the first defendant.

11  Judgment for the second defendant on the plaintiff’s statement of claim.

…”

4. It remains to determine the questions of costs.

5. Alceon seeks an order that Mr Rose pay the costs of the proceedings, and that, from 13 September 2013, those costs be assessed on an indemnity basis. As against Mrs Rose, while implicitly recognising that Mrs Rose is prima facie entitled to an order for costs in her favour, Alceon seeks a special order, by reason of her reliance on the failed defences. It seeks an order that not only would exclude any liability on Alceon to pay the costs associated with those defences, but, further, an order that Mrs Rose pay Alceon’s costs of meeting those defences.

6. The basis on which Alceon seeks an order that Mr Rose pay part of the costs on an indemnity basis lies in an Offer of Compromise, and a letter, each dated 12 September 2013. The Offer of Compromise was in the following terms:

“1.  Judgment for the plaintiff for possession of the land … together with all improvements erected on that land.

2.  Judgment for the plaintiff against the first defendant and the second defendant in the sum of $1,900,000.”

7. The Offer was expressed to be made in accordance with Uniform Civil Procedure Rules 2005 (NSW) 20.26, and to be open for acceptance by “the defendants” for a period of 28 days. The letter asserted that one of the defences pleaded by Mr and Mrs Rose was “bound to fail”, that the Offer contained in the Offer of Compromise represented a better outcome than Mr and Mrs Rose would obtain at trial, and that it would be unreasonable for them not to accept the Offer. Alceon therefore reserved the right to seek an order that costs be assessed on an indemnity basis in the event that the assertions in the letter proved to be prophetic. Reference was made to the principles stated in Calderbank v Calderbank [1975] 3 All ER 333.

Determination

Mr Rose

8. UCPR 20.26 is relevantly in the following terms:

“20.26  Making of offer

(1) In any proceedings, any party may, by notice in writing, make an offer to any other party to compromise any claim in the proceedings, either in whole or in part, on specified terms.

(2) An offer under this rule:

(a) must identify:

(i) the claim or part of the claim to which it relates, and

(ii) the proposed orders for disposal of the claim or part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment, and

…

(4) …

(b) in the event that rule 42.14 applies to the proceedings, the offeree will seek an order of the court under rule 42.14(2).

…”

UCPR 42.12 relevantly provides:

“42.14  Where offer not accepted and judgment no less favourable to plaintiff

(1) This rule applies if the offer is made by the plaintiff, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim no less favourable to the plaintiff than the terms of the offer.

(2) Unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff’s costs in respect of the claim:

(a) assessed on the ordinary basis up to the time from which those costs are to be assessed on an indemnity basis under paragraph (b), and

(b) assessed on an indemnity basis:

(i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and

(ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made.”

9. The Offer of Compromise was made jointly to Mr and Mrs Rose. It was not, in its terms, capable of acceptance by Mr Rose alone. That is especially so, since one of the orders sought in the Statement of Claim was for possession of jointly owned real estate.

10. It may true that Mr Rose could have made a counter-offer, accepting the offer so far as it related to him, but that is not the same as acceptance of an Offer of Compromise.

11. Further, it was apparent to Alceon, at least from 4 April 2014, when Mrs Rose’s Amended Defence was filed raising the Garcia and Contracts Review Act defences, that she proposed to defend the claim on a different basis to that advanced by Mr Rose. That, if nothing else, ought to have alerted Alceon to the need to seek to deal with the defendants separately.

12. In any event, Alceon has not achieved a result more favourable than its Offer. The two paragraphs of the Offer are not expressed to be disjunctive; they are most readily read as conjunctive or cumulative - that is, seeking both judgment in the sum of $2 million, and possession of the property, including that part of the property of which Mrs Rose is the owner and as to which Alceon is not entitled.

13. Alceon has not justified its claim for an order for indemnity costs against Mr Rose.

14. The order I propose to make in respect of Mr Rose is that he pay the costs of Alceon assessed on the ordinary basis.

Mrs Rose

15. So far as Mrs Rose was concerned, given that she did not seek to support the failed defences, the only costs involved were of preparation in meeting them. Those costs were coextensive with the costs incurred by Alceon in meeting those same defences, as to which an order in favour of Alceon will be made. I do not propose to make an additional order that would enable Alceon to recover the same costs in duplicate.

16. The orders I make are:

(1)  The first defendant pay the costs of the plaintiff assessed on the ordinary basis;

(2)  The plaintiff pay the costs of the second defendant.

**********

Decision last updated: 11 September 2015