Arnold v Forsythe (No 2)

[2012] NSWCA 283

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Arnold v Forsythe (No 2) [2012] NSWCA 283

Hearing dates:

On the papers

Decision date:

13 September 2012

Before:

McColl JA at [1]
Sackville AJA at [2]

Decision:

1. The appellant's motion filed on 8 March 2012 be dismissed.

2. The appellant pay the respondents' costs of the motion.

3. The respondents, if otherwise qualified, have a certificate in respect of the appeal under the Suitors Fund Act 1951.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

COSTS - application based on Calderbank letter - no genuine offer of compromise.

Legislation Cited:

Suitors Fund Act 1951

Cases Cited:

N/A

Texts Cited:

N/A

Category:

Costs

Parties:

Peter Munro Arnold (Applicant)

David Ross Forsythe (First Respondent)

Graeme John Weidenhofer (Second Respondent)

Paul Geoffrey Mannion trading as Rost & Kitchener, Chartered Accountants (Third Respondent)

Representation:

Counsel:
B.K. Nolan (Applicant)
N/A (Respondents)
Solicitors:
John Conti Lawyer (Applicant)
Beswick Lynch Lawyers (Respondents)

File Number(s):

2008/318542-006

 Decision under appeal 

Date of Decision:

2011-03-04 00:00:00

Before:

Truss DCJ

File Number(s):

2008/318542

Judgment

1. McCOLL JA: I agree with Sackville AJA.

1. SACKVILLE AJA: In Arnold v Forsythe [2012] NSWCA 18, this Court (McColl JA, Young JA and Sackville AJA) allowed an appeal from a decision of a Judge of the District Court (Truss DCJ). On 4 March 2011, her Honour dismissed a motion by the appellant (the defendant in the District Court) seeking orders:

• setting aside an order made by the District Court on 19 August 2010 striking out the appellant's defence and dismissing the appellant's cross-claim;
• setting aside a District Court judgment entered on 30 September 2010 in favour of the respondents on 30 September 2010 for $260,467.60;
• setting aside an order made by the District Court on 14 October 2010 for the payment by the appellant of interest of $46,871.04; and
• granting liberty to the appellant to file an amended defence and cross-claim in the District Court proceedings.

1. The orders made by this Court on 23 February 2012 were as follows (at [89], [91] and [100]):

"1.Appeal allowed.

2.Orders made by Truss DCJ on 4 March 2011 be set aside.

3.The default judgment and orders made by Truss DCJ on 30 September 2010 and 14 October 2010 be set aside.

4.Remit to the District Court for hearing and determination Prayer 2(b) of the notice of appeal dated 19 August 2011.

5.The appellant pay the costs of the respondents:

(a)thrown away by reason of the entry of default judgment on 30 September 2010, including the costs of the hearing on 30 September 2010;

(b)thrown away by reason of the entry of default judgment on 14 October 2010, including the costs of the hearing on 14 October 2010; and

(c)of and incidental to the appellant's notice of motion to set aside default judgment filed on 28 October 2010, including the costs of the hearing on 10 February 2011.

6.The respondents pay the appellant's costs of the appeal, including the costs of the application for leave to appeal."

Prayer 2(b) of the notice of appeal, referred to in Order 4, sought an order that the appellant be at liberty to file a defence and cross-claim in the District Court proceedings.

1. On 8 March 2012, the appellant filed a notice seeking a variation of Order 6 so that it would provide that:

"the respondents pay the appellant's costs of the appeal, including the costs of the application for leave to appeal, on an indemnity basis."

1. Since the orders were made on 23 February 2012, Young JA has retired from the Court. The parties have agreed that the motion be determined by the two remaining members of the Court.

1. The costs application was founded on what was said to be a "Calderbank" letter from the appellant's solicitors to the respondents' solicitors dated 17 June 2011. The letter was written shortly after the appellant filed his summons seeking leave to appeal from the decision of the District Court.

1. The letter offered to settle the proceedings in this Court on the basis of the following orders being made by consent:

"1.Appeal allowed.

2.Orders made on 4 March 2011 in the Court below be set aside and, in lieu of those orders, the Court make the following orders:

a.the default judgments entered 30 September 2010 and 14 October 2010 in District Court proceedings No 2008/3784 be set aside;

b.there be no order as to costs of the application by the [appellant] to set aside the default judgments with the intention that the parties pay their own costs;

c.the [appellant] pay the costs of the [respondents] thrown away by reason of the entry of the default judgments;

d.the [appellant] file a defence and cross claim in the District Court proceedings within 14 days of the date of these orders;

3.There be no order as to costs of these appeal proceedings with the intention that the parties pay their own costs."

1. The appellant contends that the letter should be viewed as a genuine offer of compromise and that it was unreasonable for the respondents not to have accepted it. This, so it is argued, warrants a departure from the usual principle that an unsuccessful respondent pay the appellant's costs of an appeal on a party and party basis.

1. The appellant's contentions are curious. As the appellant's written submissions acknowledge, the orders made by this Court were less favourable to him than the Calderbank offer in two significant respects:

• the orders made by this Court awarded the respondents their costs of the appellant's motion to set aside the default judgment, while the appellants merely offered that the parties should bear their own costs of the motion; and
• this Court remitted the question of whether the appellant should be granted leave to file a defence and cross-claim in the proceedings to the District Court, while the appellant's offer required for the appellant to be granted the necessary leave.

1. Since the orders made by this Court were significantly less favourable to the appellant than the terms offered in the letter, it is difficult to see how the letter can be regarded as making a genuine offer of compromise. In particular, the critical issue of whether the appellant should be permitted to file a defence and cross-claim has yet to be determined. In these circumstances, it was not unreasonable for the respondents not to accept the appellant's offer. To do so would have required them to forego an argument that may yet lead to the termination of the litigation.

1. It follows that the appellant's motion must be dismissed with costs.

1. The respondents have filed a motion seeking a certificate in respect of the appeal under s 6 of the Suitors Fund Act 1951. They should have such a certificate.

1. I should record that the unfortunate delay in dealing with these motions was due to a failure of the Registry to forward the material to members of the Court.

1. I propose the following orders:

1.The appellant's motion filed on 8 March 2012 be dismissed.

2.The appellant pay the respondents' costs of the motion.

3.The respondents, if otherwise qualified, have a certificate in respect of the appeal under the Suitors Fund Act 1951.

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Decision last updated: 14 September 2012