Australian Motor Homes Pty Limited v Maria's farm Veggies Pty Limited (Costs)

[2018] NSWSC 430

Supreme Court

New South Wales

Medium Neutral Citation:	Australian Motor Homes Pty Limited v Maria’s farm Veggies Pty Limited (Costs) [2018] NSWSC 430
Hearing dates:	On the papers
Date of orders:	11 April 2018
Decision date:	11 April 2018
Jurisdiction:	Common Law
Before:	Wilson J
Decision:	(1)   The defendant is to pay the plaintiff’s costs of these proceedings, on an ordinary basis, to 9am on 1 December 2017 and, on an indemnity basis, thereafter. (2)   The plaintiff is to pay the defendant’s costs with respect to this application on an ordinary basis.
Catchwords:	COMMON LAW – APPEAL FROM THE LOCAL COURT – plaintiff’s appeal dismissed – application by defendant for indemnity costs – offers to settle – Calderbank offer – no point of principle
Legislation Cited:	Civil Procedure Act 2005 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586 Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344 Singapore Airlines Cargo Pty Ltd v Principle International Pty Ltd (No 2) [2017] NSWCA 340
Category:	Costs
Parties:	Plaintiff – Australian Motor Homes Defendant – Maria’s Farm Veggies Pty Ltd
Representation:	Counsel: Mr E A Walker for the plaintiff Mr D R Stack for the defendant   Solicitors: Plaintiff –McDonald Johnson Lawyers – Craig Doyle solicitor Defendant –Baker McKenzie – David Walter solicitor
File Number(s):	2017/259089
Publication restriction:	None

Judgment

1. HER HONOUR: On 28 February 2018 the Court made orders in which the plaintiff’s appeal against a decision of the Local Court of 28 July 2017 was dismissed. Subject to any further application that might be made by the defendant, an order in favour of the defendant for costs on an ordinary basis was made: Australian Motor Homes Pty Limited v Maria’s farm Veggies Pty Limited [2018] NSWSC 216.

2. Within the time allowed, the defendant filed and served a Notice of Motion seeking an order for costs on an indemnity basis, from 9am on 1 December 2017. Filed in support of the Motion is an affidavit from the defendant’s solicitor, David James Walter, sworn on 14 March 2018. Annexed to Mr Walter’s affidavit are copies of correspondence sent by the defendant to the plaintiff seeking to settle the proceedings.

3. Any evidence or submissions in reply from Australian Motor Homes was to be filed and served by 28 March 2018. As at 9 April 2018, nothing had been filed with the Court.

4. On 25 August 2017, the plaintiff filed a Summons commencing the proceedings against the defendant, a summons which was later replaced by an Amended Summons of 3 October 2017.

5. On 8 September 2017 the defendant sent correspondence to the plaintiff concerning the plaintiff’s Motion for a Stay of Enforcement, filed consequential to the defendant’s statutory demand for payment of debt. In the letter, the defendant categorised the plaintiff’s prospects on appeal as without hope of success, and set out the basis upon which it asserted that the grounds of appeal advanced by the plaintiff would fail.

6. The defendant offered to reach “an amicable compromise”, being that its demand for payment of the debt would be withdrawn, on the basis that the plaintiff provided security in the amount of $100,000.00, and agreed to dismiss its Motion by consent without costs. The defendant was willing to hold the $100,000.00 against the determination of any further litigation.

7. No resolution of the matter was reached.

8. On 24 November 2017, the defendant sent the plaintiff what has come to be known as a “Calderbank offer”: Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586. At that date, the plaintiff’s Amended Summons was listed for hearing before this Court on 1 December 2017, counsel had been briefed, and both parties had filed and served evidence and submissions in readiness for the hearing.

9. In its letter, the defendant again canvassed the merits of the plaintiff’s appeal, by reference to evidence and authority, and concluded that the appeal had no prospects of success. A compromise, to avoid further costs and inconvenience, was offered.

10. The defendant sought to settle the matter on the following terms:

1. The Amended Summons be dismissed without orders as to costs;

2. Within a specified time frame the plaintiff pay the defendant the judgment amount of $100,000.00 in full discharge of all and any liability;

3. Reserving the defendant’s position with respect to Cornelis Disselkoen (the second defendant before the Local Court).

11. The plaintiff was placed on notice of the defendant’s intention to seek an order for costs payable on an indemnity basis from 9am on 1 December 2017, in the event that the compromise offer was rejected.

12. The matter was not settled, and proceeded to hearing, with the outcome in the defendant’s favour.

Consideration

13. Ordinarily, costs are awarded on an ordinary basis: s 98(1)(c) of the Civil Procedure Act 2005 (NSW); rule 42.2 of the Uniform Civil Procedure Rules 2005 (NSW). It is, however, within the Court’s discretion to vary the ordinary procedure. The exercise of the Court’s discretion in favour of variation may be enlivened where there has been an earlier offer of compromise by the successful party, unreasonably rejected by the opposing party: Singapore Airlines Cargo Pty Ltd v Principle International Pty Ltd (No 2) [2017] NSWCA 340 at [30] per Beazley P, Meagher and Payne JJ.

14. For the defendant to succeed in its claim for indemnity costs, it must satisfy the Court that such an order is appropriate. In Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344, at [8], it was held that,

“[…] there is no presumption that an offeree who does not accept an offer and does not obtain a judgment more favourable than the offer will necessarily pay indemnity costs from the date of the offer: Leichhardt Municipal Council v Green [2004] NSWCA 341 at [19] (Santow JA, Stein AJA agreeing); Jones v Bradley (No 2) [2003] NSWCA 258 at [6]-[9]; Ambulance Service of New South Wales v Worley (No 2) [2006] NSWCA 236; 67 NSWLR 719 at [18]. The approach frequently adopted in this jurisdiction has been to ask two questions, namely whether -

(a) there was a genuine offer of compromise, and

(b) it was unreasonable for the offeree not to accept it.”

15. There is no basis to conclude other than that the offer made by the defendant relevant to the proceedings before this Court involved a genuine element of compromise. Had the offer been accepted, the defendant would have forgone judgment interest, and the costs to which it was entitled, a not insubstantial sum.

16. I have also concluded that the rejection of the offer of compromise was unreasonable.

17. The offer was made after the evidence and submissions had been filed, allowing both parties to make an informed assessment of the prospects of the appeal. Of importance, it was made early enough in the context of the forthcoming hearing to save the costs involved should the matter proceed.

18. The offer was clear in its terms, and an adequate period of time was allowed for the plaintiff to consider and respond to it. The plaintiff was advised of the defendant’s intention to seek costs payable on an indemnity basis from 9am on 1 December 2017, should the matter proceed, and the outcome be adverse to the plaintiff.

19. In these circumstances, it is appropriate to order that the plaintiff pay the defendant’s costs of the proceedings on an ordinary basis until 9am on 1 December 2017, and on an indemnity basis thereafter.

Orders

20. The orders of the Court are:

1. The defendant is to pay the plaintiff’s costs of these proceedings, on an ordinary basis, to 9am on 1 December 2017 and, on an indemnity basis, thereafter.

2. The plaintiff is to pay the defendant’s costs with respect to this application on an ordinary basis.

**********

Decision last updated: 20 June 2018