Awad v ISPT Pty Limited and Jones Lang LaSalle (NSW) Pty Limited and Glad Cleaning Services Pty Limited (No 2)

[2015] NSWDC 330

District Court

New South Wales

Medium Neutral Citation:	Awad v ISPT Pty Limited & Jones Lang LaSalle (NSW) Pty Limited & Glad Cleaning Services Pty Limited (No 2) [2015] NSWDC 330
Hearing dates:	30 November 2015
Date of orders:	30 November 2015
Decision date:	30 November 2015
Jurisdiction:	Civil
Before:	Neilson DCJ
Decision:	Application by the first defendant for indemnity costs against the plaintiff refused
Catchwords:	COSTS – Offer of compromise found defective – Calderbank offer effective in default – Whether plaintiff’s refusal of first defendant’s offer unreasonable – First defendant found not liable on principal claim – Material exculpating first defendant produced on subpoena on 15 October 2014 – Only after exculpatory material produced could plaintiff’s non-acceptance be unreasonable – Offer lapsed on 16 July 2014 – Non-acceptance not unreasonable
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Calderbank v Calderbank [1975] 3 All E R 333 Dean v Stockland Property Management Pty Limited (No 2) [2010] NSWCA 141
Category:	Costs
Parties:	Maryam Awad (Plaintiff) ISPT Pty Limited (First defendant) Jones Lang LaSalle (NSW) Pty Limited (Second defendant) Glad Cleaning Services Pty Limited (Third defendant)
Representation:	Counsel: Mr F Austin (Plaintiff) Mr J Gracie (First defendant) Mr C Purdy (Second defendant) Mr A Oag (Third defendant)   Solicitors: Gerard Malouf & Partners (Plaintiff) Colin Biggers & Paisley (First defendant) Vardanega Solicitors (Second defendant) McCabes Lawyers (Third defendant)
File Number(s):	2014/51190
Publication restriction:	No

Judgment

1. HIS HONOUR: I shall, no doubt, be called upon to make a number of rulings concerning the question of costs. I shall merely make the usual observation in the first of my costs judgments that nothing excites the zeal, the ardour and the passion of members of the legal profession more than an argument about costs.

2. The first defendant, the owner of the Southgate Shopping Centre has successfully defended the claim against it. I entered judgment for the first defendant against the plaintiff on 27 October 2015. The first defendant now seeks an order for indemnity costs against the plaintiff. The first defendant relies upon a communication made to the plaintiff’s solicitor by letter dated 18 June 2014, which was sent by email transmission on 19 June 2014 at 8.27am. The letter of 18 June 2014 enclosed, by way of service, the Property Management Agreement between the first and second defendants. The attention of the plaintiff’s solicitors was then directed to certain parts of that document. There was then an averment by the first defendant’s solicitors that they were unable to see how the first defendant could bear any liability for the plaintiff’s claim. They then recite their instructions to serve an offer of compromise which would remain open for 28 days. In the event that the offer of compromise was found to be defective, the solicitors put the offer of compromise in the alternative as a Calderbank offer, relying on the principles established by Calderbank v Calderbank [1975] 3 All E R 333. The offer of compromise had been dated 18 June 2014. The terms of the offer were these:

“1. Verdict in favour of the first defendant.

2. The plaintiff and first defendant to bear their own costs.

3. This offer is made in accordance with rule 26.26 of the Uniform Civil Procedure Rules 2005.

4. This offer is open for acceptance for 28 days.”

3. I have difficulty in accepting that this was a valid offer of compromise. UCPR 20.26 r (3), provides this:

“An offer under this rule may propose:

A judgment in favour of the defendant:

(i) With no order as to costs, or

(ii) Despite sub r (2)(c), with a term of the offer that the defendant will pay to the plaintiff a specified sum in respect of the plaintiff’s costs, or

(b) That the costs as agreed or assessed up to the time the offer was made will be paid by the offeror, or,

(c) That the costs as agreed or assessed on the ordinary basis or on the indemnity basis will be met out of a specified estate, notional estate or fund indemnifier identified in the offer.”

The sub rule does not provide for an offer to include a provision that each party was to bear his, her or its own costs. It appears to me from the case law cited in Ritchie’s Service that an offer of compromise which includes a provision that each party is to pay its own costs of an appeal is defective: Dean v Stockland Property Management Pty Limited (No 2) [2010] NSWCA 141 at [30]. Considering that so much of the case law concerning offers of compromise has involved a very technical application of the rule it appears to me that the form of the offer of compromise did not comply with UCPR 20.26.

4. However, it can be taken as a Calderbank offer. It has been submitted on behalf of the plaintiff that this was not a true compromise but the rule itself and case law indicates that the form of offer made by the first defendant does represent a true compromise because legal costs can in themselves be quite large. It is settled in this State that a Calderbank offer will not justify an order for indemnity costs unless it is embodied in a compromise and its rejection was unreasonable. Here, after weighing all the facts of the case, I came to the view that the first defendant was not liable to the plaintiff because the first defendant, although the owner of the shopping centre involved, was not its occupier and because the reason for the leak occurring, a problem with the rooftop carpark, had only been recently observed by the second and third defendants and the security contractor to the first defendant’s and there was no evidence of the first defendant having been advised of the relevant leak and no evidence to suggest that, in any way, had the first defendant acted unreasonably in respect of the leak in question.

5. However, one could only ascertain that once one had all the documentation that made its way into evidence. Such documentation had been produced on subpoena by the three defendants and other contractors to the first defendant by 15 October 2014. The last person to produce documents relevant to liability was Grand Group Services Pty Limited, the security contractor to the first defendant, whose documents enabled one to ascertain when the leak was first observed and enabled one to distinguish that leak from numerous other leaks which had earlier been identified.

6. It is often difficult to identify the occupier of large commercial premises which often have many tenants and often have common areas and a dispute can offer occur as to who is the occupier of the common areas. Not only in my view was the Property Management Agreement relevant to determining the liability of the first defendant, but so also was the cleaning contract and so also were the various documents put into evidence which I recited in my earlier reasons for judgment to find liability vis-a-vis the second and third defendants and to exculpate the first defendant. In my view, it was only after 15 October 2014 that the plaintiff could be seen to have acted unreasonably which was well past the time when the first defendant required the plaintiff to accept the offer of compromise, which was 16 July 2014. Unfortunately, the second defendant did not repeat the offer of compromise prior to the commencement of the hearing, which might have been prudent, but that does not appear on the evidence before me to have occurred.

7. Accordingly, I refuse the application by the first defendant for indemnity costs against the plaintiff.

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Decision last updated: 19 January 2016