Barcos v Fairfield City Council

[2023] NSWDC 17

District Court

New South Wales

Medium Neutral Citation:	Barcos v Fairfield City Council [2023] NSWDC 17
Hearing dates:	On the Papers
Date of orders:	8 February 2023
Decision date:	08 February 2023
Jurisdiction:	Civil
Before:	Weber SC DCJ
Decision:	(1)   that the plaintiff pay the defendant's costs on an ordinary basis up to and including 9 March 2022 and on an indemnity basis thereafter.
Catchwords:	COSTS - Party/Party – Costs awarded to defendant - Ordinary and Indemnity basis – Unreasonable rejection of offer
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW), Pt 42.15A(2), r 20.26
Cases Cited:	Healthscope Operations Pty Ltd V David Page [2017] NSWSC 660
Category:	Costs
Parties:	Plaintiff: Elizabeth Barcos Defendant: Fairfield City Council
Representation:	Counsel: Plaintiff: Mr R. de Meyrick Defendant: Mr S. Glascott Solicitors: Plaintiff: Turner Freeman Defendant: Richard Oldfield, McCulloch & Buggy Lawyers
File Number(s):	2021/00199595
Publication restriction:	None

JUDGMENT

Introduction

1. On 16 December 2022 I delivered judgment in this matter and made orders that there be judgment and verdict for the defendant against the plaintiff. At the time of publishing my reasons I indicated an intention to order the plaintiff to pay the defendant's costs. On so indicating I was informed by the solicitors for the defendant that the defendant wished to make submissions on costs, arising out of offers which had been made.

2. Accordingly, I made orders in the nature of a timetable for the exchange of submissions and evidence on the issue of costs, and indicated that I would deal with any costs questions arising out of the submissions on the papers.

3. The parties have complied with these orders, and the defendant seeks an order that the plaintiff pay its costs on ordinary basis up to 9 March 2022 and on an indemnity basis thereafter.

4. The basis for this application are offers made to settle the proceedings on the basis of judgment for the defendant with an order that each party pay their own costs. This offer was first made on 9 March 2022 and repeated on 25 August 2022. The offers in each case were made pursuant to rule 20.26 of the UCPR, and was accompanied on each occasion with a letter which explained the defendant's views as to the problems with the plaintiff's case.

5. In each case the letter also advised the plaintiffs of the amount of costs which the defendant had incurred to date, which were $15,000 and $40,000 respectively.

Consideration

6. There was no dispute between the parties that the judgment entered by the court on 16 December 2022 was a “order or judgment on the claim no less favourable to the defendant than the terms of the offer” (UCPR 42.15A (1)). Consequently, “unless the court orders otherwise” the defendant is entitled to indemnity costs after the date of the offer which was not accepted.

7. The plaintiff bears the onus of persuading the court that indemnity costs should not be ordered (Leichardt Municipal Council v Green [2004] NSW CA 341 at [19]).

8. The principles in relation to the operation of the rules in relation to offers of compromise were helpfully collected by Wilson J in the matter of Healthscope Operations Pty Ltd V David Page [2017] NSWSC 660.

9. The plaintiff opposes the costs order proposed by the defendant on the basis that the offers in each case constituted what is colloquially referred to as “walkaway offers”, and that in the circumstances of the case, both offers were really an invitation to capitulate, the rejection of which was not unreasonable.

10. It should be noted however that the rules explicitly envisage that an offer of compromise providing for a judgment in favour of the defendant with no order as to costs can carry the cost consequences contemplated by UCPR 42.15A. This was not put in contest by the plaintiff.

11. As Wilson J observed in Healthscope the genuineness of an offer of compromise is both fact dependent and a matter of impression [26]. In all the circumstances of this case I believe that the offer made was not disingenuous, and it was unreasonable for the plaintiff to reject it. The plaintiff's claim in my view always confronted significant problems, and these were in part at least pointed out in the covering letters which accompanied both offers. Those covering letters as I have earlier indicated, also specified to the plaintiff the quantum of the substantial costs which had already been incurred as at the date of each offer.

12. Thus, in my view the offers conveyed to the plaintiff both a warning as to the difficulty which the plaintiff faced, and the reality of the compromise which the offers involved, that is to say that the plaintiff was put on notice that defendant was prepared to compromise the proceedings by bearing a significant cost burden, in relation to a claim which it did not consider to be strong.

13. In all the circumstances therefore, in my view, it was unreasonable for the plaintiff not to have accepted the offer when it was first made, and accordingly the defendant should have the costs order which it seeks.

14. Accordingly, I make the following order:

1. that the plaintiff pay the defendant's costs on an ordinary basis up to and including 9 March 2022 and on an indemnity basis thereafter.

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Decision last updated: 08 February 2023