Bentancur v Mammoliti (No.2)

[2024] NSWDC 286

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Bentancur v Mammoliti (No.2) [2024] NSWDC 286

Hearing dates:

On the papers

Date of orders:

15 July 2024

Decision date:

15 July 2024

Jurisdiction:

Civil

Before:

Abadee DCJ

Decision:

See paragraph [74]

Catchwords:

COSTS – plaintiff’s application for partial order for indemnity costs based on defendant’s rejection of either Calderbank offer or rules offer – whether unreasonable for defendant to reject Calderbank offer – whether rules offer invalidated for want of compliance with r 20.26(5)(b) of Uniform Civil Procedure Rules 2005 (NSW)

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 98(1)

Uniform Civil Procedure Rules 2005 (NSW) rr 20.26, 42.14

Cases Cited:

Bentancur v Mammoliti [2024] NSWDC 201

Calderbank v Calderbank [1975] 3 All ER 333

Cessnock City Council v 123 259 932 Pty Ltd [2024] HCA 17

Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353

Commonwealth v Gretton [2008] NSWCA 117

Hagerty v Hills Central Pty Ltd (No.2) [2018] NSWCA 279

Patterson & Anor v Mamou t/as De Novo Conveyancing (No.2) [2024] NSWDC 75

Re Earth Civil Australia [2021] NSWSC 1161

Texts Cited:

J Hamilton, G Lindsay and C Webster New South Wales Civil Procedure Handbook 2023 (Lawbook Co, 2023)

Category:

Costs

Parties:

Mr Danys Bentancur (Plaintiff)
Mr Giovanni John Mammoliti (Defendant)

Representation:

Counsel:
Mr T Cleary (Plaintiff)
Ms C Langford (Defendant)

Solicitors:
Matthews Folbigg Lawyers (Plaintiff)
Aubrey F Crawley and Co. (Defendant)

File Number(s):

2022/00368002

Publication restriction:

Nil

REASONS FOR JUDGMENT

Background

1. On 4 June 2024, I delivered reasons for ordering a monetary judgment in favour of the plaintiff (Mr Bentancur) in the sum of $35,000 as well as making an order that the defendant (Mr Mammoliti) pay Mr Bentancur pre-judgment interest on that sum^[1] . I also ordered that Mr Mammoliti pay Mr Bentancur’s costs; whilst indicating in my reasons that if the parties sought a special costs order they should apply for a variation within the time prescribed by the rules.

   1. Bentancur v Mammoliti [2024] NSWDC 201

2. On 18 June 2024, Mr Bentancur brought a notice of motion, by which he sought a variation of that costs order. The substance of the requested variation is that Mr Mammoliti pay his costs on an indemnity basis either: (a) from 30 January 2024 or (b) from 6 May 2024. The basis, or bases, for the application is set out in the supporting affidavit of Mr Brew (sworn 18 June 2024), a solicitor of the firm Matthews Folbigg Lawyers that represented Mr Bentancur. Essentially, the alternatively nominated dates were referable to the expiry dates of a Calderbank letter on 29 January 2024 and an offer of compromise on 6 May 2024, respectively.

3. Those offers were both rejected by Mr Mammoliti, and detailed reasons for the rejection of Mr Bentancur’s application for a variation of the costs order were given in the letter of Mr Mammoliti’s solicitor sent to Mr Bentancur’s solicitor dated 12 June 2024, after the reasons for the judgment were published. By that same letter, Mr Mammoliti indicated that the position should be that each party bear their own costs; but otherwise, he proposed that he pay only 30% of Mr Bentancur’s costs on the ordinary basis.

Revisiting the findings

4. The parties’ competing positions require consideration of what heads of damages were claimed and what findings were made in my reasons. The reader’s familiarity with those reasons is assumed but certain points will be emphasised.

5. Without derogating from those reasons, it is pertinent to recall that Mr Bentancur brought a claim for damages against Mr Mammoliti in contract in connection with the latter’s supply of services to him that involved the restoration (to use a generic term) of a Mercedes Benz 230 SL Pagoda motor vehicle.

6. Mr Bentancur ultimately identified the following heads of damage in his contract claim:

1. loss of monies (through the payment of invoices issued by Mr Mammoliti) in respect to works comprising: (a) the parts of the Vehicle which Mr Bentancur paid for, but which were never received by him and (b) the installation of a rebuilt engine in the Vehicle, which never occurred;

2. the cost to repair the external paint of the Vehicle damaged when it was within Mr Mammoliti’s possession; and

3. costs associated with Mr Bentancur getting a third party (Mr Tsolakis) to install the engine of the Donor Vehicle in the Vehicle, in lieu of Mr Mammoliti installing the original engine in the Vehicle.

7. Ultimately, I rejected the heads of damage identified in (a) and (b) but allowed item (c).

8. A feature of the litigation that ultimately did not need the Court’s adjudication was the circumstance concerning Mr Mammoliti’s possession of the original engine to Mr Bentancur’s vehicle right through to 29 February 2024 (a circumstance identified in an affidavit by Mr Bentancur’s son, Dylan Bentancur sworn 15 March 2024), about 3 months before the hearing commenced. At the time he commenced the proceeding (on 6 December 2022), Mr Bentancur had brought a claim for loss on the resale value of the Vehicle (as a result of the original engine not being returned) ^[2] , but with the return of that original engine by Mr Mammoliti, that claim did not need to be pursued and was abandoned.

   2. Statement of Claim, paragraph 13(c)

9. In relation to this disputed head of damage, however, key factual findings in the judgment that underpinned the reasons for finding an entitlement in Mr Bentancur to recover damages for that head of damage were that: (i) Mr Mammoliti breached an intermediate (implied) term of completing a ‘rebuild’ of the original engine into the Vehicle within a reasonable time (J[208]-[210]); (ii) Mr Bentancur was entitled to terminate the contract for breach of that term when he did in February 2022 (J[211]); (iii) Mr Bentancur was entitled to recover damages for loss of bargain; and (iv) such damages included the cost of substitute labour (afforded by Mr Tsolakis) to install the engine of the ‘donor vehicle’ into the Vehicle (after Mr Mammoliti’s arguments about causation, mitigation and a limitations defence were rejected) (J[214]-[221]; and (v) Mr Tsolakis quantified that cost as $35,000 (J[221]).

10. About this last point, quantification of the cost was partly made in Mr Tsolakis’ first affidavit (2 August 2023) and also partly made in his second affidavit (10 May 2024). Mr Mammoliti had objected to the second affidavit being read in its entirety, but that was objection was partly overruled. The second affidavit was prepared 11 days (a Friday) before the commencement of the final hearing (on Tuesday week).

The offers

11. In his affidavit, Mr Brew referred to several settlement offers and correspondence exchanged between the parties’ solicitors, but it was only the offers of settlement made on 15 January 2024 and 2 May 2024 which Mr Bentancur relied upon to support the application.

The Calderbank offer

12. The letter of 15 January 2024 sent by Matthews Folbigg Lawyers to Mr Mammoliti’s solicitors (Aubrey F Crawley & Co) was responsive to a letter (in form a Calderbank offer) from Aubrey F Crawley & Co dated 30 November 2023. That latter letter proposed, amongst other things, that Mr Mammoliti would return the Vehicle; Mr Bentancur would return items of property belonging to him; Mr Bentancur was to return four jackstands, belonging to Mr Mammoliti; and the proceeding be dismissed with no order for costs.

13. The terms of the Calderbank offer of 15 January 2024 required (to paraphrase):

1. Mr Mammoliti to return parts of the Vehicle (including but not limited to what was defined as ‘Retained Parts’), being property belonging to Mr Bentancur within 7 days of acceptance of the offer;

2. Mr Mammoliti to pay Mr Bentancur $30,000 (defined as the settlement sum) within 7 days of acceptance of the offer;

3. upon Mr Bentancur’s receipt of the ‘Retained Parts’ and the settlement sum, the parties to take steps to prepare necessary paperwork to have the proceeding dismissed with no order as to costs;

4. upon dismissal of the proceeding, the parties mutually release each other; and

5. Mr Bentancur to return Mr Mammoliti’s items of property.

14. The offer was open for acceptance until 5pm on 29 January 2024. The offer was expressed to be made in accordance with Calderbank principles; with Mr Bentancur (as the offeror) indicating his intention to rely upon those principles to support an application for indemnity costs should the offer not be accepted.

15. After Mr Bentancur’s motion was filed, and after affording Mr Mammoliti the opportunity of putting forward his own evidence in response to Mr Bentancur’s application, I directed the parties to exchange submissions and indicated I would determine the dispute about the variation of the costs order on the papers.

16. Mr Mammoliti served an affidavit from his solicitor, Mr Christopher Crawley, principal of Aubrey F Crawley & Co, (sworn 27 June 2024). There was an exhibit to that affidavit (Exhibit CWC-2). Some of the documents in that exhibit duplicated what Mr Brew had annexed to the latter’s affidavit in support of the application to vary costs.

Further developments up to the point when the rules offer was served

17. On 21 February 2024 (that is, after the Calderbank offer had lapsed), Mr Crawleysent an email to Mr Brew. The email on its face attached ‘consent orders’. Those proposed consent orders provided opportunity for the plaintiff to serve evidence in reply. In the email, Mr Crawley also responded to a letter from Matthews Folbigg Lawyers that was dated 19 February 2024.

18. Mr Crawley’s email pithily responded to Mr Bentancur’s Calderbank offer of 15 January 2024 as follows:

“Our client rejects your client’s without prejudice offer of settlement as set forth in your letter of 15 January 2024.”

19. In his supporting affidavit, Mr Brew deposed that the ‘Retained Parts’, as referred to in the Calderbank offer were collected (by him) from Mr Mammoliti’s workshop on 29 February 2024. I take it that the Retained Parts included the original engine to the Vehicle.

20. On 6 March 2024, the plaintiff foreshadowed bringing an application to amend the statement of claim and the service of lay evidence but, on the same day, the defendant indicated his opposition to further amendment (and further evidence).

21. On 7 March 2024, Registrar Raco, of the Parramatta Registry of the Court, set the matter down for hearing for the May 2024 civil sittings in Parramatta.

22. On 13 March 2024, Dylan Bentancur (one of the plaintiff’s sons) returned four jackstands to Mr Mammoliti’s workshop, in circumstances he later outlined in an affidavit he swore on 15 March 2024. That affidavit was eventually read by the plaintiff at the hearing.

23. On 17 April 2024, Judicial Registrar Howard confirmed the hearing date, and more generally, the readiness of the matter, to proceed for hearing.

The plaintiff’s offer of compromise

24. On 2 May 2024, Mr Bentancur’s solicitor served (by email) an offer of compromise. (The cover email was not annexed to Mr Brew’s affidavit).

25. The offer expressed (paragraph 5) that it was an offer made in accordance with r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’) and was made without prejudice at to costs.

26. The material terms of the settlement offered required (to paraphrase):

1. Mr Mammoliti to pay Mr Bentancur the settlement sum of $27,000;

2. the proceeding be dismissed;

3. Mr Mammoliti to pay Mr Bentancur’s costs of the proceeding (as agreed or assessed); and

4. the offer was to lapse at 8:30am on 6 May 2024.

27. On 6 May 2024, I commenced presiding over the May 2024 Parramatta civil sittings. A call over occurred that day. I made it clear to the parties that another hearing of proceeding in those sittings would proceed in priority.

28. On 13 May 2024 (just before 5pm), Mr Tsolakis’ supplementary affidavit (10 May 2024) was served on the defendant.

29. On 16 May 2024, Mr Brew emailed Mr Crawley a proposed amended statement of claim which he said the plaintiff would rely upon. The same day, Mr Crawley responded that his client did not consent to amendments; demanded that a notice of motion be filed and in the event that it was not, foreshadowed applying for the relisting of the matter.

30. On 21 May 2024, the hearing for this matter commenced.

Parties’ submissions about the Calderbank offer

Mr Bentancur’s submissions

31. Mr Bentancur submitted that the only element of the offer that was not ‘bettered’ by him in the ultimate result was mutual releases. As to that, he submits that Mr Mammoliti’s rejection of that offer only meant that he was not precluded from bringing a further suit if a new cause of action was discovered.

32. More generally, Mr Bentancur submitted that the Calderbank offer represented both a genuine offer of settlement, he obtained a better result than what he offered and that it was unreasonable for Mr Mammoliti to reject it in circumstances where: (a) it called for the return of property that was undoubtedly Mr Bentancur’s property; (b) the sum offered was substantially less than Mr Bentancur offered at the time; and (c) it made no provision as to payment of Mr Bentancur’s costs which, at that point, were substantial in value.

Mr Mammoliti’s submissions

33. As a preliminary point of note, it appears to be the case that, until this application for variation of costs was foreshadowed (by a letter of Matthews Folbigg Lawyers to Mr Mammoliti’s lawyers dated 5 June 2024), Mr Mammoliti had never sought to justify his rejection of the Calderbank offer (15 January 2024) or the rules offer (2 May 2024) until his solicitor’s letter to Matthews Folbigg Lawyers dated 12 June 2024. But in Mr Crawley’s letter of 12 June 2024, reasons were specifically advanced for why each of those particular settlement offers were rejected.

34. By Mr Crawley’s letter of 12 June 2024, insofar as it was directed to the Calderbank offer, the defendant questioned whether in fact the monetary sum that Mr Bentancur obtained (a judgment of $35,000 plus an order for interest) substantially exceeded the settlement terms in the Calderbank offer, including, but not limited to an offer amount of $30,000. The terms also included a mutual release by the parties of claims against each other. Although not stated in so many words, as at 15 January 2024, although Mr Mammoliti possessed ‘Retained parts” of the vehicle, Mr Mammoliti contended that Mr Bentancur also had items in his possession as well.

35. Secondly, there were certain matters that, individually or in combination, indicated that it was not unreasonable for Mr Mammoliti to reject the Calderbank offer. These were identified as follows:

1. at the date of the offer, Mr Mammoliti was faced with multiple heads of damage;

2. by the judgment, Mr Bentancur failed with two of them (and the third claimed head of damage – the loss of resale value to the vehicle – was abandoned); and

3. the award of $35,000 was procured only because of Mr Tsolakis’ supplementary affidavit (10 May 2024) that had been served late and, at any rate, was not available for Mr Mammoliti’s consideration as at 15 January 2024.

36. By his Counsel’s written submissions, Mr Mammoliti further submitted that the compromise offered was not especially substantial and that the time for acceptance of the offer was unreasonable.

Parties’ submissions about the rules offer

Mr Bentancur’s submissions

37. Mr Bentancur acknowledged that the time for acceptance indicated by the rules offer provided a short timeframe but argued that the proceedings were ready for hearing and there was no reason why Mr Mammoliti was not sufficiently familiar with its intricacies; including the risks involved to him.

Mr Mammoliti’s submissions

38. On the rules offer, in his letter of 12 June 2024, Mr Crawley asserted that the form of the offer was not compliant with the requirements for rules offers (or was capable, in the alternative, as being effective as a Calderbank offer), although in his letter, Mr Crawley did not elaborate why not.

39. In the written submissions of Mr Mammoliti’s Counsel, it was submitted that the rules offer was not valid since the time for acceptance was not reasonable in the circumstances: r 20.26(5)(b). He only had one business day to accept the offer.

40. Alternatively, Mr Mammoliti submitted (through both Mr Crawley’s letter and his Counsel’s written submissions) that the Court should exercise its discretion to ‘otherwise order’ (under r 42.14(2)) because:

1. The timeframe for acceptance of the offer was exceptionally short;

2. the issues upon which the plaintiff succeeded were separable to the issues upon which he failed;

3. (in a reprise of an earlier point) Mr Bentancur’s success was only achieved because of the service of a late affidavit from Mr Tsolakis;

4. the plaintiff’s costs which, as at the date of the Calderbank offer, were estimated to be $40,000 were disproportionate upon the issue upon which the plaintiff succeeded;

5. the plaintiff had increased the defendant’s costs because of a late application to amend, which was substantially unsuccessful; and

6. the proceeding should have been heard in the Local Court (referring to r 42.35 of the UCPR).

41. Mr Mammoliti also objected to his paying the costs, on an indemnity basis, of any successful application for variation of the costs.

Other reasons invoked by Mr Bentancur for a special costs order

42. In his Counsel’s written submissions Mr Bentancur argued, independently of his reliance upon the Calderbank offer and rules offer, that there were other reasons that justified a special order for indemnity costs:

1. Mr Mammoliti’s ‘indefensible’ conduct in refusing to return the original engine for years, right up to the shortly before the commencement of the hearing;

2. Mr Mammoliti caused significant additional costs to be incurred as a result of repeatedly altering his availability for hearing and attempting to vacate it (including what was said to be an ‘inappropriate’ approach to a judicial officer – I infer Judge Gibson) in the days immediately prior to the hearing; and

3. By his lawyers, Mr Mammoliti conducted the hearing inefficiently, by requiring multiple witnesses to attend for no apparent purpose.

43. Mr Mammoliti responded to these points and denied that his conduct was serious enough of its own to warrant indemnity costs.

44. Mr Bentancur filed written submissions in reply which I have also had regard to.

Consideration

45. It is trite that costs are a discretionary matter; although of course, the discretion is guided by court rules^[3] , such as the rules applicable to offer of compromises (in Division 4 of Part 20 of the UCPR). It is also well-established that in contrast with rules offers, where an offeror betters the terms of a Calderbank offer in the overall result, it does not generate the automatic costs consequences which occur when the terms appear under a rules offer^[4] .

    3. Civil Procedure Act 2005 (NSW), s 98(1)

    4. Commonwealth of Australia v Gretton [2008] NSWCA 117 at [43]

Is Mr Mammoliti entitled to substantial variations to the costs order?

46. Mr Mammoliti did not apply, himself, to the Court for a variation of the costs order to reflect his contentions that:

1. there should be no order for costs, since Mr Bentancur should not have commenced, or continued, this proceeding in this Court; or

2. Mr Bentancur should, in the event that a partial order for indemnity costs be made, only receive a portion (30%) of his costs because of the parties’ mixed success; and

3. there should be carved out of the general order for costs those which were wasted by Mr Mammoliti in having to respond to a late application to amend with the hearing imminent.

47. As the written submissions of Counsel for Mr Mammoliti properly recognised, the circumstance that Mr Bentancur availed himself within the 14 day period set by court rules to apply for variation of the costs order did not entitle Mr Mammoliti to effectively piggy-back on the former’s application to enable him to apply for a different variation so as to obtain a more favourable outcome to him^[5] . At any rate, I would not have been satisfied that the contentions had merit.

    5. Hagerty v Hills Central Pty Ltd (No.2) [2018] NSWCA 279 at [9]

47. As to (a), it is correct that the monetary judgment Mr Bentancur ultimately obtained was such as to fall within the monetary jurisdiction of the Local Court. It is also true that, in that particular circumstance, an order for costs for the plaintiff “may be made, but will not ordinarily be made, unless the District Court is satisfied the commencement and continuation of the proceedings in the District Court, rather than the Local Court, was warranted”. By this rule, whilst indicating a preference, or even a usual rule, in a typical piece of civil litigation, there is a wide discretion in a Judge of this Court.

48. Mr Bentancur did not bring a money claim in the sense of a claim in debt but, in substance (and in form), he brought a claim for unliquidated damages. Quantum was therefore unpredictable. The hearing of that claim took 4 days. It was vigorously defended. I did not locate in Mr Crawley’s affidavit in this application any suggestion by him to Mr Bentancur’s solicitors that the proceeding would have been more appropriately heard in the Local Court. I am satisfied that the commencement and continuation of the proceeding in the District Court was warranted.

49. As to (b), it is inappropriate to apportion costs on an issue-by-issue basis. It is notorious that in a claim for damages for breach of contract, many heads of damage may be cited and the Court’s task (when determining what compensation should be awarded) is to determine what is most apt in the circumstances. This was a point made by Gageler CJ in the High Court’s recent decision in Cessnock City Council v 123 259 932 Pty Ltd [2024] HCA 17 at [7] which I cited in the judgment (at J[246] ^[6] ). Promisees who succeed in establishing a breach of contract should not be deterred from identifying a range of suggested heads of damage in a damages claim for fear that different costs consequences may flow if they succeed in obtaining damages in respect to only one (or more) head(s) of damage, but not other heads of damage.

    6. At J[246], I erroneously referred to paragraph 8 of the Chief Justice’s reasons when it should have been paragraph 7.

50. As to (c), such carve out is inappropriate. Even if, which I doubt, it would be permissible to permit a carve out having regard to the fact that Mr Mammoliti did not seek a variation of the costs order within the 14 days, as I have indicated, it is inapposite (and not consonant with case management objectives) for a party, at the conclusion of a proceeding, when a final costs order has been made, to apply for certain dispensations for the costs of interlocutory disputes. This proceeding was of long duration and it is not appropriate for the resources of the Court to be invested further in adjusting general costs orders in a way that would require it to re-trace interlocutory disputes when the parties did not seek the orders at the time interlocutory orders were made.

51. Further, as a practical matter, there is every possibility, in retrospect that had Mr Mammoliti sought an order about his late motion, the Court would have made no order. This was because there was mixed success in terms of Mr Bentancur partially obtaining leave to amend but also because the amendments he was permitted to run (in relation to paragraphs 12A and 12) were the product of an external factor in the litigation – the return of the original engine to the motor vehicle – which was arguably caused by Mr Mammoliti relatively late in the conduct of the proceeding up to hearing.

The Calderbank offer

53. The onus is on the party making the Calderbank offer to satisfy the court that it should exercise the costs discretion in its favour^[7] .

    7. Commonwealth of Australia v Gretton [2008] NSWCA 117 at [46]

54. I find that the result for Mr Bentancur by the judgment did substantially (as distinct from merely nominally) exceed the terms of his Calderbank offer. Plainly, the judgment sum exceeded the monetary amount that Mr Bentancur offered.

55. I do not find persuasive Mr Mammoliti’s point that the Calderbank offer entailed other terms, such as releases, which should be reckoned with when determining whether Mr Bentancur substantially achieved a better result by his offer than he did from the judgment. Entry by parties into mutual releases is a common incident of settlement terms. That is especially so where there are indications that potential cross-claims are in prospect, or that there are actual cross-claims on foot. In this respect, I am mindful that as at 15 January 2024, it appeared that Mr Mammoliti was of the view that items of his property were in Mr Bentancur’s possession. However, Mr Mammoliti had not brought any cross-claim against Mr Bentancur for the recovery of such items. That strengthened the weight that should be accorded to the inference arising in the letter, concerning term 6, that there was no real dispute by Mr Bentancur about Mr Mammoliti’s entitlement to have property validly claimed by him to be returned. There was, however, special reason why Mr Bentancur might want a release should Mr Mammoliti, even at a late stage and close to a hearing, want to bring such a claim against him. At any rate, the presence of a term for entry into mutual releases does not alter my conclusion that Mr Bentancur did substantially better the result he achieved in the judgment: as I indicated recently in another judgment of costs^[8] , courts faced with applications for special costs orders need not parse too finely upon whether an offeror achieves a monetary judgment that substantially bettered what the offeror had previously offered. The judgment sum of $35,000 beats $30,000; even as I disregard the award of interest that Mr Bentancur also received which was a virtually inevitable consequence of obtaining a monetary judgment.

    8. Patterson & Anor v Mamou t/as De Novo Conveyancing (No.2) [2024] NSWDC 75 at [16]

56. I find, further, that the offer did constitute a genuine attempt to compromise. Putting aside the numerical difference between the judgment sum and the offered sum, which I accept was small, the Calderbank offer offered Mr Mammoliti the chance to walk away without incurring any costs liability at a time when it was estimated that the plaintiff had incurred costs of $40,000. Although Mr Mammoliti submits that this amount may, relative to the judgment sum obtained was disproportionate, he did not submit that it reflected an over-estimate of the costs that Mr Bencantur would actually have incurred to January 2024 for a hard-fought proceeding that had been commenced on 6 December 2022. Mr Mammoliti did not, for example, indicate his own solicitors’ costs incurred to that point.

57. The real issue is whether, as at 15 January 2024, it was unreasonable for Mr Mammoliti to accept the offer. This is a question for which Mr Bentancur bears the onus of proof. It has been said that whether rejection of an offer was ‘unreasonable’ depends upon all surrounding circumstances; including but not limited to the terms of the offer; but certain relevant factors include the time for acceptance of the offer; whether the offeree had all the necessary material available to evaluate the offer; and whether the offeror’s case changed after the offer; and the complexity of the issues ^[9] .

    9. See the commentary in J Hamilton, G Lindsay and C Webster New South Wales Civil Procedure Handbook 2023 (Lawbook Co, 2023) at [r 42.15.80]

58. In my view there was a change in Mr Bentancur’s case on damages after the offer was made here and, further, in my view, Mr Bentancur ‘fell over the line’, as it were, in his success because of Mr Tsolakis’ supplementary affidavit which post-dated the offer. I do not agree with Mr Bentancur’s point, advanced in submissions in reply, that the main reason for that supplementary evidence was the return of the original engine. The part of that supplementary evidence that I treated as admissible could have been adduced earlier and other parts of his evidence was determined to be inadmissible.

59. Further, neither in the Calderbank offer of 15 January 2024 or in any offer or correspondence even before that date (say, in another offer of settlement on 6 October 2023) did Mr Bentancur, through his solicitors, provide any legally reasoned basis for the quantum of the settlement sum that was offered for the heads of damage that Mr Bentancur had articulated as at the date of the offer. As it was stated in the letter of 15 January 2024, the terms of the offer (collectively) were made “purely in the interests of a commercial resolution of this dispute” (emphasis added). At that stage, the plaintiff’s claim for damages articulated four heads of damage upon which the claim for damages was based. Mr Bentancur took no step in the explanatory part of the Calderbank offer to quantify any of those heads of damage (other than the head of damage concerned with over payment of monies, which was self-evident).

60. A liability in an unsuccessful defendant to pay indemnity costs based upon a rejection of a Calderbank offer is no small thing. It has also been said that an offeree’s unreasonableness in rejecting an offer needs to be established on clear grounds^[10] . If an offeror wishes to choose that form of offer, rather than through a rules offer, and thereafter contend that it was unreasonable for the offeree to reject it, it is in my view practically incumbent upon the offeror to furnish adequate information to enable the offeree to assess its prospects of whether it can achieve a better outcome by accepting the offer or continuing with the litigation to judgment. That includes information about quantum of a party’s claim; in addition to the merits of its arguments on liability.

    10. Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 per Basten JA (Giles JA and Young CJ in Eq agreeing) at [113]

61. A monetary offer motivated by “purely commercial reasons” without any transparent and reasoned link to the legal merits of what is claimed does not, of itself, assist the offeree with such assessment. Put simply, Mr Bentancur did not do enough to establish the unreasonableness in Mr Mammoliti’s rejection of the offer.

62. I am not persuaded that it was unreasonable for Mr Mammoliti to reject the Calderbank offer made on 15 January 2024.

The rules offer

Was the rules offer compliant with the Court rules?

63. In Mr Crawley’s letter of 12 June 2024, Mr Mammoliti did not articulate how the offer of compromise was not compliant with r 20.26. But in the submissions of Counsel for Mr Mammoliti’s written submissions, it was submitted that the time for acceptance of the offer was insufficient.

64. Rule 20.26(5)(b) indicates that assessment of the reasonableness of a period of acceptance of an offer is contextual and fact-specific. Mr Mammoliti’s Counsel referred the Court to a decision of Ward CJ in Eq (as the President then was) in Re Earth Civil Australia [2021] NSWSC 1161 at [119], where an offer had been made four days prior to the start of a hearing due to the start the following business day. The offer here was slightly longer than that, and another point of distinction with that case is that it dealt with a Calderbank offer, not rules of court; and, further, indeed, other matters were cited by her Honour influencing the reason why the application for a special costs order was rejected.

65. Nevertheless, the offer was essentially dropped on Mr Mammoliti close to what the offeror perceived to be the likely commencement date of the hearing. Since the matter was in a rolling list, it was possible (although the possibility did not materialise) that the hearing would commence on 6 May 2024, or soon after; the parties could not tell. At any rate, it was made at a point when Mr Mammoliti and his legal team would have been making final preparations for that hearing and consideration of settlement offers at that late point would have distracted or diverted them from that preparation. The timing was unreasonable in the circumstances. I infer that the purpose of making the offer in the circumstances was not so much to genuinely resolve the litigation but to create a trigger for an application for indemnity costs in the contingency which later materialised, of Mr Bentancur surpassing, by the quantum of the monetary judgment what he had offered in the rules offer.

66. But as events shown, even that contingency came to pass partly by reason of the evidence of Mr Tsolakis that post-dated the offer. That, in my view, would afford a reason for ‘otherwise’ ordering, for the purposes of r 42.14(2) of the UCPR, the rules offer did not comply with Court rules.

Other independent reasons for a special costs order advanced by Mr Bentancur

67. However, by his Counsel’s closing written submissions, Mr Bentancur cited other reasons why a special order for costs might be made that went beyond reliance upon the settlement offers. These were raised in sub-paragraphs 17(a) – (c) of his Counsel’s written submissions (in chief) on the application.

68. I will take them out of order.

69. I reject the submission that Mr Mammoliti’s legal team, and especially his Counsel, effectively dragged out the length of the hearing. It was, with respect, clear that the cross-examination of Mr Bentancur’s witnesses was well prepared and on point. The plainest indication of this was the absence of objection by Mr Bentancur’s Counsel, contemporaneous to the cross-examination of the witnesses that questions were irrelevant or should be disallowed as amounting to a waste of time.

70. I am not persuaded that any approach to Judge Gibson to vacate the hearing close to or on the eve of the hearing was improper; whether or not it incurred significant costs. The submission overlooks the circumstance that the reason for the approach was Mr Bentancur’s indication that he wanted to amend his pleading. That application was partly successful and partly unsuccessful.

71. As to the last of the submissions in this connection, courts usually do not delve into the costs consequences of issues that they ultimately do not need to determine. Whatever else might be said about the propriety of Mr Mammoliti’s retention of the original engine of the vehicle, no discrete cause of action (such as detinue) was run. Even if there was a basis for the order, Mr Bentancur did not articulate from what date a partial order for indemnity costs on this basis should run from.

Other matters

72. I should not, by virtue of the process of reasoning I have expounded in this judgment, be taken to have accepted Mr Mammoliti’s submissions regarding the disproportionate costs incurred by Mr Bentancur.

Orders

73. The plaintiff’s application for variation of the costs order is refused.

74. The Court orders:

1. Subject to order 3 below, the costs order made on 4 June 2024 is confirmed.

2. The Plaintiff’s notice of motion dated 18 June 2024 is dismissed.

3. The qualification to the costs order of 4 June 2024 is that the order for costs in favour of the plaintiff is subject to the exception that the plaintiff is to pay the defendant the defendant’s costs of the motion of 18 June 2024.

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Endnotes

Amendments

15 July 2024 - Paragraph [66]: Deleted "to my view that"

Paragraph [67]: Deleted "apparently"

15 July 2024 - Amended formatting of Texts Cited field

Decision last updated: 15 July 2024