Bird v Biedrzycki (No 2)
[2019] ACTSC 247
•3 September 2019
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Bird v Biedrzycki (No 2) |
Citation: | [2019] ACTSC 247 |
Hearing Date: | On the papers |
DecisionDate: | 3 September 2019 |
Before: | Elkaim J |
Decision: | The orders made on 13 August 2019 are confirmed, except that Order (c)(i) is amended to read: (i) Judgment for the cross-appellant in the sum of $176,227.39. |
Catchwords: | APPEAL – GENERAL PRINCIPLES – Costs – Indemnity costs – Calderbank offer – judicial discretion with respect to disposition of costs – set off between monetary orders |
Legislation Cited: | Court Procedures Rules 2006 (ACT) r 1002 Leases (Commercial and Retail) Act 2001 (ACT) |
Cases Cited: | Biedrzycki v Bird & Smith [2019] ACTMC 8 Bird v Biedrzycki [2019] ACTSC 214 Leda Commercial Properties Pty Ltd v Brenda Hungerford Pty Ltd [2018] ACTCA 17; 337 FLR 252 |
Parties: | Francis Bird (First Appellant/ Cross-Respondent) Cheryl Smith (Second Appellant/ Cross-Respondent) Michael Biedrzycki (Respondent/ Cross-Appellant) |
Representation: | Counsel R Arthur (Appellants/ Cross-Respondents) B Buckland (Respondent/ Cross-Appellant) |
| Solicitors KJB Law (Appellants/ Cross-Respondents) Bradley Allen Love Lawyers (Respondent/ Cross-Appellant) | |
File Numbers: | SCA 19 of 2019 |
Decision under appeal: | Court: ACT Magistrates Court Before: Magistrate Fryar Date of Decision: 7 March 2019 Case Title: Biedryzcki v Bird & Smith [2019] ACTMC 8 Court File Numbers: CL 17 of 2016 |
ELKAIM J:
This matter commenced in the ACT Magistrates Court where a decision was given by Magistrate Fryar on 7 March 2019 (Biedrzycki v Bird & Smith [2019] ACTMC 8). Both sides appealed from this decision. I heard the appeal on 8 August 2019 and delivered a judgment on 13 August 2019 (Bird v Biedrzycki [2019] ACTSC 214).
I made the following orders:
(a)The appeal is allowed.
(b)The cross-appeal is allowed.
(c)In lieu of the orders made in the Magistrates Court on 7 March 2019, the following orders are made:
(i)Judgment for the cross-appellant (the tenant) in the sum $179,913.89.
(ii)The rental arrears held in trust by KJB Law are to be paid to the cross-respondents (the landlords) upon the cross-appellant (the tenant) acknowledging that he has received the sum referred to in order (i) above.
(iii)Each party is to pay its own costs of the hearing in the Magistrates Court.
(iv)Each party is to pay its own costs of the appeal and the cross-appeal.
(d)Liberty to both parties to apply in respect of the ‘payment out’ of the rental arrears.
In addition to the above orders I gave liberty to the parties to apply if any alternate costs order was sought. Consistent with my reasons in the appeal I will refer to the parties as the landlords and the tenant respectively.
The tenant has taken up the liberty to apply that I allowed, and has sought a variation of my costs orders. He has also sought a change to the order in respect of the rental arrears so as to achieve an effective set off between the monetary order in his favour and the order against him.
The landlords have sought an amendment to the amount of rental arrears to which they are entitled, to the effect that interest is added.
Both parties presented their arguments by way of written submissions.
The tenant’s application for solicitor and client costs
The specific application is that the landlords pay the tenant’s costs of the appeal on an ordinary basis up to and including 4 June 2019 and on a solicitor and client basis thereafter.
The origin of the application lies in two written settlement offers made on 19 February 2018 and 8 May 2019 respectively. The first offer can be described as a Calderbank offer (Calderbank v Calderbank [1975] 3 All ER 333; 3 WLR 586) while the second offer was made pursuant to rules of court and should be seen as an Offer of Compromise.
The first offer can be summarised as follows:
(a)The landlords pay the tenant $140,000.
(b)The $23,000 rental arrears held in trust is to be released to the tenant.
(c)Each party is to pay its own legal costs.
By the end of this process, acknowledging that the $23,000 originally came from the tenant, the tenant receives $163,000.
The result of my judgment is that the tenant receives $179,913.89 but loses the $23,000 rental arrears. The net result to the tenant is $156,913.89. Accordingly I disagree that the 2018 offer provided a better result to the landlords than my judgment. This means the 2018 offer cannot justify the order sought by the tenant.
The 2019 offer has a fundamental flaw. If it is valid it must comply with r 1002 of the Court Procedures Rules 2006 (ACT). This rule states, at r 1002(2)(c), that an offer under the rule must “not include an amount for costs or state that it is inclusive of course”.
The offer does include an amount for costs, namely in the sum of $10,000 to be payable by the Respondent to the Appellants. The offer is consequently not valid.
The letter annexing the offer also purports to style the offer as amounting to a Calderbank offer. In my view the offer is so confusing and so difficult to translate into specific monetary sums that it cannot qualify as an understandable offer.
Whether a Calderbank offer or a rules based offer, the offer should be unambiguous in its terms. This offer lacks this basic characteristic.
Because of the above conclusions there is no need to examine the issues raised concerning the Leases (Commercial and Retail) Act 2001 (ACT) and the decision in Leda Commercial Properties Pty Ltd v Brenda Hungerford Pty Ltd [2018] ACTCA 17; 337 FLR 252.
I would finally add this. The court always has a discretion on costs. I think the costs order that I made on 13 August 2019 reflects a just result between the parties. This is the purpose of the discretion. As concisely stated by the High Court in Gray v Richards (No 2) [2014] HCA 47; 89 ALJR 113 at [2]:
The disposition of costs is within the general discretion of the Court. Ordinarily, that discretion will be exercised so that costs are awarded to the successful party, but other factors may have a significant claim on the discretion of the Court. The disposition which is ultimately to be made in any case where there are competing considerations will reflect a broad evaluative judgment of what justice requires.
Finally I refer to the tenant’s written submissions in reply in which, from [4], a mathematical formula is applied as a gauge of the landlords’ success (or lack of success) in their appeal. It is true that $100,000 is five times more than $20,000. Nevertheless the appeal was successful in reducing the Magistrate’s figure of $150,000 down to $100,000. In my view the landlords were successful in their appeal. The ultimate result was not a product of their appeal only, but rather a reflection of the impact of the tenant’s success in his cross-appeal.
In conclusion I decline to change the original costs order.
Payment out
The tenant has submitted that instead of the formula adopted in the orders I made in the substantive judgment, that my intent for there to be a set off, as expressed at [36] would be better achieved by the reduction of the rental arrears from the judgment sum in favour of the tenant.
There is some logicality in the proposal. However it is not addressed in the landlord’s submissions and the change would not fall within the scope of the ‘slip’ rule. I would only make the suggested change with the consent of both parties. That does not exist. Accordingly the request is denied.
The landlords claim for interest on the rental arrears.
The landlords have sought interest on the arrears held in trust. It is pointed out that the Magistrate ordered interest and this was accepted by the tenant in his submissions. Whether or not the interest was “accepted” is not relevant here and I make no finding on that point.
The amount claimed is $3,686.50, being pre-judgment interest from 15 September 2016.
The tenant says there should be no award of interest, but if there is it should only be for the period from 15 September 2016 until 9 February 2017 when the arrears were paid into the solicitor’s trust account.
I do not understand the reasoning behind the limitation on interest proposed by the tenant. I have found that the landlords were entitled to the arrears and they should consequently be entitled to interest on the whole amount for the whole of the period, up to judgment, during which they were deprived of the arrears.
As to the tenant’s reliance on [36] of the substantive judgment to produce a conclusion that there was no intent on my part to award interest on the arrears, I think this is a reading that defies the wording of the paragraph.
It is evident to me that the interest has, erroneously by me, simply been omitted. This is a classic basis for the application of the ‘slip’ rule. I will amend the previous orders to reflect the addition of interest. I think the most convenient way to achieve the desired result is to reduce the judgment sum in favour of the tenant by the amount allowed for interest.
Costs of the submissions on costs
Although the landlords have been essentially successful in relation to the submissions on costs I think, consistent with the overall intent of achieving justice between the parties, that the general costs approach I have adopted should continue. I will therefore make no orders in respect of the costs of these submissions.
Orders
The orders made on 13 August 2019 are confirmed, except that Order (c)(i) is amended to read:
(i) Judgment for the cross-appellant in the sum of $176,227.39.
| I certify that the preceding twenty nine [29] numbered paragraphs are a true copy of the Reasons for Sentence of his Honour Justice Elkaim. Associate: Date: 3 September 2019 |
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