Boensch as trustee of the Boensch Trust v Pascoe (No 2)

[2016] NSWSC 343

Supreme Court

New South Wales

Medium Neutral Citation:	Boensch as trustee of the Boensch Trust v Pascoe (No 2) [2016] NSWSC 343
Hearing dates:	On the papers
Date of orders:	09 May 2016
Decision date:	09 May 2016
Jurisdiction:	Equity
Before:	Darke J
Decision:	Plaintiff ordered to pay indemnity costs from the date of the making of a Calderbank offer.
Catchwords:	COSTS – indemnity costs order – unsuccessful plaintiff failed to accept Calderbank offer – whether a genuine offer of compromise – whether unreasonable of plaintiff to not accept offer
Legislation Cited:	Civil Procedure Act 2005 (NSW) s 98 Real Property Act 1900 (NSW) s 74P(1) Uniform Civil Procedure Rules 2005 (NSW) rr 20.26, 42.15A(2)
Cases Cited:	Calderbank v Calderbank [1975] 3 All ER 333 Miwa Pty Limited v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 Whitney v Dream Developments Pty Limited [2013] NSWCA 188; (2013) 84 NSWLR 311
Category:	Costs
Parties:	Franz Boensch as trustee of the Boensch Trust (Plaintiff) Scott Darren Pascoe (Defendant)
Representation:	Counsel: Mr A Bailey (Plaintiff) Mr M F Newton (Defendant)   Solicitors: Somerville Legal (until 26 February 2016); Madison Marcus (Plaintiff) Gilchrist Connell Legal (Defendant)
File Number(s):	2012/165657
Publication restriction:	None

Judgment

Introduction

1. These proceedings concerned an application by the plaintiff for compensation under s 74P(1) of the Real Property Act 1900 (NSW). The plaintiff claimed that the defendant had, without reasonable cause, lodged a caveat and later refused or failed to withdraw the caveat. The Court delivered judgment on 10 December 2015. The Court answered certain separate questions, and ordered that the proceedings be dismissed with costs.

2. On that occasion, the Court was informed that the defendant wished to make an application for indemnity costs. Directions were made for the provision of written submissions on that question. The parties agreed that the application for indemnity costs could be dealt with on the papers. I note that the plaintiff, through a legal representative, was present in Court on 10 December 2015 when those directions were made.

3. The defendant, in accordance with the directions, provided its written submissions by 5 February 2016. The plaintiff was due to provide its written submissions in response by 19 February 2016. No submissions were provided by that date. The plaintiff’s solicitors filed a Notice of Ceasing to Act on 26 February 2016.

4. In those circumstances, I considered that I should proceed to determine the defendant’s application for indemnity costs. Reasons for judgment were prepared. On 30 March 2016 the matter was listed for judgment on 31 March 2016. The defendant’s solicitor was requested to attempt to notify the plaintiff of the listing. She managed to do so, and later on 30 March 2016 the plaintiff made contact with my chambers and requested that the matter be adjourned.

5. On 31 March 2016, Mr Korakis, solicitor, appeared for the plaintiff. He requested that I not proceed to deliver the judgment, and that time be given for the plaintiff to provide written submissions in response to those of the defendant. I acceded to that request, but ordered the plaintiff to pay the costs of the day forthwith on the indemnity basis. A direction was made for the plaintiff to provide written submissions, and for the defendant to provide any written submissions in reply.

6. Written submissions were duly provided by the plaintiff. The defendant decided not to provide any written submissions in reply.

Determination

7. The defendant’s application was founded upon three letters containing settlement offers, sent on 16 May 2013, 9 July 2014 and 24 March 2015 respectively. None of the offers were accepted by the plaintiff. The defendant seeks indemnity costs in the alternative from the dates of the offers. Reliance is placed upon the principles applicable to so-called Calderbank offers. In respect of the first offer, reliance is also placed upon the terms of the Uniform Civil Procedure Rules – in particular, UCPR r 20.26 (as it stood at the time of the first offer) and UCPR r 42.15A(2).

8. I have concluded that it is appropriate to order, pursuant to s 98 of the Civil Procedure Act 2005 (NSW), that the plaintiff pay the defendant’s costs of the proceedings on the indemnity basis as from 16 May 2013. Such an order is appropriate based upon the principles applicable to Calderbank offers, not upon the operation of the relevant provisions of the Uniform Civil Procedure Rules.

9. The letter of 16 May 2013, sent by the defendant’s solicitors to the plaintiff’s solicitors, contained two offers. One was expressed to be an Offer of Compromise under the Uniform Civil Procedure Rules; the other was expressed to be a Calderbank offer. Either one or the other was open to be accepted, but not both.

10. The Offer of Compromise included terms that the defendant would pay $80,000 to the plaintiff, and that the proceedings would be dismissed “with no order as to costs”. In my view, the offer did not comply with UCPR r 20.26 (as it then stood) because in its terms it purported to deal with costs, albeit that the stipulation was that there be no order as to costs. The offer thus fell foul of the principles stated by the Court of Appeal in Whitney v Dream Developments Pty Limited [2013] NSWCA 188; (2013) 84 NSWLR 311 at [24]-[25] (Bathurst CJ) and [52] (Barrett JA).

11. The Calderbank offer of 16 May 2013 included terms:

1. that the defendant pay $80,000 to the plaintiff, plus the plaintiff’s party/party costs of the proceedings as agreed or assessed;

2. that the terms of the settlement be recorded in a confidential Deed of Release;

3. that the proceedings be dismissed with no order as to costs; and

4. that the offer remain open for a period of 28 days.

12. The terms of the offer were clear. I do not accept the plaintiff’s submission that the terms in paragraphs (a) and (c) are inconsistent. Moreover, the offer was expressly stated to be made pursuant to the principles enunciated in Calderbank v Calderbank [1975] 3 All ER 333. The offer should be regarded as a valid Calderbank offer. The plaintiff did not contend to the contrary.

13. In Miwa Pty Limited v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 Basten JA stated (at [8]) that the approach frequently adopted in assessing Calderbank offers and their costs consequences has been to ask two questions: whether there was a genuine offer of compromise, and whether it was unreasonable for the offeree not to accept it.

14. In my opinion, the offer made on 16 May 2013 plainly constituted a genuine offer of compromise. The plaintiff was seeking compensation pursuant to s 74P(1) of the Real Property Act. The defendant had filed a defence in March 2013 by which the claim was on various grounds wholly denied. The sum of $80,000 was in the context of the proceedings a substantial, not derisory, sum. In addition, the payment of the plaintiff’s costs (from the commencement of the proceedings in May 2012 up to May 2013) would have involved more than a trifling amount.

15. The failure of the plaintiff to accept the offer should be regarded in all the circumstances as unreasonable. The offer was made some 7 weeks after the filing of the defence, albeit before evidence was served. The offer itself expressed reasons why, in the defendant’s opinion, the plaintiff’s claim was going to fail. Ultimately, the defendant’s position was vindicated, including by reason of matters contained in the defence and outlined in the offer. The offer was open for a reasonable period to enable proper consideration to be given to the compromise it contained. The plaintiff submitted that the offer was made when he was travelling in Europe. However, the plaintiff’s solicitor sent a letter in response to the offer within 4 days. This letter, which invited further debate concerning the issues in the case, was not answered. Nonetheless, the issues had previously been identified sufficiently to enable the offer to be appropriately considered. It is difficult to see how the plaintiff’s claim, viewed objectively as of the date of the offer, could have been seen as having a strength or value to warrant not accepting the offer. Nothing has been placed before the Court by the plaintiff to suggest that it was reasonable to view the claim as possessing such strength or value. The plaintiff was able to do no more than submit that at the time the offer was made, his prospects in the proceedings were at least arguable.

16. It is not necessary to consider the defendant’s alternative claims for indemnity costs.

17. The Court orders that the plaintiff pay the defendant's costs of the proceedings on the ordinary basis up to 16 May 2013, and thereafter on the indemnity basis.

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Decision last updated: 19 May 2016