Bofinger v Kingsway Group Pty Ltd (No. 2) - [2009] NSWCA 172

NEW SOUTH WALES COURT OF APPEAL

CITATION:
BOFINGER & Anor v KINGSWAY GROUP PTY LTD & Ors (No. 2) [2009] NSWCA 172

FILE NUMBER(S):
40782/07
40909/07

HEARING DATE(S):
On written submissions.

JUDGMENT DATE:
2 July 2009

PARTIES:
Ronald John BOFINGER (1st Appellant)
Sandra Anne BOFINGER (2nd Appellant)
KINGSWAY GROUP PTY LTD (1st Respondent)
RECKLEY PTY LTD (2nd Respondent)
John Edward SKEHAN (3rd Respondent)
David John LEVI & John Maxwell MORGAN (Joint Liquidators B & B Holdings Pty Ltd) (4th Respondents)
Ron TOSOLINI (5th Respondent)
Adrian MATTIUSSI (6th Respondent)
Lou POLITO (7th Respondent)
Peter HATHELIER (8th Respondent)

JUDGMENT OF:
Giles JA Handley AJA Sackville AJA

LOWER COURT JURISDICTION:
Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S):
SC 2451/06

LOWER COURT JUDICIAL OFFICER:
Young CJ in Eq.

LOWER COURT DATE OF DECISION:
15 October 2007

LOWER COURT MEDIUM NEUTRAL CITATION:
[2007] NSWSC 1138

COUNSEL:
G McVay (1st & 2nd Appellants)
R Darke SC (5th, 6th & 7th Respondents)

SOLICITORS:
Warren McKeon Dickson (Appellants)
Middletons (5th, 6th & 7th Respondents)

CATCHWORDS:
COSTS - indemnity costs - Calderbank offer - no question of principle.

LEGISLATION CITED:

CASES CITED:
Barnes v Addy (1874) LR 9 Ch App 244;
Jones v Bradley (No 2) [2003] NSWCA 258;
Leichhardt Municipal Council v Green [2004] NSWCA 341;
SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323.

TEXTS CITED:

DECISION:
Costs payable by the guarantors to the fifth to seventh respondents on an indemnity basis from 7 December 2007. The guarantors pay the fifth to seventh respondents' costs of the application for indemnity costs.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40782/07
CA 40909/07
GILES JA
HANDLEY AJA
SACKVILLE AJA
Thursday, 2 July 2009

BOFINGER & ANOR v KINGSWAY GROUP PTY LTD & ORS (NO. 2)

Judgment

THE COURT: On 3 December 2008 this Court dismissed, with costs, an appeal from the decision of Young CJ in Eq of 17 October 2007. The Chief Judge had held that puisne mortgagees, which had the benefit of guarantees from the appellants, were entitled to the surplus proceeds from the realisation by the first mortgagee of its securities and the remaining unrealised securities, in priority to the guarantors.
The guarantors’ claim was based on their payments to the first mortgagee in reduction of its debt which they had also guaranteed, and they asserted that these entitled them to be subrogated to the surplus proceeds and unrealised securities in priority to the puisne mortgagees.
The Court reserved its judgment and three separate judgments were given with different reasons, although the result was unanimous.
The guarantors had joined as defendants in the Equity Division the first, second and third mortgagees, the liquidator of the principal debtor, and the solicitors (the fifth to seventh respondents) who had acted for the first and second mortgagees in the realisation of their securities. The solicitors were sued under the rules in Barnes v Addy (1874) LR 9 Ch App 244.
When the Court's reasons…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Bofinger v Kingsway Group Pty Ltd (No. 2)

Details

AGLC: BOFINGER v Kingsway Group Pty Ltd (No. 2) [2009] NSWCA 172
Case: [2009] NSWCA 172
Decision Date: 2 July 2009

CaseChat Overview and Summary

In *Bofinger v Kingsway Group Pty Ltd (No. 2)*, the Court of Appeal of New South Wales considered an application for indemnity costs. The dispute concerned an offer made by the fifth to seventh respondents to the guarantors, which the guarantors had not accepted.

The primary legal issue before the Court was whether the guarantors should be ordered to pay the costs of the fifth to seventh respondents on an indemnity basis, following the guarantors' failure to accept a *Calderbank* offer. The Court was required to determine if there were exceptional circumstances justifying an award of indemnity costs, particularly in the absence of any question of principle being involved.

The Court reasoned that the guarantors' conduct in refusing the *Calderbank* offer, which was made in circumstances where the fifth to seventh respondents had acted reasonably and the offer was not unreasonable, warranted an award of indemnity costs. The Court applied the principle that where a party unreasonably rejects a reasonable offer of settlement, and subsequently achieves a worse outcome, an award of indemnity costs may be appropriate. The Court found that the guarantors' refusal of the offer was unreasonable and that no question of principle was raised by the proceedings that would militate against such an award.

The Court ordered that the costs payable by the guarantors to the fifth to seventh respondents be on an indemnity basis from 7 December 2007, and that the guarantors pay the fifth to seventh respondents' costs of the application for indemnity costs.

Orders

Orders of the court

Costs payable by the guarantors to the fifth to seventh respondents on an indemnity basis from 7 December 2007. The guarantors pay the fifth to seventh respondents' costs of the application for indemnity costs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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