Cahill v Kenna (No 2) - [2015] NSWSC 200

Supreme Court

New South Wales

Case Name:	Cahill v Kenna (No 2)
Medium Neutral Citation:	[2015] NSWSC 200
Hearing Date(s):	On the papers
Decision Date:	17 March 2015
Jurisdiction:	Equity Division
Before:	McDougall J
Decision:	Costs payable by plaintiffs to defendants to be assessed on the indemnity basis from 1 November 2014.
Catchwords:	COSTS - indemnity costs - Calderbank letters - whether an offer to walk away amounts to a genuine offer to compromise - whether non-acceptance was unreasonable - relevance of whether evidence had been served - where plaintiffs indicated willingness to agree to offer, then changed their minds - whether court should draw inferences as to why they changed their minds - where, even without the benefit of hindsight, the plaintiffs’ case was very weak - whether indemnity costs should run from the date of offer or the date of expiry.
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No.2) [2009] NSWCA 12 Cahill v Kenna [2014] NSWSC 1763 Calderbank v Calderbank [1975] 3 All ER 333 Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368
Category:	Costs
Parties:	Peter Anthony Cahill (First Plaintiff) Duell Estates Pty Limited (Second Plaintiff) Greg Kenna (First Defendant) ACN 102 262 359 Pty Ltd (Formerly Landmark White (NSW) Pty Ltd)
Representation:	Counsel: MS Henry SC/JAC Potts (Plaintiffs) M T McCulloch SC / MF Newton (Defendants) Solicitors: Levitt Robinson (Plaintiffs) Wotton + Kearney (Defendants)
File Number(s):	2012/198505

JUDGMENT

HIS HONOUR: These reasons deal with an application by successful defendants for costs on the indemnity basis.

Nature of and issues in the proceedings

The proceedings were heard, together with related proceedings, over five days beginning 10 November 2014. I gave judgment on 10 December 2014 ([2014] NSWSC 1763). In each proceedings, I concluded that there should be judgment for the defendants with costs.
The nature of the proceedings may be stated briefly by repeating what I said at [1] to [4], [7] and [8] of my earlier reasons:
(1) HIS HONOUR: For some years from 1992, the first plaintiff, Mr Peter Cahill, and Mr Peter Bega carried out a number of property developments in joint venture through their related companies. The relationship between Messrs Cahill and Bega began to sour in late 2005, and broke down irretrievably in 2006. It became necessary for them to unwind their commercial relationship, which in turn involved separating out, and allocating one way or the other, their interests in various joint venture projects that were then current.
(2) As part of this process, Messrs Cahill and Bega and their associated companies (from here on, I will not refer to the associated companies unless it is necessary to do so) entered into two agreements, each dated 12 April 2007. One was described as a “Heads of Agreement” (HOA). Despite its name, it was intended to be, and was, of immediate legal effect. The other agreement was called a “Mediation Agreement”. The nominated…

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 Cahill v Kenna (No 2)

Details

AGLC: Cahill v Kenna (No 2) [2015] NSWSC 200
Case: [2015] NSWSC 200
Decision Date: 17 March 2015

CaseChat Overview and Summary

The case of Cahill v Kenna (No 2) involved a dispute between the Cahills and the Kennas. The Cahills sought indemnity costs from the Kennas following a failed attempt to settle the matter. The dispute came before the court on the question of whether the Kennas' offer to walk away from the litigation constituted a genuine offer to compromise for the purposes of an indemnity costs order. The court had to determine whether the Cahills' refusal to accept the offer was unreasonable and whether the timing of the offer, in relation to the service of evidence, was relevant. Additionally, the court considered whether it should draw inferences about the Cahills' reasons for changing their minds after initially indicating a willingness to agree to the offer. The weakness of the Cahills' case, even without hindsight, also factored into the court's reasoning.

The court examined the nature and timing of the Kennas' offer to walk away from the litigation and its implications for indemnity costs. It was established that the Kennas had made a genuine offer to compromise by proposing to abandon their litigation. The court had to decide whether this constituted a genuine offer for the purposes of an indemnity costs order. The court found that the Cahills' refusal to accept the offer was unreasonable, particularly given the weak state of their case. The court also held that the timing of the offer, in relation to the service of evidence, was not a material factor. Furthermore, the court concluded that it was not appropriate to draw inferences about the Cahills' reasons for changing their minds after initially agreeing to the offer. Finally, the court determined that indemnity costs should run from the date of the offer, not the date of its expiry.

In light of the above findings, the court ordered the Cahills to pay the Kennas' costs on an indemnity basis, running from the date of the Kennas' offer. The court held that the Cahills' refusal to accept the offer was unreasonable, given the weak state of their case, and that the Kennas had made a genuine offer to compromise. The court also found that it was not appropriate to draw inferences about the Cahills' reasons for changing their minds after initially agreeing to the offer. The outcome of the case highlights the importance of considering the genuineness of an offer to compromise and the reasonableness of a party's refusal to accept such an offer when determining indemnity costs.

Orders