Caltex Australia Petroleum Pty Ltd v Troost (No 2)

[2015] NSWCA 103

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Caltex Australia Petroleum Pty Ltd v Troost (No 2) [2015] NSWCA 103

Hearing dates:

On the papers

Date of orders:

20 April 2015

Decision date:

20 April 2015

Before:

Meagher JA at [1];
Barrett JA at [2];
Emmett JA at [3]

Decision:

(1) The appeal be allowed.

(2) The orders of the District Court of 16 April 2014 be set aside.

(3) In lieu of the orders of the District Court, there be a verdict and judgment for the plaintiff against the defendant for the sum of $139,138.95 plus interest on the sum of $132,513.29 from 23 December 2009 to 23 March 2015 in the sum of $53,571.23 and an order that the defendant pay the plaintiff’s costs as agreed or assessed.

(4) The respondent pay the appellant’s costs of the appeal.

(5) The respondent be provided with a certificate under the Suitors’ Fund Act 1951 (NSW) if he is so entitled.

Catchwords:

PROCEDURE – costs – application for indemnity costs – whether it was unreasonable to not accept an offer of compromise – presumption of receipt under s 160 of the Evidence Act 1995 (NSW)

GUARANTEE AND INDEMNITY – construction of indemnity – whether the appellant is entitled to the costs of these proceedings on the basis that it has suffered “losses” under the indemnity

PROCEDURE – costs – departing from the general rule – failure in a portion of a claim – whether there should be no order as to the costs of the District Court proceedings on the basis that the appellant was unsuccessful in a discrete aspect of its claim

Legislation Cited:

Evidence Act 1995 (NSW), s 160
Uniform Civil Procedure Rules 2005 (NSW), r 51.9

Cases Cited:

Ankar Pty Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15; 162 CLR 549

Category:

Costs

Parties:

Caltex Australia Petroleum Pty Ltd (Appellant)

Representation:

Counsel:
C Locke (Appellant)
P Reynolds (Respondent)

Solicitors:
Oliveri Lawyers (Appellant)
YBR Lawyers (Respondent)

File Number(s):

2014/133036

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

District Court of NSW

Date of Decision:

16 April 2014

Before:

Gibb DCJ

File Number(s):

2012/351978

Judgment

1. MEAGHER JA: I agree with Emmett JA.

2. BARRETT JA: I agree with Emmett JA.

3. EMMETT JA: On 23 March 2015, the Court published its reasons for concluding that the appeal should be allowed, that the verdict and judgment of the District Court should be set aside, and that in lieu thereof, there should be a verdict and judgment for Caltex against Mr Troost. The Court also concluded that there should be orders for Mr Troost to pay Caltex’s costs of the proceedings in the District Court and in this Court. The parties were directed to bring in short minutes to give effect to the Court’s reasons. The purpose for giving that direction was to enable the parties to agree on the calculation of interest to be included in the amount of the judgment.

4. The parties have now provided a calculation of interest in accordance with the Court’s reasons. However, the Court has received further submissions from the parties on the question of costs. Those submissions raise three separate questions.

5. In these reasons, terms are used as defined in the reasons of 23 March 2015.

Issue 1: indemnity costs

6. First, Caltex asks for an order that its costs of the appeal be paid on the indemnity basis. It does so in reliance upon a letter dated 23 June 2014 (the June Letter) said to have been sent to YBR Lawyers, the solicitors for Mr Troost, by Oliveri Lawyers, the solicitors for Caltex. The June Letter is an offer of compromise of the appeal. Caltex says that that offer was not accepted by Mr Troost. However, YBR Lawyers say that the June Letter was never received. In relation to that question, the Court has now considered an affidavit filed on behalf of Caltex, sworn by Mr Emanueli Oliveri on 1 April 2015, and an affidavit filed on behalf of Mr Troost, sworn by Mr David Carr on 10 April 2015.

7. Mr Olivieri annexes to his affidavit a copy of the June Letter, which was addressed to the attention of Mr Carr at YBR Lawyers. The copy of the June Letter annexed to the affidavit bears no signature, although it is expressed to be written on behalf of Oliveri Lawyers by Clay Muir. While the June Letter is addressed to YBR Lawyers at a street address, immediately under the address on the letter it is stated to be “By Email” followed by Mr Carr’s email address. Mr Oliveri says in his affidavit that, on 23 June 2014, he put the original of the June Letter in an envelope, on the back of which was printed the return address of Oliveri Lawyers, that he affixed the correct stamp and that he handwrote the address of YBR Lawyers on the envelope. Mr Oliveri says that, on the same day, he deposited the envelope in a mail box at the corner of Stanley Street and Crown Street, East Sydney, 2010, and that, as at the date of swearing his affidavit, the letter had not been returned as undelivered mail.

8. On the other hand, Mr Carr says in his affidavit that he has not received, and, to the best of his knowledge, no one else employed by YBR Lawyers has received, the June Letter. In particular, Mr Car says that he has no recollection of receiving the June Letter by post, email or otherwise. He also says that, where he receives a letter that relates to a particular proceeding, his usual practice is to place the letter in the file of YBR Lawyers relating to that proceeding. He has reviewed the relevant file and there is no copy of the June Letter on the file. Mr Carr also says that he has reviewed his email records and there is no record of receiving the June Letter by email.

9. Mr Carr also explains the system in place in relation to the distribution of mail delivered to YBR Lawyers by Australia Post. Under that system, in the ordinary course, mail would be opened by the receptionist and distributed to the recipient or Mr Carr’s staff, depending upon who is responsible for assisting him in relation to particular matters. His usual practice, upon receipt of an offer to settle proceedings, is to send a copy of the offer by email to his client and counsel, where briefed. He has reviewed his emails and has no record of having sent an email relating to the June Letter to Mr Troost or to counsel. Mr Carr has also asked two other employees, who have carried out work in relation to this appeal under his supervision, whether they received or saw the June Letter. Each of them said that she had not. Each also said that she had not received the June Letter by email.

10. Caltex submits that Mr Troost has not rebutted the presumption under s 160 of the Evidence Act 1995 (NSW), under which, relevantly, it is presumed (unless evidence sufficient to raise doubt about the presumption is adduced) that a postal article sent by prepaid post addressed to a person at a specified address in Australia was received at that address on the fourth working day after having been posted.

11. The evidence in Mr Carr’s affidavit is sufficient to raise doubt about the presumption in s 160. In the light of that evidence, it would be reasonable to conclude that YBR Lawyers did not receive the June Letter making the offer of compromise by Caltex. If that were so, it could not be said that it was unreasonable for Mr Troost not to have accepted the offer. However, Caltex has not been afforded the opportunity of cross-examining Mr Carr for the purpose of testing the evidence given in his affidavit.

12. In any event, there is a further basis for concluding that it was not unreasonable for Mr Troost to have accepted the offer. The offer made by the June Letter was that the appeal be dismissed and that each party pay its own costs of the proceedings of the District Court. The June Letter said that, if Mr Troost did not accept the offer, or no response was received before its expiration, Caltex reserved its right to proceed with the appeal. The offer was to be open for acceptance until 4 pm on 27 June 2014. Under s 160 of the Evidence Act, on which Caltex relies, the June Letter would be presumed to have been received on 27 June 2014. Requiring a response to the offer on the day when it was received would not be reasonable.

13. Further, as at 23 June 2014, no appeal was on foot since, while Caltex had filed a notice of intention to appeal, no notice of appeal had been filed or served. The proposal that Mr Troost abandon the order for costs in his favour in the District Court was put without any explanation. The three-month period within which a notice of appeal was required to be filed[1] had almost expired and nothing had been put forward by Caltex as to why the decision of the District Court was erroneous. In those circumstances, even if the offer had been received by Mr Troost and he had had a reasonable time to consider it, it would not have been unreasonable to reject it.

    1. Uniform Civil Procedure Rules 2005 (NSW), r 51.9.

14. Mr Troost was given a very short time to decide whether to abandon his costs in the District Court in exchange for the abandonment of an appeal, the merits of which he had had no opportunity to consider. The only benefit that was available to him was obviating the possibility that he would incur costs in successfully resisting an appeal that he would not be able to recover from Caltex on taxation. In the absence of some indication as to the arguments that would be advanced in support of the appeal, the failure to accept the offer made by the June Letter is not a basis for ordering that the costs of the appeal be paid on the indemnity basis.

Issue 2: entitlement to costs under the indemnity

15. Second, Caltex seeks to rely on the indemnity as entitling it to the costs of the proceedings. The indemnity given by Mr Troost was in respect of “all losses, damages, costs and expenses” by reason of “any default by [the Company] under the facility”. Caltex asserts that it has incurred costs and expenses as a result of the default of the Company, including the legal costs of the proceedings in the Court of Appeal. It contends that that is an alternative basis for ordering that the costs of the appeal be paid on the indemnity basis.

16. At no stage prior to judgment did Caltex foreshadow that it would seek indemnity costs on the basis of the provisions of the indemnity. It did not seek indemnification in respect of its legal costs in the statement of claim, in the amended statement of claim or in its notice of appeal. No reference was made in the written submissions or at the hearing of the appeal to a claim under the indemnity for the legal costs of enforcing the indemnity.

17. In any event, the costs of the proceedings against Mr Troost are not losses, damages, costs or expenses by reason of default by the Company under the facility. They are costs incurred by reason of Mr Troost’s failure to discharge his obligations under the indemnity. There is no promise by Mr Troost to indemnify Caltex in respect of costs incurred in enforcing its rights as against Mr Troost. The terms of the indemnity do not constitute a basis for ordering that Mr Troost pay any costs on the indemnity basis.

Issue 3: costs of the District Court proceedings

18. Third, Mr Troost contends that there should be no order as to the costs of the proceedings in the District Court. He contends that this Court should exercise its discretion in relation to the costs by directing that there be no order as to costs of the trial because Caltex was unsuccessful in respect of the issue as to whether or not it was entitled to recover under the guarantee, as distinct from the indemnity. He contends that the guarantee issue was a discrete and significant one and that Caltex accepted the correctness of that part of the reasons of the District Court. He refers to the debate as to the guarantee issue and whether the variation of the facility agreement was material so as to attract the principles in Ankar Pty Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15; 162 CLR 549. He also asserts that the construction of the indemnity found by this Court was not advanced by Caltex at the trial in the District Court. It is by no means clear that that is so.

19. The essential question in the proceedings in the District Court was whether Mr Troost had a liability to pay to Caltex the unpaid balance of the amount owing by the Company. Ultimately, Caltex has been completely successful in its claim against Mr Troost. There can be no suggestion that Mr Troost would have consented to judgment had Caltex advanced different arguments before the District Court. No basis has been established from departing from the usual rule that costs should follow the event in the District Court.

Conclusion

20. The orders of the Court should therefore be as follows:

1. The appeal be allowed;

2. The orders of the District Court of 16 April 2014 be set aside;

3. In lieu of the orders of the District Court, there be a verdict and judgment for the plaintiff against the defendant for the sum of $139,138.95 plus interest on the sum of $132,513.29 from 23 December 2009 to 23 March 2015 in the sum of $53,571.23 and an order that the defendant pay the plaintiff’s costs as agreed or assessed;

4. The respondent pay the appellant’s costs of the appeal;

5. The respondent be provided with a certificate under the Suitors’ Fund Act 1951 (NSW) if he is so entitled.

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Endnote

Amendments

22 April 2015 - Amend Hearing Date to reflect "On the Papers"

Decision last updated: 22 April 2015