Cardno ITC Pty Ltd v 33 York Street Pty Ltd (No 2)

[2013] NSWDC 313

District Court

New South Wales

Medium Neutral Citation:

Cardno ITC Pty Ltd v 33 York Street Pty Ltd (No 2) [2013] NSWDC 313

Hearing dates:

On the papers

Decision date:

20 December 2013

Jurisdiction:

Civil

Before:

P Taylor SC DCJ

Decision:

(1) Plaintiff to pay the defendant's costs directly related to the defendant's claim for make good costs, up to but not including the first day of the trial.

(2) There be no order in respect of the costs of the submissions in respect of costs.

(3) Subject to orders 1 and 2, the defendant to pay the plaintiff's costs of the proceedings.

Catchwords:

COSTS - Calderbank order - indemnity costs - whether offer was open for a reasonable period - whether offer contained genuine element of compromise - whether rejection was unreasonable - successful on part of claim - whether conduct lengthened trial

Cases Cited:

Gonzales v The Owners of Strata Plan 74146 (Costs) [2010] NSWDC 50
Jones v Bradley (No 2) [2003] NSWCA 258
Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85
Oliveprince Pty Ltd v Corum Group Limited (No 2) [2011] NSWSC 310

Category:

Costs

Parties:

Cardno ITC Pty Ltd ACN 084 093 050 (plaintiff/cross-defendant)
33 York Street Pty Ltd ACN 104 386 889 (defendant/cross-claimant)

Representation:

Mr D Macfarlane (plaintiff/cross-defendant)
Mr M W Sneddon with Mr P Kondic (defendant/cross-claimant)
Cardno ITC Pty Ltd ACN 084 093 050 in-house lawyer (plaintiff/cross-defendant)
Morabito Legal (defendant/cross-claimant)

File Number(s):

2012/327680

Publication restriction:

No

Judgment

1. On 25 November 2013 I gave judgment for the plaintiff, Cardno ITC Pty Limited ("Cardno"), in the sum of $34,042.68 but reserved the question of costs and directed the filing of written submissions if either party sought an order other than that the defendant, 33 York Street Pty Limited ("York"), pay Cardno's costs. Cardno seeks an order that York pay Cardno's costs and that those costs be paid on an indemnity basis on and from 16 November 2013. York seeks an order that each party pay its own costs.

York's Argument

1. York relies on two matters that support its submission that it should not pay Cardno's costs.

1. First, it says that Cardno failed on a substantial issue in the litigation. York is correct in asserting that Cardno "was not successful in all respects of its pleaded claim" and that it recovered only about half of the amount claimed in the pleading. This partial recovery by Cardno arose from York's claim for the make good costs, which was largely successful. However, at the outset of the trial Cardno abandoned any resistance to the make good costs successfully claimed by York. Thus, no time at the trial, at least after its opening, was spent on the issue on which York was successful.

1. The second matter asserted by York was that Cardno's conduct unnecessarily lengthened the trial and increased the costs. I am not persuaded that the conduct of Cardno lengthened the trial. In the matters in contest at the trial Cardno was wholly successful. Any delay in the trial can be attributed to York unsuccessfully seeking to resist Cardno's claim. Accordingly, in my view, at best York would be entitled to a credit for the wasted costs of preparing the claim for "make good costs".

Cardno's Argument

1. Cardno submits that it should receive an order for indemnity costs because of a Calderbank offer. At 10.55am on Friday, 15 November 2013 Cardno offered to settle the proceedings on the following terms:

"1. The Defendant pay the Plaintiff $35,000

2. Each party pay their own costs.

3. The parties enter into a deed of settlement in which each party releases the other from any and all claims, causes of action or demands (whether or not in contemplation of a party) in any way connected with (a) the Proceedings (b) the lease or renewed lease which was in existence between the parties and / or (c) the Plaintiff's occupation of Defendant's premises."

1. The offer provided that it was open for acceptance until 5pm on Monday, 18 November 2013. Cardno says that the offer was open for a reasonable period, that it contained a genuine element of compromise, and that the rejection of the offer was unreasonable. As to the reasonable period, I note that the offer was open for approximately one and a half business days. Cardno submits that this period is sufficient relying upon Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85 at [20], Oliveprince Pty Ltd v Corum Group Limited (No 2) [2011] NSWSC 310 at [5] to [10], and Jones v Bradley (No 2) [2003] NSWCA 258 at [11] to [16].

1. York makes no submission that the offer was not open for a reasonable period. In this circumstance, I accept Cardno's submission and find that the period of about one and a half business days in the last week before the trial is a sufficient period to be reasonable.

1. Cardno contends that the offer contained a genuine element of compromise because, although it was less than the damages awarded, the amount of costs to which it is entitled would exceed that difference. For the purpose of assessing whether the offer involved a compromise by Cardno of its entitlement to costs, I must necessarily exclude the costs of the trial as they were not, at least so far as the evidence discloses, incurred by the date of the offer. Similarly, the costs of the final day before the trial were not incurred by the date of the offer and would not have been incurred had the offer been accepted. I note that the matter was listed with an estimate of one day.

1. In my view, the offer can only be a genuine compromise if Cardno was likely to recover as at the date of the offer on 15 November 2013 an amount of costs well in excess of $1,000, the approximate amount by which its offer exceeded the ultimate judgment obtained by it. In assessing what costs Cardno was likely to recover, I must make allowance for any costs entitlements of York. I do not have any evidence that would enable me to conclude as at 15 November 2013 that Cardno's entitlement to pre-trial costs would have exceeded York's entitlement to pre-trial costs by an amount exceeding $1,000. Cardno was partly unsuccessful in an application on Friday, 15 November 2013, and was ordered to pay the costs of that application and the costs thrown away by reason of amendments that were allowed.

1. Cardno was given leave to rely upon an amended statement of claim, a second amended defence to the cross-claim and an amended reply. These documents were served on the evening of 14 November 2013 indicating that all of Cardno's pleadings were recast just before the offer. I could not conclude that the value of the two costs orders in favour of York was insubstantial. As Cardno's offer involved a deed of release from any claim, it therefore required York to forego the benefit of those favourable costs orders if the offer was accepted.

1. Nor was there any evidence in respect of the costs incurred by Cardno up to 15 November 2013. There is no reason to suggest why that evidence could not have been provided. Without it I am unable to be satisfied that Cardno's recoverable costs as at 15 November 2013, assuming it obtained a costs order in its favour, exceeded the entitlements of York to costs arising from the two costs orders made on that day.

1. Contrary to Cardno's contention, this was not a case where:

"It might safely be assumed that [the party] had, by that time, incurred considerable practitioner/client costs, the party/party component of which it was prepared to forego the opportunity for recovery, if successful.

(See Gonzales v The Owners of Strata Plan 74146 (Costs) [2010] NSWDC 50 at [23]).

1. Accordingly, I am not persuaded that the offer represented a genuine compromise.

1. Cardno also contended that the rejection of the offer was unreasonable. This issue covers similar ground to that considered under the subject of whether the offer was a genuine compromise. I do not accept that the rejection of the offer was unreasonable for the reasons already given.

1. There are further reasons why the rejection of the offer was not unreasonable. The offer proposes the entry by the parties into a deed. Other than that the deed contained a wide release, the terms of the deed were unspecified. It seems to me that it was at least arguable that the offer was not capable of being accepted so as to create a binding settlement because of the uncertainty as to the content of the deed. Further, the offer made no provision about what orders were to be made in order to finalise the proceedings, when any such orders were to be made, and whether payment of the $35,000 would proceed or follow the entry into the deed or the finalisation of the proceedings.

1. In my view, if an offer is not in plain terms and readily capable of immediate acceptance, but rather is capable of leading to further disputes about its meaning, then it is not unreasonable for a party not to accept it.

1. There is one final reason why I do not think the rejection of the offer is unreasonable. On Friday, 15 November 2013 Cardno was refused leave to rely on very late affidavits. However, at trial I granted Cardno leave to read one affidavit for Jason Varker-Miles covering a far narrower ambit of the dispute. The evidence of Mr Varker-Miles was significant to Cardno's success in the proceedings. Until that leave was granted, York was entitled to believe, in accordance with the Court's orders on 15 November 2013, that the "matter is to proceed on affidavit evidence served in accordance with court orders", without the evidence of Mr Varker-Miles. In those circumstances, rejection of the settlement proposed by Cardno was not unreasonable.

1. For these reasons, I am not persuaded that the Calderbank offer provides an adequate basis for indemnity costs in favour of Cardno.

Conclusion

1. Cardno is entitled to an order for costs as a result of its success in the proceedings. However, this order is subject to two reservations.

1. First, Cardno should pay York's costs incurred up to the first day of the trial in relation to "make good" costs. This claim by York was almost wholly successful, Cardno abandoning any defence (other than one minor matter) on the first day of trial.

1. Secondly, both parties were unsuccessful in their application for particular costs orders and neither party should receive the costs of the costs submissions.

1. Accordingly, the orders of the Court in respect of costs are:

(1)   Plaintiff to pay the defendant's costs directly related to the defendant's claim for make good costs, up to but not including the first day of the trial.

(2)   There be no order in respect of the costs of the submissions in respect of costs.

(3)   Subject to orders 1 and 2, the defendant to pay the plaintiff's costs of the proceedings.

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Decision last updated: 07 April 2014