Cole v Raykir Holdings Pty Ltd (No 2)

[2019] NSWSC 1196

Supreme Court

New South Wales

Medium Neutral Citation:	Cole v Raykir Holdings Pty Ltd (No 2) [2019] NSWSC 1196
Hearing dates:	On the papers
Date of orders:	10 September 2019
Decision date:	10 September 2019
Jurisdiction:	Equity
Before:	Darke J
Decision:	The defendants to pay the plaintiffs’ costs of the proceedings on the ordinary basis up to and including 21 June 2019 and on an indemnity basis thereafter.
Catchwords:	COSTS – departure from the usual rule – application by the plaintiffs’ for indemnity costs – Calderbank letters – whether the plaintiffs’ Calderbank offer represented a genuine compromise – whether it was unreasonable for the defendants not to accept offer – indemnity costs awarded
Cases Cited:	Calderbank v Calderbank [1975] 3 All ER 333 Cole v Raykir Holdings Pty Ltd [2019] NSWSC 1017 Commonwealth of Australia v Gretton [2008] NSWCA 117 Gray v Hobson (No 2) [2018] NSWCA 131 Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85 Leichhardt Municipal Council v Green [2004] NSWCA 341
Category:	Costs
Parties:	Mitchell Edward Cole (First Plaintiff) Katherine Clare Cole (Second Plaintiff) Raykir Holdings Pty Ltd (First Defendant) Ekaterina Charonova (Second Defendant)
Representation:	Counsel: Mr T Flaherty (Plaintiffs) Mr P Cutler (Defendants)   Solicitors: Michael Flaherty Solicitors (Plaintiffs) Garry Pickering (Defendants)
File Number(s):	2018/336602
Publication restriction:	None

Judgment

1. On 13 August 2019, the Court delivered the principal judgment in this matter (Cole v Raykir Holdings Pty Ltd [2019] NSWSC 1017 – “the Principal Judgment”). These reasons, which address the question of costs of the proceedings, assume familiarity with the Principal Judgment.

2. In the Principal Judgment, the Court determined that the plaintiffs validly terminated the contract for the sale of the South Turramurra property and became entitled to liquidated damages in the amount of $458,500 (plus pre-judgment interest).

3. Following the delivery of judgment, counsel for the plaintiffs foreshadowed an application for a special costs order. Accordingly, the Court made directions for the parties to provide any affidavits and written submissions addressing the question of costs. The parties were content for the Court to determine the application on the papers.

4. The plaintiffs rely on the affidavit of their solicitor dated 16 August 2019. Annexed to that affidavit is a Calderbank letter dated 21 June 2019 written by the solicitor and sent to the defendants’ solicitor. The letter outlines reasons why the Court would not accept the defendants’ contentions that the contract had not been validly terminated. The letter makes an offer of settlement on terms that a payment in the sum of $300,000 be made to the plaintiffs within 14 days of acceptance of the offer, following which the proceedings would be dismissed with no order as to costs. The offer in the letter was open for acceptance until 4:00pm on 5 July 2019 and was expressed to be made in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333.

5. In their written submissions, the plaintiffs refer to the well-established principles governing Calderbank letters, notably that for a valid offer to trigger indemnity cost consequences, the offer must represent a genuine compromise which was unreasonable for the recipient not to accept (see Commonwealth of Australia v Gretton [2008] NSWCA 117 at [4]-[5]). The plaintiffs contend that the terms of the offer represented a genuine compromise; the $300,000 offer was approximately $200,000 less than the amount the plaintiffs valued their claim (and $158,500 less than they actually received on judgment). The plaintiffs submitted that it was unreasonable for the defendants not to accept the offer. It was submitted that the offer did not require a complete capitulation by the defendants to the plaintiffs’ demands, nor was the offer merely made by the plaintiffs to trigger costs sanctions (see Leichhardt Municipal Council v Green [2004] NSWCA 341 at [39]). It was stated that 14 days provided in the offer for acceptance was ample time for the defendants to consider it. In addition, the offer was made at a time where all of the evidence in the proceedings had been served and thus the defendants were fully aware of the issues in dispute (for example, see Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85 at [20]; Gray v Hobson (No 2) [2018] NSWCA 131 at [7]).

6. The defendants did not provide any evidence in opposition to the plaintiffs’ application. Nor did the defendants provide any written submissions addressing the terms of the plaintiffs’ offer (apart from indicating to the Court that the defendants did not consent to an award of indemnity costs).

7. In my opinion, the plaintiffs are entitled to an award of indemnity costs. The terms of the Calderbank letter are unexceptional. The plaintiffs’ offer comfortably exceeds the judgment sum of $458,000, and represented a substantial discount upon the value of the plaintiffs’ claim. I am satisfied that the offer represented a genuine compromise. I am also satisfied that it was unreasonable for the defendants not to accept the offer. In my view, the 14 days open to accept the offer was reasonable, and the defendants’ did not provide any evidence or advance any reason to suggest that this time frame was inadequate in the circumstances.

8. Accordingly, the Court will order that the defendants pay the plaintiffs’ costs of the proceedings on the ordinary basis up to and including 21 June 2019 and on an indemnity basis thereafter.

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