De Gruchy v The Owners Units Plan No. 3989 (No. 2)
[2020] ACTSC 166
•25 June 2020
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | De Gruchy v The Owners Units Plan No. 3989 (No. 2) |
Citation: | [2020] ACTSC 166 |
Hearing Date: | On the papers |
Submissions last received: | 22 May 2020 |
DecisionDate: | 25 June 2020 |
Before: | McWilliam AsJ |
Decision: | See [43] |
Catchwords: | COSTS – Court Procedure Rules 2006 (ACT), r 1002 – whether offer made was a genuine offer of compromise – whether orders made were no less favourable than the offer – whether offer was a valid Calderbank offer – whether it was unreasonable to reject the offer |
Legislation Cited: | Court Procedures Rules 2006 (ACT) – rr 1002, 1010, 1752, pt 2.10 |
Cases Cited: | Anderson Group Pty Ltd v Tynan Motors (No 2) [2007] NSWCA 120; 67 NSWLR 706 Calderbank v Calderbank [1975] 3 WLR 586 Southwell v Staite (No 2) [2019] ACTSC 83 |
Texts Cited: | Concise Oxford Dictionary (10th ed, 1999) |
Parties: | Rayne de Gruchy (Plaintiff) The Owners – Units Plan No. 3989 (Defendant) |
Representation: | Ashurst (Plaintiff) Clyde & Co (Defendant) |
File Number: | SC 506 of 2016 |
McWilliam AsJ:
On 27 March 2020, I made orders in relation to a claim in nuisance brought by Ms de Gruchy (the plaintiff), against the Owners – Units Plan No. 3989 (the defendant), concerning structure-borne noise affecting the plaintiff’s apartment in the Nishi Residential Building, Acton. I granted an injunction restraining the defendant from continuing to permit a structure-borne noise so as to cause a nuisance: see De Gruchy v The Owners – Units Plan No. 3989 [2020] ACTSC 65 (De Gruchy).
On that occasion, the following orders were made:
(1)An injunction is granted restraining the defendant from continuing to permit the structure-borne noise arising in [address for the plaintiff’s apartment] (the Apartment) so as to cause a nuisance to the plaintiff.
(2)The defendant is to take such measures as may be necessary to preclude the noise occurring in the Apartment so as to cause a nuisance to the plaintiff.
(3)The injunction set out in Orders (1) and (2) above is stayed for 12 months pending the implementation of a system by the defendant which effectively reduces the thermal load on the roof of the said building.
(4)Liberty to the parties to apply on 3 days’ notice in writing to the other in relation to the operation of Orders (1) and (2).
(5)The defendant is to pay the plaintiff damages in the sum of $20,651.75 plus interest in the sum of $3,678.01.
(6)The defendant is to pay the plaintiff’s costs.
(7)The defendant is not to require the plaintiff to contribute towards the payment of the sums stipulated in Orders (5) and (6).
(8)Order (6) is stayed for 7 days and if either party applies to vary the order within that time, will be stayed pending further order.
The plaintiff now seeks to vary the orders in respect of costs as follows:
(1)An order pursuant to r 1010 of the Court Procedures Rules 2006 (ACT) (the Rules) that the defendant pay the plaintiff’s costs assessed on a party/party basis up to 6 September 2018, and on a solicitor/client basis from 7 September 2018.
(2)Alternatively, an order pursuant to r 1752(1)(a) of the Rules that the defendant pay the plaintiff’s costs assessed on a party/party basis up to 6 September 2018, and on a solicitor/client basis from 7 September 2018.
(3)Alternatively, the defendant pay the plaintiff’s costs on a party/party basis for the whole of the proceedings.
The plaintiff relies on an offer of compromise it sent to the defendant on 9 August 2018 (Offer). The Offer proposed orders in the following terms:
1.Judgment for the Plaintiff.
2.The Defendant, within six months, or such further time as the Court allows, is to stop the nuisance, by:
(a) carrying out all such works of the kind described by Mr Wilson in Section 13 of his report of 23 March 2018 (described by Mr Wilson as grouting, option 1a, option 1b, option 2 and option 3) as are necessary, and in such manner as is necessary, to stop the nuisance; and
(b) appointing appropriate professionals and a competent builder supported by experienced and qualified tradespersons to advise about, and carry out, the works.
3. If the works referred to in Order 2 are carried out but do not stop the nuisance, the Plaintiff has liberty to apply to the Court, on 28 days’ notice, for further orders for relief.
4. The Defendant pay the entire cost of the works required by Order 2.
5. The Plaintiff, Mr Wilson or Mr Herbertson (or any combination of them), may on reasonable notice to the Defendant, have access to the common property to inspect any works being carried out in accordance with Order 2, to ascertain whether or not those works are being carried out in accordance with Order 2, and when requested to do so, the Defendant will arrange for the Defendant’s lead adviser appointed in accordance with Order 2(b), to accompany the Plaintiff, Mr Wilson or Mr Herbertson, but if that person is not available, the inspection may proceed anyway.
6.The Defendant to pay to the Plaintiff $20,000 in damages;
7. The Defendant to pay the Plaintiff’s costs on a party/party basis, to be agreed or assessed.
8.The Plaintiff is not required to contribute, in her capacity as a member of the Defendant owners corporation, to damages, costs or interest which the Defendant is required to pay to her, nor interest accruing on any amount borrowed by the Defendant in order to pay damages, costs or interest.
9. The Plaintiff may, on 10 days’ notice, apply to the Court in respect of the implementation of these orders.
The offer was open for acceptance for 28 days. The Offer was said to be made in accordance with pt 2.10 of the Rules or alternatively, as a Calderbank offer.
The plaintiff submits that either:
(a)the offer was a valid offer under pt 2.10 of the Rules, entitling the plaintiff to an order for solicitor/client costs in accordance with r 1010 of the Rules (because the outcome of the trial was no less favourable to the plaintiff); or
(b)the offer was a valid Calderbank offer, which would justify the exercise of the Court’s discretion to order costs on a solicitor/client basis after the date the offer expired, pursuant to r 1752(1)(a) of the Rules; or
(c)if no special costs order is ordered, the plaintiff nevertheless remains entitled to costs on the usual basis.
The defendant’s position is that the costs order made on 27 March 2020 should remain undisturbed. It submits that:
(a)The Offer was not a valid offer under the Rules;
(b)The Offer was not a valid Calderbank offer because it contained no genuine compromise, and in all the circumstances it was not unreasonable for the defendant to reject it; and/or
(c)The orders made on 27 March 2020 were less favourable to the plaintiff than the Offer.
Was the Offer made in accordance with the Rules?
The starting point is r 1002 of the Rules, which provides for the making of an offer of compromise. The relevant parts of r 1002 are as follows:
1002Making an offer
(1)A party may, by written notice, make an offer to another party to compromise any claim in proceedings, either in whole or in part, on stated terms.
(2)An offer under this rule must—
(a)identify—
(i) the claim or part of the claim to which it relates; and
(ii) the proposed orders for disposal of the claim or part of the claim including, if a monetary judgment is proposed, the amount of the judgment; and
(b)if the offer relates only to part of the proceedings …
(c)not include an amount for costs or state that it is inclusive of costs; and
(d)state that the offer has been made in accordance with this part; and(e)state the period of acceptance.
(3)…
(4)If the offeror makes an offer before the offeree is given particulars of the offeror’s claim, and documents available to the offeror necessary for the offeree to properly consider the offer, the offeree may, within 14 days after receiving the offer give notice to the offeror that—
(a)the offeree is unable to assess the reasonableness of the offer because of the lack of particulars or documents; and
(b)if rule 1010 applies—the offeree will seek an order under rule1010(2).
(5)The end of a period of acceptance for an offer—
(a)for an offer made 2 months or more before the date set down for the start of the trial—must be not less than 28 days after the day the offer is made; and
(b)in any other case—must be after a period that is reasonable in the circumstances.
(6)Unless the notice of offer otherwise provides, an offer providing for the payment of money or doing of an act is taken to provide for the payment or doing of the act within 28 days after the offer is accepted.
(7)Unless the notice of offer otherwise provides, an offer is made without prejudice.
(8)A party may make more than 1 offer in relation to the same claim.
(9)Unless the court orders otherwise, an offer may not be withdrawn during the period of acceptance for the offer.
(10)A notice of offer purporting to exclude, modify or restrict rule 1010 or rule 1011 is invalid.
If an offer made by a party is one that complies with r 1002, then the Rules provide for certain costs consequences. In the present case, as the Offer was made by the plaintiff, the applicable rule is r 1010, the relevant terms of which are as follows:
1010Offer not accepted and judgment no less favourable to plaintiff
(1)This rule applies if an offer is made by the plaintiff in relation to a claim, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim no less favourable to the plaintiff than the terms of the offer.
(2)Unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff’s costs in relation to the claim—
(a)if the claim is a personal injury claim …
(b)in any other case—
(i) assessed on a party and party basis up to the time when the costs are to be assessed on a solicitor and client basis under subparagraph (ii); and
(ii) assessed on a solicitor and client basis—
(A)if the offer was made before the first day of the trial—from the day the period for acceptance of the offer ends; and
(B)if the offer was made on or after the first day of the trial …
Was the Offer a genuine offer of compromise?
The defendant first submits that the Offer was not a genuine offer of compromise. Instead, it was tantamount to an offer of capitulation, as the plaintiff was seeking agreement for the full relief claimed, with an opportunity for the plaintiff to continue the proceedings if she deemed the nuisance continued.
The plaintiff argues that it is not a requirement of r 1002 or pt 2.10 of the Rules that an offer be a genuine offer of compromise. The plaintiff also argues that an offer can still be one of genuine compromise even if the difference between the amount offered and the sum claimed is very small, citing Geddes v Taleni (No 2) [2017] ACTSC 215 (Geddes). That case was directed to whether an offer was more or less favourable than a verdict sum, not whether the offer was a genuine compromise.
It is well established that an offer, which does not involve a real and genuine element of compromise, will not be taken into account in relation to costs, either under the general law principles established by Calderbank v Calderbank [1975] 3 WLR 586, or under the rules of Court: Anderson Group Pty Ltd v Tynan Motors (No 2) [2007] NSWCA 120; 67 NSWLR 706 at [8] and the cases there-cited. That statement was applied in this Court in Financial Integrity Pty Limited v Farmer and Bravium Pty Limited (No. 4) [2014] ACTSC 145 at [28] per Refshauge J.
The opening words of r 1002 of the Rules require that the offer be ‘to compromise any claim in proceedings’. It is fundamental to the operation of r 1002 that the offer be a genuine offer ‘to compromise’. On the ordinary meaning of that word, this involves offering to give something away in order to end the dispute. For example, the Concise Oxford Dictionary (10th ed, 1999) definition of ‘compromise’ is (emphasis added):
“an agreement reached by each side making concessions”.
The policy behind the rules as to offers of compromise is to encourage the early resolution of disputes. Through the provision of predictable costs consequences, parties to whom a fair and reasonable offer of compromise has been made are encouraged to accept the offer and bring the proceeding to an end: see Primus Telecommunications Pty Ltd v CCP Australian Airships Limited (No 2) [2003] VSC 141 (Primus) at [6] and the cases there-cited. Although Primus is a single instance decision of the Supreme Court of Victoria and therefore not binding on me, the rules in that Court are similar to those under consideration here and the reasoning in Primus provides useful guidance in the exercise of the Court’s discretion.
It is the case, however, that there only need be an element of compromise in order for an offer to constitute an offer under the Rules. Depending on the circumstances, an offer that allows only a small discount from complete success might nevertheless be regarded as a genuine compromise: Leichhardt Municipal Council v Green [2004] NSWCA 341 at [37].
In the present case, it is difficult to ascertain whether a genuine offer of compromise was made. The monetary claim was not quantified in the statement of claim or in the terms of the Offer. The plaintiff’s evidence had been served by the time the Offer was made, but there remained a lack of clarity as to the amount of damages sought, including aggravated damages. I have assumed in the plaintiff’s favour that the amount of damages being claimed (including aggravated damages), exceeded the $20,000 that she offered to accept, and that accordingly, the Offer was a genuine offer of compromise at the time it was made. However, the assumption is of little significance in light of the findings that follow regarding the ambiguity of the Offer and whether the Offer was in terms no less favourable than the judgment obtained.
Was the Offer clear and certain in its terms?
In order for an offer of compromise under the Rules to be efficacious, it must be clear and certain in its terms: see Dover Beach Pty Ltd v Geftine Pty Ltd [2008] VSCA 248; 21 VR 442 at [118]; see also Primus at [6].
The Offer here was not in clear terms. It did not leave the defendant in no doubt as to what was being offered to bring the proceedings to an end.
As part of the Offer, the plaintiff sought an order that the defendant appoint ‘appropriate professionals’ and ‘a competent builder supported by experienced and qualified tradespersons to advise about, and carry out, the works’.
The terms of that order are ambiguous, primarily because it is unclear what was meant by ‘appropriate’ professionals. For example, if the work was carried out by a qualified builder but that person was related to the developer, it is unclear whether the plaintiff might deem that person to be inappropriate.
The further requirement for the appointment of a ‘competent’ builder, supported by ‘experienced and qualified’ tradespersons, suffers from a similar uncertainty. It is unclear, for example, whether such an order would permit a builder to use an experienced apprentice under his or her supervision.
Such additional relief was not sought in the Statement of Claim and there is no other explanation or clarification of what these orders might mean or why they were considered necessary machinery provisions for the primary relief, being the carrying out of works to abate the nuisance.
As the defendant submitted, in effect, what was being offered was more in the nature of an initial regime, with opportunities to return to Court if the works carried out in accordance with the options proposed by the plaintiff did not ultimately abate the noise to her satisfaction, or if there were disputes about other matters, such as who was carrying out the works or how they were being carried out.
Proposed Order 9 of the Offer provided for the plaintiff to return to Court to address any dispute about the implementation of the orders. On one view, the need to include such an order is an indication that the substantive orders were not sufficiently certain as to leave the parties, or at least the defendant, with no doubt as to what was required for their compliance if the Offer were accepted. Even without reference to Order 9, however, there was a clear need for precision as to what the terms of the Offer required upon acceptance.
For completeness, I also consider there is some ambiguity in proposed Order 4 contained in the Offer, namely that the defendant pay the entirety of the costs of the work. The plaintiff, as a unit holder in the owner’s corporation, would be required to contribute to the payment of any works carried out, through the payment of levies. It was not entirely clear to me whether by including Order 4, the plaintiff was seeking to be absolved from her contribution as an owner, or whether she was merely wishing to make it clear that she was not offering to make any extra contribution to the payment of the works, over and above that required as an owner in the building. I have assumed the latter, but the point is of lesser moment given the matters already raised.
Was the judgment obtained by the plaintiff ‘no less favourable’ than the terms of the Offer?
The more significant difficulty for the plaintiff, which in my view is determinative in the exercise of the Court’s discretion on costs, is that I am not satisfied that the orders obtained by the plaintiff on 27 March 2020 were ‘no less favourable’ than the terms of the plaintiff’s Offer.
When undertaking a comparison between what was offered and what was obtained, I have applied the principle that offers of compromise should not be viewed with excessive formality or technicality, but rather with a view to giving effect to the spirit of the Rules. The Court does not look to the form of the orders, but rather to their substance: Pettitford v Whicker [2005] NSWCA 370 at [15]; Re Williams; Smith v Thwaites (No 2) [2017] VSC 771 at [29].
The Offer contained requirements that were more onerous to the defendant (that is, more favourable to the plaintiff) than the final orders made. Reference has already been made to the requirement to appoint appropriate professionals and a competent builder supported by qualified tradespeople. The Offer also sought that the plaintiff have a right to inspect the common property to ‘ascertain whether or not the works are being carried out in accordance with Order 2’. The requirement for inspection was accompanied by the right to require the lead adviser appointed to attend the inspection, ‘unless unavailable’.
Through the combination of proposed Orders 2 and 5, the plaintiff appears to have been seeking a right to dictate not only what work should be carried out to abate the nuisance, but also who should carry it out, the level of skill of persons that a third party builder should be required to either contract or employ, and a right for both the plaintiff and those professionals assisting her to supervise the works, possibly through multiple inspections, with the only requirement being that reasonable notice be given. Such orders are plainly outside the scope of the proceedings.
The selection of contractors engaged by an owners corporation to undertake works is ordinarily a matter resolved through the voting rights of all the owners, or the executive committee if such decisions are delegated. The terms of the Offer would have allowed the plaintiff to possibly exercise greater influence than her unit entitlement allowed, through forcing the defendant to return to Court before any works were carried out if she did not consider a third party selected by the defendant to be ‘appropriate’ for whatever reason.
That is not to suggest that this particular plaintiff would have adopted an extreme or unreasonable position with regard to tradespersons or quotes given to the defendant for approval – rather, it is to point out that the terms of the proposed order provided for avenues of further dispute between the parties over issues which were not in the orders sought in either the Originating Claim or the Statement of Claim accompanying it. The Offer had uncertain consequences for the defendant.
The plaintiff drew attention to cases such as Timms v Clift [1998] 2 Qd R 100 (Timms), where a plaintiff offered to settle the proceedings for $15,000 plus an apology. The plaintiff in that case was awarded $165,000 but an apology was not ordered. The Queensland Court of Appeal held (at 107-108) that the expression ‘a judgment no less favourable’ does not exclude from consideration relief sought other than monetary claims. Although there was no chance of an apology, the result of the judgment was ample vindication of the position and therefore more favourable than the offer.
Here, the terms of the Offer went further than the relief sought and ultimately obtained, and those additional requirements contained in the Offer were matters of substance. Nevertheless, they might be matters that could be overlooked if it was clear that the balance of the relief obtained (when compared to the terms of the Offer), was in substance considerably more favourable, from the plaintiff’s point of view, than the settlement proposed by her.
However, that is not the case. The Court did not order that a particular method of work be undertaken to abate the nuisance, such as compliance with any or all of the options recommended by Mr Wilson. Contrary to the plaintiff’s submission, that is a matter of some significance.
The above considerations illustrate the difficulty in the present case of comparing the Offer with the judgment. The onus is on the plaintiff to show that the Offer met the pre-conditions set down in r 1010, if she is to take advantage of the rule. Orders 2 and 5 proposed in the Offer required the defendant to give up rights that went beyond the effect of any judgment in the proceedings. These rights were the right to craft the solution to abate the nuisance, the right to choose professionals it considered suitable to carry out the work, and the right to carry out the works without a Court-ordered inspection regime allowing the plaintiff a quasi-supervisory role in the solution.
In addition, the monetary amount awarded to the plaintiff is almost equal to that which she offered to accept, distinguishing the case from Timms on that basis alone.
The result is that I am not satisfied the judgment to which the plaintiff is now entitled is ‘no less favourable’ than the Offer of compromise made. It is therefore not an offer to which r 1010 of the Rules applies.
In light of that finding, it is unnecessary to consider the other arguments raised by the defendant in its submissions.
Is the Offer otherwise a valid Calderbank offer?
The principles applicable to Calderbank offers have been set out in Hulanicki v Walton (No 2) [2015] ACTCA 45 at [13]-[16] and I have also referred to a number of the relevant considerations in Southwell v Staite (No 2) [2019] ACTSC 83 at [7]-[17].
It is unnecessary to examine the application of the principles further here, as the reasoning above also applies to defeat any claim that the Offer is one that would attract an order for indemnity costs on the basis that the Offer was a Calderbank offer.
I do not consider that it was unreasonable for the defendant to reject an Offer that contained additional terms which imposed obligations on the defendant outside the scope of the proceedings and which created a degree of uncertainty in the carrying out of any work to abate the nuisance.
Conclusion
As no reason has been established for disturbing the existing order as to costs, the application to vary the order should be dismissed. With regard to the costs of this costs application, costs ought to follow the event.
For the above reasons, I make the following orders:
(1)The application to vary Order 6 made on 27 March 2020 is dismissed.
(2)The stay of Order 6 is lifted.
(3)The plaintiff is to pay the costs of the costs application.
| I certify that the preceding forty-three [43] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Associate Justice McWilliam. Associate: Date: |
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