Dixonbuild Pty Ltd v Everhard Industries Pty Ltd (No. 2)

[2022] NSWDC 528

District Court

New South Wales

Medium Neutral Citation:

Dixonbuild Pty Ltd v Everhard Industries Pty Ltd (No. 2) [2022] NSWDC 528

Hearing dates:

On the papers

Date of orders:

3 November 2022

Decision date:

03 November 2022

Jurisdiction:

Civil

Before:

Russell SC DCJ

Decision:

(1)   The costs ordered on 11 October 2022 to be paid by the plaintiff to the defendant are to be assessed on an indemnity basis after 11 July 2022.

(2)   The costs ordered to be paid on an indemnity basis include the costs of this costs determination.

Catchwords:

COSTS — application for indemnity costs - whether offer was a genuine offer of compromise – whether it unreasonable for the plaintiff not to accept the offer

Cases Cited:

Dixonbuild Pty Ltd v Everhard Industries Pty Ltd [2022] NSWDC 464

Category:

Costs

Parties:

Dixonbuild Pty Ltd trading as Dixon Homes (Plaintiff)
Everhard Industries Pty Ltd (Defendant)

Representation:

Counsel:
B Whitten (Plaintiff)
C O’Neill (Defendant)

Solicitors:
CDI Lawyers (Plaintiff)
Clyde & Co (Defendant)

File Number(s):

2021/00361694

Judgment

Introduction

1. On 11 October 2022 I dismissed the plaintiff’s Notice of Motion filed on 13 June 2022 and ordered the plaintiff to pay the defendant’s costs – Dixonbuild Pty Ltd v Everhard Industries Pty Ltd [2022] NSWDC 464 (the primary judgment).

2. I granted leave to the parties to approach my Associate to obtain a date for argument concerning the defendant’s application for indemnity costs of the Notice of Motion. The parties later agreed that this application should be determined on the papers. The defendant filed a Written Submission dated 28 October 2022 (MFI 3) and the plaintiff filed a Written Submission dated 31 October 2022 (MFI 4).

Consideration of Indemnity Costs Application

3. The primary judgment summarised a letter dated 4 July 2022 sent by the defendant’s solicitors to the plaintiff’s solicitors – at [19]. That letter spelled out the basis upon which the defendant proposed to defend the Notice of Motion.

4. In the primary judgment, my reasons for dismissing the Notice of Motion largely aligned with the reasons set out in the letter dated 4 July 2022 – at [25]-[34], [37] and [38].

5. The letter invited the plaintiff to withdraw the Notice of Motion on the basis that each party would bear its own costs. The letter made it plain that if the plaintiff did not withdraw the Notice of Motion by 11 July 2022, the defendant would seek its costs in relation to the Notice of Motion on an indemnity basis.

6. The defendant submitted that on the application for indemnity costs there were two questions. Firstly, was the offer a genuine offer of compromise? Secondly, was it unreasonable for the plaintiff not to accept the offer?

7. The defendant submitted that the offer was a genuine offer which contained a compromise, because it made an offer for each party to bear its own costs of the Motion to that date.

8. The plaintiff accepted that the offer was a genuine compromise (MFI 4, par 16).

9. In relation to whether it was unreasonable for the plaintiff to reject the offer, the defendant submitted that:

1. The plaintiff had lost completely.

2. The reasons why it lost were essentially the reasons set out in the letter of offer itself.

3. There was no reason to reject the offer.

4. If the offer had been accepted, costs would have been saved and the substantive proceedings would have been advanced.

10. The plaintiff submitted that the authorities have set out a number of circumstances in which it might be said that the rejection of an offer was unreasonable. One of those was “an imprudent refusal of an offer to compromise” (MFI 4, par 22(e)).

11. The primary judgment set out the reasons for rejecting the application for summary judgment at pars [25]-[34]. For similar reasons the application to strike out a paragraph in the Defence was rejected – at [37]-[39].

12. The letter dated 4 July 2022 from the defendant’s solicitor set out in considerable detail the reasons why the defendant submitted the plaintiff would not succeed on the Notice of Motion. All of those reasons found favour in the primary judgment. In my view if proper consideration had been given to the letter of 4 July 2022, the plaintiff should have seen the force of the submissions in that letter and decided to withdraw the Motion. In my view it was unreasonable not to accept the offer to withdraw the Motion on the basis that each party would pay its own costs.

13. The defendant has been put to the cost and trouble of coming to court to defend the plaintiff’s Notice of Motion, upon the very same grounds which it set out months before in the letter dated 4 July 2022. While such a letter is not always required to ground an indemnity costs order, the particular letter sent in this case provided a firm foundation for the plaintiff to make a proper assessment of its prospects of success on the Notice of Motion, and the problems it faced. To ignore those matters, once they were drawn to the plaintiff’s attention, was to act unreasonably.

Orders

14. The orders of the court are:

1. The costs ordered to be paid by the plaintiff to the defendant on 11 October 2022 are to be assessed on an indemnity basis after 11 July 2022.

2. The costs ordered to be paid on an indemnity basis include the costs of this costs determination.

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Decision last updated: 03 November 2022