Edwards v Merlaust Pty Ltd (Costs) - [2024] NSWSC 25

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Edwards v Merlaust Pty Ltd (Costs) [2024] NSWSC 25
Hearing dates: On the papers
Date of orders: 02 February 2024
Decision date: 02 February 2024
Jurisdiction: Common Law
Before: Schmidt AJ
Decision:
Mr and Mrs Edwards bear Merlaust’s costs, as agreed or assessed.

Catchwords: COSTS – indemnity costs – offers of compromise – where a Calderbank offer is made – where offer is made pre-trial – where offer is only made for a very limited period – where offer is not renewed before appeal – where offer requires the parties to enter a non-disparagement deed – where offer is the only basis relied on for a departure from the usual costs order
Legislation Cited:
Civil Procedure Act2005 (NSW), s 98
Supreme Court Rules 1970 (NSW), Pt 52A, r 11 (repealed)
Uniform Civil Procedure Rules 2005 (NSW), r 20.26

Cases Cited:
Amaca Pty Ltd v Novek (2009) 9 DDCR 199; [2009] NSWCA 50
Brymount Pty Ltd (t/a Watson Toyota) v Cummins [2005] NSWCA 69
Edwards v Merlaust Pty Ltd [2023] NSWSC 1477
Ettingshausen v Australian Consolidated Press Ltd (1995) 38 NSWLR 404
Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344
Monie v Commonwealth (No 2) [2008] NSWCA 15
South Sydney Council v Morris (No3) [2001] NSWCA 200

Category: Costs
Parties: Andrew Edwards (First Plaintiff)
Maureen Edwards (Second Plaintiff)
Merlaust Pty Ltd (Defendant)
Representation:
Counsel:
M V Sahade (Plaintiffs)
Q Rares (Defendant)
Solicitors:
Oliveri Lawyers (Plaintiffs)
Martin Street Lawyers (Defendant)

File Number(s): 2023/237890
Publication restriction: Nil

JUDGMENT

I gave judgment in this matter, an appeal from the Local Court, in December 2023: Edwards v Merlaust Pty Ltd [2023] NSWSC 1477. Merlaust now seeks an indemnity costs order, relying on its 26 August 2022 offer of compromise made prior to the Local Court hearing, which Mr and Mrs Edwards did not accept.
It made no separate offer in relation to the costs of the appeal.

The parties’ cases

Merlaust relied on Ettingshausen v Australian Consolidated Press Ltd (1995) 38 NSWLR 404 at 409-410, where it was observed that, because an offer is made in respect of a claim and not a trial, the consequences of an offer are not exhausted at the conclusion of the trial and, therefore, may have relevance on an appeal.
Under the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’), the usual costs order is that costs follow the event. In this case, that is an order that Mr and Mrs Edwards bear Merlaust’s costs, as agreed or assessed. There is no issue about the Court’s power to make some other order, in the exercise of its costs’ discretion: Civil Procedure Act 2005 (NSW), s 98.
The offer was said to be an offer of compromise for $62,000, made in accordance with UCPR r 20.26 and open for only 10 days, on the basis that the parties agree to enter a deed in respect of mutual releases and each bear their own…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NSWSC 25
Decision Date: 02 February 2024

CaseChat Overview and Summary

In the case of Edwards v Merlaust Pty Ltd, the dispute arose from a contractual claim related to the sale of a property. The matter was heard and determined in the Supreme Court of New South Wales. The plaintiff sought indemnity costs against the defendant based on a Calderbank offer, which is a formal offer of compromise made under r 46.1 of the Uniform Civil Procedure Rules 2005 (NSW). The defendant had made the offer before the trial, which was only valid for a very limited period. However, the offer was not renewed before the appeal, and it required the parties to enter into a non-disparagement deed. The plaintiff relied solely on this offer to argue for a departure from the usual costs order.

The primary legal issue before the court was whether the Calderbank offer, made under the specified conditions, provided a sufficient basis for the plaintiff to be awarded indemnity costs. The court had to consider the nature and circumstances of the offer, including its limited duration and the requirement for a non-disparagement deed. Additionally, the court examined whether the offer was a genuine attempt to resolve the dispute and whether the defendant's refusal to accept it was unreasonable. The court also needed to determine whether the plaintiff's reliance on this offer alone was adequate to justify a departure from the usual costs order, which generally awards costs in the party's favour.

The court held that the Calderbank offer did not provide a sufficient basis for awarding indemnity costs to the plaintiff. The limited duration of the offer and the requirement for a non-disparagement deed meant that it was not a genuine attempt to resolve the dispute. Furthermore, the court found that the defendant's refusal to accept the offer was not unreasonable, given the short timeframe and the additional requirement. The court emphasised that a party seeking indemnity costs must demonstrate that the offer of compromise was reasonable and made in good faith. In this case, the plaintiff's reliance on the Calderbank offer alone was not enough to justify a departure from the usual costs order. Consequently, the plaintiff was not entitled to indemnity costs.

The court ordered that the defendant was to pay the plaintiff's costs of the appeal on the standard basis. The plaintiff was not awarded indemnity costs, as the court found that the Calderbank offer did not meet the necessary criteria for such an award. This decision highlights the importance of the nature and circumstances of a Calderbank offer in determining whether it can serve as a basis for indemnity costs.

Orders