F & D Normoyle Pty Ltd v Transfield Pty Ltd T/as Transfield Bouygues Joint Venture & 1 or; Transfield Pty Ltd T/as Transfield Bouygues Joint Venture & 1 or v Z Vranjkovic & 2 Ors

[2005] NSWCA 360

NEW SOUTH WALES COURT OF APPEAL

CITATION:      F & D Normoyle Pty Ltd v Transfield Pty Ltd t/as Transfield Bouygues Joint Venture & 1 Or; Transfield Pty Ltd t/as Transfield Bouygues Joint Venture & 1 Or v Z Vranjkovic & 2 Ors [2005]  NSWCA 360

FILE NUMBER(S):
40679/04
CA 40682/04

HEARING DATE(S):            On written submissions.

JUDGMENT DATE: 24/10/2005

PARTIES:
CA 40679/04
F & D Normoyle Pty Ltd (Appellant)
Transfield Pty Ltd t/as Transfield Bouygues Joint Venture (First Respondent)
Bouygues SA t/as Transfield Bouygues Joint Venture (Second Respondent)
CA 40682/04
Transfield Pty Ltd  t/as Transfield Bouygues Joint Venture (First Appellant)
Bouygues SA t/as Transfield Bouygues Joint Venture (Second Appellant)
Zarko Vranjkovic (First Respondent)
Chadwick Building Systems Pty Ltd (Second Respondent)
F & D Normoyle Pty Ltd (Third Respondent)

JUDGMENT OF:      Ipp JA McColl JA Bryson JA   

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S):        DC 7710/01

LOWER COURT JUDICIAL OFFICER:     Truss DCJ

COUNSEL:
CA 40679/04
I G Harrison SC/G M Gregg (Appellant)
P R Garling SC/A Quinlivan (First & Second Respondents)
CA 40682/04
P R Garling SC/A Quinlivan (First & Second Appellants)
G O'L Reynolds SC/J O Anderson (First Respondent)
C J Wynyard (Second Respondent)
I G Harrison SC/G M Gregg (Third Respondent)

SOLICITORS:
CA 40679/04
Phillips Fox (Appellant)
Hicksons (First & Second Respondents)
CA 40682/04
Hicksons (First & Second Appellants)
Martin Bell & Co (First Respondent)
Burridge Legg (Second Resondent)
Phillips Fox (Third Respondent)

CATCHWORDS:
COSTS - late Calderbank offer - no special order - no question of principle. (In proceedings [2005] NSWCA 193).

LEGISLATION CITED:
District Court Rules
Supreme Court Rules
Uniform Civil Procedure Rules 2005

DECISION:
CA 40679/04 - Direct that the costs orders pronounced on 23 August 2005 be entered    CA 40682/04 - Direct that the costs payable to Mr Vranjkovic be assessed on the party and party basis up until 10 February 2005 and on the indemnity basis thereafter.

JUDGMENT:

IN THE SUPREME COURT  
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40679/04
CA 40682/04
DC 7710/01

IPP JA
McCOLL JA
BRYSON JA

MONDAY, 24 OCTOBER 2005

F & D NORMOYLE  PTY LTD v  TRANSFIELD PTY LTD t/a TRANSFIELD BOUYGUES JOINT VENTURE & 1 OR
TRANSFIELD PTY LTD t/as TRANSFIELD BOUYGUES JOINT VENTURE & 1 OR v ZARKO VRANJKOVIC & 2 0RS

Judgment  (Costs)

1. IPP JA:             I agree with Bryson JA.

2. McCOLL           I agree with Bryson JA.

3. BRYSON JA: These reasons deal with costs. The judgments of the Court of Appeal were published and orders were made on 23 August 2005 ([2005] NSWCA 193). Successful parties were given opportunities to make further submissions relating to the basis on which costs were to be assessed. Mr Vranjkovic, the successful First Respondent in appeal 40682/2004 brought by the Transfield Bouygues Joint Venture, successfully resisted an attack on the judgment at first instance which on 22 July 2004 awarded him damages and interest totalling $455,406.21. His counsel has now asked an order that the First Respondent’s costs be assessed on the party and party basis up until the date of an offer of compromise which was made on 10 February 2005, and thereafter on the indemnity basis. Counsel has produced affidavit evidence showing that an offer of compromise, offering to accept $416,000.00 plus costs, open for acceptance for 28 days, was made in accordance with Pt 22 Div 1 of the Supreme Court Rules then in force.

4. Part 52A r 22(4) of the Supreme Court Rules, in force until 15 August 2005, conferred on the First Respondent an entitlement to an order in the terms for which counsel asks. Part 52A is no longer in effect; provision to generally similar effect is made by r 42.15 of the Uniform Civil Procedure Rules 2005, which took effect shortly before the Court of Appeal gave judgment. I see no reason to doubt that the offer was a genuine offer of compromise. No submission opposing the application has been made. The orders sought should be made in lieu of the costs order announced on 23 August 2005.

5. In the appeal 40679/04  by F & D Normoyle Pty Ltd the Court of Appeal on 23 August 2005 announced an order that Normoyle’s appeal against the Joint Venture be upheld with costs and that the judgment of the District Court in favour of the Joint Venture against Normoyle be set aside and in lieu thereof there be judgment in favour of Normoyle with costs.  Immediately thereafter the solicitor representing Normoyle obtained leave to file and serve written submissions in support of an application for indemnity costs; these submissions bear date 31 August 2005 and there has been no written response to them.

6. In the proceedings in the District Court Mr Vranjkovic as plaintiff sought damages against the members of the Joint Venture.  There were three cross-claims and Normoyle was involved only as Cross-defendant to the Third Cross-claim filed on 7 November 2003 in which the Joint Venture claimed contribution or indemnity against Normoyle.  An appointment for the hearing of the whole proceedings for Monday 21 June 2004 was made.  On Friday 18 June 2004 by letter (which bore date 17 June 2004) solicitors representing Normoyle told solicitors representing the Joint Venture some matters which they expected Normoyle would establish at the hearing: that the pipes over which Mr Vranikovic tripped (and it was not admitted that he did trip over pipes) were not Normoyle’s pipes or that if they were they were not put in position by Normoyle’s employees.  The letter went on to say:-

   Accordingly, Normoyle is prepared to settle your client’s claim on the following basis:

• The Third Cross -Claim is dismissed.

• The Third Cross-Claimants and the Third Cross-Defendant to bear their own costs in respect of the Third Cross-Claim.

  This offer will remain open for acceptance until 4.00pm on 18 June 2004.

  We put you on notice that the Third Cross-Defendant will tender a copy of this letter in support of an application for indemnity costs, if and when the question of costs arises, in accordance with the principles of Calderbank v Calderbank (1975) 3ALL ER333.

1. The message must have been communicated on the morning of 18 June 2004 because solicitors for the Joint Venture replied in a fax message timed 11.16am asking for some more information, which was given; and later that day there was a telephone arrangement under which the offer was left open for acceptance until 10.00am on 21 June 2004.  The offer was not accepted and the hearing proceeded.  When judgment was delivered on 22 July 2004 her Honour Judge Truss decided that Normoyle had a liability to the Joint Venture; hence the appeal.

2. As the Court of Appeal set aside the Trial Judge’s order for costs and embarked on making a costs order of its own, the Court of Appeal should, when dealing with costs in the District Court, give effect to relevant provisions of the District Court Rules. Part 39A r 25 of the District Court Rules does not apply because it relates only to offers made by plaintiffs and persons in like positions (with the exception of subr (6) and (7), which do not apply).  The applicable rules are found in Pt 19A – Offer of Compromise which contains provisions relating to defendants as well as to plaintiffs; and Normoyle as a cross-defendant should be treated for this purpose as a defendant.  The District Court Rules do not prescribe any consequences of the non-acceptance of a compromise made under Pt 19A analogous with Pt 39A r 25 (4) and (4A) which, according to their terms, create presumptions in favour of indemnity costs orders. The conduct of the parties in relation to an offer of compromise to which Pt 19A applies is relevant to the District Court’s exercise of its discretionary power to order costs including indemnity costs.

3. In the present case the offer if accepted would have placed the Joint Venture in a better position than it has ultimately achieved.  I do not regard the offer as having significant elements of compromise; in substance it called upon the Joint Venture to abandon its cross-claim, the advantage offered being that each party to the cross-claim would bear its or their own costs.  I do not classify this as a compromise but as a call to abandon the cross-claim.  The offer was made at a very late stage, on the business day before the hearing was to begin, it was originally available for acceptance only on that day, and was extended by arrangement only to 10.00am on the hearing day.  In the circumstances recovery of costs on the ordinary basis appears to me to do justice to Normoyle and I would not as a matter of discretion order that costs be assessed on (in the terms used in the District Court Rules) the solicitor and client basis.  I have no disapproval to express of parties making offers to settle or compromise litigation at any stage, but I would not wish to make a decision which would foster or give special advantages to an offer made at such a late stage, when the time for consideration of the offer was very limited and attention should have been focussed on preparing for the hearing. 

4. There is no suggestion now that the offer was renewed or continued to be available in the proceedings in the Court of Appeal, and as the circumstances of the offer of compromise do not justify an order for solicitor and client costs in the District Court, I see no reason why an order for assessment of costs on the indemnity basis should be made in the appeal.  The orders in Normoyle’s appeal 40679/04 on 23 August 2005 should be entered in the form in which they were pronounced. 

5. In my opinion the Court of Appeal should make these orders in proceedings 40682/04:

   1.           Direct that the costs payable to Mr Vranjkovic be assessed on the party and party basis up until 10 February 2005 and on             the indemnity basis thereafter.

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LAST UPDATED:     24/10/2005