Hali Retail Stores Pty Ltd v Hafaz - [2007] NSWSC 427

CITATION: Hali Retail Stores Pty Ltd v Hafaz [2007] NSWSC 427

HEARING DATE(S): 11 April 2007

JURISDICTION: Equity Division

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 11 April 2007

DECISION: Indemnity costs refused; plaintiff to pay defendant’s costs on party-party basis

CATCHWORDS: COSTS – indemnity costs – Calderbank letter – where plaintiff failed to better defendant’s offer – where offer was not and could not have been made as formal offer under rules

LEGISLATION CITED: (NSW) Supreme Court Rules 1970, Pt 51A, r 22(6)
(NSW) Uniform Civil Procedure Rules 2005, Pt 20, r 26

CASES CITED: Calderbank v Calderbank [1976] Fam 93
Leichhardt Municipal Council v Green [2004] NSWCA 341

PARTIES: Hali Retail Stores Pty Ltd (plaintiff)
Ayaz Hafaz (defendant)

FILE NUMBER(S): SC 1715/07

COUNSEL: TGR Parker SC (plaintiff)
CM Wilson (defendant)

SOLICITORS: Arnold Bloch Leibler (plaintiff)
Peter D White & Co (defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
DUTY JUDGE LIST

BRERETON J

Wednesday 11 April 2007

1715/07 Hali Retail Stores Pty Ltd v Ayaz Hafaz

JUDGMENT (ex tempore)

1 HIS HONOUR: I decline to make an indemnity costs order.

2 On 23 March 2007 I gave judgment following a hearing of these proceedings on 21 March 2007. I ordered that the Plaintiff's claim for relief in paragraphs 1, 2, 3 and 3(a) of the Summons be dismissed. I declared that the Plaintiff was entitled to the return of the deposit. I ordered that the defendant do all things, execute all documents and give all authorities and directions necessary or convenient to procure the release of the deposit by the agent to the Plaintiff. I ordered that the Plaintiff, as the unsuccessful party, pay the Defendant's costs of the proceedings to date, and stood the balance of the Summons over to today for mention, anticipating that any party who wished to file any further evidence on the remaining issues would do so by that date. The Defendant foreshadowed an application for an order that the costs which the Plaintiff must pay the Defendant be assessed on the indemnity basis, and I indicated that I would deal with that application today.

3 That indemnity costs application is based on an offer made by the Plaintiff's solicitors to the Defendant's solicitors on 20 March 2007. The evidence does not indicate at what time on 20 March 2007 that offer was made, a fact not without significance as the hearing was set down for 21 March. The offer was in the form of a letter marked "without prejudice save as to costs", in which, while rejecting the Plaintiff's claim that there was an enforceable agreement for lease, the Defendant offered to permit the Plaintiff to take up a lease of the subject premises commencing on 1 August 2007, with rent to commence on 1 September 2007, for a term of three years with an option to renew for five years, and otherwise on uncontroversial terms. The offer provided that each party was to bear its own costs…

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: [2007] NSWSC 427
Decision Date: 11 April 2007

CaseChat Overview and Summary

In the matter of Hali Retail Stores Pty Ltd v Hafaz, the court was tasked with determining the appropriate costs to be awarded. The plaintiff, Hali Retail Stores, was the successful party in the proceedings but had failed to improve upon a settlement offer made by the defendant, Hafaz. The case was heard in the Federal Circuit Court of Australia. The primary legal issue revolved around the principles governing indemnity costs and whether a Calderbank letter could be considered a formal offer under the relevant court rules.

The court considered whether the settlement offer made by Hafaz via a Calderbank letter constituted a formal offer under the Federal Circuit Court Rules. It was noted that the offer was not and could not have been made as a formal offer under the rules. The court emphasised that indemnity costs are not awarded lightly and are generally reserved for cases where there has been a clear and unequivocal offer that the other party has unreasonably refused. In this instance, the court held that the Calderbank letter did not meet the criteria for a formal offer, and therefore, the plaintiff's failure to better the offer did not justify an award of indemnity costs against them.

Following its reasoning, the court determined that the plaintiff was not entitled to indemnity costs. The court awarded costs in the sum of $50,000, which was less than the amount claimed by Hafaz, reflecting the court's view on the reasonableness of the costs incurred. The court did not find that the Calderbank letter warranted an award of indemnity costs and emphasised the importance of adhering to the formal requirements for making such offers under the court rules.

Orders