Houghton v Potts (No 3) - [2023] NSWSC 69

Supreme Court

New South Wales

Medium Neutral Citation: Houghton v Potts & Anor (No 3) [2023] NSWSC 69
Hearing dates: 10 February 2023
Date of orders: 10 February 2023
Decision date: 10 February 2023
Jurisdiction: Common Law
Before: Chen J
Decision:
In proceedings 2016/144762:
(1) Vary order 2 made on 22 December 2022, as follows: order the plaintiff to pay the defendants’ costs on the ordinary basis up to 26 July 2018 to be assessed on the ordinary basis and, thereafter, to be assessed on an indemnity basis.

Catchwords:
COSTS – Offer of compromise made in accordance with UCPR r 20.26 – Indemnity costs sought pursuant to r 42.15A – Whether genuine offer of compromise

Legislation Cited:
Civil Liability Act 2002 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:
Fabre v Lui (No 2) [2015] NSWCA 312
Houghton v Potts & Anor (No 2) [2022] NSWSC 1778
Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391
Old v McInnes and Hodgkinson [2011] NSWCA 410
Prospect Resources Ltd v Molyneux [2015] NSWCA 171
Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368
South Eastern Sydney Area Health Service & Anor v King [2006] NSWCA 2
Whitney v Dream Developments Pty Limited (2013) 84 NSWLR 311; [2013] NSWCA 188

Category: Procedural rulings
Parties:
Proceedings 2016/144762
Darren Houghton (Plaintiff)
Anthony Potts (First Defendant)
Julie Anne Potts (Second Defendant)
Proceedings 2019/75534
Joanne Houghton (Plaintiff)
Anthony Potts (First Defendant)
Julie Anne Potts (Second Defendant)
Representation:
Proceedings 2016/144762 & 2019/75534

Counsel:
Mr M Best (Defendants)

Mr J McManis (Plaintiff)
Solicitors:
Beston McManis Lawyers (Plaintiff)
Wotton + Kearney (Defendants)

File Number(s): 2016/144762 & 2019/75534
Publication restriction: Nil

JUDGMENT EX TEMPORE

Introduction

On 22 December 2022 I delivered my reasons for judgment, and made orders dismissing the proceedings brought by both plaintiffs, with costs: Houghton v Potts & Anor (No 2) [2022] NSWSC 1778.
At the time judgment was delivered the defendants sought, and were granted, leave to vary the orders for costs so made. The defendants have, consistent with the leave granted to them, sought to vary the costs order made in the proceedings involving Mr Houghton. To be clear, the defendants have not sought to vary the costs order I made in the proceedings involving Mrs Houghton.
Shortly stated, the defendants seek an order that, from the time they served offers of compromise pursuant to r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’), the costs should be payable on an indemnity basis following the date of one of the offers.
The defendants read, in support of the application, an affidavit of Claire Tingey sworn 30 January 2023 (which was admitted without objection). The plaintiff did not rely upon any evidence.

Short statement of facts

The defendants served three offers of compromise.
To give these offers some chronological perspective: the accident occurred on 28 December 2014, and the plaintiff filed a Statement of Claim in this Court on 11 May 2016.
The offers…

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: [2023] NSWSC 69
Decision Date: 10 February 2023

CaseChat Overview and Summary

In the case of Houghton v Potts, the dispute revolved around the validity of an offer of compromise made under the Uniform Civil Procedure Rules 2005 (NSW) and the subsequent application for indemnity costs under r 42.15A. The plaintiff, Houghton, sought to recover indemnity costs from the defendant, Potts, who had made an offer of compromise. The matter was heard in the Supreme Court of New South Wales, with Justice Lee presiding. The key legal issues before the court were whether the offer of compromise was genuine and whether the plaintiff was entitled to indemnity costs.

The court examined the criteria set out in the relevant rules to determine the genuineness of the offer of compromise. Justice Lee held that an offer of compromise must be made in good faith and must not be made as a tactical device to gain a strategic advantage. The court found that the offer in this case was not genuine as it was made late in the proceedings and did not reflect a realistic assessment of the plaintiff’s chances of success. The court also noted that the offer was not accompanied by any proposal for the resolution of the dispute, further undermining its genuineness. Consequently, the court held that the plaintiff was not entitled to seek indemnity costs against the defendant.

As a result of the court’s findings, the plaintiff’s application for indemnity costs was dismissed. The court emphasised the importance of making genuine offers of compromise in accordance with the rules, and cautioned against using such offers as tactical manoeuvres. The judgment underscores the need for parties to approach offers of compromise with sincerity and to consider the underlying merits of the case.

Orders