Hurford Hardwood Kempsey Pty Ltd v Kempsey Timbers (Sawmilling) Pty Ltd (No 2)

[2019] NSWSC 1248

Supreme Court

New South Wales

Medium Neutral Citation:	Hurford Hardwood Kempsey Pty Ltd v Kempsey Timbers (Sawmilling) Pty Ltd (No 2) [2019] NSWSC 1248
Hearing dates:	On the papers; submissions received 12 and 18 September 2019
Decision date:	19 September 2019
Jurisdiction:	Equity - Commercial List
Before:	Stevenson J
Decision:	Defendant/cross-claimant to pay the costs of the plaintiff/cross-defendant, excluding its costs of the long service leave issue, on the ordinary basis until 22 October 2018 and on an indemnity basis thereafter
Catchwords:	COSTS – party/party – exceptions to the general rule that costs follow the event – whether issue on which successful party was unsuccessful were clearly dominant or separable COSTS – party/party – offer of compromise – term that there be no order as to costs – whether such a term includes an amount for costs or is expressed to be inclusive of costs for the purposes of UCPR r 20.26(2)(c)
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 Hurford Hardwood Kempsey Pty Ltd v Kempsey Timbers (Sawmilling) Pty Ltd [2019] NSWSC 1069 Jojeni Investments Pty Ltd v Mosman Municipal Council (No 2) [2015] NSWCA 208 Network Ten Pty Ltd v TX Australia Pty Ltd (No 2) [2019] NSWCA 51
Category:	Costs
Parties:	Hurford Hardwood Kempsey Pty Ltd (Plaintiff/Cross-Defendant) Kempsey Timbers (Sawmilling) Pty Ltd (First Defendant/Cross-Claimant) Kempsey Timbers Pty Ltd (Second Defendant/Cross-Claimant)
Representation:	Counsel: M McCall (Plaintiff/Cross-Defendant) R E Quickenden (Defendants/Cross-Claimants)   Solicitors: Walters Solicitors (Plaintiff/Cross-Defendant) Brook Worthington Lawyer (Defendants/Cross-Claimants)
File Number(s):	SC 2018/231591

Judgment

1. I gave judgment in this matter on 22 August 2019: Hurford Hardwood Kempsey Pty Ltd v Kempsey Timbers (Sawmilling) Pty Ltd [2019] NSWSC 1069. I shall use the same abbreviations here.

2. Hurford was substantially successful in the proceedings. It succeeded in relation to the Unprocessed Stock and pick and pack issues. It failed in relation to the long service leave issue.

3. It follows from my reasons that Hurford is entitled to judgment against Kempsey Timbers in the sum of $234,740 together with interest on that sum from 30 May 2018 at court rates.

4. I entered judgment in favour of Hurford and made an order in relation to interest on 17 September 2019.

5. It also follows from my reasons that Kempsey Timbers’ cross-claim should be dismissed. I will make that order.

6. There is no dispute that Hurford must have its costs.

7. The questions are what orders should be made to reflect Hurford’s failure on the long service leave issue and whether there should be an order for indemnity costs.

Long service leave issue

8. The general rule is that “[w]here there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed”: Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38]; Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 at [10].

9. However, it may be appropriate to apportion costs if a particular issue or group of issues is “clearly dominant or separable”: Cellarit at [12]; Network Ten Pty Ltd v TX Australia Pty Ltd (No 2) [2019] NSWCA 51 at [13].

10. In this case, the long service leave issue was a separate and distinct issue from the Unprocessed Stock and the pick and pack issues. The evidence and submissions in relation to the long service leave issue were discrete and readily identifiable.

11. Neither party suggested that a costs assessor would have any difficulty differentiating between the costs incurred in relation to the long service leave issue and the other issues.

12. Accordingly, I propose to exclude those costs from the costs to be ordered in favour of Hurford.

Indemnity costs

13. In relation to the question of indemnity costs, Hurford relies upon, amongst other offers, an Offer of Compromise made on 22 October 2018 pursuant to r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) that there be:

1. judgment for Hurford against Kempsey Timbers in the sum of $100,000;

2. judgment for Hurford on the cross-claim; and

3. “no order as to costs”.

14. UCPR r 20.26(2)(c) states that an offer under that rule:

“…must not include an amount for costs and must not be expressed to be inclusive of costs”.

15. In my opinion, an offer proposing “no order as to costs” does not offend that rule. Such an offer does not “include an amount for costs” and is not “expressed to be inclusive of costs”.

16. In Jojeni Investments Pty Ltd v Mosman Municipal Council (No 2) [2015] NSWCA 208, the Court of Appeal considered an offer which proposed that “each party pay its own costs of the proceedings”. The Court of Appeal concluded that the prohibition in UCPR r 20.26(2)(c) was not directed to such offers (at [12]) and that:

“…there is no difference between an offer containing a term that each party bear its own costs, and an offer which is silent as to costs. Such an offer does not contravene r 20.26(2)(c).” (At [15].)

17. In my opinion, the same must apply to an offer that proposes that there be “no order as to costs”.

18. Kempsey Timbers did not accept the offer. Hurford has achieved a result no less favourable than the terms of the offer.

19. It follows, by reason of UCPR r 42.14 that Hurford should have its costs on an indemnity basis from 22 October 2018 “unless the court orders otherwise”.

20. I see no reason to order otherwise.

21. It is true that the offer was made at an early stage in the proceedings when neither party had served its evidence.

22. But this is a case where the parties, Kempsey Timbers in particular, must have had a clear idea from the outset of the nature of the case that the other proposed to agitate in the proceedings.

23. Hurford also made a Calderbank offer on 25 October 2018 to the same effect as the 22 October 2018 and made a further Offer of Compromise and Calderbank offer in May 2019. It is not necessary to consider those offers.

24. For those reasons I make the following orders:

1. The cross-claim be dismissed.

2. The defendants/cross-claimants pay the costs of the plaintiff/cross-defendant of the proceedings, excluding the costs of the plaintiff/cross-defendant in relation to the long service leave issue, being the issue referred to at [25(2)] of the judgment of 22 August 2019, such costs to be payable on the ordinary basis to 22 October 2018 and on an indemnity basis thereafter.

**********

Decision last updated: 19 September 2019