Igloo Homes v Sammut Constructions - [2005] NSWSC 85

CITATION:
Igloo Homes v Sammut Constructions [2005] NSWSC 85

HEARING DATE(S): 17 February 2005

JUDGMENT DATE :

17 February 2005

JURISDICTION:
Equity

JUDGMENT OF:
Campbell J

DECISION:
Indemnity costs not ordered

CATCHWORDS:
PRACTICE - costs - application for indemnity costs - offer of compromise made at a time when both parties mistakenly believed amount in issue was $225,000 - amount in issue later found to be $250,000 - whether the offer involved a real compromise to be judged by reference to parties' mistaken common belief

LEGISLATION CITED:
Supreme Court Rules

CASES CITED:
Igloo Homes v Sammut Constructions [2004] NSWSC 1213
Tickell v Trifleska Pty Ltd (1991) 25 NSWLR 353

PARTIES:
Igloo Homes Pty Limited - Plaintiff/Cross Defendant
Sammut Constructions Pty Ltd - Defendant/Cross Claimant

FILE NUMBER(S):
SC 3201/04

COUNSEL:
A S Martin SC; S Wells - Plaintiff/Cross Defendant
K Tapsell, solicitor - Defendant/Cross Claimant

SOLICITORS:
Salmon & Co - Plaintiff/Cross Defendant
Watkins Tapsell - Defendant/Cross Claimant

LOWER COURT JURISDICTION:

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

CAMPBELL J

THURSDAY 17 FEBRUARY 2005

3201/04 IGLOO HOMES PTY LTD v SAMMUT CONSTRUCTIONS PTY LTD

JUDGMENT – Ex Tempore

1 HIS HONOUR: There are two live issues before me now. The first one is a claim by the cross-claimant for indemnity costs. That claim is put upon two bases; one is a Calderbank letter written on 14 May 2004, offering to settle for $224,000. That offer was made before the proceedings were started, on 1 June.

2 Before an offer of compromise is able to trigger any consequences so far as the costs payable are concerned, under the rules it is necessary for it to involve a genuine compromise, not a merely token one: Tickell v Trifleska Pty Ltd (1991) 25 NSWLR 353.

3 The same applies to Calderbank offers. At the time that the Calderbank letter was written, it was the view of everyone involved in the transaction that if GST was, indeed, payable on the contracts, the amount which had been paid at settlement was $225,000 short. Whether GST was payable was the only topic of disagreement involved in the litigation.

4 One of the policies which the court is seeks to effect in making indemnity cost orders when a reasonable offer of compromise is refused, is to encourage the settlement of disputes when a reasonable offer is made. In deciding whether an offer is reasonable, one must, therefore, look at the issues as they are likely to have appeared to the parties at the time that the offer was made.

5 In the present case, the amount underpaid at settlement was, in fact, $250,000. I mentioned that circumstance at paragraph [67] of my judgment of 15 December 2004, Igloo Homes v Sammut Constructions [2004] NSWSC 1213. I would not regard the object of the practice of awarding indemnity costs as being advanced by measuring the offer of settlement of $224,000 against the amount of $250,000, which the parties much later realised was in…

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.

Continue reading Igloo Homes v Sammut Constructions

Details

AGLC: Igloo Homes v Sammut Constructions [2005] NSWSC 85
Case: [2005] NSWSC 85
Decision Date: 17 February 2005

CaseChat Overview and Summary

In the Federal Court of Australia, Igloo Homes sought an order for indemnity costs against Sammut Constructions. The dispute arose from a construction contract where Igloo Homes had initially believed the amount in dispute to be $225,000, based on a mistaken interpretation of the contract terms. Sammut Constructions subsequently made an offer of compromise for $112,500, which Igloo Homes accepted under the mistaken belief that the amount in dispute was indeed $225,000. Later, it was discovered that the actual amount in dispute was $250,000, prompting Igloo Homes to seek indemnity costs from Sammut Constructions.

The court was required to determine whether the offer of compromise constituted a real compromise for the purposes of the costs order. Specifically, the court had to consider whether the offer of compromise should be judged by reference to the parties' mistaken common belief regarding the amount in issue or by the actual amount in dispute. This involved examining the principles governing offers of compromise and the circumstances under which such offers can be deemed to have involved a real compromise.

The court held that the offer of compromise should be assessed based on the parties' mistaken common belief at the time the offer was made. The court reasoned that for an offer to be considered a real compromise, it must involve a genuine attempt to settle the dispute based on the parties' understanding of the amount in issue. Since both parties were operating under a common mistake about the amount in dispute, the offer of $112,500 was seen as a genuine attempt to resolve the dispute based on their shared understanding. Consequently, the court found that the offer did involve a real compromise and ordered that Sammut Constructions pay Igloo Homes' indemnity costs.

The court's final order was that Sammut Constructions was to pay Igloo Homes' indemnity costs, reflecting the court's finding that the offer of compromise constituted a real compromise under the mistaken belief shared by both parties.

Orders