Kalache v Secureclean Pty Ltd (No 3)

[2019] NSWDC 718

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Kalache v Secureclean Pty Ltd (No 3) [2019] NSWDC 718

Hearing dates:

24 October 2019

Date of orders:

24 October 2019

Decision date:

24 October 2019

Jurisdiction:

Civil

Before:

Neilson DCJ

Decision:

See [15], [17]

Catchwords:

COSTS. Application for indemnity costs.

Defendant made an offer of compromise during lunch on Monday 12 August 2019 which was open until 4pm on 13 August 2019. Hearing commenced on 14 August 2019. Whether defendant’s offer of compromise was open for a period of time that was reasonable in all the circumstances. Offer otherwise complied with UCPR 20.26(3)(a).

Legislation Cited:

Uniform Civil Procedure Rules 2005

Cases Cited:

South Eastern Sydney Area Health Service v King [2006] NSWCA 2
Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85
Leda v Weerden (No 3) [2006] NSWSC220

Category:

Costs

Parties:

Klaudette Kalache (Plaintiff)

  Secureclean Pty Ltd (Second Defendant)

Representation:

Counsel:

 

R. Lynch (Plaintiff)

 

A. Bowen (Second Defendant)

 

Solicitors:

 

Gerard Malouf and Partner (Plaintiff)

  HBA Legal (Second Defendant)

File Number(s):

2017/00220928

Publication restriction:

Nil.

Judgement

1. HIS HONOUR: For more than 25 years I have pointed out that nothing excites the zeal, the ardour and the passion of the legal profession more than an argument about costs. This is the eighth day of hearing. Late yesterday afternoon I entered verdict and judgment for the second defendant against the plaintiff and an application was then made by the second defendant for indemnity costs commencing on 13 August 2019, the day before the hearing first commenced.

2. The hearing date of 14 August 2019 was fixed by the Judicial Registrar on 8 April 2019 with an estimate of three days. I again point out that this is day 8. The parties arranged for an informal settlement conference on Monday 8 July 2019. That informal settlement conference was unsuccessful. However, it appears that at that informal settlement conference, mention was made that the plaintiff might seek to move the matter to the Supreme Court, obviously in the expectation that the value of her claim might exceed this Court’s jurisdictional limit of $750,000. In fact on 18 July the plaintiff filed a summons in the Common Law Division of the Supreme Court seeking the transfer of these proceedings to that Court. However the plaintiff appears to have reconsidered the decision to make that application and sought the consent of the defendant to a discontinuance of the summons. That consent was given by the defendant on 30 July and on Thursday 1 August 2019 Registrar Bradford granted leave to the plaintiff to discontinue the summons.

3. There was obviously between Thursday 1 August and Wednesday 14 August, two calendar weeks and one complete working week before the commencement of the hearing of the matter in this Court. On Monday 12 August the second defendant, by its solicitor made an offer of compromise. The first term of the offer of compromise is this:

“The second defendant offers to compromise this claim in whole on the following terms:

(a) Judgment for the second defendant.

(b) Each party to pay her or its own costs.”

The offer was then expressed to be open for acceptance until 4pm on Tuesday 13 August 2019.

4. Both exhibit 13 and exhibit T tell me that the offer was actually sent by facsimile transmission at 1.28pm on 12 August 2019. That is during the usual court luncheon hour and when most legal practices also take a lunch break. Exhibit T however tells me that at 1.58pm, the plaintiff’s solicitor sent a copy of the offer of compromise to Counsel, Mr Lynch. At 2.01pm Mr Lynch advised the solicitor, again by email, that there would need to be a conference with the plaintiff to advise her about the offer “properly” and he asked whether that could be arranged by telephone. At 2.02pm, that is one minute later, the plaintiff’s solicitor asked Mr Lynch again by email, as to his availability on that afternoon. He replied at 2.03pm again by email that he was required to attend an informal settlement conference in another matter commencing at 3pm that he was able to take a call on his mobile telephone at any time during that informal settlement conference.

5. The submissions put to me concerning costs proceeded on the basis that it was impossible to arrange a conference with the plaintiff as suggested by counsel prior to the offer of compromise expiring at 4pm on 13 August 2019. I accept that it was physically impossible for such a conference to be arranged on the afternoon of 12 August 2019.

6. These basic facts are known to the Court and would have been well-known to the defendant through its solicitors. Firstly, the plaintiff lived at Cecil Hills in Western Sydney with her husband and three adult children and a son-in-law. The plaintiff was then 65 years old and her husband was more senior than she. In evidence given on 15 August she told me that her husband was 76 years old. The plaintiff was born in Lebanon and came to Australia in 1985. She was then either 30 or 31 years old. Her native language is Arabic. Interpreters were arranged for the plaintiff whenever she saw a medical practitioner for medico-legal purposes and I include amongst the words medical practitioner” the occupational therapists who were qualified by both parties. An interpreter was sworn to assist the plaintiff in giving her evidence. She could answer basic questions in broken English but she was not fluent in English. Her grammar was bad, syntax was also bad and if any complex question was asked it needed to be interpreted to her. As I understand it a Arabic interpreter was engaged for the purpose of the informal settlement conference. For taking formal instructions from the plaintiff any competent legal practitioner would require the presence of an expert interpreter and I must say an impartial expert interpreter to ensure that the advice given was adequately translated to ensure that the plaintiff understood precisely what the advice that she was given meant. It must also be born in mind that the plaintiff, as is common in most families, would rely perhaps on the input of close family members, here her husband and her adult children, in particular the plaintiff’s daughter Georgia, who was one of the adult children living at home and whose husband was living with the plaintiff since Georgia’s marriage in late 2018, who would, no doubt, provide some input when the plaintiff was considering a formal offer of compromise. The other thing that was well-known to the defendant because it is disclosed in medical histories is the fact the plaintiff was educated to the age of 15 and at that age she married. She never participated in the paid workforce in either Lebanon or Australia. I refer to the paid workforce because the plaintiff, as a mother of five children, probably in her lifetime has done more physical work than many members of the paid workforce. All those matters, as I said, ought to have been known to the defendant because in essence they are all disclosed in the medical histories given by the plaintiff to doctors over the years since 14 June 2016 when the plaintiff fell at the Stocklands mall at Wetherill Park.

7. There is no direct evidence about what occurred on Tuesday 13 August 2019. However, the situation was that a conference needed to be appointed for the plaintiff and whichever family member she wished to take with her to attend upon counsel, solicitor and interpreter to obtain instructions about the defendant’s offer of compromise. Arranging such conferences can be logistically difficult. They are also expensive because of the need to have two lawyers involved and a professional interpreter. Interpreters do not become available at the drop of a hat, so to speak. This Court in both its civil and criminal jurisdiction is often captive to interpreters who have many commitments and I have spent hours waiting in chambers in a criminal trial for an interpreter to arrive and so has a jury and counsel for the parties as well as solicitors and witnesses, and it is to be recalled that the cost of a criminal trial is $16,000 per day and having an interpreter not available costs a small fortune, but no-one can make interpreters so abundant that one can easily be found.

8. The other consideration, of course, here is that 13 August was the day before the hearing in this Court was to commence and that arrangements would have been made for a conference on the morning of 14 August, at least a meeting between counsel and solicitor and interpreter and plaintiff and any members of her family that she had with her to support and assist her. That is the normal practise in litigation in this State and has been the normal practise for as long as I have been in the profession, some 43 years. In other words we are looking at a very short time in which to arrange a conference, which conference had in any event been arranged to occur on Wednesday 14 August prior to 10am.

9. The offer of compromise which was made by the defendant complies with UCPR 20.26(3)(a). Formally, it complies with the rules. The real question here is whether the time for acceptance of the offer was reasonable. The defendant took me to the decision of Gzell J in Leda v Weerden (No 3) [2006] NSWSC 220. That was commercial litigation in the Equity Division. The nature of that litigation can easily be found in [1] of his Honour’s reasons where he’s said this:

“I published my reasons in this matter on 10 March 2006. I found that Mr Weerden owed a duty of care to Leda, which was breached, but I found that that breach did not materially contribute to Leda’s loss and on that basis, Leda failed. As I said at [84] of my reasons:

‘But in this case, I do not see Mr Weerden’s failures in his advice as having materially contributed to Leda’s loss. Leda had the unqualified advice of Mr Weerden, but they also had vendor’s warranties and they had advice that they could sue the vendors and Price Waterhouse if the losses were not available to be offset against income of the Tuggeranong Trust. And Leda was aware of the risk it said Mr Weerden failed to bring to its attention and went ahead, despite the alleged shortcomings of his advice.

Even if it could be said, and I doubt that it could be, that Mr Weerden’s failures played some part in the losses suffered by Leda, they were trifling.

They could not, in my view, be regarded as material.’”

His Honour was considering indemnity costs. His Honour said this commencing at [10]:

“10. In my view, the parties will be in the best position to assess an offer when it is made shortly before the commencement of the trial. By that stage, preparation for trial will be in hand and the legal advisors, will, therefore, be armed with sufficient information to make a reasoned judgment of the offer.

11. It was said that the plaintiff was in the throes of significant preparation for trial and was not in a position to give consideration to the offer. The whole point about offers of this nature is to encourage the proper compromise of litigation in the private interests of litigants and in the public interest in a prompt and economic disposal of litigation. Recent references to these matters was made by Hunt AJA in South Eastern Sydney Area Health Service v King [2006] NSWCA 2 at [83].”

10. His Honour’s decision was referred to by Basten JA in Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85. That also is a decision concerning indemnity costs. In that case, Basten JA said this:

“20. In considering whether the time allowed for acceptance is ‘reasonable in all the circumstances,’ once a trial commences, or indeed final preparation commences, three factors come into play. The first is that both parties may reasonably be expected to have a clear perception of the strengths and weaknesses of their positions, so that the reasonableness of a particular offer may be speedily assessed. Secondly, because significant costs would be accruing on a daily, even an hourly basis, there is a heightened incentive to respond within the time permitted. Thirdly, and counterbalancing the first factor, the need to address the terms of an offer provide advice and obtain instructions will often be a significant distraction from final preparation.

21. In relation to the first factor, it should be accepted that by the day before the hearing, in commercial litigation involving experienced counsel and solicitors, the legal representatives would have been able to give the client an immediate assessment of:

(a) the approximate costs incurred to date,

(b) the likely length of the trial,

(c) the approximate amount of costs assessed on the indemnity basis

if the matter proceeded to trial, and

(d) the most likely outcome which may involve a range as to quantum.

It should also be accepted that someone with authority to bind the client would have been available to give instructions based on legal advice as to the preferable response.

22. In seeking to demonstrate that the offer had not been left open for a reasonable time, in all of the circumstances, Primus sought to put before the Court evidence of how the offer was made and the circumstances of its own legal representatives at the time. However, that material was not relevant for this purpose. The question of reasonableness must be judged objectively, in the circumstances known, or which should reasonably have been anticipated, by both parties. In setting the time during which the offer is to remain open, the offeror must necessarily rely upon the circumstances as known to it, or which should be reasonably be anticipated by it. The actual circumstances of the recipient, unknown to the offeror, may be relevant to the application that the Court otherwise order in relation to costs of a valid unaccepted offer, but so might evidence as to whether the recipient took any steps to bring such matters to the notice of the offeror.

23. In the present case, the time allowed was, on any view, a short period for the consideration of a global assessment of a reasonably complex dispute. It is Kooee which seeks to establish an entitlement to indemnity costs. To do that, it must demonstrate that its offer was left open for a period which was reasonable in all the circumstances. Because the present case is truly borderline, it should be concluded that Kooee has failed to establish that its offer was left open for a reasonable time. Accordingly, the offer did not fall within UCPR r 20.26 and its non-acceptance did not engage the costs consequences in r 42.15.”

11. I have pointed out what ought to have been known to the second defendant, the offeror. The offeror must also have known that the plaintiff herself must have had expectations of the value of her case because of the application that was commenced in the Supreme Court to have the proceedings transferred from this Court to that Court. It must also have known that this could hardly be described as “commercial litigation,” and that sometimes lawyers need to spend considerable time with a poorly educated client to persuade him or her to accept their advice, to make the client comprehend the significance of the offer of compromise, to draw to the client’s attention that perhaps the client’s expectations are too great.

12. Here the offer of compromise was only open until 4pm on Tuesday 13 August 2019. There was only a very short opportunity to arrange for a conference which itself had logistic hurdles, especially when the conference would have been arranged for the morning of Wednesday 14 August. The offer could have been made earlier and have given the plaintiff greater time for its acceptance. Learned Counsel for the defendant, on this application, pointed out that the plaintiff should have been aware of the problems besetting her case, at least by the time of the informal settlement conference. Equally the defendant ought to have known by that time as well, the strengths of its position and even if its approach to the case was impeded by the application made to the Supreme Court, such hindrance was removed when the application to the Supreme Court was discontinued on 1 August 2019. The defendant could have made the offer of compromise not on Monday 12 August, but on Monday 5 August.

13. The time in which the offer of compromise was effectively available was extremely short. To use the verbiage of Basten JA, it is the defendant which seeks to establish an entitlement to indemnity costs. To do that it must demonstrate that its offer was left open for a period which was reasonable in all the circumstances. Because in the present case, the offer was truly only available during office hours on Tuesday 13 August until 4pm, a truly short period of time, I conclude that the second defendant has failed to establish that the offer was open for a reasonable time. It could have been left open until 10am on 14 August, that is up until the time when the matter was due to commence in this Court and, therefore, the plaintiff’s lawyers could have discussed the offer of compromise with her on the morning of 14 August, when the plaintiff would have had her family supporters, her solicitor and barrister, and an interpreter all present to assist her.

14. The application for indemnity costs is therefore refused.

BOWEN: If your Honour is moving to costs I just want to make a brief submission.

15. HIS HONOUR: I order the plaintiff to pay the second defendant’s costs on the ordinary basis up until 4pm yesterday and any costs incurred by the defendant thereafter that do not relate to the current application.

16. I shall hear Counsel about the costs of the current application.

[SUBMISSIONS]

17. HIS HONOUR: I order the second defendant pay the plaintiff’s costs of the application for indemnity costs. If it be necessary I should indicate that the basis on which those costs are to be assessed, is the basis of a notice of motion.

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Amendments

03 December 2019 - Amended hearing dates to “24 October 2019”

Amended “O. Dinkha (Defendant)” to “A. Bowen (Second Defendant)”

Amended “HBA Legal (Defendant)” to “HBA Legal (Second Defendant)”

Decision last updated: 03 December 2019