Lasting Impressions Home Renovations Pty Ltd v Felder NSW Pty Ltd

[2024] WADC 33 (S)

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   LASTING IMPRESSIONS HOME RENOVATIONS PTY LTD -v- FELDER NSW PTY LTD [2024] WADC 33 (S)

CORAM:   LONSDALE DCJ

HEARD:   17 MAY 2024 AND ON THE PAPERS

DELIVERED          :   6 SEPTEMBER 2024

FILE NO/S:   CIV 5138 of 2022

BETWEEN:   LASTING IMPRESSIONS HOME RENOVATIONS PTY LTD

Plaintiff

AND

FELDER NSW PTY LTD

First Defendant

K R ENGINEERING (WA) PTY LTD

Second Defendant

CORNELIUS JACOBUS JOHANNES BADENHORST

Third Defendant

Catchwords:

Costs - Plaintiff's application for indemnity costs

Legislation:

Nil

Result:

Application for indemnity costs refused

Representation:

Counsel:

Plaintiff	:	Mr P G McGowan
First Defendant	:	Mr J Johnstone
Second Defendant	:	Mr J Johnstone
Third Defendant	:	Mr J Johnstone

Solicitors:

Plaintiff	:	Smart Legal WA
First Defendant	:	Kotze Law
Second Defendant	:	Kotze Law
Third Defendant	:	Kotze Law

Case(s) referred to in decision(s):

Eccles v Koolan Iron Ore Pty Ltd [2013] WASC 418 (S)

Lasting Impressions Home Renovations Pty Ltd v Felder NSW Pty Ltd [2024] WADC 33

LONSDALE DCJ:

Introduction and overview

1. The plaintiff brought an action against the defendants under the Australian Consumer Law for misleading and deceptive conduct in relation to the sale of a piece of machinery known as an edgebander.  The matter came before me for trial.  On 17 May 2024 I awarded judgment to the plaintiff and published written reasons.[1]  Thereafter, I made consequential orders, including orders for the payment of costs and interest.  The plaintiff had made oral submissions in support of the application for indemnity costs.  The defendants sought and were granted leave to file written submissions.  The parties agreed that the application for indemnity costs could thereafter be dealt with on the papers.

   [1] Lasting Impressions Home Renovations Pty Ltd v Felder NSW Pty Ltd [2024] WADC 33.

2. I have decided that the defendants should not pay the plaintiff's costs on an indemnity basis and my reasons follow.

3. In oral submissions, counsel for the plaintiff referred to a 'Calderbank' offer made on 21 February 2023.  The terms of that offer were that the defendants pay the purchase price of $93,720 to the plaintiff in exchange for the plaintiff returning the edgebander to the defendants.  The offer was to remain open for acceptance on or before 5.00 pm on Tuesday, 7 March 2023.  The defendants declined to accept the offer. 

4. The defendants contend that their rejection of the offer was not unreasonable having regard to the fact that the plaintiff's case was hotly in contention.

Legal principles

1. The relevant principles concerning whether the refusal of a Calderbank offer should result in an order for the payment of indemnity costs were summarised in the case of Eccles v Koolan Iron Ore Pty Ltd:[2]

   [2] Eccles v Koolan Iron Ore Pty Ltd [2013] WASC 418 (S) [9].

   The relevant principles governing an award of indemnity costs were considered by Buss JA, with whom Wheeler JA agreed, in Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1. Buss JA put forward the following principles:

   (1)a Calderbank offer will not justify an award of indemnity costs unless its rejection was unreasonable;

   (2)all of the relevant facts and circumstances must be considered in determining whether a party's rejection of a Calderbank offer was unreasonable;

   (3)the mere fact that the recipient of a Calderbank offer is ultimately worse off than he or she would have been had the offer been accepted, does not mean that its rejection was unreasonable;

   (4)whether conduct is reasonable or unreasonable always involves matters of judgement and impression;

   (5)it is not possible nor desirable to enumerate exhaustively all circumstances which must be taken into account, in a particular case, in deciding whether the rejection of a Calderbank offer was unreasonable, but, ordinarily, regard should be had to, at least, the following:

   (a)the stage of the proceeding in which the offer was received;

   (b)the time allowed to the offeree to consider the offer;

   (c)the extent of the compromise offered;

   (d)the offeree's prospects of success, assessed as at the date of the offer;

   (e)the clarity with which the terms of the offer were expressed; and

   (f)whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it;

   (6)the party who makes a Calderbank offer that is rejected bears the onus of satisfying the court that it should make an award of indemnity costs in his or her favour; and

   (7)the standard to be applied in awarding indemnity costs should not be allowed to diminish to the extent that an unsuccessful party will be at risk of an order for costs assessed on an indemnity basis absent some blameworthy conduct on its part ‑ a test of unreasonableness should not be upheld on other than clear grounds.

2. Having regard to the foregoing principles, I do not consider that an award of indemnity costs is appropriate. 

3. The plaintiff had claimed he purchased the machine in reliance of representations made by the defendants concerning the machine's functionality.  The plaintiff's action was a claim as to misleading and deceptive conduct contrary to the Australian Consumer Law.  The defendants, in denying the conduct was misleading and deceptive, relied on the terms of the written contract.  Without regard to all of the other evidence in the case, the terms of the written contract were arguably not misleading and deceptive. 

4. However, the issues in this case required a consideration ‑ not only of the terms of the written contract ‑ but of written and oral communications between the parties prior to the signing of the contract and to their subsequent conduct.  These factual issues were resolved on the evidence led at trial.  Although, having carefully considered that evidence, I concluded that the defendants conduct was misleading and deceptive, I would not have said that the defendants' case had no prospects of success. 

5. Also, the offer made by the plaintiff was made nine months prior to the commencement of trial and before the parties had engaged in discovery or had engaged expert witnesses.  The terms of the plaintiff's offer did not proffer any reason for why the offer should be accepted other than a broad assertion that the machine was defective and/or malfunctioning.  The assertion that the machine was defective and/or malfunctioning was not strictly correct.  It is true that the machine did not have the level of specifications that the plaintiff had been expecting and (on an analysis of all of the representations made by the defendants) was entitled to expect.  However, the evidence did not go so far as to amount to a finding that the machine was defective or malfunctioning. 

6. I decline to make an order for indemnity costs but will order that the defendants pay the plaintiff's costs up to and including the trial. 

Orders

1. The defendants pay the plaintiff's costs, to be taxed if not agreed, up to 17 May 2024. 

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.

LB

Associate to Judge Lonsdale

6 SEPTEMBER 2024