Laurette v Walsh
[2010] NSWSC 955
•24 August 2010
CITATION: Laurette v Walsh & Anor [2010] NSWSC 955 HEARING DATE(S): 24 August 2010 JUDGMENT OF: Ball J EX TEMPORE JUDGMENT DATE: 24 August 2010 DECISION: The plaintiff and first defendant bear his or her own costs. CATCHWORDS: COSTS - Calderbank offer - whether reasonable to refuse. COSTS - offer of compromise - offer not comparable with result LEGISLATION CITED: Property Relationships Act 1984 (NSW)
Uniform Civil Procedure Rules (NSW)CATEGORY: Procedural and other rulings CASES CITED: Evans Shire Council v Richardson [2006] NSWCA 61 PARTIES: Kym Laurette (Plaintiff)
Damon Walsh (First Defendant)FILE NUMBER(S): SC 2007/256646 COUNSEL: Ms M Gillies (Plaintiff)
Mr J O Anderson (First Defendant)SOLICITORS: White Barnes (Plaintiff)
Martin Bell & Co (First Defendant)
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
BALL J
24 AUGUST 2010
2007/256646 KYM LAURETTE v DAMON WALSH
EX TEMPORE JUDGMENT
1 The current application before me concerns the costs of the hearing in this matter. The plaintiff owns a 50 per cent interest in a hobby farm at Hedgwick Hills and the first defendant owns a 25 per cent interest in that farm. The remaining 25 per cent is held by the second defendant, who is the first defendant’s brother. In these proceedings the plaintiff claimed pursuant to s 14 of the Property Relationships Act 1984 (the Act) that she should be entitled as an adjustment to hers and the first defendant’s respective interests in the property so that she acquired the first defendant's 25 per cent interest. I found that the only adjustment that should be made in the plaintiff’s favour was an adjustment of $16,000 to take account of money obtained by the first defendant after the relationship broke down from the sale of personal property that was acquired by the plaintiff and first defendant during the course of the relationship.
2 In the normal course of events the costs order that would follow from the finding that I have made is that each party should bear his or her own costs. That is because, although the plaintiff was partially successful in that she recovered $16,000, UCPR r 42.30(2) provides that a successful party in a claim under the Act should not normally be entitled to recover costs if the adjustment made in that party’s favour is less than $60,000.
3 Both parties, however, say that a different order should be made in relation to costs. The first defendant relies on a Calderbank offer dated 16 July 2008. On the other hand, the plaintiff relies on a formal offer of compromise made in accordance with the rules, which was made on 11 June 2009.
4 The terms of the Calderbank offer were essentially that the property be sold and that if it was sold for a shortfall after costs and after payment out of the mortgage, then the plaintiff should bear 40 per cent of the shortfall and the defendants should bear 60 per cent of the shortfall. On the other hand, if the sale of the property realised a surplus, then according to the offer of compromise that surplus would be divided so that the plaintiff received 60 per cent and the defendants received 40 per cent. It was also a term of the offer of compromise that the parties agree that they be legally and beneficially entitled to any personal property in their respective possession at the time the offer was made.
5 The principle that applies in determining whether a Calderbank offer should be taken into account in determining costs is whether it was unreasonable for the offeree to refuse to accept the offer at the time that it was made: Evans Shire Council v Richardson [2006] NSWCA 61. In this case the first defendant says that it was unreasonable of the plaintiff to refuse to accept the offer because ultimately she did no better than the offer. That is because it now appears that the property will be sold for $375,000. As a consequence of that, the plaintiff will receive 50 per cent of the net proceeds of sale plus $16,000. That is estimated to amount to approximately $102,000 or, more accurately, 59.25 per cent of the total value of the property. The first defendant says that that amount falls below the 60 per cent referred to in the offer of compromise and in those circumstances the plaintiff has done no better than she would have done if she had accepted the offer.
6 As I say, however, the question is whether it was unreasonable of the plaintiff at the time to reject the offer. In my opinion it was not. At that time, the plaintiff was not in a position to know whether she faced a shortfall or a surplus. If, for example, she faced a shortfall, it may have been important to know what other personal assets of the parties had been sold by the first defendant and to know how much he had raised from the sale of those personal assets to determine whether he should bear a greater proportion of that shortfall.
7 Even in the case of a surplus, I do not think that the plaintiff could make a reasonable assessment of the offer unless the offer had explained to her what assets had been sold by the first defendant, how much he had realised from the sale of those assets and what he had done with the proceeds of sale. Consequently, I am not prepared to make any special order in relation to costs based on the Calderbank offer.
8 The next question is whether I should make any special order based on the offer of compromise. The principles that apply to formal offers of compromise are different from those that apply to Calderbank offers. In the case of formal offers of compromise the question that the Court has to address is whether ultimately the offeree did better than the offer that had been made.
9 Implicit in that, however, in my view is that the offer that was made and the result that occurred must be comparable. In this case the order that the plaintiff sought was an order relating to the proportion in which she held the relevant property. In fact, she sought 100 per cent of the property. On the other hand, the offer that she made was an offer to accept from the defendants the amount of $80,000 plus costs in exchange for her interest in the property. The question is whether an offer of $80,000 plus costs is comparable to a result in which the plaintiff sought to obtain the first defendant’s 25 per cent interest in the property but ended up with an adjustment in her favour of $16,000.
10 In my opinion the offer is not comparable with the result. That is because the orders for which the plaintiff contended were orders adjusting the parties’ respective interests in the property and an order that the property be sold. On the other hand, the offer that was made was an offer that the defendants buy the plaintiff’s interest. Even if the plaintiff had sought that order at the final hearing, I would not have made it because I would not have been satisfied that the first defendant could have complied with it. Consequently, it is not possible to say that the plaintiff did better as a result of the court proceedings than she would have done if the first defendant had accepted the offer that had been made.
11 For those reasons I am not prepared to make any special order for costs based on the offer of compromise. It follows that the appropriate order for costs in this case as between the plaintiff and first defendant is that each party bear his or her own costs.
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