Lee Rumble v Liverpool Plains Shire Council [No. 2]

[2012] NSWDC 99

District Court

New South Wales

Medium Neutral Citation:	Lee Rumble & Anor v Liverpool Plains Shire Council & Ors [No. 2] [2012] NSWDC 99
Hearing dates:	22 May 2012, 23 May 2012, 24 May 2012, 25 May 2012, 28 Mary 2012 and 13 July 2012
Decision date:	20 July 2012
Before:	Mahony SC DCJ
Decision:	See paragraph 14 of Judgment
Catchwords:	Costs following Calderbank Offer
Legislation Cited:	Civil Procedure Act 2005
Cases Cited:	Calderbank v Calderbank ]1975] 3 All ER 333 Vieira v O'Shea (No. 2) [2012] NSWCA 121 Miwa Pty Ltd v Siantan Properties Pty Ltd (No. 2) ]2011] NSWCA 344
Category:	Costs
Parties:	Lee Rumble - First Plaintiff Robert Rumble - Second Plaintiff Liverpool Plains Shire Council - First Defendant Mervyn John Prendergast - Second Defendant Matthew Sproul - Third Defendant Christine Anderson - Fourth Defendant Simon Carroll - Fifth Defendant Paul Fahey - Seventh Defendant Chris Byers - Eighth Defendant Darren Clark - Ninth Defendant
Representation:	S Galitsky - Plaintiff J Guihot - First to Fifth and Seventh to Ninth Defendants Websters Solicitors - Plaintiffs Moray & Agnew - First to Fifth and Seventh to Ninth Defendants
File Number(s):	11/58125
Publication restriction:	Nil

Judgment ON COSTS

1. The defendants, by notice of motion filed with leave on 13 July 2012, seek the following orders:

(1)   An order that the costs orders made on 5 July 2012 in favour of the plaintiffs against the first defendant be revoked.

(2)   That in lieu thereof the Court order that:

(a)   The plaintiffs pay the First Defendant's costs of the proceedings;

(b)   Alternatively, that there be no order as to costs up to 16 May 2012; or

(c)   Alternatively,

(i)   The First Defendant pay the costs of the plaintiffs on an ordinary basis up to 16 May 2012

(ii)   Each plaintiff to pay the costs of the First Defendant on and from 17 May 2012,

(iii)   That such costs be paid by the plaintiffs on an indemnity basis.

(d)   Each plaintiff to pay the First Defendant's costs of this motion.

(e)   That the First Defendant's costs of the motion be paid by the plaintiffs on an indemnity basis.

(3)   An order that enforcement of the judgment in favour of each plaintiff against the First Defendant be stayed pending an assessment of the First Defendant's costs payable under Order 2 and that any such costs be set off against the said judgments in favour of the plaintiffs.

(4)   Such further or other orders so as to give effect to the orders sought herein.

1. The defendants relied on an affidavit of Mark James Brothers sworn 11 July 2012 which annexed correspondence between the parties. Relevantly, it included a letter from the defendants' solicitors to the plaintiffs' solicitors dated 30 April 2012, which contained the following:

"We are instructed to make one final offer to settle these proceedings The offer is our clients' highest position and no further offers will be made. The offer is as follows:

1.  In full settlement of:

1.1   all claims by the plaintiffs against the first, second, third, fourth, fifth, seventh, eighth and ninth defendants; and

1.2   the cross claim by the first defendant against the plaintiffs

these defendants will pay the sum of $180,000.00 ("the settlement sum") comprising:

1.3  the sum of $147,238.91 to be paid as directed by you; and

1.4  a sum of $32,761.09 to be retained by the first defendant and be applied to all outstanding rates and charges owed to the first defendant by the plaintiffs up until 30 June 2012, and all interest arrears up until 20 April 2012.

Plus costs as agreed or assessed.

For the avoidance of any doubt, your clients will receive the sum of $147,238.91 plus costs as agreed and assessed and all rates, charges and interest due to the first defendant by the plaintiffs until 30 June 2012 shall be forgiven.

This offer remains open for acceptance until 5.00pm on Wednesday 16 May 2012 whereupon it will be deemed withdrawn and the defendants will embark on preparing the matter for hearing.

This offer is made in accordance with the principles referred to in Calderbank v Calderbank [1975] 3 All ER 333 and should the offer not be accepted this letter will be relied upon on the question of costs."

1. The offer set out in that letter is more favourable to the plaintiffs than the judgment obtained by them on 5 July 2012.

1. The plaintiffs relied on an affidavit of Stephen Roy Webster sworn on 12 July 2012. That affidavit deposed to matters that occurred pre-trial between the parties and in particular to a proposed resolution of the dispute between the parties negotiated between Mr Webster and Messrs Everingham Solomons, the solicitors who previously had advised the defendants. Apparently a resolution had been negotiated to the stage where a deed of release was prepared and forwarded to the plaintiffs for their consideration.

1. The defendants relied on a further affidavit in reply from Mark James Brothers sworn on 12 July 2012. That affidavit deposed to the circumstances in which the first defendant had negotiated the pre-trial resolution, that the plaintiff had been advised that a council officer responsible for those negotiations had no authority to enter into a binding agreement on the part of council and that at a meeting of council the council had rejected the negotiated terms and had resolved to seek further legal advice in relation to the matter.

1. Thereafter, the plaintiffs commenced these proceedings.

Consideration

1. The plaintiffs' application, relying on the letter dated 30 April 2012, is brought in accordance with the principles referred to in Calderbank v Calderbank ]1975] 3 All ER 333. That principle enlivens a wide discretion in the Court in relation to costs in circumstances where if it is demonstrated that an offer capable of acceptance by the offeree was made and the evidence demonstrates that the offeree's rejection of it to be unreasonable, then the Court has a discretion to "otherwise order" in respect of the question of costs after the expiry of the period given for acceptance of the offer, see Vieira v O'Shea (No. 2) [2012] NSWCA 121 at [10].

1. The evidence here demonstrates that following commencement of the proceedings the defendants made an offer by letter dated 19 March 2010 to the plaintiffs of the sum of $40,000 plus costs as agreed or assessed in full settlement of the plaintiffs' claims, subject to the parties entering into a mutually acceptable deed of release. That offer was rejected by the plaintiffs by letter dated 10 June 2010 and a counter offer was made on their behalf in the sum of $2.4 million dollars. That offer was repeated by letter dated 7 July 2010.

1. The matter was referred for mediation on 16 April 2012 but failed to settle there. The defendants' offer by letter dated 30 April 2012 was made at a time when the evidence was complete, including the evidence in relation to valuation of the vehicles, and no defendants' witnesses had been required for cross-examination at the trial which was due to commence on 22 May 2012. The offer expired at 5pm on Wednesday 16 May 2012 and therefore gave the plaintiffs over two weeks to consider the offer and assess the risk in not accepting it.

1. I find that the defendants' offer was a genuine offer of compromise, notwithstanding that it did not speak for the interests of the sixth defendant (State of NSW) in the litigation. The plaintiffs discontinued the proceedings against the sixth defendant before trial.

1. It was submitted on behalf of the plaintiffs that the offer contained in the defendants' solicitors letter dated 30 April 2012 constituted a generous offer on an objective view of the matter. However, the test is whether the conduct of the offeree in rejecting the offer is unreasonable and it was submitted on behalf of the plaintiffs that it was not unreasonable for them to reject the offer for the following reasons. First, the offer set out no theory of the defendants of their assessment of the plaintiffs' damages. Secondly, the plaintiffs were unsophisticated people, who unlike the defendants, were not commercial litigants. Thirdly, the period of seventeen days from the date of the offer until its expiry was simply insufficient time for the plaintiffs to properly assess it. They were based at a remote location, and were remote from their legal advisers. They were of a particular mindset in respect of the litigation, given the previous attempt at resolution of the matter with the council had failed. Therefore, it was not unreasonable for the plaintiffs to not accept the offer, relying on Miwa Pty Ltd v Siantan Properties Pty Ltd (No. 2) ]2011] NSWCA 344.

Decision

1. I do not accept the submissions made on behalf of the plaintiffs. The offer was made on 30 April 2012 at a time when all of the evidence was complete, the parties had been through a mediation process and the plaintiffs had the benefit of experienced legal advisers. Their failure to accept the offer reveals that either their assessment of the value of their claim was erroneous or at least that they were prepared to accept a risk which materialised on judgment on 5 July 2012, namely, that they would receive a less favourable result.

1. Once the plaintiffs had failed to accept the offer, the "real cause and occasion of the litigation" is the attitude the plaintiffs adopted to it (see Miwa, supra, per Basten JA at [6]). However, I note that the defendants did not make an offer in accordance with Part 20 or 26 of UCPR, which would have carried with it a presumptive entitlement to indemnity costs in the present circumstances.

Orders

1. I make the following orders:

(1)   I vacate Order No. 3 made on 5 July 2012.

(2)   I order the First Defendant to pay the Plaintiffs' costs up to and including 16 May 2012 on an ordinary basis.

(3)   I order the Plaintiffs to pay the costs of the First Defendant on and from 17 May 2012 on an ordinary basis.

(4)   I order the Plaintiffs to pay the First Defendant's costs of the Motion heard on 13 July 2012 on an ordinary basis.

(5) I direct pursuant to s 135 of the Civil Procedure Act 2005 that enforcement of the judgments in favour of each plaintiff against the first defendant be stayed pending an assessment of the first defendant's costs in Order (3) above.

(6)   I further direct that the costs referred to in Order (5) above be set off against the judgments in favour of each plaintiff.

Decision last updated: 20 July 2012