Lodhia v Trust Company of Australia (No.2)

[2005] FMCA 200

FEDERAL MAGISTRATES COURT OF AUSTRALIA

LODHIA v TRUST COMPANY OF AUSTRALIA (No.2) [2005] FMCA 200

BANKRUPTCY – COSTS – Purported Calderbank letter – where letter merely iterates respondent’s view of the applicant’s prospects of success – whether entitling respondent to an order for indemnity costs.

Applicant: CHANDRA KAND LODHIA

Respondent: TRUST COMPANY OF AUSTRALIA LIMITED (ACN 004 027 740)

File Number: SYG3546 of 2004

Judgment of: Raphael FM

Hearing date: 23 February 2005

Date of Last Submission: 23 February 2005

Delivered at: Sydney

Delivered on: 23 February 2005

REPRESENTATION

Counsel for the Applicant: Mr R Newton

Solicitors for the Applicant: Hunter Lawyers

Solicitors for the Respondent: Raj Lawyers

ORDERS

1. Application dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 3546 of 2004

CHANDRA KAND LODHIA

Applicant

And

TRUST COMPANY OF AUSTRALIA LIMITED (ACN 004 027 740)

Respondent

REASONS FOR JUDGMENT

1. In this matter having given judgment and ordering that the applicant pay the respondent's costs, I was requested by Mr Doble who appears on behalf of the respondent, to consider giving an alternative order on the basis that a "Calderbank" letter had been delivered to the applicant by the respondent.  Mr Doble requested a taxation on an indemnity basis and handed up to me a copy of the so‑called Calderbank letter.  The letter is in the following relevant terms:

   “In the meantime we respectfully submit that given the outcome of the hearing of your client's second notice of motion in the District Court proceedings on 8 February 2005, there can be no prospect of your client succeeding in his application to set aside the bankruptcy notice.  In the circumstances, we invite your client to submit to orders whereby his application be dismissed with an order that your client pay our client's costs of the application. 

   This offer is made in accordance with the principles enunciated in Calderbank v Calderbank and in the event the offer contained herein is not accepted, this letter will be tendered in support of our client's application for a special costs order, including an order that our client be paid otherwise than in accordance with the Federal Court scale.”

2. With respect to the respondents, I do not consider that this letter is what is commonly known as a "Calderbank" letter.  It seems to me to be no more than a letter pointing out to the applicant that his case is not strong and is unlikely to succeed.  There is no real offer made to the applicant other than for him to do that which the respondent's defence requires.  In any event, the letter was sent the day before the hearing.  It is difficult to see what advantage there might have been for the applicant in accepting the offer.

3. Calderbank offers and the cost consequences of their being ignored are intended to promote settlement between parties on commercial terms.  They are not intended to allow a plaintiff or a defendant who believes they have a strong case to iterate that fact and when they are successful to claim indemnity costs.  I decline the application.

I certify that the preceding three (3) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate: 

Date: