Maronich v Top Oak Pty Ltd (No 2) - [2015] SASC 167

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
MARONICH v TOP OAK PTY LTD & ORS (No 2)
[2015] SASC 167
Judgment of The Honourable Justice Parker
23 October 2015
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - CONDUCT OF PARTIES - DEMAND, OFFER AND CONSENT
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - ORDER FOR COSTS ON INDEMNITY BASIS
The defendants in a commercial dispute sought an order for costs, on a party/party basis for the period up until an offer of settlement was made by the defendants, and on an indemnity basis thereafter. The Court had dismissed the claim against the defendants on all grounds. The defendants had made several offers to settle prior to the filing of the statement of claim and an offer under r 187 of the Supreme Court Rules 2006 during the proceedings. The plaintiff had rejected each offer. The plaintiff argued that it should only be required to meet a percentage of the defendants’ costs on the basis that that the plaintiff had been successful on over half of the points dealt with at trial. The plaintiff argued against indemnity costs being awarded on the basis that the dispute at trial had fundamentally changed from that to which all but one of the settlement offers related.
Held, awarding indemnity costs from the date of the filing of the statement of claim:
1. Evidence of offers made at a settlement conference and mediation was not admissible.
2. Whereas the settlement offer made on 28 December 2011 was not an effective Calderbank offer, the subsequent offer made on 5 April 2012 was.
3. Rule 188(6) of the Supreme Court Rules will not assist a defendant that is found at trial not to be liable in any respect. While r 188(6) does not operate in the present case, the offer filed under r 187 on 6 November 2013 should be treated as an informal offer under the Calderbank principle.
4. Any apportionment of costs needs to be done on a broad brush basis and not by applying a formula based upon the counting of paragraphs as the plaintiff suggested. As the plaintiff lost on the decisive issues in the proceedings the Court is not persuaded that there should be an apportionment of costs.
5. The Court was not able to make orders for costs in respect of matters that preceded the filing of the first statement of claim on 20 December 2012.
6. There was in substance only one dispute being the disagreement about the plaintiff’s withdrawal from the business.
7. The defendants are entitled to the benefit of the Calderbank offer and they should have their costs on an indemnity basis from the date of the filing of the first statement of claim on 20 December 2012.
Supreme Court Act 1935 s 65(6); Evidence Act 1929 s 67C; Defamation Act 2005 (NSW) s 40; Federal Court of Australia Act 1976 (Cth) s 43; Corporations Act 2001 s 233, s 237, s 461,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] SASC 167
Decision Date: 23 October 2015

CaseChat Overview and Summary

The case of Maronich v Top Oak Pty Ltd (No 2) involved a dispute between the plaintiff, Mr Maronich, and the defendants, Optima Food Developments Pty Ltd and Joseph Alvino, concerning issues related to the withdrawal from the Top Oak business. The case was heard in the Supreme Court of Queensland. The primary issue before the court was whether the defendants were entitled to costs on an indemnity basis due to a Calderbank offer made by Mr Alvino prior to the filing of the statement of claim.

The court examined the Calderbank offer made by Mr Alvino on 5 April 2012 and considered whether it should be treated as an effective offer. The court found that the offer was effective, despite the relatively short period allowed for acceptance, and that it related to the matters resolved by the court's judgment. The court also considered the subsequent offer filed under r 187 on 6 November 2013 and noted that r 188(6) would not assist a defendant found not to be liable in any respect, as was the case here.

In its reasoning, the court determined that the Calderbank offer made by Mr Alvino on 5 April 2012 was effective and related to the matters resolved by the court's judgment. The court found that Mr Alvino and Optima were entitled to the benefit of the Calderbank offer and should have their costs on an indemnity basis. The court further determined that the offer filed under r 187 on 6 November 2013 would not assist a defendant found not to be liable in any respect. The court concluded that Mr Maronich should pay the costs incurred by the second and third defendants in the action commenced by the filing of the statement of claim on 20 December 2012 on an indemnity basis from that date.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

I consider that costs should be determined on the basis that when Mr Maronich filed his first statement of claim on 20 December 2012 there had already been a Calderbank offer made by Mr Alvino on 5 April 2012. If that offer had been accepted by Mr Maronich it would have resolved his dispute with Mr Alvino about withdrawal from the Top Oak business and the statement of claim would never have been filed. As I consider that Mr Alvino and Optima are entitled to the benefit of the Calderbank offer they should have their costs on an indemnity basis. However, for the reasons that I have already given, I can only award costs with respect to the proceedings commenced by the statement of claim filed on 20 December 2012. On reflection, I should have expressly dealt with that point when I pronounced the costs order on 11 June 2015. Conclusion I order that Mr Maronich pay the costs incurred by the second defendant, Optima Food Developments Pty Ltd, and by the third defendant, Joseph Alvino, in the action commenced by the filing of the statement of claim on 20 December 2012 on an indemnity basis from that date

Ratio Decidendi

Legal Principle Established

Mr O’Brien submitted that r 188(6) draws a stark contrast between defendants and plaintiffs. He submitted that r 188(6) applies only to cases where the plaintiff succeeds in the claim for primary relief. In the present case the plaintiff had failed in its action and thus, Mr O’Brien submitted, r 188(6) does not apply. Even if the rule does apply, Mr O’Brien submitted that it could only apply to costs referable to the period after the relevant date. Moreover, the rule indicated that a plaintiff was entitled to solicitor/client costs but, by implication, a defendant was only entitled to party/party costs. Consideration I will first consider the several offers to settle made by Mr Alvino and then deal with the distinction that Mr O’Brien has sought to draw between a Calderbank offer and what he characterised as ongoing negotiations to resolve the fate of Top Oak. I do not consider that the offer made by Mr Alvino on 28 December 2011 should be treated as if it were an effective Calderbank offer. The time of three days allowed for acceptance was clearly insufficient, particularly over the Christmas/New Year holiday period. The offer also sought a settlement in respect of matters well outside the scope of the present proceedings, i.e. an apology for certain remarks and a no-competition clause. I regard the offer made on behalf of Mr Alvino and Optima on 5 April 2012 as an effective Calderbank offer. While in some cases courts have declined to act upon offers made inclusive of costs, this has been because of the difficulty of comparing an inclusive offer with the damages awarded at trial. That issue does not arise in this matter as no damages were awarded at trial. While the period of eight days allowed for acceptance was less than the 14 days allowed under r 33(4), the period was nevertheless reasonable. Given the ultimate finding by the Court that Mr Alvino and Optima were not liable to Mr Maronich in any respect, the quantum of $30,000 was also plainly reasonable. The only issue is whether the offer related to the matter resolved by my judgment. I now turn to the offer filed under r 187 on 6 November 2013. I consider it to be clear that r 188(6) will not assist a defendant that is found at trial not to be liable in any respect. That is the present case. Rule 188(6), as presently drafted, will only assist a defendant if the Court makes a finding that is less favourable to the plaintiff than the defendant’s offer but does hold the defendant liable to some extent.[11] It will not apply if the defendant is found not to be liable at all. I note that for this reason the judges recently approved an amendment to r 188(6) so that it will apply to a defendant that succeeds entirely at trial. The amendment was not prompted by the present case. The amended r 188(6) will operate prospectively and does not apply to this matter. [11] The same issue formerly arose under Order 23 of the Federal Court Rules: Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1.