Mervyn Christopher McFarland v Common Australia Pty Ltd (No 2)

[2018] NSWDC 427

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Mervyn Christopher McFarland & Anor v Common Australia Pty Ltd (No 2) [2018] NSWDC 427

Hearing dates:

30, 31 August, 3 -7 September 2018

Date of orders:

07 September 2018

Decision date:

07 September 2018

Jurisdiction:

Civil

Before:

Neilson DCJ

Decision:

I order the first plaintiff to pay the costs of the defendant and cross-claimant on the ordinary basis until 26 July 2018 and thereafter on an indemnity basis.

 

I order the second plaintiff to pay the costs of the defendant/cross-claimant on the ordinary basis.

 I direct that the costs recoverable not be reduced because the judgments entered were within the jurisdictional limit of the Local Court as the plaintiff's claim was brought in this Court claiming more than the Local Court's jurisdictional limited.

Catchwords:

CIVIL – COSTS – Claim for indemnity costs – Adequacy of offers made by Defendant

Cases Cited:

Calderbank v Calderbank [1975] 3 All Eng R 333
Nobrega v Trustees for the Roman Catholic Church for the Archdiocese of Sydney (No. 2) [1999] NSWCA 133
Nu Line Construction Group Pty Ltd v Fowler [2012] NSWSC 816
Rolls Royce Industrial Power (Pacific) Ltd v James Hardie and Coy Pty Ltd [2001] NSWCA 461; (2001) 53 NSWLR 626

Category:

Costs

Parties:

Mervyn Christopher McFarland (First Plaintiff/First Cross-Defendant)
Wendy Ann Miller (Second Plaintiff/Second Cross-Defendant)
Common Australia Pty Ltd (Defendant/Cross-Claimant)

Representation:

Counsel:
Mr A Fronis (Plaintiffs/Cross-Defendants)
Mr C Simpson (Defendant/Cross-Claimants)

  Solicitors:
Ace Law (Plaintiffs/Cross-Defendants)
Blue Ocean Law (Defendant/Cross-Claimants)

File Number(s):

2017/82305

Publication restriction:

Nil

Judgment

1. HIS HONOUR: The defendant/cross-claimant seeks indemnity costs against Mr McFarland from 3 November 2016 and from Ms Miller from 25 March 2017.

2. On 2 November 2016 the defendant's lawyers wrote to the plaintiffs' lawyers offering to resolve proceedings, which had only just been commenced, by the payment by the plaintiffs to the defendant of $17,940. In the second paragraph of the letter is this matter:

"As you know, our Client is prepared to litigate and has instructed us to file their claim and statement of claim should this offer of compromise be rejected or ignored."

That was a clear indication that the defendant wished to make a cross-claim against the plaintiffs, but the nature of the cross-claim is not disclosed by the letter. Without having a cross-claim either in filed form or even in draught form, it would be impossible for the plaintiff's solicitor to advise the plaintiff about the offer that was contained in the letter of 2 November 2016.

3. On 24 March 2017 the defendant's lawyer made another offer in these terms:

"1. The defendant pay the plaintiffs $5,000 in full and final settlement of all the proceedings and the defendant's cross-claim as referred to above.

2. The proceedings are discontinued by consent.

3. Each party bear their [sic] own costs associated with the proceedings.

4. The parties enter into a mutually agreed deed of release:

(a) Releasing each other from the proceedings and the defendant's proposed cross-claim; and

(b) Providing mutual non-disparagement and confidentiality obligations."

Clearly, the last offer is more favourable than the outcome of the proceedings. However, the cross-claim to which the offer refers is described thus:

"We are further instructed that our client has a cross-claim exceeding $20,000 relating to the failure of the plaintiffs to pay the mortgage for the property. In the event this matter is not settled, we are instructed to file the cross-claim for the outstanding mortgage, plus interest and costs."

The amount of the judgment which has been entered which represents the outstanding mortgage monies and interests and costs was not in excess of $20,000 but only $13,406.38. In particular, there is no mention of the claim for loss of sheep and for loss of income referrable to the lost sheep. The defendant's solicitor also prepared a "formal" offer of compromise but that document, which also bears date 24 March 2017, does not comply with the rules.

4. The next offer was made on 12 July 2018. Essentially, the elements of the offer are these:

"1. The plaintiffs pay the defendant/cross-claimant $20,000.

2. The proceedings (both the plaintiff's claim and the defendant's cross-claim) be discontinued by consent.

3. Each party to pay his, her or its own costs associated with the proceedings.

4. The parties to enter into a mutually agreed deed of release, releasing each other from the proceedings and from the cross-claim and providing mutual non-disparagement and confidentiality obligations."

That offer was open until 5pm on Friday 10 August 2018, the Friday before the last Lismore sittings commenced on 13 August 2018, when this matter was first listed for hearing. That offer, if accepted, would have resulted in an outcome more favourable to the plaintiffs because they would have only had to pay $20,000 as distinct from the judgments that I have entered earlier today, as well as the costs which are being asked for, even if those costs were only on the ordinary basis.

5. That letter is expressed to be made in accordance with the principles of Calderbank v Calderbank [1975] 3 All Eng R 333. By the time that that offer was made, the plaintiff had filed the amended statement of claim on 31 May 2017 and the defendant had filed its defence and the original cross-claim on 5 September 2017. I granted leave to the defendant to file an amended cross claim in Court, but that only changed how the defendant calculated the losses resulting from the destruction of the sheep, which is referred to in the judgment.

6. In my view, the first plaintiff/first cross-defendant must pay costs on an indemnity basis from the day after that offer was made, 12 July 2018 or some later date. I mention the day after the offer was made because that is what is provided for by the rules, but those rules depend on a formal offer of compromise, which there was not. I must allow some reasonable time for the first plaintiff/first cross-defendant to give instructions to his solicitors about the offer and it appears to me appropriate that I order that the first defendant pay costs on an indemnity basis from 26 July 2018.

7. The reasons why I do not make any other order for indemnity costs are essentially twofold. In Rolls Royce Industrial Power (Pacific) Ltd v James Hardie and Coy Pty Ltd [2001] NSWCA 461; (2001) 53 NSWLR 626, the plaintiff succeeded at the trial on a case that significantly changed after the offer had been made. Here, the plaintiffs could only know what the defendant's real position was since the filing of the cross claim on 5 September 2017.

8. A similar decision is that of Nu Line Construction Group Pty Ltd v Fowler [2012] NSWSC 816, where the offer was made before a definite identification of the relevant parties' claim. Again, this occurred in these proceedings. A similar case is Nobrega v Trustees for the Roman Catholic Church for the Archdiocese of Sydney (No. 2) [1999] NSWCA 133, where the respondent's offer was made before any notice of appeal had actually been filed.

9. For those reasons, I order the first plaintiff to pay the costs of the defendant and cross-claimant on the ordinary basis until 26 July 2018 and thereafter on an indemnity basis. I order the second plaintiff to pay the costs of the defendant/cross-claimant on the ordinary basis. I direct that the costs recoverable not be reduced because the judgments entered were within the jurisdictional limit of the Local Court as the plaintiff's claim was brought in this Court claiming more than the Local Court's jurisdictional limit.

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Amendments

28 February 2019 - Typographical error.

Decision last updated: 28 February 2019