Moshos v French (No. 3)

[2014] NSWSC 1417

Supreme Court

New South Wales

Medium Neutral Citation:	Moshos v French (No. 3) [2014] NSWSC 1417
Hearing dates:	On the papers
Decision date:	15 October 2014
Jurisdiction:	Equity Division
Before:	Darke J
Decision:	Proceedings dismissed. Plaintiff to pay defendants' costs of proceedings.
Catchwords:	COSTS - indemnity costs - Calderbank offer not accepted by unsuccessful plaintiff - whether unreasonable of plaintiff to not accept offer
Cases Cited:	Calderbank v Calderbank [1975] 3 All ER 333 Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No.2) [2005] VSCA 298; (2005) 13 VR 435 Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 Tati v Stonewall Hotel Pty Ltd (No 2) [2012] NSWCA 124 Vasilis Floros Moshos v Kenneth Geoffrey French (No.2) [2014] NSWSC 862
Category:	Costs
Parties:	Vasilis Floros Moshos (plaintiff) Kenneth Geoffrey French (first defendant) Local Appliance Rentals Pty Ltd (second defendant)
Representation:	Solicitors: Kings Law Group (plaintiff) Kosmin & Associates (defendants)
File Number(s):	2013/290093
Publication restriction:	Nil

Judgment

1. On 27 June 2014, the Court rejected the plaintiff's claim that he made a binding contract with the first defendant concerning the shares in a company that was to be incorporated to carry on a household rental goods business (see Vasilis Floros Moshos v Kenneth Geoffrey French(No.2) [2014] NSWSC 862). The Court answered certain separate questions accordingly, and directed the parties to bring in Short Minutes to deal with any further orders for the disposition of the proceedings, and costs.

1. The parties agree that an order should be made dismissing the proceedings, but are at odds on the question of costs. The parties have provided written submissions on the issue, and have agreed that it may be dealt with on the papers. Submissions were provided by the defendants on 19 September 2014 and 9 October 2014 (in reply), and by the plaintiff on 2 October 2014.

1. In summary, the defendants seek an order that some of their costs be paid on an indemnity basis due to the failure of the plaintiff to accept an offer contained in a Calderbank letter. The plaintiff resists that, and further submits that the defendants ought not have the costs of an affidavit sworn by the first defendant, Mr French, on 19 February 2014, and ought to pay the costs of this costs application.

1. The Calderbank letter was sent by email on 11 April 2014 to the plaintiff, who was then unrepresented in the proceedings. The letter is in the following terms:

"We refer to the above matter and note that your evidence is complete. Based on the evidence served on behalf of the plaintiff, and in accordance with advice from Counsel briefed to appear at the hearing on behalf of the defendants, the plaintiff's claim appears to be unsupported by the totality of the evidence to date.

In order to facilitate a resolution of the dispute without recourse to a hearing and on the basis that our clients take a commercial view of the matter, we are instructed to offer that the proceedings be discontinued with each party to pay its own costs.

This offer is made under the principles in Calderbank v Calderbank [1975] 3 All ER 333 and remains open for a period of fourteen (14) days from the date of this letter.

Should you wish to accept the offer, there will also be a condition of settlement that the parties enter into a Deed of Settlement which will, inter alia, provide for mutual releases in relation to the subject matter of the present dispute."

1. The plaintiff did not respond to the letter.

1. By the time the letter was sent, the plaintiff had served two affidavits in support of his case, and the defendants had served an affidavit sworn by Mr French (on 19 February 2014). The matter had already been set down for hearing, to commence on 5 May 2014.

1. After the time for acceptance of the offer expired, and after the plaintiff had filed an affidavit in reply to Mr French's affidavit, the defendants served a further affidavit sworn by Mr French (on 29 April 2014) and an affidavit sworn by Ms Perston (also on 29 April 2014).

1. The result obtained by the plaintiff is less favourable to him than the position he would have been in had he accepted the Calderbank offer. The plaintiff has failed to establish his claims, and faces an adverse costs order.

1. It is clear that a failure of an offeree to accept a Calderbank offer, the terms of which are more favourable to the offeree than the result achieved in Court, is relevant to the question whether the Court should depart from the usual position and award costs on an indemnity basis. However, there is no presumption that in those circumstances indemnity costs will be awarded (see Miwa Pty Ltd v Siantan Properties Pte Ltd (No2) [2011] NSWCA 344 at [8]; Tati v Stonewall Hotel Pty Ltd (No 2) [2012] NSWCA 124 at [9]; Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No.2) [2005] VSCA 298; (2005) 13 VR 435 at [19]).

1. In Miwa (supra), Basten JA (with whom McColl and Campbell JJA agreed) stated that the approach frequently adopted has been to ask two questions, namely, whether there was a genuine offer of compromise, and whether it was unreasonable for the offeree to accept it.

1. In Hazeldene's Chicken Farm Pty Ltd (supra), the Court of Appeal in Victoria stated at [25]:

"The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations. It is neither possible nor desirable to give an exhaustive list of relevant circumstances. At the same time, a court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:

(a) the stage of the proceeding at which the offer was received;

(b) the time allowed to the offeree to consider the offer;

(c) the extent of the compromise offered;

(d) the offeree's prospects of success, assessed as at the date of the offer;

(e) the clarity with which the terms of the offer were expressed;

(f) whether the offer foreshadowed an application for an indemnity costs [sic - order] in the event of the offeree's rejecting it."

1. The above portion of the judgment in Hazeldene's Chicken Farm Pty Ltd (supra) was referred to with apparent approval by Basten JA in Miwa (supra) at [12].

1. The defendants submit that the Calderbank offer was a genuine compromise, and one that remained open for acceptance for a reasonable period. The defendants further submitted that it was unreasonable for the plaintiff not to accept the offer having regard to the fact that the Court did not accept the plaintiff's evidence as to the making of the alleged contract. The plaintiff submitted that it was not unreasonable for him to not accept the Calderbank offer in circumstances where, as accepted by Mr French in cross-examination, his affidavit of 19 February 2014 did not contain a complete account, given to the best of his ability, of his version of events. The defendants, in reply, countered that the plaintiff was in possession of all material facts at the time the offer was made.

1. For the following reasons, I do not think that an award of indemnity costs should be made in this case.

1. I accept that the offer was a genuine offer of compromise, and one that remained open for acceptance for a reasonable period. However, the extent of the compromise was not great and, as pointed out by the plaintiff, was made at a time when the evidence from the defendants' side was incomplete. Moreover, the offer was made at a time when the plaintiff was not legally represented (although he seems to have obtained legal representation a reasonably short time thereafter), and it did not in terms foreshadow that an application may be made for indemnity costs in the event it was not accepted. In those circumstances, and bearing in mind that the plaintiff's case could not be considered to lack reasonable prospects of success, I am not convinced that it was unreasonable for the plaintiff to not accept the offer.

1. In my view, the appropriate order for costs is that the plaintiff pay the defendants' costs of the proceedings on the ordinary basis. I do not think that Mr French's affidavit of 19 February 2014 was so deficient that the successful defendants should be deprived of their costs in respect of that affidavit. The affidavit, which essentially took the form of a response to particular paragraphs of the plaintiff's affidavit, contained relevant material and some denials of important conversations deposed to by the plaintiff.

1. Further, I do not think that the defendants should be ordered to pay the costs of this costs application. The parties were directed to bring in Short Minutes dealing with further orders, and costs. Costs were not agreed, and some expense has no doubt been incurred by the parties in dealing with the matter. Nevertheless, those costs would be modest, and neither party has succeeded in obtaining the costs orders they sought.

1. The Court will make the following orders:

(1)   That the proceedings be dismissed; and

(2)   That the plaintiff pay the defendants' costs of the proceedings.

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Decision last updated: 15 October 2014