Murphy v Gillis

[2022] NSWSC 1160

Supreme Court

New South Wales

Medium Neutral Citation:

Murphy v Gillis and Ors [2022] NSWSC 1160

Hearing dates:

26 August 2022

Date of orders:

26 August 2022

Decision date:

26 August 2022

Jurisdiction:

Common Law

Before:

Campbell J

Decision:

(1) Amend order 2, pronounced on 25 March 2022, to read:

“2. The plaintiff to pay the defendant’s costs up to and including 5pm on 24 July 2019 on an ordinary basis and thereafter on an indemnity basis, as agreed or assessed.”

(2) The plaintiff to pay the defendant’s costs of the application for a special cost order.

Catchwords:

CIVIL PROCEDURE – costs – application for a special order as to costs – indemnity costs sought in circumstances where offer to compromise made – application of r 42.15A Uniform Civil Procedure Rules 2005 (NSW)

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW), rr 20.26, 42.15A

Cases Cited:

Murphy v Gillis and Ors [2022] NSWSC 184

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Louise Murphy (Plaintiff)

Michael Joseph Gillis (First Defendant)
Gana Holdings Pty Ltd (Second Defendant)
Gana Holdings Pty Ltd as trustee for Gana Holdings Trust trading as Gillis Delaney Lawyers (Third Defendant)

Representation:

Counsel:
T. Harris-Roxas (Defendant)

Solicitors:

File Number(s):

2017/352141

Publication restriction:

Nil

Judgment

1. Ms Murphy was one of five plaintiffs who brought professional negligence proceedings against the defendant legal practice. In my judgment of 25 March 2022, I made the following orders:

1. Judgment for each defendant against the plaintiff.

2. The plaintiff to pay the defendant’s costs.

3. Liberty to apply, on a date to be arranged with my associate.

2. The defendant, originally by notice of motion filed on 8 April 2022, sought to vary my costs order by seeking a special order for costs referable to the rejection of formal offers of settlement. By amended notice of motion dated 24 August 2022, filed in Court today, the order is formulated as an order that the plaintiff pay the defendant’s costs on the ordinary basis up to and including 5pm on 24 July 2019, and thereafter on the indemnity basis.

3. The basis of that application is the rejection of an offer of compromise, under r 20.26, Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), made by letter dated 24 July 2019. As I have said in the immediately preceding case of Moore v Gillis (“Moore”), I have set out the provisions so far as they need to be expressed, and the principles governing the exercise of the discretion in relation to costs orders involved, in my earlier judgment in the matter of Lawson v Gillis (“Lawson”). These reasons assume familiarity with my earlier reasons, including my analysis of the correct approach to the application of the discretion. For the reasons I gave in Lawson, I’m satisfied that the letter of 24 July 2019 is an offer of compromise under r 20.26.

4. In my judgment of 25 March 2022 ([2022] NSWSC 184), I indicated that I would have assessed Ms Murphy’s damages, had she been successful in proving negligence, in the sum of $479,302.72, net of the as‑yet‑unassessed costs of the legal practice in acting for Ms Murphy in Federal Court after the rejection of an offer to compromise which was central to Ms Murphy’s claim of negligence. There were some complications in Ms Murphy’s case, which did not affect the other cases (see judgment [138] and following). But I made clear, as in the other cases, that I would have treated the unpaid costs in relation to the Federal Court proceedings as a separate head of damages available to Ms Murphy.

5. Having said that, I am satisfied that the offer of compromise in the sum of $225,000 plus costs, on the ordinary basis, in an uncapped amount, was a genuine attempt at settlement and not mere tactical posturing to attempt to engage the rules. As in the other cases I have already dealt with, the offer of compromise was subject to a condition in identical terms to that I have set out in the previous cases: preserving the law practice’s rights to enforce any judgment registered in their favour arising out of an unresolved cost assessment.

6. That matter was critical in my assessment of the facts in the Lawson case. As in the Moore case, Ms Murphy rejected the offer of compromise by a letter dated 31 July 2019, and by putting a counteroffer in the sum of $800,000, exclusive of and in addition to her costs of the proceedings on the ordinary basis. Like Mr Moore’s case, Ms Murphy and those advising her were able to make an offer to pay a portion of the unpaid costs which the law practice claimed in the sum of $250,000. Ms Murphy also sought a deed of release in her favour, releasing her from any liability to the law practice arising out of the Federal Court proceedings. Her case was somewhat different, in that the law practice had acted for her in various other matters - and she made it quite clear that the release she sought did not extend to those other matters. As in the Mr Moore’s case, the content of the letter of rejection and counteroffer puts a different complexion upon the facts from the facts as I found them to be in Mr Lawson’s case.

7. Clearly, Ms Murphy and those advising her felt able to consider the offer of compromise and condition (e), and to respond to the offer of compromise taking that condition into account, by proposing terms of a counteroffer which sought to finalise that issue as well. Given this, I am of the view, as Ms Harris‑Roxas has argued, that this case is materially different from Mr Lawson’s case, and that there is no rational basis for ordering otherwise than giving effect to the presumptive effect of r 42.15A UCPR.

8. My order is:

1. Amend order 2, pronounced on 25 March 2022, to read:

“2. The plaintiff to pay the defendant’s costs up to and including 5pm on 24 July 2019 on an ordinary basis and thereafter on an indemnity basis, as agreed or assessed.

2. The plaintiff to pay the defendant’s costs of the application for a special cost order.

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Decision last updated: 30 August 2022