New South Wales Land and Housing Corporation v Quinn (No 3)

[2018] NSWDC 193

District Court

New South Wales

Medium Neutral Citation:	New South Wales Land and Housing Corporation v Quinn (No 3) [2018] NSWDC 193
Hearing dates:	25 June 2018
Date of orders:	26 June 2018
Decision date:	26 June 2018
Jurisdiction:	Civil
Before:	P Taylor SC DCJ
Decision:	(1) By consent of the parties and without prejudice to any appeal rights, as Mr Quinn from 16 May 2014 continued to pay an amount in respect of rent after the Tribunal terminated the lease, order under the slip rule in r 36.17 that the judgment amount be amended to $7,704.12. (2)   Order that the plaintiff pay the defendant’s costs of the proceedings, those costs to be assessed on an indemnity basis from after 29 May 2015. (3)   Order that the costs payable in order (2) above be no less than the amount of the judgment plus interest specified in order (1) above, and that Mr Quinn be at liberty to set-off his costs entitlement against the judgment.
Catchwords:	COSTS — Party/Party — Exceptions to general rule that costs follow the event — Offers of compromise/Calderbank offers
Legislation Cited:	Uniform Civil Procedure Rules, r 36.17
Cases Cited:	Australian Receivables Ltd v Tekitu Pty Ltd (Subject to Deed of Company Arrangement) (Deed Administrators Appointed) & ors [2011] NSWSC 1425 Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 Capital Securities XV Pty Ltd (formerly known as Prime Capital Securities Pty Ltd) v Calleja [2018] NSWCA 26 Cardno ITC Pty Ltd v 33 York Street Pty Ltd (No 2) [2013] NSWDC 313 Cretazzo v Lombardi (1975) 13 SASR 4 Daftar v Al-Khamisy (No 3) [2014] NSWDC 345 Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 HM&O v Ingram [2012] NSWSC 1225 Leichhardt Municipal Council v Green [2004] NSWCA 341 Livsey v Australian National Car Parks Pty Ltd (No 2) [2015] NSWDC 118 Manly Council v Byrne and Anor (No. 2) [2004] NSWCA 227 New South Wales Land and Housing Corporation v Quinn (No 2) [2018] NSWDC 161 Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No 2) [2018] NSWCA 40 Sabah Yazgi v Permanent Custodians Ltd (No 2) [2007] NSWCA 306 Singleton v Macquarie Broadcasting Holdings Ltd (1991) 24 NSWLR 103
Category:	Costs
Parties:	New South Wales Land and Housing Corporation (plaintiff) Robert Quinn (defendant)
Representation:	Counsel: Mr A Di Francesco (plaintiff) Mr R Dalgleish (defendant)   Solicitors: Legal Services Branch, Housing NSW (plaintiff) John Byrnes & Associates (Legal) Pty Ltd (defendant)
File Number(s):	2014/232539
Publication restriction:	None

Judgment

1. On 31 May 2018 I gave judgment for the New South Wales Land and Housing Corporation against Robert Quinn in the sum of $7,118.22. [1] The parties agreed that this sum needs amendment because of some small payments made by Mr Quinn, and I will make an order under the slip rule to correct that error.

   1. New South Wales Land and Housing Corporation v Quinn (No 2) [2018] NSWDC 161 at [259].

2. The matter is also before me on three issues concerning costs. The parties agree that Mr Quinn was substantially successful but the Corporation says it won on some minor issues: the date of vacant possession and the limitation issue so that Mr Quinn should receive only 85% of his costs. However, these issues consumed an insignificant amount of time and were worth a little over $1,500, much less than 1% of the amount claimed. The major part of the small judgment amount in favour of the Corporation was not a matter of dispute by Mr Quinn.

3. It is not unusual that the successful party will fail on some issues of fact or law. [2] Generally, a costs liability is not differentiated according to success on an issue unless the issue is clearly dominant or severable,[3] or if an issue took up a significant part of the trial. [4] A broad‑brush approach should be applied. [5]

   2. Cretazzo v Lombardi (1975) 13 SASR 4 at [12], Australian Receivables Ltd v Tekitu Pty Ltd (Subject to Deed of Company Arrangement) (Deed Administrators Appointed) & ors [2011] NSWSC 1425 at [59].

   3. Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [18], Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38].

   4. Sabah Yazgi v Permanent Custodians Ltd (No 2) [2007] NSWCA 306 at [24].

   5. Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No 2) [2018] NSWCA 40 at [6].

4. The Court may award costs in Mr Quinn's favour even though the Corporation was awarded a minor amount of damages. [6] A nominal award of damages does not give an entitlement to costs. [7] As Mr Quinn was, as a matter of substance, successful in the proceedings, he is entitled to his costs. In my view, the Corporation's success on some minor issues would not justify an apportionment of or discount on a costs order in favour of Mr Quinn.

   6. Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 at [685].

   7. Cf HM&O v Ingram [2012] NSWSC 1225 at [6]-[9].

5. The second issue is whether the small judgment in favour of the Corporation should be stayed pending the assessment of costs. The Corporation opposed a stay order but accepted that the costs would exceed the judgment. Both parties expressed no opposition to an order for set‑off and a specification of a minimum sum of costs so as to remove the need for a stay.

6. The final and significant issue is whether Mr Quinn is entitled to some of the costs being payable on an indemnity basis. Some 13 days before the first hearing date Mr Quinn served a Calderbank offer in the following terms:

“I refer to previous correspondence in relation to this matter. I have now had the opportunity this morning of having a further lengthy conference with my client in relation to all issues relevant to this dispute.

Notwithstanding the fact that there is significant merit in the case which would be argued on behalf of my client should any Supreme Court proceedings be commenced seeking to have the previous administrative decisions made by the department set aside, it is simply the case that my client is not in a financial position to commence further proceedings in the Supreme Court.

So far as the District Court proceedings are concerned, there are a number of the legal arguments which can be relied upon by my client, but again the financial drain and strain on my client over the last few years directly relating to this dispute, together with the adverse effect that the proceedings have had on my client's general health, have led him to a position where he would rather try and resolve this matter prior to the currently listed date for Hearing. In those circumstances he has instructed me to put an offer of settlement to the Plaintiff of: a verdict for the plaintiff in the sum of $20,000.00 with no order as to costs. The verdict would be payable within 28 days of the offer being accepted and the verdict being entered.

You should understand that this offer is made on the practical basis that my client instructs me that he has no current assets and that his income consists of money received from Centrelink for the aged pension. He relied on the goodwill of family members for accommodation and the amount of the settlement he is offering is in fact monies that some of his children have offered to provide my client with in order to settle this dispute.

Having regard to the instructions I have received regarding my client's current financial circumstances, it seems to me that should any significant judgment be entered against him in these proceedings, he would simply have no capacity to pay any such sum and in such circumstances it would seem inevitable that my client would have to declare himself bankrupt or in fact be declared bankrupt through Court Orders and enforcement procedures. Obviously if that circumstance became a reality, the Plaintiff would receive no monies at all.

Costs of preparation for the hearing are now about to escalate on both sides. Having regard to the fact that the hearing is set to commence on Thursday, 28 May 2015, it would be appreciated if I could have a reply to my client's offer by not later than 12.00 noon next Wednesday, 20 May 2015.

This offer is made pursuant to the principles of Calderbank v Calderbank. If the offer is not accepted and my client achieves a more favourable result from the court, this letter will be tendered in any costs application and my client will seek an order that his costs be paid by the plaintiff on an indemnity basis from the date of this offer.

I await your reply.” [8] (Underlining in original).

8. Exhibit 1.

7. To justify a special costs order on the basis of a Calderbank offer, it must be unreasonable for the Corporation to have refused the offer. [9] In this case, the offer was for $20,000 inclusive of costs, where the Corporation obtained judgment for a little over $7,000 and no costs, indeed will be required to pay costs. So the offer was significantly more favourable to the Corporation than the result of the proceedings.

   9. Singleton v Macquarie Broadcasting Holdings Ltd (1991) 24 NSWLR 103 at 108.

8. The Corporation says it was not unreasonable to reject the offer on two bases. The first is that the period for which the offer was open was a little less than three business days and this was an unreasonably short period. The provision of a shorter period to accept an offer of settlement is less likely to be unreasonable in the days leading up to a trial. The trial was to commence a little over a week after the offer was alleged to expire, substantial costs would be expected to be incurred at that time and the parties should be aware of the important issues. But less than three days is close to the margin of what is a reasonable period. [10]

   10. See e.g. Livsey v Australian National Car Parks Pty Ltd (No 2) [2015] NSWDC 118, Daftar v Al-Khamisy (No 3) [2014] NSWDC 345, Cardno ITC Pty Ltd v 33 York Street Pty Ltd (No 2) [2013] NSWDC 313.

9. On this occasion I am relieved from determining whether three days is an unreasonably short period because the offer was not subject to such a condition. The circumstance that the offer requests a response within that three-business-day period does not mean that the offer expired on that day. The Corporation made no response, not before the three days elapsed nor in the three years subsequently. There was no request for an extension or inquiry as to whether the offer remained available and no counter-offer was made. The failure of the Corporation to respond at all to the offer does not support the submission that the offer was open only for an unreasonably short period. [11]

   11. Cf Leichhardt Municipal Council v Green [2004] NSWCA 341 at [55] and [57].

10. As there was no evidence of the Corporation's consideration of the offer, I would not infer that the Corporation gave the offer consideration. If that was because the offer was believed to have expired or was about to expire, that is an unreasonable construction of the offer and I do not accept that it justifies a failure to accept it or respond to it. In any event, I do not infer any reasonable decision‑making process in respect of the offer.

11. In the absence of evidence, and an explanation for that absence, Jones v Dunkel permits an inference that any evidence about consideration of the offer would not have assisted the Corporation. Whether I draw the inference or not, there is no evidence to suggest a reasonable decision. The evidence that is available points the other way.

12. For these reasons, I am not persuaded that the shortness of the period for which the offer was said to be open indicates something other than an unreasonable rejection of the offer. The period was not short. There was no period specified at all, and I have no evidence that the Corporation thought otherwise.

13. The other matter advanced by the Corporation to resist indemnity costs was that Mr Quinn's case changed in the days shortly after the offer. That is not a point in the Corporation's favour if the offer remained opened, as I have found it did. A proper reading of the offer was that it had no time placed upon acceptance so it remained open for a reasonable period, including the first two days of the trial when the defendant's case, if it was somewhat unclear, was made plain.

14. It is necessary that the offer be a genuine compromise. The size of the amount offered compared to the sum claimed might lead to the inference that there was no genuine compromise. I do not think this is correct. Although it is small compared to the sum claimed, the sum offered was large compared to the weekly rent that had been previously paid by Mr Quinn and large even in comparison to what the Corporation asserts Mr Quinn should have then been paying, about 40 times the latter, and 200 times the former. The offered sum of $20,000 was more than half of the rental amount in dispute from the day Mr Quinn received notice of the cancelled rebate to the date the lease was terminated. As indicated, it was substantially more favourable than the result of the proceedings.

15. In these circumstances, I accept that the offer was a genuine attempt to compromise the dispute.

16. Mr Quinn tendered his Pensioner Concession Card as evidence that he was receiving an old age pension. I accepted this as evidence over the Corporation's objections without further evidence of authentication from Mr Quinn in accordance with Capital Securities XV Pty Ltd (formerly known as Prime Capital Securities Pty Ltd) v Calleja. [12]

    12. [2018] NSWCA 26 at [99]-[102].

17. Mr Quinn submitted that the circumstance that he is an aged pensioner was material. I am not persuaded that the financial means of the offeror is a matter of real significance in deciding, in this case, whether the decision to reject the offer was unreasonable. [13] Less still was I satisfied that the pensioner status of Mr Quinn is evidence probative of Mr Quinn's means. This decision is thus not determined on whether Mr Quinn has wealth or resources or is impecunious.

    13. Cf Manly Council v Byrne and Anor (No. 2) [2004] NSWCA 227 at [19].

18. Accordingly, I accept that Mr Quinn's offer was a genuine attempt to compromise the dispute. It was significantly more favourable than the judgment obtained by the Corporation. It was open for a reasonable period because no closed period was specified.

19. For these reasons and because of the absence of any response to the offer by the Corporation and the lack of evidence of whether it was given any consideration, I find that it was unreasonable for the Corporation to reject it.

20. The costs payable to Mr Quinn should be on an indemnity basis, not from the date of the offer, but from the date when it was reasonable to accept it in circumstances where the defendant's case was clarified at the opening of the trial. I will allow indemnity costs from after the second day of the trial, namely, from after 29 May 2015.

21. The orders of the Court therefore are:

1. By consent of the parties and without prejudice to any appeal rights, as Mr Quinn from 16 May 2014 continued to pay an amount in respect of rent after the Tribunal terminated the lease, order under the slip rule in r 36.17 that the judgment amount be amended to $7,704.12.

2. Order that the plaintiff pay the defendant’s costs of the proceedings, those costs to be assessed on an indemnity basis from after 29 May 2015.

3. Order that the costs payable in order (2) above be no less than the amount of the judgment plus interest specified in order (1) above, and that Mr Quinn be at liberty to set-off his costs entitlement against the judgment.

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Endnotes

Decision last updated: 17 July 2018