Nominal Defendant v Genn (No 2)

[2004] NSWCA 335

NEW SOUTH WALES COURT OF APPEAL

CITATION:      Nominal Defendant v Genn (No. 2) [2004]  NSWCA 335

FILE NUMBER(S):
40941/03

HEARING DATE(S):            Written submissions in Chambers

JUDGMENT DATE: 21/09/2004

PARTIES:
Nominal Defendant (A)
Stephen Richard Genn (R)

JUDGMENT OF:      McColl JA Young CJ in Eq Kirby J   

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S):        DC 6108/99

LOWER COURT JUDICIAL OFFICER:     Gamble ADCJ

COUNSEL:
G M Watson SC and P D Ryan (A)
M J Neil QC and J A Jobson (R)

SOLICITORS:
Henry Davis York (A)
Milicevic Solicitors (R)

CATCHWORDS:
COSTS - Offer of Compromise - discretionary considerations - no special costs order warranted.

LEGISLATION CITED:
Supreme Court Rules 1970 (NSW) Pt 22

DECISION:
Order as pronounced on 1 September 2004 stands, costs to be assessed on the ordinary basis.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

40941/03

McCOLL JA
YOUNG CJ in EQ
KIRBY J

Tuesday, 21 September 2004

NOMINAL DEFENDANT v GENN (No. 2)

Judgment on Costs

1. McCOLL JA:     I agree with Young CJ in Eq.

2. YOUNG CJ in EQ:  The Court on 1 September 2004 dismissed this appeal with costs, but on the application of the respondent, reserved the question as to whether those costs should be on the indemnity or other basis and gave the parties leave to put in submissions in writing.

3. The respondent obtained a verdict for $355,743.53.

4. On 23 December 2003, the respondent offered to compromise the claim by accepting $5,000 less than the verdict.  However, the respondent also wanted his costs of both the trial and the appeal paid by the appellant.  The respondent says that he made an offer, he obtained more than the offer from the Court.  He submits that these circumstances trigger a general guideline that the respondent should get his costs after the relevant date, on the indemnity basis.

5. The appellant says:

   (a)        the Offer of Compromise is not a genuine compromise;

   (b)        the form of the offer was faulty;  and

   (c)as a matter of discretion, no special costs orders should be made in this case.

6. The perceived wisdom is that to be an Offer of Compromise under Part 22 of the Rules, there must be some real element of compromise involved in the offer; see eg Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358. Counsel for the respondent points to the case referred to in the Supreme Court Practice of Forbes Services Memorial Club Ltd v Hodge 8 March 1995, unreported, in which this Court, constituted by Kirby P, Priestley and Cole JJA considered that a compromise by reducing a verdict by $129 was a compromise within the meaning of the Supreme Court Rules and that it was idle for courts to speculate on the difference between a compromise and a real compromise. That matter really only went to discretion.

7. In my respectful view, that is the approach that should be taken so long as there is a compromise which is not a sham.  The fact that there is an actual offer of compromise triggers the operation of the Rules.  The matter of whether the offer constitutes "real" and "substantial compromise" is a discretionary factor.

8. The argument that the compromise was not in proper form is to a degree a technical one.  It says that the Offer of Compromise must put forward the order that should be made.  The Offer put it that the plaintiff would receive $5,000 less but get his costs of below and of the appeal to that date.  The proper form was that the appeal should be allowed with a reduced verdict and that that form of verdict would mean that the costs would ordinarily be paid by the respondent.

9. In my view this is a mere technicality which should not deflect the Court from making the proper assessment in the instant case.

10. As to discretion, Mr Watson SC for the appellant puts that there was no doubt that the appeal had merit as the Court unanimously found that "The decision below is so flawed that it cannot stand".  Despite this, the respondent had argued to uphold the judgment below on all grounds.  In view of this, and in view of the tiny compromise the respondent was willing to make and given that the respondent still required his costs of the appeal to be paid, no special costs order should be made in this case.

11. In my view that is the correct approach.  When one takes into account the way the appeal was conducted, the deficiencies in the judgment below and the small amount of the compromise, this is not an appropriate case where indemnity costs should be allowed.

12. Accordingly, the order as pronounced on 1 September 2004 stands, the costs to be assessed on the ordinary basis.

13. KIRBY J:  I agree with Young CJ in Eq.

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LAST UPDATED:            23/09/2004