Ozzy States Pty Ltd v Norton Property Group Pty Ltd

[2019] NSWDC 308

District Court

New South Wales

Medium Neutral Citation:	Ozzy States Pty Ltd v Norton Property Group Pty Ltd & Anor [2019] NSWDC 308
Hearing dates:	5 June 2019
Date of orders:	28 June 2019
Decision date:	28 June 2019
Jurisdiction:	Civil
Before:	Weber SC DCJ
Decision:	(1)   That the defendants pay the plaintiffs’ costs of the proceedings including the cross claim, other than the plaintiffs’ application for indemnity costs, the subject of this judgment.  (2)   The plaintiffs pay the defendants’ costs of the application for indemnity costs, the subject of this judgment.
Catchwords:	COSTS – Party/Party – Exceptions to general rule that costs follow the event – application by plaintiffs for costs on indemnity basis – Offers of compromise/ Calderbank offers – where offer was made close in time to the commencement of the hearing – where offer failed to articulate with precision all relevant reasons why offer should be accepted – where it was not unreasonable for defendants to reject offer – costs on the ordinary basis to follow the event
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Calderbank v Calderbank [1975] 3 All ER 333 NMFM Properties Pty Ltd v Citibank Ltd (No 2) (2001) 109 FCR 77
Category:	Costs
Parties:	Ozzy States Pty Ltd (Plaintiff 1; Cross Defendant 1) JRNN Pty Ltd (Plaintiff 2; Cross Defendant 2) Norton Property Group Pty Ltd (Defendant 1; Cross Claimant) Christos Exarhos (Defendant 2)
Representation:	Counsel: Mr S Goodman SC (Plaintiff 2; Cross Defendant 2) Mr A Byrne (Defendants; Cross Claimant)   Solicitors: Clinch Long Woodbridge (CLW) Lawyers (Plaintiff 2; Cross Defendant 2) Levitt Robinson Solicitors (Defendants; Cross Claimant)
File Number(s):	2017/00264811

Judgment

Introduction

1. On 29 April 2019, I delivered judgment in these proceedings. I ordered that verdict and judgment be given for the plaintiffs against the defendants in the sum of $178,000 together with interest. I also ordered that the cross claim be dismissed.

2. At the time of delivering judgment, I indicated my intention to make an order that the defendants pay the plaintiffs’ costs of the proceedings including the costs of the cross claim.

3. The plaintiffs asked me not to make final costs orders, as they wished to be heard further concerning costs.

4. I then made directions for a timetable for the provision of written submissions on costs. The parties agreed that the matter of costs would be determined by me on the papers.

5. The plaintiffs now seek an order in the following form:

The defendants pay the plaintiffs' costs of the proceedings on the ordinary basis up to 13 March 2019 and on the indemnity basis on and from 14 March 2019.

6. The order is sought on the basis of the defendants’ failure to accept a Calderbank offer made by the plaintiffs and which expired on 13 March 2019.

7. This offer was an offer that there be judgment for the plaintiffs in the sum of $150,000 with each party to bear its own costs. The offer was received on 6 March 2019, that is, 20 days before the commencement of the proceedings. The letter explained the reasoning behind the offer as follows:

a. the central issue is whether, for the purposes of the Agreement the Option Agreements were contracts for the purchase of property;

b. on the proper construction of the Option Agreements, they were not contracts for the purchase of property. In particular:

i. the rebuttable presumption in New South Wales is that there is no

binding contract until there has been an exchange of signed contracts

in the form approved by the Real Estate Institute of New South

Wales: see e.g. McDonald v Commissioner of Taxation (2001) 109

FCR 207 at [18]-[21];

ii. there is nothing to rebut the presumption in the present case. Indeed,

there has been no exchange of signed contracts in the form approved

by the Real Estate Institute of New South Wales; and text of the

Option Agreements confirms that the parties to the Option

Agreements intended that there be no contract for the purchase of

land by reason of the entry into the Option Agreement: see, e.g., cl

2.4

8. The parties have provided helpful written submissions.

9. There was no disagreement as to the principles which are to be applied in considering whether a failure to accept an offer contained in a Calderbank letter should lead to an indemnity costs order. As such, and at the risk of it being thought that I have not done justice to the parties’ careful written submissions, I do not propose to restate those principles, other than to say:

1. The making of a Calderbank offer better than the result ultimately obtained, does not automatically translate into an indemnity costs order.

2. The cardinal question to be determined in all such cases is whether the rejection of the offer was in all the circumstances unreasonable.

10. The plaintiffs, in their written submissions, point out that the offer to settle at some $150,000 translates into a total offer when interest is included of some $201,947. That may well be the case; however, the offer which was made did not draw the attention of the defendants to the interest consequences of the offer, either by way of principle, or by means of quantification of the kind which appeared in the plaintiffs’ submissions before me.

11. In that regard, I note that it is said in the authorities that the reasons why a Calderbank offer should be accepted should be precise, “descending to particularity” (NMFM Properties Pty Ltd v Citibank Ltd (No 2) (2001) 109 FCR 77, at 98).

12. In my view, it is also relevant to note the timing of the offer, being as it was, close to the hearing date, and only carrying with it a 7 day period within which it might be accepted.

13. It seems to me that it was not unreasonable for the defendants to not have accepted the offer given its quantum of $150,000, as compared to the $178,000 judgment which the plaintiffs now enjoy.

14. I also do not accept that the period of time available to accept the offer was reasonable, given that the 7 day period, as one would expect, translated into 5 business days. This, given the proximity of the offer to the commencement of the hearing, militates against a finding that it was unreasonable to have rejected the offer.

15. The defendants also say that the offer provided only partial reasons why it should be accepted, insofar as it dealt only with the single issue of contractual construction; whereas, there were other causes of action pleaded, and indeed the case as was ultimately run, was different from the case as was extant at the time of the offer. I accept this is the case.

16. The defendants also submit that the legal and factual matters the subject of the proceedings were complex, involving potentially conflicting appellate authorities as to the nature of various types of options. This is so.

17. In the circumstances, therefore, the plaintiffs have not persuaded me that the failure of the defendants to accept the offer was unreasonable, and as such, I decline to make the costs order as sought by the plaintiffs.

18. I make the following orders:

1. That the defendants pay the plaintiffs’ costs of the proceedings including the cross claim, other than the plaintiffs’ application for indemnity costs, the subject of this judgment.

2. The plaintiffs pay the defendants’ costs of the application for indemnity costs, the subject of this judgment.

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Decision last updated: 11 July 2019