Platformco Investments Pty Ltd v Hanna Contracting Services Pty Ltd (No 2)

[2024] NSWDC 170

District Court

New South Wales

Medium Neutral Citation:

Platformco Investments Pty Ltd v Hanna Contracting Services Pty Ltd (No 2) [2024] NSWDC 170

Hearing dates:

On the papers

Date of orders:

13 May 2024

Decision date:

13 May 2024

Jurisdiction:

Civil

Before:

Cole DCJ

Decision:

The plaintiff is to pay the defendant’s costs in this matter on a party/party basis up until the end of 22 February 2024, and on an indemnity basis from 22 February 2024 onwards.

Catchwords:

COSTS – Calderbank offer – basis for award of costs – indemnity costs

Cases Cited:

Platformco Investments Pty Ltd v Hanna Contracting Services Pty Ltd [2024] NSWDC 117

Calderbank v Calderbank [1975] 3 All ER 333

Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344

Haxeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298

Category:

Consequential orders

Parties:

Platformco Investments Pty Ltd (Plaintiff)
Hanna Contracting Services Pty Ltd (Defendant)

Representation:

Counsel:
G McNally SC with J Pokoney (Plaintiff)
MD Martin KC (Defendant)
Solicitors:
CLS Legal (Plaintiff)
Mills Oakley (Defendant)

File Number(s):

2023/141414

Publication restriction:

Nil

JUDGMENT

1. Platformco Investments Pty Ltd (‘Investments P/L’) sued Hannas Contracting Services Pty Ltd (‘Hannas P/L’) for damages for the alleged breach of two consulting agreements.

2. Investments P/L was wholly unsuccessful in the proceedings (see Platformco Investments Pty Ltd v Hanna Contracting Services Pty Ltd [2024] NSWDC 117 (‘the first judgment’)).

3. This decision deals with the application by Hannas P/L for an order that Investments P/L pay its costs of the proceedings on a party/party basis up to and including 22 February 2024 and that Investments P/L pay its costs of the proceedings on an indemnity basis from 22 February 2024 onwards.

4. Investments P/L concedes that it is appropriate that an award of costs be made against it, but argues that indemnity costs should not be given, and the whole costs order should be on a party/party basis.

The offer of 19 February 2024

5. The statement of claim in these proceedings was filed on 3 May 2023.

6. The trial in the matter took place on 6-7 March 2024. The plaintiff was wholly unsuccessful.

7. By letter dated 13 February 2024 (‘the letter’), but received by Investments P/L on about 16 February 2024, Hannas P/L offered to “accept a discontinuance of the proceedings with no orders as to costs” (‘the offer’). The offer was expressly made “under the principles found in Calderbank v Calderbank” (see Calderbank v Calderbank [1975] 3 All ER 333 (‘Calderbank’)) and was accompanied by an explanation, in direct language, as to why it was believed that Investments P/L could not succeed in the matter. The offer was to remain open for a period of 14 days. The letter said “In the event that the offer is rejected and our client achieves a better outcome than the offer this letter will be tendered in support of an order for indemnity costs against your client”.

8. The offer was not accepted by the plaintiff.

Consideration of the arguments

9. In Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344 (‘Miwa’), Basten JA, with whom McColl JA and Campbell JA agreed, considered “informal offers of compromise” in the context of an application for an award of indemnity costs.

10. In Miwa, Basten JA said that the usual approach in considering indemnity costs where there has been an offer is to ask two questions [at 8]:

1. Whether the offer of compromise was a true offer of compromise, in the sense that the offer involved the offeror giving something away.

2. Whether it was unreasonable for the offeree not to accept it.

11. It was argued by Investments P/L that the offer was not a real compromise because it did not offer anything by way of settlement of the monetary claim made by Investments P/L. I reject that argument. Hannas P/L set out the view that it successfully argued at trial, namely that Investments P/L’s claim was bound to fail. Investments P/L’s claim did fail, largely on the grounds foreshadowed in the letter. The offer of compromise made by Hannas P/L in this case was a true offer of compromise because Hannas P/L offered to forgo its costs if the offer were accepted. The offer came at a stage where trial preparation was advanced and counsel had been briefed.

12. In Miwa, by reference to Haxeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298, Basten JA set out the following factors as relevant to the question of whether it was unreasonable of Investments P/L to reject the offer [at 12]:

(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 indemnity costs in the event of the offeree's rejecting it.

13. About six days after making the offer, Hannas P/L filed a notice of motion seeking the vacation of the hearing, leave to amend its defence and leave to file a cross-claim. Orders with respect to evidence were also sought. Investments P/L argued that “the state of the proceedings was put in doubt” by Hannas P/L’s notice of motion, and that the timing of the notice of motion, which was unsuccessful, meant that it was not open for Hannas P/L to contend that the offer came at a time when the proceedings were at an advanced stage. I reject this argument. There was nothing in the timing of the offer that disqualified it or undermined its characterisation or use as a Calderbank offer.

14. Investments P/L said that the terms of the offer did not invite a sensible commercial discussion of the parties competing positions. The dismissive language used in the letter to describe the plaintiff’s case was said to be such that it “could only have the effect of entrenching positions”. I reject this argument. Like most communication, the letter was capable of evoking a range of reactions, among them a realisation of the flaws in the plaintiff’s argument. A Calderbank offer need not include an offer of damages.

15. The final argument advanced by Investments P/L is that the offer “relies on the affidavit of Mr Hanna as demonstrating the “fatal flaws”” in Investments P/L’s position and Mr Hanna did not give oral evidence at trial. Investments P/L argued that Mr Hanna’s affidavit was not read, but that is not strictly true. A small portion of Mr Hanna’s affidavit was read. In any event, the fatal flaws in Investments P/L’s case did not emerge from the evidence of Mr Hanna, which should be evident from the first judgment.

Conclusion

16. I find that the offer was made at an appropriate time. Adequate time was given for the plaintiff to consider the offer. In the context of the claim, which had no merit, the extent of the compromise was appropriate. The flaws in the plaintiff’s case were set out clearly in the letter, and were apparent at the time of the offer, flowing, as they did, from the terms of the agreements. It was clearly stated that the letter contained a Calderbank offer. The letter foreshadowed an application for indemnity costs in clear language.

17. Hannas P/L is entitled to the award of costs which it seeks.

Order

18. The following order will issue:

The plaintiff is to pay the defendant’s costs in this matter on a party/party basis up until the end of 22 February 2024, and on an indemnity basis from 22 February 2024 onwards.

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Decision last updated: 13 May 2024