Primus Telecommunications Pty Limited v Kooee Communications Pty Limited

[2007] NSWSC 444

CITATION:	Primus Telecommunications Pty Limited v Kooee Communications Pty Limited & Anor [2007] NSWSC 444
HEARING DATE(S):	13/04/07
JUDGMENT DATE :	7 May 2007
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	Einstein J
DECISION:	Defendants to pay 75% of plaintiff's costs of the whole of the proceedings on a party party basis
CATCHWORDS:	Costs
PARTIES:	Primus Telecommunications Pty Limited (Plaintiff) Kooee Communications Pty Limited (First Defendant) SP Telemedia Limited (Second Defendant)
FILE NUMBER(S):	SC 50004/06
COUNSEL:	Mr R Garratt QC, Mr D Priestley (Plaintiff) Mr J Duncan (Defendants)
SOLICITORS:	Browne & Co (Plaintiff) Sparke Helmore (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

Einstein J

Monday 7 May 2007

50004/06 Primus Telecommunications Pty Ltd v Kooee Communications Pty Limited & Anor

JUDGMENT

Costs

1 Following the delivery of two judgments [2007] NSWSC 91 and [2007] NSWSC 374 there remains only for decision the question of costs.

2 It is fair to say that the proceedings were vigorously contested. It is fair to say that to a certain extent each party achieved some success. In many ways the principled exercise of the material discretion as to costs inheres in weighing the true measure of the respective successes.

3 The plaintiff submits that the defendants ought pay the plaintiff’s costs of the proceedings on an indemnity basis. This submission is based on the propositions that:

i. at all material times prior to commencement, and during the currency of these proceedings, to the defendants’ knowledge the plaintiff was prepared to resolve all disputes between the parties on a basis that is for all relevant purposes indistinguishable from the court’s determinations, (save for one matter, expenses) and in fact to compromise below that.

ii. The plaintiff was at all relevant times prepared to concede the entirety of the defendants’ claim in respect of Revenue Share, if proper payment was forthcoming for the amounts owing to the Plaintiff under the Separation Deed.

4 The defendants flatly deny this proposition. They contend and I accept that the following are examples of the plaintiff's conduct which belie the above contention:

a. In the letter from the plaintiff’s solicitors to Kooee dated 8 December 2005 (page 11 of the bundle marked exhibit D1 13/4/07) the plaintiff demanded ‘the amount owing to Primus by Kooee pursuant to the notices issued under Clauses 2.1, 2.4 and 6 of the Separation Deed’ without any concession or allowance for Collections or Revenue Share.

b. In the letter from the plaintiff’s solicitors to Kooee dated 20 January 2006 (page 16 of D1 13/4/07), against a demand for the full amount of Net Debtors, Unbilled Revenue and Primus Costs, there was an acknowledgement of Collections ‘providing a credit to Kooee’. However, there was no concession or allowance for Revenue Share.

c. It was not until the letter of 20 January 2006 that the plaintiff notified the first defendant of the amount of Net Debtors for which it was given judgment. This notification was preceded by no less than 3 claims for Net Debtors, all of differing amounts and none of the differences being de minimis.

d. In its Summons (filed shortly after the letter above), the plaintiff claimed $6,239,810.07, without concession or allowance for Collections or Revenue Share. Furthermore, in Section B, Issues Likely To Arise, the plaintiff noted as one of the issues likely to arise ‘the existence and value of any claim in set off that the Defendants may have’.

e. In its Response to Cross-claim, the plaintiff denied any obligation in respect of Revenue Share, and denied any obligation to bring to account Collections in the proceedings.

f. Throughout the first hearing, the plaintiff actively maintained and argued its denial of any obligation in respect of Revenue Share.

g. Continuing through the second hearing, the plaintiff actively maintained and argued its denial of any obligation to bring to account Collections in the proceedings.

5 It is true to say that the defendants did have some successes in the litigation However in terms of viewing the issues in perspective it has to be observed that the costs incurred in respect of Collections and Expenses were relevantly inconsequential.

6 The so-called Calderbank letter sent by the plaintiff on 21 September 2006 and the purported Offer of Compromise dated 19 January 2007 do not meet the requisite criteria which inform the consequences of a failure to accept such letters or offers.

7 The reasons for this have been chronicled by the defendants who submissions in this regard are adopted as correct. The reasons are:

11. The plaintiff relies upon a Calderbank offer made on 21 September 2006, and a purported Offer of Compromise dated 19 January 2007.

12. The plaintiff acknowledges that the Calderbank offer ‘standing alone’ does not give rise to any presumption in favour of a special costs order. The defendants agree. Furthermore, the defendants submit that nothing raises this offer above stand-alone consideration (see the submissions above under the heading ‘plaintiff Says’).

13. The purported Offer of Compromise was not an effectual Offer of Compromise for the purposes of the Rules.

14. This purported offer provided:


TAKE NOTICE that the plaintiff offers to compromise these proceedings (claim and cross-claim) on payment by the defendants to the plaintiff of the sum of $2,500,000, plus the plaintiff’s costs.

This Offer will remain open for acceptance until 4 p.m. on Monday 29 January 2007. (emphasis added)


15. Due to the consequences that may follow, an Offer of Compromise must be construed carefully. An Offer of Compromise must be unequivocal, and must be capable of being made a judgment upon acceptance (Pt20 r27). The purported offer met neither of these criteria.

16. The defendants submit that the purported offer suffered from two fundamental problems. On its face:


a. the purported offer specified a condition for the coming into existence of a compromise (‘on payment’), but did not identify the payment as being the compromise;

b. further, the purported offer provided for the attainment of no compromise until payment; that is, until payment of both the sum of $2,500,000 and the Plaintiff’s costs (unascertained) had been made.

8 The defendants contention is that:

i. each side had some success in the matters which it agitated; the successes of the defendant were reasonably substantial;

ii. in the circumstances, the appropriate order for costs is for the defendants to pay the plaintiff's costs of and associated with its claim and for the plaintiff to pay the defendant' costs of and associated with the cross claim.

ii. otherwise, the plaintiff is entitled to no more than the usual cost order.

Decision

9 To my mind, standing back from a whole of the litigation, it may be seen that the plaintiff was successful in relation to the issues which expended a very considerable segment of time and costs albeit that the defendants did have some successes.

10 The principled exercise of the discretion is to order that the defendants pay 75% of the plaintiff's costs of the whole of the proceedings on a party party basis. .

Order

11 The Court orders that the defendants pay 75% of the plaintiff's costs of the whole of the proceedings on a party party basis.