Pritchard Associates v Stevenson

[2002] NSWSC 657

CITATION:	Pritchard Associates v Stevenson & Anor [2002] NSWSC 657
CURRENT JURISDICTION:	Common Law Division
FILE NUMBER(S):	SC 11597 of 1997
HEARING DATE(S):	15 July 2002
JUDGMENT DATE:	26 July 2002
PARTIES :	Pritchard Associates Pty Limited (Plaintiff) v David Stevenson (First Defendant) Harvey Wong (Second Defendant)
JUDGMENT OF:	Master Malpass

COUNSEL :	N/A (Plaintiff) Mr R S Angyal (First Defendant) N/A (Second Defendant)
SOLICITORS:	Truman Hoyle (Plaintiff) Holman Webb (First Defendant) N/A (Second Defendant)
CATCHWORDS:	Calderbank letters - indemnity costs.
LEGISLATION CITED:	Supreme Court Rules 1970, Pt 22.
CASES CITED:	Calderbank v Calderbank [1975] 3 All ER 333. Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425. Nobrega v The Trustees Of The Roman Catholic Church For The Archdiocese of Sydney (No.2) BC9902730. Sanko Steamship Co Ltd v Sumitomo Australia Ltd Fed No. 22/96.
DECISION:	See paragraph 24.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

Master Malpass

FRIDAY 26 JULY 2002

11597 of 1997 Pritchard Associates Pty Limited v David Stevenson & Anor

JUDGMENT

1 Master: These proceedings were heard in March 2002. The trial occupied ten days. A reserved judgment was delivered on 23 April 2002. The judgment determined the question of liability. The quantification of the judgment sum was deferred so that it could be the subject of further argument in the future.

2 The proceedings were listed for further hearing on 15 July 2002. The court heard argument on three questions.

3 One of these questions concerned the quantification of the judgment sum. This question was resolved during argument and a consensus was reached on the mathematics of the judgment sum. Accordingly, I directed entry of judgment in the sum of $463,880.32. Another of the questions (concerning the balance of a sum held by the court as security) was also resolved by the court and orders were made in relation to it.

4 The remaining question was one of costs. The plaintiff sought an order in the following terms:-

“2 The First Defendant pay the Plaintiff’s costs:-
(a) from 27 May, 1997 to 3 February, 1999 on a party/party basis;
(b) from 4 February, 1999 to 15 July, 2002 on an indemnity basis.”

It was common ground that these orders were not intended to disturb any costs order already made in the proceedings.

5 The dispute between the parties concerned the order sought in 2 (b). The first defendant opposes costs being ordered on an indemnity basis.

6 Apart from material already available to the court, the plaintiff relied on material contained in an affidavit sworn by Mr Edwards (the solicitor for the plaintiff).

7 Considerable of the material relevant to his application may be found in the judgment delivered on 23 April 2002. I do not propose to repeat all of that material in this judgment.

8 Prior to the trial, the plaintiff had made two “without prejudice” offers. I am not satisfied that either of these offers can be regarded as an offer of compromise complying with the requirements of Pt 22 of the Supreme Court Rules 1970. This seems to be a position ultimately accepted by the plaintiff and saw argument proceeding on the basis that both offers should be regarded as Calderbank letters (Calderbank v Calderbank [1975] 3 All ER 333).

9 During argument, it became common ground that this Court was bound by what had been said by the Court of Appeal in Nobrega v The Trustees Of The Roman Catholic Church For The Archdiocese of Sydney (No. 2) BC 9902730 (21 May 1999).

10 In Nobrega, Powell JA quoted observations made by Sheppard J (as he then was) in Sanko Steamship Co Ltd v Sumitomo Australia Ltd Fed No. 22/96:-

“Apart from this matter though, it seems to me that one needs to be careful about making orders based on perceived unreasonable conduct in refusing to accept offers. It is in the public interest, as well as in the interest of the parties to litigation, for negotiations to settle cases to take place and for settlements to be achieved if they possibly can be. It has been said that the fact that the law does not provide a full indemnity for costs may be an important spur to settlement; see the judgments of Devlin LJ in Berry v British Transport Commission (1962) 1 QB 306 at 323 and Handley JA in Cachia v Hanes (1991) 23 NSWLR 304 at 318 referred to in the Judgment in Cussons at 227-8. In some cases the so called Calderbank approach may place a weapon in the hands of parties to litigation which ought not to be allowed to be abused. The ordinary rule is that costs when ordered in adversary litigation are to be recovered on the party and party basis. Any attempt to disturb that situation needs to be carefully considered. It should only be departed from where the conduct of the party against whom the order is sought is plainly unreasonable.
This was a difficult case involving a myriad of issues both of fact and of law ... My own reasons for judgment reflect the difficult contractual and other issues which had to be considered. In the Judgment I have also alluded to the difficulties that arose because of the need to sift and weigh evidence from a multiplicity of witnesses who gave evidence through interpreters. The case was certainly not clear cut and was hard fought. In those circumstances it seems to me very difficult to reach the conclusion that either party was acting at all unreasonably.”

11 Prior to the delivery of that judgment, the decided cases had thrown up differences in approach in the ordering of indemnity costs in Calderbank situations. In this Court, there had been the approach taken by Rolfe J in Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425. A different approach had been taken in judgments of the Federal Court (see inter alia Sanko). It may be observed that the judgments delivered in Nobrega do not refer to the Multicon decision.

12 On 4 February 1999, the plaintiff made the first of the two offers. It was an offer to accept payment of A$275,000 inclusive of interest and costs. This offer was not accepted. On 12 February 2002, the second of the two offers was made. It was an offer to accept the sum of A$150,000 in respect of the claim and $60,000 in respect of costs. This offer was also not accepted.

13 The relief obtained at trial was substantially more favourable to the plaintiff than that which was sought in either of the two offers.

14 The plaintiff has argued that there has been unreasonable conduct on the part of the first defendant which entitles it to the indemnity costs order that is sought. Apart from pointing to the disparity between the quantum of the offers and the relief obtained, the plaintiff also looks to various aspects of the conduct of the first defendant in and about the refusal of the offers and the defence of the claim. In opposing the order sought for indemnity costs, the first defendant disputes that his conduct was unreasonable.

15 It is not in dispute that the court has a discretionary power in relation to the ordering of indemnity costs which is to be exercised having regard to the relevant circumstances of the particular case before it.

16 Each of the offers was reasonable. An acceptance of either would have produced a substantially more favourable result for the first defendant. The second of the two offers was made shortly prior to the commencement of the trial and was even more favourable than the first. Rather than accept either of them the first defendant chose to refuse them both and proceed with a lengthy and hotly contested trial.

17 He appears to have taken and persisted in the stance that the plaintiff should not recover any part of its claim.

18 A principal issue was dispute as to the alleged retainer. This was a primary issue and took up the most time at the trial. The plaintiff was put to proof of its retainer with the first defendant contending that he had no legal liability and that any retainer was with San Kung (an entity shrouded in mystery and which may have been dissolved). Fact-finding was of importance to this issue.

19 The other principal issues are referred to in the earlier judgment. They throw up questions of fact and law.

20 At least by the time of the making of the second offer, he was in a position to assess the offer and the weaknesses in his own case (inter alia the plaintiff’s evidence had been reduced to writing and the first defendant had access to the relevant documentation).

21 He was aware that there were conflicting versions of various relevant conversations and that questions of reliability and credibility of witnesses were matters of utmost importance. The apparent objective of the first defendant manifested at the trial was to destroy the credibility of Mr Pritchard. In seeking to achieve this objective, Mr Pritchard was subjected to an inordinately long cross-examination (which extended over a period of about 5 days) and very serious allegations were made. The objective was not realised. The allegations were not made out and questions of reliability and credibility were resolved in favour of the plaintiff.

22 Whilst the case was bitterly fought and the court was required to manage a formidable volume of material, it does not seem to me to be a case that can be regarded as being difficult.

23 In the circumstances of this particular case, I am satisfied that the first defendant’s refusal of each of the offers was unreasonable. I am satisfied that justice is best served if the discretion of the court is exercised in favour of the plaintiff.

24 Aside from costs orders that have been previously made, I make the following orders concerning the costs of the proceedings:-

1. The first defendant is to pay the plaintiff’s costs from 27 May, 1997 to 3 February, 1999 on a party/party basis;

2. The first defendant is to pay the plaintiff’s costs from 4 February, 1999 to 15 July, 2002 on an indemnity basis.

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Last Modified: 07/29/2002