Reliance Leasing Pty Ltd v Smith (No. 2)

[2022] NSWDC 535

District Court

New South Wales

Medium Neutral Citation:	Reliance Leasing Pty Ltd v Smith (No. 2) [2022] NSWDC 535
Hearing dates:	On the papers
Date of orders:	7 November 2022
Decision date:	07 November 2022
Jurisdiction:	Civil
Before:	Russell SC DCJ
Decision:	(1)   Order the defendant to pay the costs of the plaintiff of the Notice of Motion filed by the defendant on 26 August 2022, including the costs of this costs determination.
Catchwords:	COSTS – party/party – exceptions to general rule that costs follow the event – party seeking indulgence or dispensation of the court – whether offer was a genuine offer of compromise – whether it unreasonable for the plaintiff not to accept the offer
Cases Cited:	Reliance Leasing Pty Ltd v Smith [2022] NSWDC 505
Category:	Costs
Parties:	Reliance Leasing Pty Limited (Plaintiff) Mark James Smith (Defendant)
Representation:	Counsel: T Smartt (Plaintiff) D Eardley (Defendant) Solicitors: Nelson McKinnon Lawyers (Plaintiff) Moscardo Lawyers (Defendant)
File Number(s):	2021/245743

Judgment

Introduction

1. In this matter judgment was delivered on 27 October 2022 granting leave to the defendant to file a cross claim – Reliance Leasing Pty Ltd v Smith [2022] NSWDC 505 (“the primary judgment”). The question of costs was reserved for later argument. The parties agreed to file written submissions and have the costs issue dealt with on the papers. The defendant filed a written submission on costs (MFI 4). The plaintiff filed a written submission on costs (MFI 5).

Offer Made by the Defendant

2. The defendant Mr Smith seeks an order that the plaintiff Reliance Leasing Pty Ltd (Reliance) pay his costs of the Notice of Motion which was the subject of the primary judgment. Normally a party who seeks an indulgence from the court, in this case an extension of time in which to file a cross claim, would pay the costs of the opposing party.

3. However, Mr Smith relies upon a letter dated 13 October 2022 sent by his solicitor to the solicitor for Reliance. This letter said:

“We offer that your clients not oppose our client’s motion for leave and otherwise consent to the granting of the leave sought in our client’s motion. Should your client(s) maintain its/their objection to our client’s said motion and our client is successful on the hearing of the motion, we shall rely upon this correspondence on the issue of costs in accordance with Calderbank v Calderbank [1976] Fam 93 which costs we shall seek on an indemnity and/or lump sum basis.”

4. Mr Smith submits that the usual rule referred to above would be displaced for three reasons:

1. A Calderbank offer was sent to Reliance but was not accepted.

2. The court made orders consistent with the Motion “save as to some minor amendment to the pleading”.

3. Mr Smith was successful on the Motion.

5. Mr Smith submitted that the decision of Reliance not to consent to a grant of leave to file the cross claim “was unreasonable in the circumstances as the evidence sets out and articulates that there is much greater debate here between the parties rather than a mere simple enforcement of a guarantee pursuant to a loan”.

6. Reliance opposes the application for a costs order in favour of Mr Smith upon the following bases:

1. Mr Smith has not bettered his purported offer. He was not successful in seeking leave to file the cross claim in the form he was then proposing.

2. Mr Smith has not discharged his onus to show that there was a genuine compromise. Mr Smith offered nothing other than that Reliance “not oppose” or “otherwise consent” to the filing of the proposed cross claim. There was, for example, no offer for each party to pay its or his own costs.

3. Although the offer broadly invited Reliance not to oppose the Motion, the offer did not specify what orders Mr Smith was proposing or how long the offer was open.

7. I accept the submissions of Reliance. The purported offer was not a genuine offer of compromise, in that it did not give up anything on Mr Smith’s behalf. Instead of being a compromise, it invited capitulation.

8. The proposed form of the cross claim put forward by the Notice of Motion was itself quite defective. It was only when the problems with the pleading were raised during exchanges between the Bar Table and the Bench in oral submissions that counsel for Mr Smith wisely indicated that certain variations would be required to the proposed cross claim to deal with the problems in the pleading. The purported offer made by Mr Smith did not address the glaring infelicities in the initial version of the proposed pleading. Reliance was quite justified in declining to agree to that cross claim being filed. If that document had been filed, either Reliance would have put on a motion to strike it out, or the court would have been left in the position of dealing with a pleading which was clearly defective.

9. In my view it was not unreasonable for Reliance to refuse to accept Mr Smith’s “offer”. I therefore decline to make the costs order sought. Firstly, the offer made was not a genuine offer of compromise. Secondly, the actions of Reliance in declining to accept the offer were not unreasonable.

Orders

10. The order of the court is:

1. Order the defendant to pay the costs of the plaintiff of the Notice of Motion filed by the defendant on 26 August 2022, including the costs of this costs determination.

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Decision last updated: 07 November 2022