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

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

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.
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.”

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

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

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

Mr Smith was successful on the Motion.

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…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] NSWDC 535
Decision Date: 07 November 2022

CaseChat Overview and Summary

Reliance Leasing Pty Ltd was engaged in litigation with Smith, and the dispute centred on whether Smith had failed to honour financial obligations under a lease agreement. The case was heard in the Supreme Court of New South Wales. The plaintiff sought an order for Smith to pay costs incurred in relation to a Notice of Motion filed by Smith on 26 August 2022, including the costs associated with determining these expenses. The legal issues before the court involved the general principle that costs follow the event and the exceptions to this rule. Specifically, the court had to decide whether Smith's offer was a genuine offer of compromise and whether it was unreasonable for the plaintiff not to accept it.

The court considered the criteria for determining a genuine offer of compromise and examined whether Smith's offer met these criteria. It was noted that an offer is generally considered genuine if it is made in good faith and is reasonable in the circumstances. The court further explored the notion of reasonableness in the context of whether it was unreasonable for the plaintiff not to accept the offer. The court concluded that Smith's offer was indeed a genuine offer of compromise, as it was made in good faith and was reasonable under the circumstances. However, the court found that it was not unreasonable for the plaintiff not to accept the offer, as the plaintiff had a legitimate basis for rejecting it.

Ultimately, the court ordered Smith to pay the costs incurred by the plaintiff in relation to the Notice of Motion filed on 26 August 2022, including the costs of this costs determination. This decision reinforces the principle that a genuine offer of compromise can shift the burden of costs, but the reasonableness of not accepting such an offer must also be considered in the context of the specific circumstances of the case.

Orders

Orders of the court

(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.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

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