Rodny v Stricke (No 2)

[2020] NSWSC 950

Supreme Court

New South Wales

Medium Neutral Citation:

Rodny v Stricke (No 2) [2020] NSWSC 950

Hearing dates:

On the papers

Decision date:

24 July 2020

Jurisdiction:

Common Law

Before:

Adamson J

Decision:

(1)   Note that the defendants have applied in writing to my Associate for an order different from the one proposed in order (3) made on 25 June 2020.

(2)   Order the plaintiffs to pay the defendants’ costs of the proceedings on the ordinary basis up to and including 11 November 2019 and on an indemnity basis thereafter.

Catchwords:

COSTS — Party/Party — Exceptions to general rule that costs follow the event — Offers of compromise and Calderbank offers — whether plaintiffs’ rejection of defendants’ offer unreasonable — order for costs on indemnity basis

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW), rr 20.26, 42.15A

Cases Cited:

Calderbank v Calderbank [1975] 3 All ER 333

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

Morgan v Johnson (1998) 44 NSWLR 578

Rodny v Stricke [2020] NSWSC 800

Category:

Costs

Parties:

Laurence Rodny (First Plaintiff)
Communications Power Incorporated (Aust) Pty Ltd (ACN 001 521 160) (Second Plaintiff)
Angela Stricke (First Defendant)
Helen Meddings (Second Defendant)
Natalie Stoianoff (Third Defendant)
Vlad Sofreski (Fourth Defendant)
The Owners – Strata Plan No 56911 (Fifth Defendant)

Representation:

Counsel:
C Birch SC (Plaintiffs)
J Knackstredt (Defendants)

Solicitors:
Strata Specialist Lawyers (Plaintiffs)
Clyde & Co (Defendants)

File Number(s):

2019/226633

Judgment

Introduction

1. On 25 June 2020 I delivered judgment and made orders in this matter: Rodny v Stricke [2020] NSWSC 800, refusing leave to appeal, dismissing the summons and ordering the plaintiffs to pay the defendants’ costs of the proceedings unless an application was made for a different order. My judgment in the principal matter is to be read with this judgment.

2. By written notice dated 26 June 2020, in accordance with the order made, the defendants applied for an order that the plaintiff should pay their costs on the ordinary basis up to and including 11 November 2019 and on an indemnity basis thereafter.

The facts

3. On 11 November 2019, the defendants made two offers to resolve the proceedings: an offer under r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) (the Rules Offer) and an offer which purported to be made in accordance with Calderbank v Calderbank [1975] 3 All ER 333 (the Calderbank offer). Each of the offers was open for 28 days and was in the same terms, namely that the defendants offered to settle the proceedings on the basis of the following orders:

1. Proceedings dismissed;

2. The plaintiffs to pay $10,000 to the defendants on account of the costs order made by Deputy President Westgarth (order (3)) in dismissing the application for leave to appeal to the Appeal Panel from the adjournment decision; and

3. There be no order as to the costs of the proceedings in the Supreme Court.

4. The order made by the Appeal Panel referred to in order (2) was that the appellant pay the respondents’ costs of the appeal as agreed or assessed. On 11 November 2019, the defendants’ solicitors wrote to the plaintiffs’ solicitors advising that their costs were $17,147.20 on a party/party basis. This amount was said to be the sum of $14,700 for counsel’s fees and 70% of solicitor’s costs of $3,496.

Consideration

5. The defendants submitted that the plaintiffs, by choosing not to accept either the Rules Offer or the Calderbank Offer, are in a worse position since they are, as a result of my decision, exposed to an order for costs of the whole of the proceedings and an uncapped liability for the proceedings before the Appeal Panel. Thus, the defendants contended, the plaintiffs ought pay their costs on an indemnity basis from the day after the date of the offer pursuant to UCPR, r 42.15A. They also contended, on the basis of the principles in Calderbank, that it was unreasonable for the plaintiffs not to accept the defendants’ offer and that this unreasonableness ought sound in indemnity costs: Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [8]-[16] (Basten JA, McColl and Campbell JJA agreeing).

6. The plaintiffs argued that the defendants had not provided sufficient detail of their claim for costs of $17,147.20 on a party/party basis to permit them to assess the reasonableness of the claim. They also submitted that the offer was not, in truth, an offer to compromise the proceedings, but rather an offer to the plaintiffs to capitulate entirely. They also contended that the costs order made by the Appeal Panel was also the subject of an application for leave to appeal to this Court.

7. Further, the plaintiffs submitted that the offer was not made in compliance with the UCPR since it was not an offer to compromise the proceedings.

8. I am not persuaded that an offer which, if accepted, would have the effect that the proceedings are finally disposed of in favour of the offeror, cannot be an offer of compromise. The offer to forego costs, in a case such as the present, confers a sufficient element of compromise in both offers to bring them within the principles applicable to Calderbank offers and offers of compromise within the UCPR.

9. I do not accept the plaintiffs’ submissions about the quantification of the costs of the proceedings before the Appeal Panel. The offer to settle the plaintiffs’ costs liability by payment of $10,000 plainly involved a substantial discount on the defendants’ actual costs incurred and its assessment of its party/party costs. There is no evidence that the plaintiffs sought greater particularity of the calculation of costs by the defendants’ solicitors. The plaintiffs can be taken to have appreciated what their own costs were and have been in a position to judge the defendants’ by comparing them. The proceedings before the Appeal Panel took one day but were hard-fought on a number of bases. The offer to settle the costs of those proceedings for $10,000 would appear to be eminently reasonable and a rejection of that offer unreasonable. I do not consider it to be relevant that the plaintiffs have chosen to seek leave to appeal against the costs order made by the Appeal Panel. The order remains valid unless and until this Court grants leave to appeal against it and allows the appeal.

10. The purpose of the rules in the UCPR for offers of compromise is to encourage parties to consider the settlement of proceedings by reference to the expected result. This leads to economical disposal of proceedings and discourages speculative or opportunistic litigation or the continued prosecution of proceedings where the result has been accurately predicted by one party who is prepared to compromise, at least on costs. I am not persuaded that there is any reason to “otherwise order” within the meaning of UCPR, r 42.15A. The plaintiffs have failed to establish circumstances which would warrant such departure: Morgan v Johnson (1998) 44 NSWLR 578 at 581-582 (Mason P, Sheller JA agreeing).

Orders

11. For the reasons set out above, I make the following notation and order:

1. Note that the defendants have applied in writing to my Associate for an order different from the one proposed in order (3) made on 25 June 2020.

2. Order the plaintiffs to pay the defendants’ costs of the proceedings on the ordinary basis up to and including 11 November 2019 and on an indemnity basis thereafter.

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Decision last updated: 24 July 2020