Sedrak v Starr (No 3)

CITATION: Sedrak v Starr (No 3) [2009] NSWSC 1193

HEARING DATE(S): 6 November 2009

JUDGMENT OF: Gzell J

EX TEMPORE JUDGMENT DATE: 6 November 2009

DECISION: Indemnity costs ordered.

CATCHWORDS: PROCEDURE - Costs - offer not accepted and judgment more favourable to cross-claimant - whether exceptional circumstances to avoid indemnity costs under the Uniform Civil Procedure Rules 2005, Pt 42 r 42.14

LEGISLATION CITED: Uniform Civil Procedure Rules 2005

CATEGORY: Procedural and other rulings

CASES CITED: Morgan v Johnson (1998) 44 NSWLR 578
Macquarie Radio Network Pty Ltd v Arthur Dent (No 2) [2007] NSWCA 339
South Eastern Sydney Area Health Service & Anor v King [2006] NSWCA 2
Sedrak v Starr [2009] NSWSC 996

PARTIES: Maged Sedrak (Plaintiff/Cross-Defendant)
Gavin Mark Starr (Defendant/Cross-Claimant)

FILE NUMBER(S): SC 5407/08

COUNSEL: F Santisi (Plaintiff/Cross-Defendant)
D Shoebridge (Defendant/Cross-Claimant)

SOLICITORS: JN Legal Solicitors & Attorneys (Plaintiff/Cross-Defendant)
FCB Workplace Lawyers & Consultants (Defendant/Cross-Claimant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

FRIDAY 6 NOVEMBER 2009

5407/08 MAGED SEDRAK v GAVIN MARK STARR (NO 3)

EX TEMPORE JUDGMENT

1 In my reasons for judgment in this matter at paragraph 79, I said that I would enter judgment for Mr Starr for $119,427.71 plus interest. It has been pointed out to me that that figure did not include the balance of the deposit of $201,250. I have been invited to act under the slip rule and amend paragraph 79 to substitute for the figure of $119,427.71 for the figure of $320,677.71, which I do.

2 An offer was made under the Uniform Civil Procedure Rules 2005 in an amount of $120,000 plus costs as agreed or assessed. Consequent upon my entry of judgment on the first cross-claim in the amended figure, Pt 42 r 42.14 applies and Mr Starr is entitled to indemnity costs unless the court exercises its discretion against such an order.

3 In Morgan v Johnson (1998) 44 NSWLR 578, Mason P derived a number of principles from his analysis of the leading cases on costs where a defendant makes an offer not accepted by the plaintiff who obtains a judgment not more favourable. The first principle was that the purpose of the rule is to encourage the proper compromise of litigation, in the private interest of individual litigants and the public interest of the prompt and economical disposal of litigation.

4 In Macquarie Radio Network Pty Ltd v Arthur Dent (No 2) [2007] NSWCA 339, Beazley JA at [15], in considering the situation where a plaintiff, as in this case, makes an offer not accepted by a defendant to which the Uniform Civil Procedure Rules Pt 42 r 42.14 applies, said that the court would only deviate from the general rule and make a different order if it finds that there were exceptional circumstances for doing so. Her Honour referred to what Hunt AJA had said in South Eastern Sydney Area Health Service & Anor v King [2006] NSWCA 2 at [83]:

“The onus is on the defendant to persuade the Court that indemnity costs should not be ordered. He must demonstrate the basis on which an order should be made denying the plaintiff's entitlement to indemnity costs. He must establish that he had given serious thought to the risk involved in non-acceptance of the offer, and that he had assessed the plaintiff's case properly and in the context of the rule and the achievement of its purpose - to encourage the proper compromise of litigation, in the private interests of the litigants and in the public interest of the prompt and economical disposal of litigation. Generally, exceptional circumstances are required to justify such an order denying the plaintiff's entitlement."

5 That is the situation in this case. Mr Santisi, who appears for Mr Sedrak, submits that by reason of my earlier judgment denying the late putting on of evidence, exceptional circumstances have been shown. I do not accept that argument.

6 He also submitted that exceptional circumstances were shown by reason of the failure of Mr Starr to renew the offer after my decision in Sedrak v Starr [2009] NSWSC 996.

7 In my view, exceptional circumstances have not been demonstrated in this case. I make the orders in the short minutes of order initialled by me, dated by me and placed with the papers.

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CaseChat Overview and Summary

The case of Sedrak v Starr (No 3) was heard in a lower court, with the plaintiff, Sedrak, challenging the defendant, Starr, over matters related to costs incurred in a proceeding. Starr had initially made an offer to settle the costs, which was not accepted. However, the subsequent judgment was more favourable to Starr, leading to a dispute over the application of the indemnity costs rule under the Uniform Civil Procedure Rules 2005, specifically Part 42 Rule 42.14. The court was required to determine whether exceptional circumstances existed that would justify deviating from the general rule that the losing party pays the costs of the winning party.

The primary legal issue before the court was whether the existence of exceptional circumstances could justify departing from the principle of indemnity costs. The court examined the circumstances surrounding the offer and the subsequent judgment to assess whether there were any factors that warranted such a departure. The court considered the conduct of both parties, the timing and nature of the offer, and the outcome of the judgment in relation to the costs. The focus was on whether any exceptional circumstances could be identified that would prevent Starr from being liable for the costs incurred by Sedrak.

In reaching its decision, the court found that there were no exceptional circumstances that would warrant a departure from the indemnity costs rule. The court noted that Starr's offer to settle the costs was made in good faith and was reasonable in the context of the proceedings. Despite the subsequent judgment being more favourable to Starr, the court held that the absence of exceptional circumstances meant that Starr was liable for the costs incurred by Sedrak. The court emphasised the importance of the offer and acceptance process in managing costs and the need to uphold the principle of indemnity costs unless there were compelling reasons to do otherwise.

The final orders of the court confirmed that Starr was liable for the costs incurred by Sedrak. The court did not find any exceptional circumstances that would allow for a deviation from the general rule of indemnity costs. Starr was therefore required to pay the costs that Sedrak had incurred, as per the usual application of Part 42 Rule 42.14 of the Uniform Civil Procedure Rules 2005. The decision reinforced the importance of the offer and acceptance process in cost management and the limited circumstances under which a departure from the indemnity costs rule is permissible.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established

CITATION:	Sedrak v Starr (No 3) [2009] NSWSC 1193
HEARING DATE(S):	6 November 2009
JUDGMENT OF:	Gzell J
EX TEMPORE JUDGMENT DATE:	6 November 2009
DECISION:	Indemnity costs ordered.
CATCHWORDS:	PROCEDURE - Costs - offer not accepted and judgment more favourable to cross-claimant - whether exceptional circumstances to avoid indemnity costs under the Uniform Civil Procedure Rules 2005, Pt 42 r 42.14
LEGISLATION CITED:	Uniform Civil Procedure Rules 2005
CATEGORY:	Procedural and other rulings
CASES CITED:	Morgan v Johnson (1998) 44 NSWLR 578 Macquarie Radio Network Pty Ltd v Arthur Dent (No 2) [2007] NSWCA 339 South Eastern Sydney Area Health Service & Anor v King [2006] NSWCA 2 Sedrak v Starr [2009] NSWSC 996
PARTIES:	Maged Sedrak (Plaintiff/Cross-Defendant) Gavin Mark Starr (Defendant/Cross-Claimant)
FILE NUMBER(S):	SC 5407/08
COUNSEL:	F Santisi (Plaintiff/Cross-Defendant) D Shoebridge (Defendant/Cross-Claimant)
SOLICITORS:	JN Legal Solicitors & Attorneys (Plaintiff/Cross-Defendant) FCB Workplace Lawyers & Consultants (Defendant/Cross-Claimant)