Shimden Pty Ltd v Park Pty Ltd (No 2)

[2022] NSWSC 415

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Shimden Pty Ltd v Park Pty Ltd (No 2) [2022] NSWSC 415

Hearing dates:

On the papers

Date of orders:

8 April 2022

Decision date:

08 April 2022

Jurisdiction:

Equity

Before:

Darke J

Decision:

Order that the defendant pay the plaintiff’s costs of the proceedings (other than in relation to the Cross-Claim), with such costs to be paid on the ordinary basis in respect of costs incurred up to and including 14 September 2021, and on an indemnity basis in respect of costs incurred thereafter

Catchwords:

COSTS – plaintiff successful in obtaining judgment – judgment in an amount less than $500,000 – whether plaintiff should not receive a costs order because the proceedings could have been commenced in the District Court – at time of commencement the proceedings included a claim for the withdrawal of a caveat – held that the proceedings could not have been commenced in the District Court – plaintiff entitled to costs order – some costs to be paid on an indemnity basis due to unreasonable failure of defendant to accept a Calderbank offer

Legislation Cited:

Real Property Act 1900 (NSW), s 74MA

Uniform Civil Procedure Rules 2005 (NSW), r 42.34

Cases Cited:

Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322

Shimden Pty Ltd v Park Pty Ltd [2022] NSWSC 267

StockCo Agricapital Pty Ltd v Dairy Livestock Services Pty Ltd (No 2) [2020] NSWSC 636

Category:

Costs

Parties:

Shimden Pty Ltd (Plaintiff/Cross-Defendant)
Park Pty Ltd (Defendant/Cross-Claimant)

Representation:

Counsel:
Mr F C Corsaro SC with Mr F F F Salama (Plaintiff/Cross-Defendant)
Mr P T Newton SC (Defendant/Cross-Claimant)

Solicitors:
Memcorp Lawyers (Plaintiff/Cross-Defendant)
Stanton and Stanton Lawyers (Defendant/Cross-Claimant)

File Number(s):

2019/229337

Publication restriction:

None

Judgment

1. The Court delivered its reasons for judgment in this matter on 15 March 2022 (see Shimden Pty Ltd v Park Pty Ltd [2022] NSWSC 267). In accordance with those reasons, judgment was entered for the plaintiff against the defendant on 29 March 2022 in the sum of $381,369.51, such sum including interest up to judgment of $40,123.52.

2. The question of costs remains outstanding.

3. The plaintiff seeks a costs order in its favour in accordance with the usual rule that costs follow the event, and further seeks the costs on an indemnity basis from 14 September 2021 due to the failure of the defendant to accept a Calderbank offer made on that day in the sum of $347,000 inclusive of costs.

4. The defendant resists any order for costs in favour of the plaintiff. It invokes Uniform Civil Procedure Rules 2005 (NSW) r 42.34 which provides:

42.34   Costs order not to be made in proceedings in Supreme Court unless Court satisfied proceedings in appropriate court

(1)   This rule applies if—

(a)   in proceedings in the Supreme Court, other than defamation proceedings, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $500,000, and

(b)   the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants.

(2)   An order for costs may be made, but will not ordinarily be made, unless the Supreme Court is satisfied that—

(a)   for proceedings that could have been commenced in the District Court—the commencement and continuation of the proceedings in the Supreme Court, rather than the District Court, was warranted, or

(b) for proceedings under Part 2 of Chapter 7 of the Industrial Relations Act 1996—the commencement and continuation of the proceedings in the Supreme Court, rather than the Local Court, was warranted.

5. It is clear that r 42.34(1) is satisfied in this case, so the rule applies to the proceedings. Rule 42.34(2) relevantly provides, in respect of proceedings that could have been commenced in the District Court, that an order for costs may be made but will not ordinarily be made unless the Court is satisfied that the commencement and continuation of the proceedings in the Supreme Court, rather than the District Court, was warranted.

6. An initial question arises as to whether the proceedings could have been commenced in the District Court. The proceedings, as originally framed by the Summons that was filed on 24 July 2019, included a claim under s 74MA of the Real Property Act 1900 (NSW) for the withdrawal of a caveat. A claim of that nature could not have been heard by the District Court. So, even though the proceedings also included a claim for damages that could have been brought in the District Court, the proceedings, viewed as a whole, could not have been.

7. In my opinion, the proceedings were not proceedings that could have been commenced in the District Court within the meaning of r 42.34(2)(a). It follows that r 42.34(2) does not operate so that an order for costs in favour of the plaintiff will not ordinarily be made unless the Court is satisfied that the commencement and continuation of the proceedings in the Supreme Court, rather than the District Court, was warranted. In my view, that is so notwithstanding the fact that the caveat issue was resolved shortly after the commencement of the proceedings (see StockCo Agricapital Pty Ltd v Dairy Livestock Services Pty Ltd (No 2) [2020] NSWSC 636 at [23]).

8. The defendant submitted that once the caveat issue was resolved the proceedings, which were then confined to common law claims that fell within the jurisdictional limit of the District Court, ought to have been maintained in that court. It may be that it would then have been appropriate to transfer the proceedings (which for a time also included a Cross-Claim against the plaintiff for damages), but no such application was brought. As I have said, I do not think that r 42.34(2) operates in this case, but even if it did, the commencement of the proceedings in the Supreme Court was warranted, and where both parties maintained common law claims in this Court for amounts well in excess of $500,000, and neither sought an order for transfer, I think that the continuation of the proceedings in this Court was warranted.

9. It follows from the above that r 42.34 does not afford a reason to depart from the usual position that costs follow the event. The plaintiff was successful on its claims that were initially brought by Summons and later by pleadings. It is appropriate that an order be made that the defendant pay the plaintiff’s costs of the proceedings (other than in relation to the Cross-Claim, which was discontinued in February 2021).

10. It is next necessary to consider whether the plaintiff should have an award of indemnity costs from 14 September 2021.

11. In my opinion, such an order should be made. The Calderbank offer made by the plaintiff on 14 September 2021 was an offer to accept $347,000 inclusive of costs. The plaintiff succeeded in obtaining a judgment in a sum in excess of the offer, even after allowance is made for interest for the period from 14 September 2021. The offer was clearly expressed, and made at a stage in the proceedings (after the matter had been set down for hearing) when both parties would have been in a good position to assess their prospects. The offer was expressed to be open for a reasonable period, being 14 days. I am also satisfied that the offer amounted to a real and genuine compromise on the part of the plaintiff which was claiming a substantially higher amount. It is open to the Court to take into account on the question of costs the failure of a party to accept a Calderbank offer. That is so even where the offer is expressed to be inclusive of costs (see Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322 at [5]-[7], [115] and [144]-[145]). In my view, the defendant acted unreasonably in failing to accept the offer which represented a real compromise on the part of the plaintiff. The costs incurred by the plaintiff thereafter can be regarded as the result of that unreasonable failure to accept the offer and thereby bring the proceedings to an end. In these circumstances I consider it appropriate, in the exercise of the Court’s discretion as to costs, to order that the plaintiff’s costs from 14 September 2021 be paid by the defendant on an indemnity basis.

12. Accordingly, the Court will make the following orders as to costs:

1. Order that the defendant pay the plaintiff’s costs of the proceedings (other than in relation to the Cross-Claim); and

2. Order that such costs be paid on the ordinary basis in respect of costs incurred up to and including 14 September 2021, and on an indemnity basis in respect of costs incurred thereafter.

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Amendments

19 April 2022 - Coversheet/Representation amended

Decision last updated: 19 April 2022