Smits v Roach - [2002] NSWSC 663

CITATION: Smits & Ors v Roach & Ors [2002] NSWSC 663

CURRENT JURISDICTION: Equity Division
Commercial List

FILE NUMBER(S): SC 50099/99

HEARING DATE(S): 4 July 2002

JUDGMENT DATE: 6 August 2002

PARTIES :

Leonardus Smits (1st Pltf)
John Leslie (2nd Pltf)
Plantoy Pty Limited (3rd Pltf)
Walter Roach (1st Def)
Valerie Roach (2nd Def)
Winnote Pty Limited (In Liq) (6th Def)
Sydtech Pty Limited (In Liq) (7th Def)

JUDGMENT OF: McClellan J

COUNSEL : W Haffenden (Pltfs)
E Finnane (Defs)

SOLICITORS: Smits Leslie, Solicitors (Pltfs)
McCabe Terrill Lawyers (Defs)

CATCHWORDS: COSTS - defendants seek costs on an indemnity basis - rejection of an offer of compromise - offer not bettered in litigation - failure to accept offer was unreasonable

LEGISLATION CITED: Legal Profession Act
Supreme Court Act s 76

CASES CITED: Multicon Engineering Pty Limited v Federal Airports Corporation (unreported 20 May 1996 NSWSC Rolfe J)
AMEV Finance Ltd v Artes Studios Thoroughbreds Pty Ltd (1988) 13 NSWLR 486
Cachia v Hanes & Anor (1994) 179 CLR 403
Atlas Corp Pty Ltd v Kalyk [2001] NSWCA 10
Guss v Veenhuizen (No 2) (1976) 136 CLR 147

DECISION: See para 23

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

McCLELLAN J

TUESDAY, 6 AUGUST 2002

50099/99 SMITS & ANOR v ROACH & ORS

JUDGMENT

1 HIS HONOUR: The defendants seek costs on an indemnity basis. The plaintiffs submit that no order as to costs should be made.

2 The defendants found their submission on four matters. Firstly, it is submitted that the agreement which was reflected in the Ten Point Plan made in September 1999 should have been honoured by the plaintiffs. The failure to honour that agreement, it is submitted, is relevantly unreasonable conduct having regard to the fact that the plaintiffs have wholly failed in the proceedings.

3 Secondly, the defendants have tendered evidence of two offers which they made to settle the proceedings. The first offer was made by letter dated 19 September 2000 which was marked “Without Prejudice Save As To Costs”. The offer made was that the proceedings “be settled on the basis that a proof of debt by your firm in the amount of $375,000 will be admitted in the winding up of the third and fourth defendants in the event that they are successful in the Freehills proceedings.” Various consequential orders were contemplated in the letter. The letter concluded with the following statement:

“The first and second defendants are concerned to save all of the parties costs and inconvenience (if possible). If this offer is rejected and judgment is obtained against our clients at a sum equal to or lower than the sum, then we will rely upon this letter in support of an application that any costs incurred by our clients after the date of this facsimile be payable by you on an indemnity basis.”

4 Thirdly, an offer was made by the defendants’ senior counsel to the plaintiffs’ senior counsel when the former provided the latter with a…

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.

Continue reading Smits v Roach

Details

AGLC: Smits v Roach [2002] NSWSC 663
Case: [2002] NSWSC 663
Decision Date: 6 August 2002

CaseChat Overview and Summary

Smits v Roach was a case before the Supreme Court of Victoria. The dispute involved a claim for costs on an indemnity basis, where the defendants sought reimbursement of their legal expenses. The case arose from a rejected offer of compromise, which the defendants argued was not bettered in subsequent litigation and that their failure to accept the offer was unreasonable. The court had to decide whether the defendants' refusal to accept the offer of compromise was justifiable and whether it entitled them to indemnity costs.

The legal issues before the court were the circumstances under which a party could be awarded costs on an indemnity basis and whether the rejection of an offer of compromise could be considered unreasonable. The court considered the principles governing offers of compromise and the factors that should be taken into account in determining whether an offer should be accepted or rejected. The court also examined the conduct of the parties and whether the defendants' decision not to accept the offer was a reasonable one in the circumstances.

The Supreme Court held that the defendants were entitled to indemnity costs because their decision not to accept the offer of compromise was reasonable. The court found that the offer did not provide a better outcome for the defendants than what was achieved in litigation, and that their refusal to accept the offer was not unreasonable. The court also noted that the offer was made late in the proceedings and did not take into account the defendants' legal costs. The court held that the defendants' decision to reject the offer was reasonable and that they were entitled to indemnity costs.

The final orders of the court were that the defendants were entitled to indemnity costs, to be taxed on the higher of the standard basis or the party and party basis. The court also ordered that the plaintiffs pay the defendants' costs of the proceedings up to the date of the offer of compromise, and that the defendants pay the plaintiffs' costs from that date onwards.

Orders