Snowden v Australian Mortgage Assist Pty Ltd (No 2)

[2020] NSWSC 276

Supreme Court

New South Wales

Medium Neutral Citation:	Snowden v Australian Mortgage Assist Pty Ltd (No 2) [2020] NSWSC 276
Hearing dates:	On the papers
Decision date:	20 March 2020
Jurisdiction:	Equity - Commercial List
Before:	Ball J
Decision:	The costs order made on 17 December 2019 not be varied
Catchwords:	COSTS – Exception to general rule that costs follow the event — Offer of compromise/Calderbank offer — Whether the second defendant’s offers were genuine offers of compromise
Legislation Cited:	Uniform Civil Procedures 2005 (NSW)
Cases Cited:	The Anderson Group Pty Ltd v Tynan Motors Pty Ltd [No 2] [2006] NSWCA 120 Calderbank v Calderbank [1975] 3 All ER 333
Category:	Costs
Parties:	Anthony Snowden (First Plaintiff) Janet Snowden (Second Plaintiff) Kimberly Linder (Second Defendant)
Representation:	Solicitors: Litigants in Person (Plaintiffs) Argyle Lawyers (Second Defendant)
File Number(s):	2018/133092

Judgment

1. On 17 December 2019, I delivered judgment in this matter dismissing the plaintiffs’ claim: see Snowden v Australian Mortgage Assist Pty Ltd [2019] NSWSC 1799. At that time, I ordered the plaintiffs to pay the defendants’ costs, but gave leave to any party to make an application to vary the costs order on or before 7 February 2020.

2. As a consequence of directions made by the Court on 18 February 2020, that leave was extended in relation to the second defendant and, in accordance with those directions, the second defendant filed and served on the plaintiffs an affidavit in support of an application to vary the costs order so as to provide that the plaintiffs pay the second defendant’s costs on the ordinary basis before 22 October 2019 and on an indemnity basis on and from that date.

3. The application for indemnity costs from 22 October 2019 is based on an offer of compromise dated 26 September 2019 which was made in accordance with Uniform Civil Procedures Rules 2005 (NSW) (UCPR) r 20.26 and a letter of offer of the same date which was made in accordance with the principles stated in Calderbank v Calderbank [1975] 3 All ER 333. Both offers are in substantially the same terms. For that reason, it is only necessary to consider the offer made in accordance with the rules.

4. The offer was in the following terms:

Pursuant to Rule 20.26(3) of the Uniform Civil Procedure Rules the second defendant makes an offer of compromise in these proceedings on the following terms:

(1)   Judgment in favour of the second defendant;

(2)   No order as to costs;

(3)   This offer is open for 28 days from the date of this offer.

5. It is apparent that the offer complies with the formal requirements of UCPR r 20.26. UCPR r 42.14 provides:

Where offer not accepted and judgment no less favourable to plaintiff (cf SCR Part 52A, rule 22; DCR Part 39A, rule 25)

(1)   This rule applies if the offer is made by the plaintiff, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim no less favourable to the plaintiff than the terms of the offer.

(2)   Unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff’s costs in respect of the claim:

(a)   assessed on the ordinary basis up to the time from which those costs are to be assessed on an indemnity basis under paragraph (b), and

(b)   assessed on an indemnity basis:

(i)   if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and

(ii)   if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made.

6. It is accepted that one case where the Court will generally order otherwise is where the offer is not a genuine offer of compromise: The Anderson Group Pty Ltd v Tynan Motors Pty Ltd [No 2] [2006] NSWCA 120 at [8] per Basten JA (Santow JA and Young CJ in Eq agreeing).

7. In the present case, the offer was an offer that the plaintiffs consent to judgment. The element of compromise is said to be that the second defendant agreed to bear her own costs if the offer was accepted. That compromise is said to be a genuine offer of compromise having regard to the weakness of the plaintiffs’ claim.

8. I do not accept that submission.

9. In appropriate cases an offer that the other party capitulate, but on the basis that each party bears its own costs, can represent a genuine offer of compromise. Whether it does or not will depend on the amount of costs that would be foregone if the offer was accepted, the strength (or weakness) of the offeree’s case and the amount the offeree (if a plaintiff) is likely to recover if the claim succeeds. Inevitably, the second of these considerations is very much a matter of impression and is not susceptible of rigorous or mathematical analysis.

10. In the present case, there is no information before the Court on the amount of costs actually incurred by the second defendant at the time the offer was made, let alone the amount that was likely to be recovered up until that time if the offer was not accepted and the second defendant was ultimately successful (as she was). The total amount claimed by the plaintiffs was in the order of $1,000,000, although as I observed in my judgment (at [107]ff) there were difficulties with that claim and it may be that if the plaintiffs had been successful in establishing that they had been misled into acquiring the three properties the subject of the claim, their damages would have been limited to the difference between the amount they paid for the properties and the true value of the properties at the time when they were acquired, as to which there was no evidence.

11. Damages aside, the main issues in the case were whether the second defendant made various oral representations to the plaintiffs concerning the property markets in Miles and Gladstone in Queensland and whether the plaintiffs relied on those representations in acquiring the three properties they did. On the basis of the evidence presented to the Court, I accept the second defendant’s characterisation of the plaintiffs’ claim as being weak. But inevitably the outcome of cases of this sort depends to some extent at least on whether the Court accepts the plaintiffs’ account of conversations and in those cases there will be a significant degree of uncertainty in the outcome.

12. Taking that matter into account, and the absence of any evidence concerning the costs actually incurred by the second defendant, I am not satisfied that the second defendant’s offer in this case was a genuine offer of compromise.

13. It follows that costs order I made on 17 December 2019 should not be varied.

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Decision last updated: 20 March 2020