The Croatian Club Limited v Westwood Capital Pty Limited (No 2)

[2024] NSWSC 1016

Supreme Court

New South Wales

Medium Neutral Citation:

The Croatian Club Limited v Westwood Capital Pty Limited (No 2) [2024] NSWSC 1016

Hearing dates:

On the papers, last submissions received 8 August 2024

Date of orders:

14 August 2024

Decision date:

14 August 2024

Jurisdiction:

Equity

Before:

Pike J

Decision:

(1)   The Defendant pay the Plaintiff’s costs of the proceedings as agreed or assessed on the ordinary basis.

(2)   There be no order to costs insofar as the Second Defendant is concerned.

Catchwords:

COSTS – costs order – Calderbank offer – whether costs should be ordered on an indemnity basis from the date of offer by plaintiff to first defendant – where rejection of offer was not unreasonable – costs ordered on the ordinary basis – no question of principle

Legislation Cited:

Civil Procedure Act 2005 (NSW) s 98

Uniform Civil Procedure Rules 2005 (NSW) r 42

Cases Cited:

Calderbank v Calderbank [1975] 3 WLR 586

Jones v Bradley (No 2) [2003] NSWCA 258

Joudo v Joudo(No 2) [2024] NSWSC 469

Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368

SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323

The Croatian Club Limited v Westwood Capital Pty Limited [2024] NSWSC 895

Texts Cited:

Nil

Category:

Costs

Parties:

The Croatian Club Limited (Plaintiff)
Westwood Capital Pty Ltd (First Defendant)
Registrar-General, Land Registry Services NSW (Second Defendant)

Representation:

Counsel:
G Ng SC (Plaintiff)
M Condon SC with J M Kadar (First Defendant)

Solicitors:
Hall & Wilcox (Plaintiff)
Jordan Djundja Lawyers (First Defendant)

File Number(s):

2023/157905

Publication restriction:

Nil

JUDGMENT

1. On 25 July 2024, I delivered judgment in these proceedings: see The Croatian Club Limited v Westwood Capital Pty Limited [2024] NSWSC 895 (Principal Judgment). These reasons assume familiarity with and maintain the same defined terms as in the Principal Judgment.

2. In the Principal Judgment, I granted leave to the Club, pursuant to s 74O of the Act to lodge a caveat in the same form as the Original Caveat. I also directed the parties to confer and provide to my chambers any agreed orders as to costs, and failing this, to provide any submissions and other material relied on in relation to costs, whereupon I would determine the question of costs on the papers.

3. The parties were not able to agree orders as to costs. Accordingly, these reasons determine the appropriate costs order.

Overview of the positions of the parties

4. The Club contends that Westwood Capital pays the Club’s costs of the proceedings:

1. On the ordinary basis from the date of the commencement of the proceedings, 17 May 2023, up to and including 19 July 2023; and

2. On an indemnity basis on and from 20 July 2023.

5. In making this contention, the Club relied on an offer which was made to Westwood Capital on 20 July 2023, by email sent from the solicitors for the Club to the solicitors for Westwood Capital (the Offer). The Offer was made pursuant to the principles articulated in Calderbank v Calderbank [1975] 3 WLR 586, and was in the following terms:

1. The Original Caveat be reinstated to the register for the Property as if it had been continuously registered since 13 August 2021; and

2. Westwood Capital pay the Club’s costs in these proceedings in the amount of $52,000, which was a “genuine compromise of the costs incurred” by the Club, because the Club’s actual total costs incurred to the date of the Offer were in excess of $65,000.

6. The Club contends that the outcome of the Principal Judgment was less favourable to Westwood Capital than the terms of the Offer, which also articulated and brought to Westwood Capital’s attention, the deficiencies in its case, namely the lack of any evidence demonstrating effective service of the Lapsing Notice.

7. Westwood Capital seeks the following costs orders:

1. That Westwood Capital pay the Club’s costs of the substantive proceedings as agreed or assessed on the ordinary basis; and

2. That there be no order as to costs insofar as the Registrar-General, Land Registry Services NSW is concerned.

8. As I understand it, order (b) sought by Westwood Capital is not in issue.

9. Westwood Capital contends that the rejection of the Offer was not unreasonable, with reasonableness assessed at the time of an offer being made, without the benefit of hindsight: see Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [33].

10. In supporting this contention that the rejection of the offer was not unreasonable, counsel for Westwood Capital contended that the Principal Judgment gave rise to a set of circumstances less favourable to the Club than the terms in the Offer. This was articulated in several ways.

11. First, despite the Club being granted leave to lodge a caveat in the same form as the Original Caveat, it is open to conclude that the Club obtained a less favourable outcome having regard to priority between dealings.

12. Second, that the Offer required complete capitulation from Westwood Capital and only proposed compromise in relation to the payment of the Club’s costs, which were asserted without evidentiary foundation.

13. Third, the Offer contended Westwood Capital had “no prospects” of success in regard to the factual determination of the effective service of the Lapsing Notice and the existence of a caveatable interest. Whilst Westwood Capital was ultimately unsuccessful on these factual issues, it contends that its position was not untenable.

14. Fourth, that the Offer contained no legitimate reasoning as to why it should be accepted.

15. Fifth and finally, that the Offer was open for acceptance for seven days, did not provide any foundation for the costs sought by the Club, and did not provide for Westwood Capital’s right to have the costs assessed.

16. As such, the only issue for me to determine is whether I should make an order that Westwood Capital pay any of the Club’s costs on an indemnity basis, as contended for by the Club, being on and from 20 July 2023 being the date of the Offer, or whether I should make an order that Westwood Capital pay the Club’s costs solely on an ordinary basis, as contended for by Westwood Capital.

Relevant principles as to costs

17. The relevant principles as to costs are not in dispute.

18. The starting point is s 98 of the Civil Procedure Act 2005 (NSW), which provides that costs are in the discretion of the Court. This discretion is a broad one. Rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides that, in making an order as to costs, the Court is to order that costs follow the event, unless it appears that some other order should be made, with costs being assessed on the ordinary basis, pursuant to UCPR r 42.2.

19. I recently summarised the other legal principles relevant to the determination of whether the rejection of an offer was unreasonable in Joudo v Joudo (No 2) [2024] NSWSC 469 at [12]-[15]. I do not repeat what was there said.

Determination

20. I am not satisfied in all of the circumstances that it was unreasonable for Westwood Capital to reject the Offer made by the Club on 20 July 2023. A multitude of issues were raised in the proceedings on which Westwood Capital’s position was arguable.

21. I am not satisfied that I should exercise the discretion of the Court so as to order that Westwood Capital should pay the costs on an indemnity basis on and from the date of the Offer.

22. The primary relief sought by the Club in this Offer was that the Original Caveat be reinstated as if it had been registered since 13 August 2021. This was not the relief which was granted by me in the Principal Judgment, which instead, allowed the Club to lodge a new caveat in the same form as the Original Caveat, but was not a reinstatement of the Original Caveat.

23. I am not satisfied that the purported discount of the Club’s costs, from an amount in excess of $65,000 to $52,000, was a genuine compromise, in circumstances where no evidence to support or verify the quantum sought by the Offer was provided. Further, the Offer did not allow for the Club to request a costs assessment of the quantum sought.

24. For these reasons, I determine that Westwood Capital should pay the costs of the Club as agreed or assessed on the ordinary basis.

25. The Court makes the following orders:

1. The Defendant pay the Plaintiff’s costs of the proceedings as agreed or assessed on the ordinary basis.

2. There be no order to costs insofar as the Second Defendant is concerned.

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Decision last updated: 14 August 2024