Tulloch (deceased) v Braybon (No 3)

[2010] NSWSC 1065

CITATION:	Tulloch (deceased) v Braybon & ors (No 3) [2010] NSWSC 1065
HEARING DATE(S):	23 June 2010
JURISDICTION:	Equity Division Expedition List
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	23 June 2010
DECISION:	Variation of orders made on 17 June 2010
CATCHWORDS:	PROCEDURE – Costs
LEGISLATION CITED:	(NSW) Uniform Civil Procedure Rules 2005 r 42.15A
CATEGORY:	Consequential orders
PARTIES:	John Archibald Tulloch (since deceased) Raymond Patrick Braybon (first defendant) Racing Information Services Australia Pty Ltd (second defendant) Racing Victoria Limited (third defendant)
FILE NUMBER(S):	SC 09/287768
COUNSEL:	I M Neil SC w LM Wilson (plaintiff) P T Taylor SC w S Blount (first defendants)
SOLICITORS:	Lumleys Solicitors (plaintiff) Taylor & Whitty (first defendant) Allens Arthur Robinson (second defendant) Minter Ellison (third defendant)

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

BRERETON J

Wednesday, 23 June 2010

2009/287768 John Archibold Tulloch (since deceased) v Raymond Patrick Braybon & Ors

JUDGMENT (ex tempore)

1 HIS HONOUR: Consequent upon the judgment given and orders provisionally made on 17 June 2010, a number of issues remain for determination.

2 The first is whether a declaration should be made to the effect of order 1 of that date, and/or whether it should be varied to specify a date from which the co-ownership it describes commenced. Neither party suggests that no such declaration should be made. The plaintiff proposes, and the defendant does not oppose, that a date be inserted specifying from when the co-ownership commenced. As a result of the argument, it appears that there is a reasonable consensus that the appropriate date would be 23 April 2007.

3 Although I have some reservations about including such details in a declaration where the precise issue has not been addressed and resolved in the case, it does seem to be a necessary consequence of my conclusions that the co-ownership commenced between 2 April 2007, when Mr Braybon served the registration papers, and 18 May 2007, when they were ultimately registered. Given the consensus which has emerged, and for the purpose of quieting potential future disputes, I will insert a reference to 23 April.

4 I would also extend the declaration to cover the entitlements to the prize money held by the third defendant Racing Victoria Limited, and make an order for distribution of that money (to which Racing Victoria has, as previously recorded, submitted).

5 The other remaining issue is the question of costs. Prima facie, the defendant having succeeded, there would be, as provisionally included in order 2 of 17 June, an order that the plaintiff pay the defendants’ costs. The question is whether some other order is appropriate, having regard to the history of offers made before and during the proceedings which now emerges.

6 As recorded in paragraph 22 of the principal judgment, the criminal proceedings concluded with the acquittal of Mr Braybon on 14 November 2008. On 7 January 2009, Mr Tulloch again accused Mr Braybon of having stolen the horse. On 11 February 2009, Mr Tulloch's solicitors made an offer to Mr Braybon's solicitors in the following terms:

1. The after all costs associated with the racehorse, being the costs associated with obtaining, maintaining, training and racing the horse are met, the winnings generated by the horse are distributed 50/50 between our client and your client.

2. That Mr Jack Tulloch be registered as the managing owner, but your client will retain a 50% share in the racehorse.

3. The any costs associated with the racehorse which are not covered by winnings generated by the racehorse, will be shared by our client and your client on a 50/50 basis.

7 Although it was submitted (for Mr Braybon) that this offer contemplated recovery from Mr Braybon of the purchase price of the horse, I think that, properly construed in the context of the letter as a whole – including, in particular, the reference to Jeanette Black's evidence in the criminal proceedings and to the offer providing a greater benefit than that evidence – I think the reference to costs of "obtaining" the horse are a reference to costs of acquisition as distinct from the purchase price itself.

8 On 19 February 2009, Mr Braybon's solicitors responded rejecting that offer and making a counter-offer which in substance proposed that out of the prize money there first be paid to Mr Braybon reimbursement for services rendered in respect of the horse of $10,000 to Mr Tulloch of $20,000, for services rendered and for costs of defending the criminal proceedings of $20,000. It also provided for Mr Braybon to pay Mr Tulloch $58,000 (being half of the purchase price) on any eventual sale of the horse.

9 The counter-offer was not accepted, and the proceedings were instituted on 26 February 2009. Shortly thereafter, on 4 March 2009, the horse was removed from the care of Mr Moody, though repossessed by Mr Moody the following day.

10 On 1 April 2007, after the proceedings had been instituted, but before Mr Braybon filed a defence, he made a formal offer of compromise in compliance with the rules in the following terms:

1 - The defendant offers to settle these proceedings in terms set out in this Offer of compromise;
2 - verdict for the defendant;
3 - each party to bear its own costs.

11 Plainly, the result ultimately obtained by Mr Braybon was more favourable to the defendant and less favourable to the plaintiff than that in the offer of compromise, because that result was, in substance, a judgment for the defendant, which ordinarily would involve the plaintiff paying the defendant's costs. The element of compromise was the foregoing of the claim for costs.

12 (NSW) Uniform Civil Procedure Rules 2005 r 42.15A applies if an offer is made by a defendant and not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim concerned as or more favourable to the defendant than the terms of the offer. It provides that in those circumstances, unless the Court orders otherwise, the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim on the ordinary basis up to the time from which the defendant becomes entitled to indemnity costs, and on the indemnity basis from the beginning of the day following the day on which the offer was made. The conditions engaging that rule are satisfied in this case, and that must, therefore, be the costs order, unless the Court otherwise orders.

13 Essentially, three reasons are raised for an "otherwise order". The first is that it is said that it was not unreasonable for Mr Tulloch to reject the offer in circumstances where the defence was not yet known and the proceedings were at an early stage. However, the issues had already been agitated between the parties in the criminal proceedings. While the defendant's negotiating position may have been that set out in the letter of 19 February 2009, that self-evidently changed, at least from the date of the offer of compromise. I do not think that the circumstances in which the offer was made and rejected were such as to justify an “otherwise order”.

14 Next it was said there was no genuine compromise, essentially because not having even filed a defence, the defendant would have incurred very little costs at that stage. I accept that only a very small element of compromise only involved when this offer was made, for that very reason. That does not disqualify it from consideration under UCPR r 42.15A, since such offers are specifically referred to in UCPR r 20.26(2). But the circumstance that only a very slight element of compromise would then have been involved is of some significance in deciding whether or not as a matter of discretion to “otherwise order”.

15 The other and more significant matter is the offer made on 11 February 2009 on behalf of the plaintiff which, had it been accepted, would have afforded the defendant a result practically equivalent to that which he has obtained out of the proceedings, and would have averted the costs of the proceedings as a whole. On the other hand, the response on behalf of the defendant, including an offer to pay his half share of the purchase price of the horse, if and when it was sold, although also proposing some further adjustments in the defendant's favour, was probably on balance also not far off the mark of the ultimate outcome, although more complexities are involved in it.

16 Had the plaintiff instituted proceedings claiming relief to the effect of that set out in the offer of 11 February 2009, and not the far more extensive relief ultimately claimed, the plaintiff's case, on the question of costs, would have been far more compelling than in the events which have happened. Nonetheless, it seems to me that, just as by the offer of compromise of 1 April 2009 the defendant afforded the plaintiff an opportunity to escape from the proceedings without adverse costs consequences on terms substantially equivalent to the outcome of the proceedings, so before proceedings were commenced, the plaintiff offered the defendant a chance to avoid the proceedings altogether on similar terms with similar cost consequences.

17 On balance I think the better view is that the two offers effectively cancel each other out in that way. I will therefore not make a special costs order in favour of the plaintiff, but I will also not make an indemnity costs order in favour of the defendant. The appropriate order remains that which I initially proposed: that the proceedings be dismissed with costs; that is costs on the ordinary party/party basis.

18 My orders are:

1. Withdraw orders 1 and 2 made on 17 June 2010, and in lieu thereof:

(1) Declare that the plaintiff John Archibald Tulloch deceased, and since his death his estate as to one-half share and the first defendant, Raymond Patrick Braybon, as to the other one-half share, have since 23 April 2007 been, and are the beneficial owners as tenants-in-common of one share in the horse Excelltastic , and the prize money won by it.

(2) Order that the third defendant Racing Victoria Limited distribute, in accordance with the Australian Rules of Racing, all prize money won by Excelltastic to the plaintiff and to the first defendant in equal shares.

(3) Order that Jeanette Black, as representative of the estate of John Archibald Tulloch, pay the first defendant's costs, and be entitled to an indemnity in respect of those costs out of the estate.

(4) Order that the proceedings be otherwise dismissed.

2. I direct that the exhibits may be returned at the expiration of seven days.

**********