Zaki Property Pty Ltd v ACE Australian construction Experts Pty Ltd (No 2)

[2018] NSWSC 1207

Supreme Court

New South Wales

Medium Neutral Citation:	Zaki Property Pty Ltd v ACE Australian construction Experts Pty Ltd (No 2) [2018] NSWSC 1207
Hearing dates:	On the papers
Date of orders:	06 August 2018
Decision date:	06 August 2018
Jurisdiction:	Equity
Before:	Robb J
Decision:	See paragraph 21
Catchwords:	COSTS — Party/Party — Bases of quantification — Ordinary basis COSTS — Party/Party — Bases of quantification — Indemnity basis COSTS — Party/Party — Offers of compromise/Calderbank offers — whether Calderbank offer should be effective from the end of the 10 day period for which the offer was open or the date when the offer was made
Cases Cited:	Zaki Property Pty Ltd v ACE Australian Construction Experts Pty Ltd: [2018] NSWSC 976 Meldov Pty Ltd v Bank of Queensland (No 2) [2015] NSWSC 740 Walker v Harwood [2017] NSWCA 228
Category:	Costs
Parties:	TSA Management Pty Ltd (applicant) ACE Australian Construction Experts Pty Ltd (respondent)
Representation:	Counsel: J Mee (applicant) YLR Chen (respondent) Solicitors: Hardings Lawyers (applicant) RJI Legal (respondent)
File Number(s):	2017/386567

Judgment

1. I delivered the primary judgment in this matter on 27 June 2018: Zaki Property Pty Ltd v ACE Australian Construction Experts Pty Ltd: [2018] NSWSC 976.

2. The issue on the notice of motion filed by the applicant, TSA Management Pty Ltd (TSA), was whether the respondent, ACE Australian Construction Experts Pty Ltd (ACE) should be ordered to pay it an amount of $12,372.80, as the reasonable expenses incurred by it in complying with a subpoena to produce filed on 13 February 2018.

3. As stated at [73], I decided that the order sought by TSA in its notice of motion should be made.

4. At [74], I ruled that costs should follow the event, and ACE should be ordered to pay TSA's costs of the notice of motion.

5. I gave TSA leave, if it wished to claim that the costs should be paid on other than the ordinary basis, to deliver written submissions to my associate, and made directions concerning the delivery of a response by ACE.

6. The Court has now received written submissions from both TSA and ACE.

7. The effect of TSA's submissions is to ask the Court to make an order that the costs be paid by ACE on an indemnity basis rather than the ordinary basis, at least from 1 May 2018, if not earlier.

8. TSA's claim was for $12,372.80. On 1 May 2018, TSA's solicitors made a Calderbank offer to ACE's solicitors, in which they indicated that TSA would compromise its claim for a sum of $7500, on the basis that TSA would not seek payment of its legal costs incurred to that date.

9. The letter stated that the offer was open for acceptance until 4 PM on 10 May 2018.

10. ACE's solicitors responded to the Calderbank offer on 14 May 2018 by rejecting the offer, and increasing ACE's offer to $3800, from the earlier amount offered of $965.80.

11. The Court was advised that TSA's solicitors had made the same Calderbank offer in an earlier letter sent on 26 April 2018 that was inadvertently dated 26 February 2018. The discovery of that error led to the sending of the further letter in the same terms on 1 May 2018.

12. ACE does not contest TSA's claim that the 1 May 2018 offer satisfies the requirements of a valid Calderbank offer, and that the offer to accept $7500 was a genuine offer of compromise. Clearly, the effect of the order made is that TSA has succeeded in obtaining relief substantially in excess of the Calderbank offer.

13. The only matter put in issue by ACE is it claims that indemnity costs should not run from the date of the Calderbank offer, but should only run from the end of the 10 day period for which the offer was open. ACE relied for this purpose on observations made by Slattery J in Meldov Pty Ltd v Bank of Queensland (No 2) [2015] NSWSC 740 at [5], and by Basten JA (Payne JA agreeing) in Walker v Harwood [2017] NSWCA 228 at [11]-[12]. ACE's point was that the person receiving a Calderbank offer must have a reasonable time to receive and consider legal advice about the offer, and assess the circumstances, before deciding whether or not to accept the offer.

14. It may be noted that ACE's solicitors did not respond to the Calderbank offer until 14 May 2018, but in that letter they did not explain why they needed 14 days in order to respond to the offer. All they did was to offer on behalf of ACE an amount that was about half of the amount of the compromise offered by TSA.

15. It is not necessary to decide any issue of principle in this judgment, particularly on the point of when it is appropriate for the indemnity costs to run from the date the Calderbank offer lapses rather than the date when the offer is made.

16. I note from [12] of the primary judgment that TSA's solicitors first claimed the amount of $12,372.80 by letter dated 21 March 2018. That letter explained the basis of the claim.

17. At [15], I set out the terms of ACE's solicitors' 26 March 2018 response. In that letter the solicitors explained why their client offered to pay a total of $965.80.

18. As set out at [16], TSA's solicitors responded on 11 April 2018 by giving more reasons why TSA had made the claim that it had made.

19. The point of these observations is that, before the date of the Calderbank offer on 1 May 2018, there had already been open correspondence in which ACE had received an explanation for TSA's claim, and it had from 21 March 2018 to consider the merits of that claim. It had taken advice, and rejected the claim.

20. In these circumstances, in my view, it is appropriate for the indemnity costs order to run from 1 May 2018.

21. Accordingly, in addition to the orders indicated in the primary judgment, I order that the costs that the respondent was ordered to pay to the applicant by order 2 made on 27 June 2018 be payable on the ordinary basis up to 1 May 2018, and on the indemnity basis thereafter.

**********