Alamdo Holdings Pty Limited v Australian Window Furnishings

Civil Procedure Act 2005, Clause 5, Schedule 6, s 98 LEGISLATION CITED : Supreme Court Rules 1970, Part 52A rules 33(2), 33(4) and (5) Uniform Civil Procedure Rules 2005, rule 42.1

Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2004] NSWSC 487; [2004] ANZ ConvR 351 Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2005] NSWSC 774 Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2006] NSWCA 224; (2007) NSW ConvR 56-167 Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2007] HCA Trans 94 CASES CITED : Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2006] NSWSC 1073 Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 McFadzean v Construction Forestry Mining and Energy Union [2007] VSCA 289 South Sydney Council v Royal Botanic Gardens and Domain Trust (No 2) [2000] NSWCA 242

Alamdo Holdings Pty Limited - Plaintiff PARTIES : Australian Window Furnishings (NSW) Pty Ltd - First Defendant Hunter Douglas Ltd - Second Defendant

COUNSEL : Mr R G McHugh/Ms K M Richardson - Plaintiff Mr A J Meagher SC/Mr J A C Potts - Defendants

SOLICITORS : Speed & Stracey - Plaintiffs Corrs Chambers Westgarth - Defendants

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

50135/99 ALAMDO HOLDINGS PTY LIMITED v AUSTRALIAN WINDOW FURNISHINGS (NSW) PTY LTD & ANOR JUDGMENT 1 I am dealing with questions of costs consequent upon final disposition of the substantive claims in these protracted proceedings which were commenced by summons filed on 4 November 1999. 2 The outcome was that the plaintiff, Alamdo Holdings Pty Ltd ("Alamdo"), recovered judgment in the sum of $233,660.47 against the defendant, Australian Window Furnishings (NSW) Pty Ltd ("AWF"), together with interest of $120,000.00. 3 This result was the product of a combination of a referee's report, decisions of the court concerning adoption of the report and issues not dealt with by the referee (Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2004] NSWSC 487; [2004] ANZ ConvR 351), the court's decision on a question ordered to be separately determined (Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2005] NSWSC 774) and, ultimately, an agreement of the parties. The elements of the result other than the parties' agreement went to issues of liability. Once the position on liability had crystallised by non-consensual means - and following dismissal of an appeal by Alamdo to the Court of Appeal (Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2006] NSWCA 224; (2007) NSW ConvR 56-167), dismissal of an application by Alamdo for special leave to appeal to the High Court (Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2007] HCA Trans 94) and dismissal of a subsequent application by Alamdo for leave to amend the summons (Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2006] NSWSC 1073) - the parties were able to agree the quantum of damages and interest for inclusion in orders disposing of all matters other than costs. Those orders were made on 27 March 2007. I heard argument on costs on 22 October 2007. 4 Alamdo's claims in the proceedings were claims for damages for breach by AWF of covenants contained in a lease of industrial premises between Alamdo as lessor and AWF as lessee. The covenants were, in broad terms, repair covenants. 5 In Alamdo's summons, as originally filed, there were claims for (a) the cost of repair and remedial work listed in 187 individual items for each of which a particular sum of money was specified (ranging from a low of $45.00 for "Repaint Plantroom door and frame" to a high of $77,726.00 for "Repair damaged bitumen both carparks near main building") - a total of $604,161.15; (b) establishment costs, including labour - $14,945.01; (c) project management - $47,789.30; (d) geotechnical consultant - $3,520.00; (e) loss of rent - $258,540.00; (f) "interest pursuant to clause 9.4 of the lease" - not quantified; and (g) "all costs, charges and expenses (including legal costs and disbursements and professional consultants fees)" - also not quantified. 6 The total quantified claim, at that point, was $928,955.46. This was reduced to $924,111.10 before and during the reference hearing. 7 In terms of liability, the results in relation to the distinct items in paragraphs (a) to (e) of the summons were as follows: (a) Alamdo was successful in relation to 144 of the 187 work items and, if these are grouped according to trades, the success was in respect of 18 out of 24 trade groups; (b) The finally agreed figure included an apportioned amount for establishment costs; (c) The finally agreed figure also included an apportioned amount for project management; (d) Alamdo recovered nothing in respect of the geotechnical consultant whose work related to the bitumen paving claims which the referee and the court determined adversely to Alamdo; (e) The claim for loss of rent was determined adversely to Alamdo by both the referee and the court. 8 It is to be remembered that Alamdo's claim was a claim for unliquidated damages for breach of contract. The several claimed amounts, as set out in the summons, really represented amounts spent or estimated as necessary to be spent to effect particular items of repair or restoration. They were not the subject of any liquidated claim. 9 AWF says that twelve heads of claim were recognised as "big ticket items". These included the claims for $258,540.00 for loss of rent, $77,726.00 for bitumen paving carparks near the main building and $67,264.00 for bitumen paving of another carpark. Submissions refer to several occasions on which the description "big ticket items" was used in the opening address by senior counsel for AWF at the hearing before the referee. The twelve items referred to as "big ticket items" involved an aggregate claim for $628,057.00. That claim was successful in respect of three of the twelve items and to the extent of $81,610.00 (or 13%) of the total of $628,057.00. 10 That total of $628,057.00 was, of course, part of Alamdo's overall claim. As I have said, the overall claim, as initially advanced, was in the sum of $928,955.46, disregarding the interest claim and the claim for expenses (items (f) and (g) at paragraph [5] above) and was revised before and during the reference hearing to a sum of $924,111.10. 11 Leaving to one side claims in respect of interest and expenses, the outcome in the proceedings can be seen to have been as follows: 1. Alamdo recovered judgment in the sum of $233,660.47 in respect of claims quantified by it at $924,111.10. 2. As regards particular items of repair and restoration work, Alamdo was successful in respect of 144 items out of a total of 187 items and 18 trade groups out of 24 trade groups. 3. As regards the twelve so-called "big ticket items", Alamdo was successful in respect of three; and those three represented $81,610.00 out of a total of $628,057.00 claimed for the "big ticket items". 12 There are other ways in which the result may be evaluated. For example, some of the claims involved more evidence and more detailed submissions than others. Some claims called for more comprehensive and deeper legal analysis than others. It may also be possible to view as separate components or aspects the commencement of the proceedings, the reference and the hearing before the referee, the motions concerning adoption of the referee's report (including determination of liability issues not dealt with by the referee), the determination of the separate question and the determination of the application for leave to amend. Another possible dichotomy is between success on matters of fact and success on matters of construction of the lease. 13 Alamdo's primary submission is that, as the successful party and in the light of rule 42.1 of the Uniform Civil Procedure Rules 2005, it is entitled to an order that AWF pay Alamdo's costs of the proceedings. That submission proceeds on the simple basis that the "event", for the purposes of rule 42.1, is the money judgment entered against AWF and in favour of Alamdo. 14 AWF makes a number of submissions in favour of a different result. One of them involves a question about transition from the Supreme Court Rules 1970 to the Uniform Civil Procedure Rules 2005 and it is desirable to deal with that submission at once. 15 Mr Meagher SC drew attention, on behalf of AWF, to provisions of the Supreme Court Rules dealing with Commercial List proceedings claiming damages (which these are) and saying that, where the proceedings were commenced after 1 October 1997, a plaintiff who recovered not more than $225,000.00 was not entitled to the costs of the proceedings "unless, it appearing to the Court that the plaintiff had sufficient reason for commencing or continuing the proceedings, the Court makes an order for payment": Supreme Court Rules, Part 52A rule 33(2). It was further provided that, where a plaintiff in proceedings of the particular description recovered more than $225,000.00 but not more than $450,000.00, costs recoverable by the plaintiff were limited to one half of the whole amount, unless the court saw fit to make some other order: Part 52A rules 33(4) and (5). These rules made it clear that the court was to take into account whether the plaintiff, at the time of commencing the proceedings, had reasonable grounds for expecting to recover more than $225,000.00. 16 It was acknowledged by Mr Meagher that, although these proceedings were commenced before the commencement of the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules, the matter of costs following judgment entered after that commencement was in no way governed by the former provisions. Clause 5 of Schedule 6 to the Civil Procedure Act says that Act and the uniform rules apply to proceedings commenced before the Act's commencement as they do to proceedings commenced on or after that commencement - subject, however, to a power of the court to dispense with provisions of the uniform rules in relation to such pre-commencement proceedings, it being also provided that the court may make "such consequential orders (including orders as to costs) as are appropriate in the circumstances. 17 It is by no means clear that, in proceedings straddling the commencement of the Civil Procedure Act and the uniform rules, the court could, pursuant to that regime, superimpose the relevant aspects of the former Part 52A rule 33. But it is not submitted on behalf of AWF that the court should do that - merely that the terms of the costs regime that existed when the proceedings were commenced may properly be taken into account by the court when it exercises the discretion with respect to costs than now derives from s 98 of the Civil Procedure Act. 18 I am not persuaded that this is an appropriate approach. The legislature has made it plain that the regime with respect to costs contained in the Civil Procedure Act and the uniform rules should apply to incomplete proceedings to the exclusion of the pre-existing regime. A discretion to grant dispensations from the new regime was recognised. The replacement of one by the other is complete. The court should therefore approach costs questions in such proceedings without regard to any impact that the superseded provisions may have had. 19 I return therefore to the contention of Alamdo that, on the basis that costs should follow the "event" in accordance with rule 42.1 of the Uniform Civil Procedure Rules, the appropriate outcome is simply an order that AWF pay Alamdo's costs. 20 AWF's principal submission in response is that there should be no order as to costs, so that each party is left to bear its own costs. That submission is made on the footing that more than half the time and expense involved in the reference to the referee was devoted to items on which Alamdo was wholly unsuccessful. That is said to be borne out by the fact that an analysis of the transcript of proceedings before the referee shows 63.4% of pages to be concerned with items on which Alamdo was unsuccessful, 19.6% to relate to items on which Alamdo was successful and the remainder to cover matters not related to specific items. In relation to the hearing by me of the adoption motions, it is said by AWF that it was successful on some 90% of the matters debated. On the question for separate determination, AWF was wholly successful. AWF also successfully resisted Alamdo's application for leave to amend. A just outcome in those circumstances, it is said, is that there should be no order as to costs. In essence, the money judgment in Alamdo's favour should be seen as offset by the substantial success of AWF as just described. 21 This general submission of AWF is supplemented by submissions challenging as arbitrary the division of claims into trade group and items of work. It also submitted that recovery of only a small sum in respect of a particular item can hardly be regarded as a success. AWF also emphasises the importance it attaches to the "big ticket items", saying: "If the plaintiff could trade the success it had on the items it won for success on the Big Ticket Items on which it failed, it would undoubtedly do so, because it would thereby more than double its damages claim." 22 AWF also says that, out of the total claim, as pressed, of $924,111.10, Alamdo eventually abandoned or lost its claim to the extent of $600,733.01. 23 If its primary submission is not accepted, AWF proposes, as an alternative, a quite complex set of orders. It is desirable first to consider the primary positions taken by the parties. 24 In determining the question of costs, the court must proceed, in the first instance, in the way described in rule 42.1 of the Uniform Civil Procedure Rules to which brief reference has already been made. That rule is as follows: "Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs." 25 The position here is the same as that which prevailed under Part 52A rule 11 of the former Supreme Court Rules. The discretion to make "some other order" under that rule was the subject of the following observations of the Court of Appeal (Beazley JA, Tobias JA and McColl JA) in James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296: "[31] Costs orders in the Supreme Court are governed by the provisions of s.76 of the Supreme Court Act 1997 and the Supreme Court Rules . Section 76 provides, relevantly that subject to the Act and the Rules, costs shall be in the discretion of the Court: s.76(1)(A). Part 52A r.11 acts as a limited proscription of the Court's discretion conferred by s.76. Part 52A r.11 provides that, subject to Part 52A, the Court shall order that costs follow the event ' except where it appears to the Court that some other order should be made as to the whole or any part of the costs '.

[32] The effect of Pt 52A r.11 is that an unsuccessful party may be ordered to pay the entirety of the costs of the successful party, even though the successful party did not succeed on all issues. However, as is specified by the rule itself, the Court is entitled to make a different order. That may occur where there are multiple issues involved. This was the subject of comment in Waters v. P C Henderson (Aust) Pty. Limited (unreported CA(NSW) Kirby P, Mahoney and Priestley JJA, 6 July 1994) where Mahoney JA said: 'Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless, unless a particular issue or group of issues is clearly dominant or separable, it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed.'

[33] Similarly, Toohey J made the following observations in Hughes v Western Australian Cricket Association (1986) ATPR 40-748: '1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order. 2. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed. 3. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the party's costs of them. In this sense, "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law.' (references omitted)

[34] Where a matter involves multiple issues and the question before the court is whether it should make some other order as to costs other than the order that costs follow the event, a distinction is commonly drawn between cases which involve clearly discrete issues for determination, and those in which all issues are inseparable, or at least sufficiently linked, with respect to the overall disposition of a particular matter. In Permanent Trustee Aust Ltd v FAI General Insurance Co Ltd (unreported, NSWSC, 3 June 1998), Hodgson CJ in Eq noted that the obvious examples of a matter involving discrete issues is one where a plaintiff makes separate claims for different relief, or a claim by a plaintiff and a cross-claim by a defendant. Another example is where a respondent is successful in having an appeal against an earlier decision dismissed, but for reasons other than those raised in the respondent's Notice of Contention. This is not to say that so-called 'discrete issues', for the purposes of apportioning costs, only exist in cases where there are separate claims made within a single matter. As Toohey J stated in the passage quoted at [33] above, it can relate to ' any disputed question of fact or law ' before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter.

[35] In Madden v Connell [2001] NSWSC 1051, Hamilton J referred to there being a 'rule' that where there are 'discrete issues and the time taken on each issue at the hearing can be identified or realistically estimated', an order for costs may be made against the party which fails on such issues, or alternatively, that party may be deprived of its costs for that portion of the matter. In the Court's opinion it is preferable not to speak in terms of 'rules'. However, the underlying approach to the 'rule' stated by his Honour may be an available approach to the exercise of the court's discretion as to costs in a particular case, depending upon all of the circumstances.

[36] Where the court does exercise its discretion to apportion costs, the apportionment itself involves the exercise of discretion. As Gummow, French and Hill JJ recognised in Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261: 'Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion for the trial judge. Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation.' This case is a classical example of that sentiment." 26 A recent statement of the relevant principles is found in the judgment of the Court of Appeal (Beazley JA, McColl JA and Basten JA) in Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373: "[7] As the appellants submit, the commencing position is that costs follow the event so that a successful party is entitled to costs. In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 (at [24]). A similar approach is adopted in the Court of Appeal. If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 (at [27]).

[8] Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 (at [18]) per Hislop J (with whom Beazley JA and Tobias JJA agreed)." 27 In McFadzean v Construction Forestry Mining and Energy Union [2007] VSCA 289, the Court of Appeal of Victoria upheld orders that successful plaintiffs pay 40% of the costs of unsuccessful defendants. The court (Warren CJ, Nettle JA and Redlich JA) said at [153]: "The judge below acknowledged that in the normal course, a plaintiff who was only successful on one of a number of pleaded causes of action would be entitled to costs. In our view, the reasons his Honour gave for departing from this course were sound. The Rules of Court are wide enough to permit an apportionment of costs according to issues or causes of action. Importantly, the judge regarded the case brought by the successful appellants as a 'substantial failure ... whether assessed by references to causes of action or issues.' His Honour observed that the plaintiffs had been successful in eight of the 63 causes of action they had brought, and that, assessed as a proportion of the disputed questions of fact resolved in their favour, the success of the plaintiffs was substantially less than that. In these circumstances, there was clearly a reasonable basis for his Honour's conclusion that a 'substantial injustice' would result from an award of costs in favour of the successful plaintiffs." 28 The court also said at [156]: "The appellants also put their complaint in these terms: that the judge erred in failing to have regard to the fact that the 'plaintiffs' claims' were not severable. As we have noted, in exercising its discretion as to costs the court is entitled to take into account the failure of a party on certain 'issues'. But in this context, as the judge noted, 'issue' is not used in the technical pleading sense, but refers to any disputed question of fact of law. Accordingly, the question of the severability of 'claims', in the sense of causes of action, is not precisely to the point. In any event, his Honour was aware of the need to consider the extent to which the evidence led in respect of the successful Wilkinson v Downton claims also related to the other causes of action. Despite the complex nature of the case, his Honour found that 'it remains entirely possible to identify the disputed issues which I had to resolve, and the evidence adduced specifically with respect to each of them.' As his Honour found, the causes of action on which the successful plaintiffs failed dominated the trial." 29 Difficulties of delineation and apportionment were mentioned at [158]: "In fixing costs a superior court may treat 'heads of controversy as units of litigation' and give directions to the taxing master in relation to them, such units not being circumscribed by pleadings, causes of action or issues capable in themselves of leading to the granting of relief. But to avoid the complications of taxation resulting from making orders recognising the entitlements to costs of a party on each action on which they were successful, the orders may be notionally set off against each other or other adjustments made so as to produce an order for a proportion of one party's costs. This approach to costs orders where an action has had mixed success has been followed in a number of cases. In Hughes v Western Australian Cricket Association (Inc) , Toohey J had regard to the fact that the plaintiff had succeeded on some issues but failed on others, but concluded that: 'it would be unsatisfactory to attempt to apportion issues and leave the fixing of costs of those issues to the taxing officer. That would impose a very great burden on him and upon the parties' legal representatives.' In our view, the judge's approach to the apportionment of costs was particularly apposite in this case, having regard to the multiplicity of parties, actions, and issues, and the mixed success enjoyed by the plaintiffs." 30 The general approaches recognised in the case law allow attention to be paid to "multiple issues" or "matters" or "heads of controversy" or "portions" of a plaintiff's claim. Time spent on identifiable aspects may be taken into account. The delineation is not necessarily to be derived from pleadings or statements of causes of action. And it should not be made in such a way as to cast impossible or difficult burdens upon the person whose task it will be to assess costs. The real guiding principle, it seems to me, is that stated by Gummow, French and Hill JJ in Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261: "Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion for the trial judge. Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation." 31 I have referred to various dichotomies or criteria or methods of measurement put forward by each party as indicators of its success and the opponent's corresponding lack of success. I am not, however, persuaded that any of them alone represents a reliable basis for approaching the question of costs, or that the whole in combination can really indicate more than the validity of a general impression. Some of the matters put forward seem, in any event, to involve arid comparison: what follows if one party prevailed on a greater number of factual issues while the other prevailed on a greater number of issues of construction; or if one achieved a better outcome on matters requiring comprehensive legal analysis while the other prevailed in areas involving more evidence and more detailed submissions? Regard to "success" or lack of it on the individual items within the 187 is of virtually no relevance when the amount involved in the bitumen repairs ($77,726.00 for one area and $67,264.00 for the other) and the very significant legal argument in relation to the bitumen repairs is contrasted with the item involving $858.60 for installation of a heater covered at paragraph 100 of my judgment of 7 June 2004. 32 In the end, any form of mathematical precision is impossible in this case. The court must resort to "matters of impression and evaluation". When that approach is taken, the result is seen to be one in which Alamdo recovered judgment upon a claim for unliquidated damages in a sum representing about 25% of its quantified claims ultimately pressed, while AWF prevailed on most of the controversial legal issues and questions of construction. Some departure from the rule that would see AWF made liable for the whole of Alamdo's costs is, in my view, required. 33 It is, as I have said, the principal contention of AWF that the departure from the general rule should be such that there is no order as to costs and each party should be left to bear its own costs - in other words, that Alamdo, which has received an award of damages, should be refused its costs. 34 That outcome, it seems to me, will generally be appropriate only if the conduct of the party who has recovered judgment has been in some way improper or unreasonable: see generally the annotations at paragraph 42.1.20 of "Ritchie's Uniform Civil Procedure (NSW)". I do not consider that to be the case here. In particular, I do not consider that Alamdo resisted unreasonably the contentions of AWF on the legal issues and issues of construction on which AWF was ultimately successful by way of defence in several areas. All such issues were fairly arguable. It cannot be said that Alamdo induced AWF to participate in litigation that was unnecessary. 35 The appropriate departure from the general rule should be based wholly on the mixed success of the parties or the mixed outcome in the proceedings but, in the end, I am not satisfied that it is practicable to deal with that mixed outcome by fashioning an order that deals with separate issues or aspects or claims. My general impression is that AWF had very significant success in making good defences of some difficulty and thereby confined Alamdo's monetary success to a sum very significantly less than that which it sought. 36 The approach favoured by Alamdo, if its principal contention is not accepted, is that it should have a fixed percentage of its costs rather than some mathematically calculated portion - in other words, that it should simply be deprived of a proportion of its costs on the basis of a general assessment of respective degrees of success. Such an approach is consistent with that taken in a number of cases where issue-by-issue treatment has been considered impracticable or inappropriate. I need only mention, by way of example, the decision of the Court of Appeal in South Sydney Council v Royal Botanic Gardens and Domain Trust (No 2) [2000] NSWCA 242. 37 The appropriate exercise of the discretion conferred by s 98 of the Civil Procedure Act 2005 and Rule 42.1 of the Uniform Civil Procedure Rules is, in my view, to enable Alamdo to recover one-half of its costs of the action. There will be an order accordingly. 38 I have not so far mentioned offers of compromise and submissions based on them. It is sufficient to refer briefly to a course of correspondence which began on 7 September 1999 (that is, before the summons was filed) when Alamdo wrote to AMF claiming $970,494.04. On 13 September 1999, AMF responded and offered "$20,000 in full and final settlement of any outstanding works". That offer was rejected on 24 September 1999 in a letter which conveyed Alamdo's counter-offer "to accept payment of the sum of $400,000 inclusive of interest and costs in full and final settlement of all matters between us on this subject matter". It appears that there was no response by AWF. 39 Bearing in mind that little would have been incurred by way of interest and costs as at September 1999 and that the eventual disposition, implemented by orders made in March 2007, was $353,660.47 (inclusive of interest of $120,000.00), I accept AWF's submission that Alamdo's offer in September 1999 to accept $400,000.00 inclusive of interest and costs was not such an offer as made it unreasonable for AWF not to accept. 40 The only order with respect to costs will be that which I have already indicated, namely, an order that the defendant pay one-half of the plaintiff's costs of the proceedings as agreed or assessed. **********

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