In this matter I delivered judgment on 6 December 2019: Pearson v Jamaica Blue Pty Ltd [2019] NSWSC 1737. At that time I ordered that the appeal was upheld on grounds 1(b) and 3(a), otherwise the appeal was dismissed and leave to appeal was refused. The matter was stood over to a date to be fixed for the making of orders as to the further determination of the appeal and as to costs. The reasons for the last order were explained in my reasons for judgment at [97] and [98].
The parties have now agreed that the amount of the judgment given by the Local Court should be varied to $34,553.90 instead of $63,831.50. Accordingly, I propose to order that judgment of the Local Court given on 7 June 2019 is varied under s 41(1)(a) of the Local Court Act 2007 (NSW) so that there is judgment in favour of Jamaica Blue Pty Ltd against Mr Pearson in the sum of $34,553.90.
The only remaining issue is the costs of the appeal.
Section 98 of the Civil Procedure Act 2005 provides the Court with a wide discretion in relation to costs in a matter such as this. The general rule is that costs follow the event, as provided in the Uniform Civil Procedure Rules r 42.1. "The event" is to be taken as referring to the practical result of a particular claim: Doppstadt Australia Pty Limited v Lovick and Son Developments Pty Limited (No 2) [2014] NSWCA 219 at [15].
Alan Pearson v Jamaica Blue Pty Ltd [2020] NSWSC 121 | Case summary | Zoe
It appears to me that the practical result of this appeal is mixed. The plaintiff, Mr Pearson, sought judgment in his favour; that is he was seeking in effect that he not be required to pay anything to the defendant, Jamaica Blue. This is borne out by order 4 sought in the summons by which the appeal was commenced. In this regard, he was not successful. The result of the appeal is that he is liable to pay to Jamaica Blue $34,553.90 instead of $63,831.50. Similarly, however, the defendant, Jamaica Blue, sought to preserve the judgment in the Local Court at least to the extent of $61,665.03. That appears from paragraph 88 of Jamaica Blue's written submissions of 24 October 2019. In that regard, Jamaica Blue was not successful and is only entitled to recover $34,553.90. The practical result, therefore, was that each of Mr Pearson and Jamaica Blue were to a certain extent unsuccessful and each achieved about half of what was sought in this appeal.
Where the event or practical result of a matter is mixed it is often appropriate to take a broad-brush approach to the assessment of costs; and it is a matter of impression and evaluation, especially where a degree of apportionment can be done by reference to the issues or the way in which the matter was conducted: Avopiling Pty Limited v Bosevski (2018) 98 NSWLR 171 at [172]. The factors or principles that are taken into account in determining costs in such a case were set out in [173] of Avopiling, in particular the last dot point where it was said:
"Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation."
That is the approach I intend to adopt.
In doing so, it is important that the Court takes into account all the relevant circumstances of the case. The circumstances in the present case include that it was not unreasonable for Mr Pearson to bring the appeal in the circumstances. It was submitted by Mr Birch on behalf of Jamaica Blue that the matter could have been disposed of under the slip rule in the Local Court. I do not accept that submission. This was not a matter that was likely to be able to be resolved under the slip rule in that court given the nature of the positions adopted by the parties. Mr Pearson was challenging both his liability to pay any amount and the extent of the liability whereas Jamaica Blue only conceded that there had been an error to the extent of about $2,000 in the statement of the amount which the Local Court found Mr Pearson was liable to pay Jamaica Blue. In those circumstances it was not unreasonable, in my view, for the plaintiff, Mr Pearson, to commence the proceedings by way of appeal rather than seeking to have the matter dealt with under the slip rule, which I anticipate would have been vigorously opposed by Jamaica Blue given the position they have adopted in the appeal.
Having regard to the extent of the success of each party, the nature of the issues which were argued, which covered not only the existence of liability on Mr Pearson's part but also the extent of liability, and taking into account the amount of time spent on each in a broad-brush way because the issues were not clearly separated and the time spent on each was not able to be assessed on a mathematical basis such as by identifying the number of the paragraphs in the written submissions concerned one topic and the number concerning another, it seems to me that, subject to one further matter, the plaintiff should be entitled to half of his costs of the appeal.
That further matter is that Jamaica Blue made an offer to settle the appeal on or about 17 October 2019 which was to the effect that the judgment of the Local Court should be amended so that the amount of the judgment was $34,553.90 and there be no order as to costs. This was made by way of a Calderbank letter and it was repeated on an open basis in court on 4 November 2019, when the matter came before me for hearing. Given that the offer was that there be no order as to costs, it amounted, in effect, to an order to resolve the appeal for $34,553.90 inclusive of costs. I do not accept that this entitled Jamaica Blue to costs in these proceedings or to indemnity costs for two reasons.
First, as it turns out Mr Pearson has recovered $34,553.90 and would, but for the effect of the settlement offer, be entitled to half the costs of the appeal. The offer of compromise was only for, in effect, $34,553.90 inclusive of costs. Therefore, assessed practically, the offer can be seen as not more favourable to the plaintiff than the result he would have obtained, putting the offer of compromise aside for the moment. On the usual principles, therefore, I would not find that Jamaica Blue was entitled to costs on an indemnity basis or to a costs order in its favour in those circumstances.
Secondly, where an offer of compromise is more favourable, the applicable principles are that the making of an offer of compromise in the form of a Calderbank letter may justify departure from the ordinary basis on which costs are awarded and assessed but this is not always the case. The ultimate question is whether the offeree's failure to accept the offer in all the circumstances warrants departure from the ordinary rule, and generally such a departure will not be justified unless in all the circumstances it was unreasonable for the offeree not to accept the offer: Hunter v Roberts (No 2) [2019] NSWCA 235 at [6].
The considerations as to the determination of whether refusal was unreasonable include the following:
"(a) the stage of the proceedings at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree's prospects of success assessed at the date of the offer;
(e) the clarity with which the terms of the offer were expressed; and
(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it."
Hunter v Roberts at [7].
I accept that there was a substantial element of compromise in the offer. However, I do not accept that it was unreasonable for Mr Pearson to refuse the offer even at the late stage of the proceedings when the position of the parties had become quite clear. Mr Pearson's prospects of success were not so poor that he should have accepted the offer of, effectively, half the position he adopted with no order as to costs. It had, in effect, been conceded that the judgment of the Local Court could not stand because of an error. There was a failure by the Local Court to give reasons for the admittedly erroneous result. It was clearly arguable that there may have been no liability at all on Mr Pearson's part, although that argument was rejected in my earlier judgment. There was a reasonable case that the amount owing, if an amount was owing, was only in the order of $35,000.00.
Accordingly, in my view, the offer of compromise in the letter of 17 October 2019 and the later open offer of 4 November 2019 do not justify departing from my initial view that Jamaica Blue should pay half of Mr Pearson's costs of the appeal.
In those circumstances, the orders of the Court are:
1. The judgment of the Local Court given on 7 June 2019 is varied under s 41(1)(a) of the Local Court Act 2007 (NSW) so that there is judgment in favour of Jamaica Blue Pty Ltd against Mr Pearson in the sum of $34,553.90.
2. Jamaica Blue Pty Ltd is to pay half of Mr Pearson's costs of the appeal as agreed or assessed.
[3]
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Decision last updated: 24 February 2020