[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[2]
Judgment
THE COURT: On 18 October 2019 this Court delivered judgment in respect of an appeal brought by Mr Vase against Ms Bokan: Antov v Bokan (No 2) [2019] NSWCA 250. The second respondent to the appeal, Ms Antova, did not participate in the hearing.
The Court ordered that the appeal be dismissed with costs.
Immediately following the making of those orders, counsel for the first respondent made an application to file written submissions seeking a variation of the costs order in light of a Calderbank letter which had been sent on 24 April 2019, which was 14 days after the first respondent had filed its submissions in reply to the appellant's written submissions and approximately 9 weeks prior to the hearing of the appeal on 2 July 2019.
The terms of the offer contained in the Calderbank letter were relevantly as follows:
"We are instructed to make the following offer to settle the proceedings:
1. The Court of Appeal proceedings 2018/332235 be dismissed with no order as to costs;
2. The existing order that the [f]irst [r]espondent to pay the [a]ppellant's costs of the Notice of Motion for security for costs remain.
("Offer")
This Offer is open to be accepted until 4pm 24 May 2019. The Offer must be accepted in writing.
Our client reserves the right to rely on this letter on the question of costs in accordance with the principles set out in Calderbank v Calderbank [1976] Fam 93 and subsequent cases on point and pursuant to s 131(2)(h) of the Evidence Act 1995 (NSW)." (emphasis in original).
Both sides have filed submissions in relation to the variation of the costs order sought by the first respondent.
The first respondent accepted that she bore the onus of satisfying the Court that it should exercise its discretion to order indemnity costs from the date of (or a period shortly after) the Calderbank letter. She referred to and called in aid the statement of applicable principles with regard to Calderbank offers in this Court's recent decision in Hunter v Roberts (No 2) [2019] NSWCA 235 at [6]−[7] as follows:
"The general rule as to the costs of proceedings is that they should 'follow the event' or result (UCPR, r 42.1); and unless the Court orders 'otherwise' those costs are to be assessed on the 'ordinary basis' (UCPR, r 42.2), which entitles the party to recover a 'fair and reasonable amount' for costs (Civil Procedure Act 2005 (NSW), s 3(1) and Legal Profession Uniform Law Application Act 2014 (NSW), Pt 7, Div 3). The making of an offer of compromise in the form of a Calderbank letter may justify a departure from the ordinary basis on which costs are awarded and assessed and, as Giles JA observed in SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37], the ultimate 'question is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule'. Subsequent authorities (including Leichhardt Municipal Council v Green [2004] NSWCA 341) have proceeded on the basis that such a departure will not be justified unless in all the circumstances it was unreasonable for the offeree not to accept the offer.
The relevant principles are not in issue and sufficiently summarised in the following statements of the Court in Perisher Blue Pty Ltd v Nair-Smith (No 2) [2015] NSWCA 268 at [14], [16] and [60]:
'[14] There is no presumption that an offeree who does not accept an informal offer and does not obtain a judgment more favourable than the offer, will necessarily pay indemnity costs from the date of the offer: Leichhardt Municipal Council v Green [2004] NSWCA 341 at [19] (Santow JA, Stein AJA agreeing); Jones v Bradley (No 2) [2003] NSWCA 258 at [6]-[9]; Ambulance Service of New South Wales v Worley (No 2) [2006] NSWCA 236; 67 NSWLR 719 at [18] and Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 (Miwa) at [8].
…
[16] It has been said an assessment of the reasonableness of a party's conduct in not accepting an offer must be made on a summary basis: Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322 (Elite v Salmon) at [148] (Basten JA). The factors relevant to the question whether a rejection of an offer is unreasonable include whether the offeree had an adequate opportunity to enable it to consider and deal with the offer: Elite v Salmon at [99] (McColl JA) citing Donnelly v Edelstein (1994) 49 FCR 389 at 396.
…
[60] Considerations relevant to the determination of an unreasonable refusal are identified in Miwa (at [12]), based on Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; 13 VR 435 at [25], and include:
(a) the stage of the proceeding 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 as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed;
(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it.'"
The first respondent submitted that the offer of 24 April 2019 was clear, that sufficient time was given to consider the offer (which was open to be accepted until 4.00pm on 24 May 2019) and that the extent of the compromise was significant in the circumstances. The first respondent also submitted that, as vindicated by the judgment of the Court and as exposed by the first respondent's written submissions, the appellant's prospects on the appeal were not strong and that it was unreasonable in all the circumstances for the appellant not to have accepted the offer.
The first respondent sought a variation of the orders made on 18 October 2019 by ordering the appellant to pay the first respondent's costs of the appeal on the ordinary basis until 23 April 2019 and on an indemnity basis thereafter.
In a short written submission filed in response, the appellant submitted that it was not automatic that the first respondent would be entitled to an award of indemnity costs. That proposition is undoubtedly correct. The appellant also submitted that the:
"…offer was not a genuine compromise of the appeal. It sought merely a dismissal of the appeal and did not attempt to traverse any of the arguments raised on the appeal. It also contained a costs offer (in the sense that each party was to pay their own) but without any notice to the appellant of what the respondent's costs were (if any)".
In our opinion, the first respondent is entitled to a variation of the costs order but not in terms of the variation sought which would, in effect, have required the appellant to accept the offer on the very day it was made. The Calderbank letter gave the appellant a period of one month in which to accept it. That was no doubt chosen as a reasonable time for the consideration of the offer and, in our opinion, any variation of the costs order should operate from that date rather than the date of the Calderbank letter.
In our opinion, the offer was clear and did entail genuine compromise. It must have been obvious to the appellant that the first respondent had incurred significant costs in preparing her written submissions in response to the appellant's own written submissions on the appeal, particularly in the context of a case which had run for 8 days at trial and had resulted in a judgment of some 199 pages.
To the extent that the appellant submitted that the first respondent "did not attempt to traverse any of the arguments raised on the appeal", that submission should be rejected. The offer was served 14 days after the first respondent had served her written submissions in reply. Those submissions were detailed and set out clearly the weaknesses in the appellant's case. Those submissions were plainly vindicated by the subsequent decision of the Court of Appeal.
To the extent that the appellant submits that the Calderbank letter did not provide the appellant with any notice of "what the respondent's costs were (if any)", the Calderbank letter did not require the appellant to pay any of the respondent's costs and it must have been obvious, from the nature of the case, including the length of the trial and the wide ranging nature of the grounds of appeal, that the costs incurred to the date of the offer were significant. It must also have been obvious that in the preparation for the hearing of the appeal, the first respondent would incur further substantial costs. It is not without significance that the appellant himself had retained senior and junior counsel for the appeal. In these circumstances, it is plain that what was in effect a walk away offer, together with the appellant continuing to enjoy an earlier costs order, did entail a significant compromise on the part of the first respondent.
It follows that the following order should be made:
Vary the order made on 18 October 2019 by ordering the appellant to pay the first respondent's costs of the appeal on the ordinary basis until 24 May 2019 and on an indemnity basis thereafter.
[3]
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Decision last updated: 30 October 2019