Coshott v Woollahra Municipal Council [2007] NSWSC 1315 | Case summary

1 HIS HONOUR: On 9 August 2007 I made orders in relation to proceedings, which had been commenced by Mr Coshott against Woollahra Council. I dismissed the plaintiff's appeal from the decision of a Costs Review Panel dated 16 February 2005. In addition, I refused the plaintiff's claim for declaratory relief and dismissed the summons. I ordered the plaintiff to pay the defendant's costs both in relation to the appeal and the claim for declaratory relief contained in the summons. I granted liberty to the Council to apply regarding a refinement of the Costs Order. 2 On 14 November 2007 the Council made an application in relation to the costs I had ordered. The Council sought indemnity costs in relation to its costs incurred since 13 July 2005. 3 There is no need for me to set out the full details of the original proceedings heard by me on 3 and 4 July 2007. The facts and circumstances are fully set out and discussed in my judgment of 9 August 2007. 4 It may be said, however, that there were two very distinct claims for relief in the plaintiff's summons. The first was an appeal from a costs assessment of a Review Panel under the provisions of the Legal Professional Act 1987. This related to the costs awarded in favour of the Council by Puckeridge DCJ in the District Court on 5 December 2002. The Council filed a party/party Bill of Costs in October 2003 claiming costs in the sum of $116,418.10. Assessor Browne finally determined the plaintiff's liability to costs in relation to these proceedings in the sum of $81,322.18. There was then a Review Panel exercise. This review was completed on 16 February 2005. The substance of the review was that the Assessor's original determination was confirmed. 5 The plaintiff's second claim in the summons related to an amount of $150,000.00, which the plaintiff sought to recover from the defendant by way of restitution. The plaintiff never satisfactorily explained the precise manner in which this $150,000.00 was calculated. It appears generally, however, that it principally related to the costs of proceedings in the Federal Court. These costs were ordered against the plaintiff on 23 March 1999 and were subsequently allowed at $120,000.00. There was an appeal from this decision to the Full Federal Court and the outcome of this resulted in a further costs order being made against the present plaintiff in the sum of $11,230.25. There were also contested garnishee proceedings in the Federal Court and this resulted in a further costs order being made against the plaintiff in favour of the defendant. 6 Finally, there had been earlier proceedings in the Land and Environment Court before Bannon J. These were concluded by the dismissal of the plaintiff's summons, although no order for costs was made against him. It appears there may have been an appeal from this decision to the New South Wales Court of Appeal and costs were apparently awarded in favour of the Council on this matter as well. 7 It was the general assumption made by me in my original decision that the sum of $150,000 comprised, in general terms, the sum of these various costs orders to which I have most recently referred. They stood in contrast to the costs orders made in the District Court which were the subject of the appeal contained in the first part of the plaintiff's summons. 8 On 13 July 2005 the Council's solicitors had written to the solicitors for the plaintiff. This letter was written shortly after the present proceedings were commenced in the Supreme Court and only a few months after the conclusion of the review by the Costs Review Panel. 9 There is no need for me to set out the letter in full. The first three pages analyse the various claims made by the plaintiff in the summons. They argue, in a proper and rational fashion, that the plaintiff's appeal from the costs assessment was likely to be unsuccessful. Secondly, they made it clear to the plaintiff that the second part of his proceedings (those in which he sought to recover $150,000.00) were misconceived because they were based upon a mistaken assumption on his part that the Premsure Scheme was, in some way involved in the Federal Court and Land and Environment Court proceedings. The letter made it clear that this assumption was not soundly based. 10 The letter then continued: - "Having regard to the matters raised above, the orders and declaration sought in Mr Coshott's Summons, must fail. However, in an attempt to resolve the matter on a commercial basis , the Council has instructed us that it will agree to bear its own costs of the Summons in exchange for a dismissal of the Summons along with orders that the assessment of the Council's party/party costs be referred back to the Costs Review Panel for re-assessment on the issue of quantum only. It is a condition of the settlement that Mr Coshott agree that the Council and Premsure had a right to recover costs with respect to the District Court, Federal Court and LEC (and continue to have such a right). In exchange, the Council agrees to provide a copy of all confidential documents, which were before Mr Browne and the Costs Review Panel. Mr Coshott would then be provided with an opportunity to serve Notice of Objections and the Council would be provided with an opportunity to serve a Reply to Notice of Objections. Accordingly, it would be necessary for the following orders to be made by consent in Short Minutes of Order: (1) Summons filed 9 March 2005 be dismissed; (2) Plaintiff and Defendant bear their own costs of the Summons; (3) Certificate of Determination (CL 91897/03) by the Costs Assessor, Mr Darryl I. Browne dated 22 November 2004 be set aside; (4) Certificate of Determination (CL 91897/03) by the Costs Review Panel consisting of Robert J. Benjamin and Gordon Salier dated 22 November 2004 be set aside; (5) The Court notes that the Plaintiff and Defendant agree with the Costs Review Panel's opinion that: (a) The Costs Assessor did not err in law in his determination of the indemnity issue; (b) The Costs Assessor did not err in law in his determination of the subrogation issue; (c) The Costs Assessor did not err in law in his determination to take into account and rely upon the documents produced by the Costs Applicant (the Defendant) whilst denying the Costs Respondent access thereto and an opportunity to challenge or rebut those documents; and (d) The Cost Assessor did not deny natural justice to the Review Applicant (the Plaintiff). (6) That the matter be referred to costs assessment for re-assessment of the Cost Applicant's (the defendant's) party/party costs (CL 91897/03). (7) The Court notes that the Defendant agrees to provide copies of all confidential documents to the Plaintiff which were before Mr Browne and the Costs Review Panel (but not before the plaintiff) within 14 days of these orders being made. In addition, the Council and Mr Coshott would be required to enter into an appropriately worded Deed of Release with respect to the costs paid in the Federal Court and LEC proceedings. Should the above offer not be accepted and, as we anticipate, our client is successful at achieving a more favourable outcome, we reserve the right to tender this letter to the Court in support of appropriate orders, including an order that Mr Coshott pay the Council's costs of the Summons on an indemnity basis. This offer remains open for 21 days from the date of this letter." 11 The Council has argued before me that the Court, in its discretion, should order indemnity costs against the plaintiff for the period following the date of the letter, 13 July 2005. The Council has argued the letter may be properly viewed as a Calderbank letter (see Calderbank v Calderbank (1975) 3 All ER 333). Further, the Council argues that the offer of settlement was a reasonable one. It was made early in the proceedings and it gave a reasonable time for the plaintiff to respond. In effect, the plaintiff made no response to the offer. There was an offer of compromise made by his solicitors dated 10 August 2005 which in turn was ignored by the defendant Council. 12 The plaintiff has not disputed that Deacons letter of 13 July 2005 might properly be regarded as a Calderbank letter. He has, however, placed reliance upon a decision of the New South Wales Court of Appeal in Leichhardt Municipal Council v Green [2004] NSWCA 341. This decision was given on 22 September 2004. The leading judgment was by Santow JA. Bryson and Stein JJA agreed with Santow JA. In that decision, Santow JA said at para 44: - "…It is difficult to accept that the fact that a Calderbank offer by a defendant was not accepted gives rises to a prima facie entitlement to costs on an indemnity basis, when the course of authority in this area has been so overwhelmingly to the contrary." 13 At para 46, Santow JA pointed out that, for the Court to depart from the general rule as to costs, there must be particular grounds on which the Court can exercise its discretion. A defendant must show that the plaintiff's rejection of the offer was "unreasonable" under the general law. The discretion is to be exercised in all the circumstances of the case. His Honour made the point that indemnity costs do not flow as a matter of course from unaccepted defendant offers. 14 At para 47, Santow JA noted that there is very little difference between Calderbank offers and the situation involving an application for indemnity costs following an unaccepted offer of compromise by a defendant. Once again, his Honour stressed the unusual nature of an award of indemnity costs in relation to Calderbank letters. 15 In Oshlack v Richmond River Council (1998) 193 CLR 72 the High Court confirmed that, in the absence of special circumstances, the general rule should be applied by the Court in awarding costs to the successful party. In a passage often cited Gaudron and Gummow JJ stated (at 89): - "There is no absolute rule with respect to the exercise of the power conferred by a provision such as s 69 of the Court Act that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party. … Nor, before or since the introduction of the Judicature system, has there been any absolute proposition that the sole purpose of a costs order is to compensate one party at the expense of another … It may be true in a general sense that costs orders are not made to punish an unsuccessful party. However, in the particular circumstance of a case involving some relevant delinquency on the part of the unsuccessful party, an order is made not for party and party costs but for costs on a "solicitor and client" basis or an indemnity basis. The result is more fully or adequately to compensate the successful party the disadvantage of what otherwise would have been the position of the unsuccessful party in the absence of such delinquency on its part." 16 In the present matter, the Council has in my view satisfied me that, in the exercise of my discretion, I should make the suggested indemnity costs order. In my view, the plaintiff's rejection of the offer made to him was unreasonable. First, in relation to the costs appeal, the Council correctly identified the principles in relation to Mr Coshott's continued arguments regarding the District Court costs and the Premsure Scheme. The plaintiff had become so obsessed with his arguments in this regard that, in the ultimate, he refused to avail himself of the opportunity to make detailed submissions in relation to the costs assessment process itself. Similarly, with the continued assertions that the Council had not included all amounts in its Annual Reports, Mr Coshott's arguments ignored the evidence that had been placed before the Costs Assessor in this regard. 17 Secondly, the Council were in effect giving the plaintiff the opportunity to go back before the Costs Assessor so that he could make detailed objections to the bill which had been prepared. The plaintiff had, without making any submissions in that regard, already seen the original bill reduced by about 30%. There was every reason to suppose that he might have further been able to reduce the quantum of the costs by making detailed submissions. The offer of compromise gave him that very opportunity. Thirdly, it was not a situation in which the plaintiff was simply being asked to capitulate on the basis that he had no case. True it is that he was being asked to drop the unreasonable claims which he had been making throughout the costs assessment process but which had been rejected on two occasions. But the fact remains that he was being given, as I have said, an ample opportunity to ventilate any argument that he might make on the merits regarding the quantum of the costs he had to bear. Fourthly, so far as the summons itself was concerned, he was being invited to terminate those proceedings without having to pay any costs to the Council. 18 In relation to the second aspect of the plaintiff's summons, the letter from the Council made it clear (as the evidence did before me) that the plaintiff's arguments in this regard were completely misconceived as a matter of fact. The Premsure Scheme simply did not apply to the earlier proceedings and so the restitution argument had no legs at all. 19 In all these circumstances, I consider that the plaintiff's refusal to accept the offer of compromise was unreasonable. Further, the plaintiff's failure to accept that his own position in relation to the matters he wanted to argue was hopeless constituted an unreasonable stance on his part. 20 Before me, the only real matter relied upon by Mr Coshott was the sentence in the letter toward the end at page 4 which states as follows: - "In addition, the Council and Mr Coshott would be required to enter into an appropriately worded Deed of Release with respect to the costs paid in the Federal Court and LEC proceedings." 21 The plaintiff's submission focussed on the last three words. He said that the defendant did not, in the ultimate, get the benefit of such a result in the present proceedings even though the summons was dismissed. In other words, he argued that the result was not more favourable to the Council. While it is true that the orders I made did not specifically refer to proceedings in the Land & Environment Court, the defendant's letter in this regard had proceeded on the assumption that the amount of $150,000.00 sought to be recovered by Mr Coshott extended beyond the Federal Court to the Land & Environment Court proceedings. This assumption was probably not correct. But the fact that the assumption may have been incorrect in relation to the Land & Environment Court proceedings does not, in my opinion, alter the situation. After all, it was for the plaintiff to establish how the amount of $150,000.00 was constituted and he did not ever achieve this aim. Of course, it was clear that approximately $132,000.00 was represented by known costs amounts but the difference was never satisfactorily explained by the plaintiff in the proceedings before me. Moreover, the only costs order that had any bearing on the Land & Environment Court proceedings was in fact a costs order in the Court of Appeal. There were no orders for costs made in the Land & Environment Court itself. In any event, the outcome of the present proceedings was in reality clearly more favourable to the defendant than the terms offered in the letter. Consequently, the plaintiff's arguments in this regard should be rejected. 22 For these reasons, I order that the plaintiff pay the defendant's costs and that those costs be paid on an indemnity basis in relation to costs incurred on and after 13 July 2005.

Coshott v Woollahra Municipal Council

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Judgment (10 paragraphs)

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Cases Cited (2)