David Kenneth Costin trading as DC Build Construct v Catherine Maree Parer in her capacity as administrator of the deceased estate of Christopher Charles Musgrave No. 2
On 17 September 2021 judgment was given in favour of the plaintiff in this matter in the sum of $276,435.88 together with interest. At the time of handing down judgment I indicated that subject to any other submissions of the parties there would be an order that the defendant pay the plaintiff's costs. It was indicated that the parties wished to make submissions on that issue. The issue was not whether or not a costs order in favour of the plaintiff should be made but whether it should be on the ordinary basis or on an indemnity basis from a certain date. Directions were made for the filing of any further evidence going to the issue of costs as well as for the filing of submissions. Those directions have been complied with and this is the costs judgment.
The plaintiff seeks an order that the defendant pay the plaintiff's costs on the ordinary basis up to and including 12 February 2021 and thereafter from 13 February 2021 the defendant pay the plaintiff's costs on the indemnity basis. The plaintiff relies on UCPR 42.14 and UCPR 42.16.
The defendant's position is to argue that there should not be an order for indemnity costs for any period and that the order to be made should be that foreshadowed in the judgment of costs being paid by the defendant to the plaintiff on the usual basis.
The basis of the plaintiff's application is that under cover of a letter dated 11 February 2021 the plaintiff served an offer of compromise dated 12 February 2021 pursuant to UCPR 20.26 offering to compromise the matter by entry of judgment in the sum of $285,000. The letter of 11 February 2021 stated that if that offer was found not to be within the rules then it was put forward as a Calderbank offer. There is no argument from the defendant that offer was not made in accordance with the UCPR.
The judgment determined by the court is for the sum of $276,435.88 plus interest up to judgement. At the time of handing down the reasons and giving the judgment the amount of interest had not been quantified. The interest referred to in the orders was interest both before and after judgment, though no order is required for interest after judgment due to the provisions of section 101 of the Civil Procedure Act (CPA). The reasons for judgment make it clear at paragraph 97 that all but $790.90 of the $276,435.88 was a successful claim in debt. There appeared to be in final submissions an emphasis by the plaintiff on the judgment being obtained in debt rather than of damages or as a quantum meruit, for reasons that were not made clear. I note that by section 100 CPA interest may accrue not only on a debt claim but a claim for recovery of money expressly including any debt or damages or the value of any goods. That section is inclusive not exclusive and does not prevent interest on any money found due as a quantum meruit. The plaintiff's statement of claim included a claim for interest.
In any event the parties have now agreed the amount of interest up to judgment in the amount of $25,507.55 and were, whilst preparing the costs submissions, in the process of having judgment entered in the amount of $301,943.43; see paragraph 3 of the plaintiff's submissions on costs dated 24 September 2021 and there is no demur from that in the submissions subsequently filed by the defendant. Despite this, the defendant submits at paragraph 27 of her submissions dated 1 October 2021 that the judgment of the court was in the sum of $276,435.88. That paragraph states that the judgment was expressed to be exclusive of interest. With the greatest respect to the defendant that is simply wrong. In the copy of the judgment handed down on 17 September the concluding paragraph states that there shall be a judgment for the plaintiff "in the sum of $276,435.88 together with interest to date and ongoing as provided for by the Civil Procedure Act and UCPR together with costs subject to any submissions of the parties". At T200 of the occasion when the judgment was given, at line 24 it was said "in this matter I find for the plaintiff in the sum of $276,435.88 together as in meaning with-plus that is-interest to date…..". There is no basis for the submission that the judgment does not include pre-judgement interest.
The same conclusion on this point is reached by reason of the provisions of UCPR 42.16. That rule provides for disregarding any amount of interest contained in the judgment accrued after the making of an offer to determine whether the result achieved by a party making the offer has been improved upon by the judgment. The interest accrued if ordered forms part of the judgment relevantly (i.e as at the time of the offer) to the consideration of the offer of compromise provisions.
The plaintiff has undertaken that calculation in the affidavit of Mr James sworn 24 September 2021. The table at paragraph 3 of Mr James's affidavit setting out the total of $25,507.55 as interest shows that in the period 1 January 2021 to 17 September 2021 approximately $8000 of interest accrued. Adopting that period favours the defendant by a period of some 42 days. If $8000 is deducted from the judgement of $301,943.43 the figure arrived at is approximately $294,000. The offer primarily relied upon by the plaintiff is that which was made on 12 February 2021 seeking or offering a judgment of $285,000. The plaintiff is therefore correct to argue that the judgment obtained on the claim is no less favourable to the plaintiff than the terms of the offer of 12 February 2021.
As a consequence by UCPR 42.14 (2) the plaintiff is entitled, unless the court orders otherwise, to an order against the defendant for the plaintiff's costs assessed on the ordinary basis up until 12 February 2021 and thereafter from 13th February 2021 on an indemnity basis.
The overall thrust of the defendants argument is that it was not unreasonable for the defendant to reject the offer. The defendant relies on two matters to support this, namely the fact that the defendant was the administrator of the estate of her late brother who had contracted with the builder and also that the defendant did not have a "clear perception" as to the strength or weakness of her position until the plaintiff served his affidavit of 21 May 2021 and the expert evidence of Mr Evans served 10 days later.
Much of the submissions by the parties engaged in a debate as to the circumstances in which a court would "order otherwise". Numerous authorities were relied upon by the parties. The argument for the defendant relies on authorities where it has been shown that it was not unreasonable to reject the offer though the authorities relied upon at paragraph 7 of the defendant's submissions are cases arising from offers by way of a Calderbank letter and not under the UCPR offer of compromise provisions, other than for the decision in Rogers v Rogers [2018] NSWSC 1982. That decision does give a more tempered measure for determining whether the court should order otherwise than as contended for by the plaintiff, who maintains that "generally exceptional circumstances are required" to disentitle the plaintiff to indemnity costs. Support for the plaintiff's decision is found in South East Area Health Service v King [2006] NSWCA 2, referred to at paragraph 3 of the submissions in reply, and also from Hillier v Sheather (1995) 36 NSWLR 414 at 422. The question was also considered in Barakat v Bazdarova [2012] NSWCA 140 at paragraphs 42 and following. Those passages identified a conflict of opinion as to whether exceptional circumstances are required. For present purposes and favourable to the defendant I proceed on the basis that exceptional circumstances are not required and that the position is as argued by the defendant, and is as follows, as stated in Rogers at [316] (excluding citations):
…….a party seeking to persuade the court to order otherwise must identify some feature or features of one or more of the proceedings, the claim, the offer (including for example when it was made) and the order or judgement obtained by the successful party which provide a rational basis for the court to displace what the rule specifies is the costs order
In the present case the features argued by the defendant to satisfy that criteria are set out at paragraph 10 above.
There are two simple points which prevent the defendant succeeding in her argument. The first is that the full extent of the case of the plaintiff was known to the defendant by no later than 20 November 2019. As set out at paragraph 5 of the earlier judgement that was the date of the invoice of the builder seeking a sum of $301,578.92. That invoice was supported by no less than 212 pages of documents. Mr Musgrave died in August 2019. The invoice just referred to was received by the administrator as acknowledged by paragraph 13 of the defendant's submissions. The second is that this is a very simple matter. The case was one where the plaintiff sued for a money sum in debt or alternatively damages or quantum meruit for work that had been done pursuant to a cost plus building contract. The questions really can be reduced down to whether the work was done in accordance with the contract and whether the contract requires the cost to be reasonable, and if so whether it was, and if necessary whether the claim in quantum meruit succeeds. As to whether the work was done the house had been occupied by the late Mr Musgrave since April 2019. I infer that the estate has had the benefit of the property since his death. As to whether the costs were reasonable the administrator was fully able to assess that matter since 20 November 2019. The statement of claim was served on 16 December 2020. I find that the defendant was able to obtain a very clear perception of the issues in this case since November 2019. That the defendant is the administrator of the estate of the owner means that she did not have first hand knowledge of the events in question. In a case conducted largely on documents, and where those documents were provided at the time they were, that disadvantage of a lack of first hand knowledge does not prevent the defendant having a clear perception of the strength or weaknesses of her case. I conclude that there is no feature in this case that provides a rational basis for disentitling the plaintiff to an indemnity costs order as allowed for by UCPR 42.14.
In my view the further recourse of the defendant to seek to analyse the history of the various offers made backwards and forwards does not on the facts of this case advance the position. If anything it paints a picture of the defendant simply trying to gain some discounted outcome. This view is supported by the offer made by the defendant on 23 April 2021 of $1000 plus costs capped at $10,000 (an offer described at par 17 of the defendant's submissions as "genuine"). This should be seen in the context of, as noted in the earlier judgment, of $170,000 of the plaintiff's claim being debts the plaintiff incurred to third party suppliers and contractors. The progression in the offers then made by the defendant in June, July and August 2021 is from $185,000, to $200,000 and lastly to $300,000. None of those offers were made under the offer of compromise provisions and each of them were all inclusive, that is inclusive of costs. This approach supports the view just expressed that the defendant was simply negotiating to obtain a discounted outcome. There is nothing inappropriate in that course, but it is not a course which supports a finding of some feature giving a rational basis to deny an indemnity order.
The costs order therefore is for the defendant to pay the plaintiff's costs of the proceedings on the ordinary basis up until 12 February 2021 and thereafter from 13th February 2021 on the indemnity basis.
I note the reference in the submissions to the parties agreeing a minute of judgment in the sum of $301,943.43 and presume that matter can be attended to in the registry. If there is any difficulty in that regard I give the plaintiff leave to relist the matter as may need to be.
[2]
ORDERS
The defendant to pay the plaintiff's costs of the proceedings on the ordinary basis up to and including 12 February 2021 and thereafter from 13 February 2021 on the indemnity basis, in the amount agreed by no later than 10 November 2021, and in the absence of such agreement, as assessed.
The parties have leave to relist the matter in connection with the entry of judgment should the need arise.
[3]
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Decision last updated: 21 October 2021
Parties
Applicant/Plaintiff:
David Kenneth Costin trading as DC Build Construct
Respondent/Defendant:
Catherine Maree Parer in her capacity as administrator of the deceased estate of Christopher Charles Musgrave No. 2