Held: Defendants' costs in the substantive proceedings to be costs assessed on the ordinary basis
Source
Original judgment source is linked above.
Catchwords
Held: Defendants' costs in the substantive proceedings to be costs assessed on the ordinary basis
Judgment (2 paragraphs)
[1]
reasons for Judgment
On 17 October 2018, I handed down my reasons for rejecting the Plaintiff's claim to an easement and I ordered that the Plaintiff pay the Defendants' costs: see Eddy Gross v Graham Leslie Greer & Anor [2018] NSWSC 1572. Those reasons should be read together with these reasons and I shall use the same abbreviations as appeared in those earlier reasons.
The Defendants seek an order that the Plaintiff pay their costs on an indemnity basis, relying on the decision of Calderbank v Calderbank [1975] 3 All ER 333 ("Calderbank"). This application is based on the fact that the Defendants, through their solicitors, sent an email and two letters to the Plaintiff's solicitors, namely:
1. an email of 2 November 2017 ("the November email");
2. a letter of 24 May 2018 ("the May offer"); and
3. a letter of 20 July 2018 ("the July offer").
I do not think the November email (sent before this litigation commenced) can be viewed as a Calderbank offer, and for three reasons:
1. It is not expressed to be such.
2. Before the offer is made, the email commences with the words:
"If my clients were to accept your client's contention that…"
which rather undermines the contents as being capable of formal acceptance.
1. It does not indicate expressly or inferentially that, if the offer is not accepted, it will be relied upon on the question of costs - a matter which, although not decisive, is to be taken into account, as is the clarity with which the terms of the offer are expressed: see Horseshoe Pastoral Company Pty Ltd v Murray Smith (trading as South Coast Tile & Slate Company) (Court of Appeal, 7 November 1995, unreported); Giller v Procopets (No 2) [2009] VSCA 72; (2008) 24 VR 1 at 122 per Maxwell ACJ, Ashley and Neave JJA.
Eddy Gross v Graham Leslie Greer & Anor [2018] NSWSC 1656 | Case summary | Zoe
The May offer and the July offer are both expressed to be Calderbank offers. The differences between the two offers, apart from their date, is that the May offer makes no reference to an expert report of a Mr Potter, who was retained by the Defendants and who valued the compensation due for the easement at $32,000, and the May offer required acceptance within seven days and the July offer did not specify a time for acceptance. Both the May offer and the July offer offered to grant an easement three metres in width for $25,000. I should note that, although the ROC to which the Plaintiff asserted entitlement was 20 metres in width, the Plaintiff made it clear that a ROC of three metres would be sufficient for his needs.
The Defendants contend that the failure of the Plaintiff to accept either the May offer or the July offer should lead to the result, in accordance with the principles outlined in Calderbank, that the Plaintiff, having been wholly unsuccessful in the case, should pay the Defendants' costs on an indemnity basis.
The party seeking an order for indemnity costs bears the onus of establishing that it is appropriate for the Court in its discretion to make such an order. There is a difference between the position where an offer of compromise is made by a party pursuant to the Uniform Civil Procedure Rules 2005 (NSW) and that offer is not accepted, on the one hand, and a Calderbank offer that is made by a party in accordance with the principles outlined in Calderbank and that offer is not accepted, on the other hand. As Santow JA (with whom Bryson and Stein JJA agreed) explained, in the former situation, a prima facie entitlement to an order for indemnity costs arises where the offeror has achieved a result equal to, or more favourable than, the offer made, whereas the costs consequences of a Calderbank offer "lie within the discretion of the Court, to be exercised having regard to all the relevant circumstances of the case": see Leichhardt Municipal Council v Green [2004] NSWCA 341 at [19], citing in support SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37] per Giles JA, affirmed in Jones v Bradley (No. 2) [2003] NSWCA 258 at [9] per curiam.
There was agreement between the parties that the approach which should be taken in this case was to answer the two questions identified by Basten JA (with whom McColl and Campbell JJA agreed) in Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [8], namely, whether:
1. there was a genuine offer of compromise, and
2. it was unreasonable for the offeree not to accept it.
In my view, the May offer and the July offer were genuine offers of compromise. The Defendants had obtained a valuation from an expert of the compensation due for a three metre wide easement in favour of the Plaintiff along the ROC and offered a discount on that amount. It was accepted by Mr Cassamatis that the expert had not, in reaching his valuation of the compensation due, taken into account the fact that Lots 3, 4 and 5 already had the benefit of the ROC over the Defendants' land, but the May offer and the July offer appear to me to evince attempts to resolve the matter.
In relation to [7(b)] above, the fact that the offer was not accepted does not give rise to any prima facie presumption that an indemnity costs order should be made in his favour: see Leichhardt Municipal Council (supra) at [19] per Santow JA. Mr Cassamatis contended that it was unreasonable for the Plaintiff not to have accepted the May offer or the July offer because:
1. the Defendants were offering the Plaintiff what he was seeking by the proceedings, albeit at a price but were willing to discount the expert's valuation; and
2. the Plaintiff abandoned his claim based on s 88K of the Conveyancing Act 1919 (NSW) ("Conveyancing Act").
The Plaintiff's primary case was that, as a result of the DP and the CT, he was entitled to an easement which benefited Lot 21 (and which would pass with his land to any transferee). Much of Mr Cassamatis's written submissions on costs focussed on the substantive issues on which the Defendants were successful. I do not think it was unreasonable of the Plaintiff to reject an offer that required him to pay for the right to use the ROC, even though I have come to the view, contrary to the case advanced by the Plaintiff, that he did not have the right to use the ROC. The view that non-acceptance of the offer was not unreasonable is strengthened by the fact that, although the valuer's figure of $32,000 was discounted by 20%, the figure used did not take into account the existing easements in favour of the subdivided Lots of 3, 4 and 5, which existing easements were likely to considerably impact the amount of compensation which would need to be paid: see Re Seaforth Land Sales Pty Ltd's Land [1976] Qd R 190 at 195 per Douglas J (considering Queensland legislation similar to s 88K of the Conveyancing Act); Owners Strata Plan 13635 v Ryan [2006] NSWSC 221 at [85] and [120]; Tenacity Investments v Ku-Ring-Gai Council and Ors [2008] NSWLEC 27 at [126] and [163] per Pain J; Ross Bilton & Ors v Georgia Ligdas [2016] NSWSC 1262 at [6(16)] and [114]; Bradbrook & Neave's Easements and Restrictive Covenants (A. J. Bradbrook & S. V. MacCallum, LexisNexis Butterworths, 3rd ed, 2011) at [3.15].
I do not think the fact that the Plaintiff abandoned his claim based on s 88K of the Conveyancing Act affects the position of whether it was unreasonable for him not to accept the May offer and the July offer. If he was correct in his primary claim, he did not need to rely on a s 88K claim. The period of time for acceptance of seven days in the May offer was, I think, too short, but I do not place any weight on that because, even when the July offer was not so limited, the Plaintiff did not accept it. Another point made by Mr O'Loughlin was that the May offer and the July offer did not highlight s 88(1) of the Conveyancing Act as a reason for rejecting the Plaintiff's claim, that being an important part of the reasoning in my earlier judgment. Whilst this is true, the May offer and the July offer did emphasise that there was no DP which created an easement in favour of Lot 21 over Lot 63.
Mr O'Loughlin contended that another reason the Plaintiff was justified in not accepting either the May offer or the July offer was that those offers only related to that portion of the ROC that passed over the Defendants' land. He contended that acceptance of either offer would not establish the Plaintiff's rights over the ROC over Lot 1, which land has now itself been subdivided: see Exhibit 1 on this application. I do not think that there is anything in this point. The Defendants could only offer an easement over their land - if the grant by the Defendants of an easement over Lot 63 did not enable the Plaintiff to reach the road from his lot and, therefore, was of little value to him, then the proceedings were a waste of time because the owners of the new subdivided lots (formerly Lot 1) were not joined to these proceedings. In any event, I do not think that the underlying assumption is correct - on the authority of Gallagher v Rainbow & Ors (1994) 179 CLR 624, the burden of the ROC imposed on Lot 1 passed to the new subdivided lots and the benefit of the ROC over Lot 1 passed to all of the subdivided lots of Lot 6.
It follows, from what I have said in [3], [9] and [10] above, that:
1. the Defendants' costs in the substantive proceedings should be costs assessed on the ordinary basis; and
2. the Defendants should pay the Plaintiff's costs of this application for indemnity costs, also assessed on the ordinary basis.
[2]
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Decision last updated: 05 November 2018