Gabriel v Grech

The costs of the proceedings in the Local Court

1. The proceedings in the Court below were heard over a total of eight days (six days of evidence and submissions and a further two days on costs). The evidence was adduced on 9, 10 and 11 March 2016 and 13, 14 and 15 July 2016. The hearing was adjourned and directions made for the provision of written submissions following receipt of transcript. On 15 November 2016 the parties made oral submissions, by reference to the written submissions which had already been filed and served.

Costs as between the plaintiff and the defendant

1. As referred to above, the Local Court ordered the plaintiff to pay the defendant's costs as agreed or assessed. As I have set aside judgment in favour of the defendant and entered judgment in favour of the plaintiff, the costs order made by the Local Court in favour of the defendant ought be set aside. There would appear to be no reason why costs ought not follow the event in accordance with the general rule: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.1. Accordingly, I consider that the costs order made by the Local Court as between the plaintiff and the defendant ought be set aside and the defendant ought to be ordered to pay the plaintiff's costs of the proceedings.

The relevant issues

1. The costs order as between the plaintiff and DMC requires greater analysis. It was open to DMC, as a cross-defendant, to challenge the plaintiff's claim against the defendant. It did so with significant vigour on a number of separate fronts. DMC's challenges to the plaintiff's entitlement to judgment against the defendant included the following: 1. The plaintiff did not own the car which his son was driving at the time. 2. The accident was staged. 3. The claim by the plaintiff was fraudulent. 4. The claim for damages grossly overstated the damage actually incurred.
2. In essence, the plaintiff's claim for damages was a simple claim resulting from a rear-end motor vehicle collision. It was originally listed for three days. DMC's sceptical attitude to the plaintiff's claim, which led it to allege fraud, resulted in a significant prolongation of the proceedings. Its challenge to the ownership of the car (which was admitted on the pleadings by the defendant) also took time.

The conduct of the hearing in the Local Court

1. The statement of claim which commenced the proceedings in the Local Court was filed on 28 February 2014. The substantive hearing in the Local Court commenced on 9 March 2016. The plaintiff's evidence in chief was given in the form of an affidavit. He was not cross-examined by the defendant. Mr Barham, who appeared for DMC, cross-examined him for about a day and a half on 9 and 10 March 2016. A relatively small proportion of that time was devoted to the question of damages.
2. The plaintiff's son, Mark Gabriel, was called by the plaintiff. His evidence in chief was relatively brief. He was cross-examined for a short period by Mr Rollinson, who appeared for the defendant. Mr Barham cross-examined Mark Gabriel for the balance of 10 March 2016 and for the whole of 11 March 2016. The proceedings were adjourned part-heard for a further period of three days which commenced on 13 July 2016. Mr Barham's cross-examination of Mark Gabriel continued for most of 13 July 2016 and concluded in the afternoon. He was briefly re-examined. Much of the cross-examination of Mark Gabriel by Mr Barham related to the allegation of fraud and the issue of ownership of the car.
3. The plaintiff called Colin Seaman, a panel beater, who gave evidence on damages. The affidavit of Mr Quirk, an expert, was read on 13 July 2016 on behalf of the plaintiff.
4. On 14 July 2016, Mr Quirk confirmed his affidavit. He was not cross-examined by Mr Rollinson. He was cross-examined by Mr Barham briefly about the condition of the vehicle.
5. Mr Rollinson then called the defendant to give evidence. His evidence in chief was relatively brief and included evidence by affidavit. He was cross-examined briefly by Mr Adelstein, who appeared for the plaintiff. Mr Barham cross-examined the defendant for most of the day but the defendant was stood down before the end of the day so that the parties could address other evidentiary issues. A substantial part of the cross-examination of the defendant related to the alleged relationship between him and Camperdown Smash Repairs, which formed part of the basis of DMC's allegation of fraud.
6. Mr Barham called Mr Burgess, a crash investigator, to give evidence, at 3.41pm on 14 July 2016. His affidavit was read. He was cross-examined by Mr Adelstein about his initial report, which had not been annexed to his affidavit. Mr Burgess accepted that his report recorded that he had "found nothing which would indicate any suggestion that the subject incident was staged by means of coercion between the parties involved". Mr Burgess agreed with the proposition put by Mr Adelstein that he had destroyed his notes because he believed, rightly or wrongly, that the initial report brought the matter to an end.
7. Mr Rollinson did not cross-examine Mr Burgess who was excused before the Court adjourned at the end of 14 July 2016. On 15 July 2016, Mr Adelstein tendered the Burgess report, which had contained his initial advice that there was nothing to suggest that the collision had been staged.
8. Mr Rollinson tendered the insurance policy for DMC. Further documents were tendered before Mr Barham opened the case for DMC by calling Nigel McDonald whose report about the mechanics of the accident was tendered. He was cross-examined by Mr Rollinson and Mr Adelstein before the morning tea adjournment. Further documents were tendered, following which directions were made for the further conduct of the proceedings.
9. On 15 November 2016 the parties addressed. At the conclusion of the hearing on 15 November 2016, her Honour reserved her decision.
10. In March 2017 her Honour made substantive orders and published reasons.
11. The parties made written submissions on costs prior to the hearing on costs which was listed on 24 May 2017. DMC relied on alleged offers which it had made to the plaintiff to settle his claim before the proceedings were commenced. In his written submissions, Mr Barham said of present relevance: "Annexed to these submissions are copies of offers made to the plaintiff prior to the commencement of proceedings. (Notwithstanding the orders claimed, the cross-defendant acknowledges on the basis of the authority referred to below, that whilst the offer is relevant, it cannot be relied upon the question of indemnity costs.) Nonetheless, had the offers been accepted, there would have been no proceedings commenced. Acting properly, the offer/s should have been accepted. Not only did the cross-defendant beat that offer, by virtue of succeeding in the proceedings outright, the amount offered was also greater than the amount which the court would have ordered as damages. The entirety of the proceedings was occasioned by the unreasonable failure of the plaintiff to accept that offer. It is true that the offer is not styled as a 'Calderbank Offer', however, it is nonetheless a highly relevant consideration on costs. It was not made by a solicitor, but it was marked 'without prejudice' and it was sent to the solicitors then acting for the plaintiff. The intent of the offer was plain. The offer was open for acceptance. It was repeated. As to its effect, see Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311; [2013] NSWCA 188 at [43] where Bathurst CJ said: 'That is not to say that the conduct of the parties during litigation, including the making of open offers, may not in certain circumstances be relevant to the appropriate manner in which a court's discretion as to costs should be exercised. However, an offer made expressly pursuant to r 20.26 will not of itself take effect as a Calderbank offer unless there is something in it or in the surrounding circumstances to indicate that it is proposed to be relied upon on the question of costs, irrespective of its effectiveness as an offer under r 20.26.' Whilst the cross defendant's offers did not indicate that they would be relied upon the question of costs, which Bathurst CJ found to be the essence of a Calderbank offer, the failure to accept the offers has been the entire cause of the proceedings and is a further ground as to why the costs of the successful cross-defendant should not be reduced. It is another example of the cross defendant not having acted unreasonably."
12. In the course of the costs argument on 24 May 2017, Mr Barham tendered an email dated 10 April 2012 (approximately two years before the plaintiff commenced the proceedings in the Local Court), from Mr Bamback, the Claims Manager of Vehicle Hire Insurance, to Barakat Lawyers, who then acted on behalf of the plaintiff. The document also contained a response dated 1 May 2012.
13. The terms of Mr Bamback's email of 10 April 2012 to Barakat Lawyers were as follows: "Further to the below e-mail I would confirm that I have now spoken to the AAMC appointed Assessor Garry Smith. I understand from my discussion with Garry that he first assessed this vehicle back in September 2011. An initial cash settlement was proposed at $21,567.54 however unless the vehicle was dismantled any unseen damage was difficult to determine. Subsequent to this the assessor had discussions with both your client and their repairer and it was requested that the vehicle be dismantled so that all unseen damages could be reviewed. Neither the repairer or your client has advised that the vehicle has been dismantled. At this stage VHI would prefer on a "without prejudice" basis to cash settle your client for the reasonable cost of repairs, however until the vehicle is dismantled and the assessor can review any unseen damage the initial offer of $21,567.54 that I believe was amended to $29,638.03 following a subsequent assessment will remain. This offer was made to your client in a discharge on the 20th of December. VHI is anxious to finalise this claim to the satisfaction of all parties hence our previous offer of settlement. It is obvious however that your client is unhappy with proposed settlement. In the circumstances until the vehicle is fully stripped a completely accurate valuation of the damages is unable to be made. I trust this explains the situation on where we are at with the quantification of your client's loss."
14. On 1 May 2012, Barakat Lawyers wrote back to Mr Bamback as follows: "I refer to previous communications regarding the above matter. On 24 April 2012 I sent you an email in reply to your earlier email of 10 April 2012. I also proposed a certain course of action in relation to this matter. I am yet to receive any reply. I would appreciate your response with a view to progressing this matter to finality. I look forward to hearing from you."
15. It is noteworthy that the offer actually made, apparently on 20 December 2011, was not in evidence. Mr Bamback's understanding of the offer may or may not have been correct. It is, in any event, plain from the terms of his email of 10 April 2012 that Mr Bamback was unsure about the final figure but merely stated his belief. It is also significant that Barakat Lawyers' reply dated 24 April 2012, referred to in the email of 1 May 2012, was not in evidence. This evidence did not provide a satisfactory basis for any conclusion about costs, even putting out of consideration that the correspondence did not meet any of the requirements for a Calderbank offer and was not put on that basis.
16. In the Local Court, Mr Barham made oral submissions based on the document (which was marked Exhibit 6 on the costs hearing) as follows: "So that was from 1 May 2012 until 20 December 2012, there was 29,638.03 on the table, they didn't take it. The plaintiff didn't take it because he wanted to run this case where effectively I think the number was 67, I stand to be corrected on that, plus $10,000 odd interest. The statement of claim says 66,178.16 plus interest and sundry, so we got up to $76,308.89 and that was at 28 February 2014. As I've indicated, there's authority against me that says I can't rely on this as a Calderbank letter, I've referred to that in the written submission and I don't seek to rely on it as a Calderbank letter, but it shows that my client at that stage, before it had done all the investigation and everything, had made an offer. If they had taken it, we wouldn't be here, we just wouldn't be here, Mr Grech wouldn't have been dragged along under false pretences and Mr Grech wouldn't have had to join my claim under false pretences. So that's number 6." [Emphasis added.]
17. The costs hearing did not conclude on 24 May 2017 and was stood over to 14 July 2017. On that day, Mr Watson of counsel appeared for the plaintiff, instructed by Mr Adelstein, who had previously appeared. He did not refer to Mr Barham's submission about the effect of the communications between Barakat Lawyers and Mr Bamback referred to above.
18. Notwithstanding Mr Barham's concession that the offer which had been made to the plaintiff did not amount to a Calderbank offer and that there was authority against him relying on it as such, her Honour found at [26] of her judgment on costs dated 11 August 2017: "Joseph Gabriel had the opportunity to resolve the proceedings early when DMC sent him an offer to settle the proceedings. He refused to do so and persevered in circumstances where he could not prove ownership nor that the damage to the BMW was as extensive as was alleged and that the repairs cost as much as alleged."
19. Although her Honour did not specifically refer to the offer made in April 2012 in terms, it does not appear that there was any other offer which met the description in her Honour's reasons as did Exhibit 6, although that offer preceded the commencement of the proceedings by two years.
20. The argument on costs continued on 14 July 2017. At the conclusion of argument, her Honour again reserved her decision. Costs orders were made on 11 August 2017, as referred to above.

Offers made by the parties to settle the proceedings and other correspondence relied on by the parties

1. On 6 May 2016, DMC's solicitors wrote a Calderbank letter to the plaintiff's solicitors in the following terms: "We refer to this matter and note that it is our view and the view of our client that our client will succeed in successfully defending the cross-claim and will succeed and obtaining an order that the Plaintiff pay our client's costs on an indemnity basis. We note that our client's costs to date exceed $275,000 plus GST. A very significant amount of work has been required due to the investigations that were required in order to disprove the Plaintiffs claim involving various Motions including Markus applications, issuing numerous Subpoenae for Production, reviewing thousands of pages of documents and tens of thousands of telephone records, RMS records, Police records etc and various vacated hearing dates and the hearing itself. The Cross-Defendant's party/party costs are approximately as follows: Fraser Clancy Lawyers professional fees (exc GST) $194,000.00 Counsel's fees $31,617.55 Filing fees $4,922.00 Transcript fees $1,995.00 Expert fees $6,612.10 Office expenses and disbursements, photocopying, brief preparation, colour copying, facsimiles $5,403,67 Total $244,550.32

The above figures are exclusive of GST as our client is registered for GST. If the matter proceeds then these costs will increase. We further note that the Plaintiffs and the Defendant's costs will also increase. SETTLEMENT OFFER Our client has instructed us that it is prepared to accept payment from the Plaintiff in the sum of $200,000 in respect of payment of our client's party/party costs in full and final settlement of the proceedings. The above offer is to remain open for a period of fourteen (14) days from the date of his offer. Once accepted, it is a further term of the offer that payment must be made within a further fourteen (14) from the date of acceptance. It is a further term of the settlement that Terms of Settlement will be executed by the Plaintiff. We make this offer directly to the Plaintiff because the Defendant has made it quite clear that he has no funds and because we have put the Plaintiff on notice that we will be seeking a Bullock and/or Sanderson Order for payment of the Cross-Defendant's costs by the Plaintiff. The Plaintiff is, of course, at liberty to negotiate with the Defendant to seek contribution towards payment of the settlement monies."

1. By email dated 10 October 2017 (after the Local Court had made a costs order in DMC's favour) DMC's solicitors sent a letter dated 9 October 2017 to the plaintiff's solicitor which set out, in the form of a Calderbank offer, an offer relating to the costs of the Local Court proceedings in the following terms: "We refer to our recent discussions with you during which you requested that we make an offer to your client in respect of costs. We have now sought our client's instructions in relation to an offer. We advise that the Cross-Defendant's costs on a party/party basis are, in our estimate, $365,043.70 including disbursements of approximately $115,000. We note that the Court allowed 50% of those costs (i.e. $182,500). We note that in any Cross-Appeal we will be seeking an order that the Plaintiff be ordered to pay 100% of those costs. Our client has instructed us it is prepared to accept the sum of $125,000 in respect of its costs, (being approximately one third of our estimate of party/party costs). In order to hasten and assist any resolution of this matter we sought a significant discount on costs from our client in order to truncate any settlement negotiations and so as not to delay the preparation of the appeal. We are happy to provide a document setting out some detail in relation to those costs and disbursements on a confidential and without prejudice basis if your firm requires this."
2. These letters have been reproduced in part to show the extreme lack of proportionality between DMC's costs and the amount in issue.

The parties' submissions

1. The plaintiff submitted that because DMC failed in its allegation of fraud, it should bear the costs of the litigation of that issue. He also relied on the initial advice received by DMC from Mr Burgess to demonstrate that DMC had no foundation in the expert evidence to allege that the accident was staged, there being no indication from the circumstances of the accident that it was other than a real accident. He submitted that DMC prolonged the proceedings, incurred disproportionate costs and, by its conduct in the litigation, caused an injustice to the other parties.
2. The plaintiff submitted in writing: "The second defendant grossly prolonged the proceedings below, causing the plaintiff to incur solicitor and client costs far beyond what they could reasonably have expected to incur in litigating genuine issues given that the amount in issue was a fraction of the costs incurred. The plaintiff submits that it was unreasonable for the second defendant to have subjected the plaintiff to the expenditure of costs incurred in the proceedings below. By turning basic proceedings in the Local Court concerning damage to a vehicle into a complex odyssey involving allegations of a criminal conspiracy to defraud, argued over a period of years, at a staggeringly disproportionate cost to any amount potentially in issue, the second defendant acted improperly and unreasonably, in contravention of its obligations under the Civil Procedure Act. The plaintiff submits that the appropriate order is that the second defendant pay the plaintiffs costs of the proceedings below on an indemnity basis from the date of the second defendant's appearance in the matter."
3. DMC submitted that it should not be ordered to pay the costs of the Local Court proceedings because the plaintiff had conducted the appeal in this Court on a different basis than it had conducted the hearing in the Court below.

The conduct of the proceedings in this Court

1. The summons in this Court was filed on 8 September 2017. An amended summons was filed on 3 October 2017. On 5 December 2017 DMC filed a notice of motion to strike out the proceedings on the ground that they were not commenced within time. The motion was heard by Walton J on 20 March 2018. On 1 November 2018, his Honour made orders dismissing the notice of motion and reserved the costs: Gabriel v Grech [2018] NSWSC 1652.
2. On 6 May 2019 DMC filed a notice of motion for security for costs, which it subsequently amended on 21 May 2019. DMC's application was supported by an affidavit of its solicitor, Mr Clancy, who deposed that he estimated that DMC's costs for the appeal to this Court would amount to $181,280, being past costs of $63,839 and expected future costs of $117,441. The motion was listed for hearing on 14 August 2019 before Harrison AsJ, who reserved her decision. On 11 September 2019, Harrison AsJ refused the application for security for costs and reserved the costs of the motion: Gabriel v Grech [2019] NSWSC 1163.
3. There were several further directions hearings at which directions were made for filing a court book and submissions. I heard the substantive matter on 4 March 2020 and delivered reasons on 11 March 2020: Gabriel v Grech (No 3) [2020] NSWSC 218. As stated above, I reserved the questions of costs and the appropriate order on the cross-claim.
4. Subsequently, I made directions regarding the filing of evidence and submissions on these questions. As referred to above, on 18 May 2020 I made orders regarding the defendant, who is no longer relevant to these proceedings having been granted leave to discontinue his proceedings.
5. On 1 September 2020 the plaintiff informed the Court and DMC that he no longer sought to challenge the Local Court's dismissal of the cross-claim. This is relevant to the costs of the proceedings in this Court.

Offers made by the parties to settle the proceedings and other correspondence relied on by the parties

1. Between 1 December 2017 and 4 March 2020, the plaintiff made five offers to DMC to settle the appeal and one offer to settle DMC's unsuccessful application for security for costs. Each of these offers was in the form of a Calderbank offer and each indicated that the plaintiff would rely on the letter on the question of costs. Each offer was refused.
2. The first offer, dated 1 December 2017, was an offer that the plaintiff would pay DMC $10,000, that the proceedings in this Court would be vacated, that each party would bear his or its (as the case may be) costs of the proceedings in this Court and that all previous costs orders in the Local Court would be vacated. The letter contained the following explanation of the compromise inherent in the offer: "The offer provides a compromise of the $15,900.00 that the plaintiff would be entitled to if he is successful on the appeal. It also compromises the plaintiff's not insignificant costs incurred in the proceedings below which, if successful, would pertain to the costs of the proceedings that took place over a span of approximately 3 years, which was heard over 9 days in court, and included the provision of written submissions. Moreover, it also compromises the plaintiff's costs to date on this appeal. This is in addition to the $10,000.00 payment to the second defendant. Accordingly, it is a genuine compromise offered in the interests of commerciality. This offer will remain open until 5.00pm on 29 December 2017."
3. This offer was rejected by DMC in a letter dated 15 December 2017. DMC's solicitors contended that, contrary to the magistrate's findings, the allegation of fraud was made out. A counter-offer was made which would, if accepted, have required the plaintiff to pay $100,000 for DMC's costs of the Local Court proceedings and discontinue the proceedings in this court with an order that each party pay its own costs.
4. The plaintiff made a further offer on 11 February 2019, in Calderbank form, to settle the proceedings on bases which included that DMC would pay 50% of the plaintiff's costs in the Local Court and in this Court and that the Supreme Court proceedings would be discontinued. DMC did not accept this offer.
5. By letter dated 14 May 2019 sent under cover of an email dated 15 May 2019, DMC offered to settle the proceedings on the basis that the plaintiff would pay it $80,000 in full and final settlement of the plaintiff's claim in the Local Court and the costs. The offer remained open for acceptance for 14 days. On 22 August 2019, it was renewed for a further 7 days.
6. On 5 September 2019, the plaintiff made a Calderbank offer to DMC to settle the proceedings on the basis that DMC would pay 50% of its costs in the Court below and in this Court, that the proceedings in this Court would be discontinued and that other consequential orders vacating previous orders of the courts would be made. The offer was expressed to be open until 5pm on 18 September 2019 or the day before Harrison AsJ listed the motion for judgment. The following day, DMC's solicitors took exception to the offer on various bases, including that the time allowed for its consideration was too short.
7. On 5 February 2020, DMC made further Calderbank offers to the plaintiff to settle the proceedings in this Court and in the Local Court, which were expressed to be open for 14 days. It said, of present relevance: "We are now instructed to settle both the Local and Supreme Court proceedings as follows: - • Local Court proceedings 2014/63251 - Joseph Gabriel to pay Drive My Car Rentals ["DMC"] 20% of DMC's party/party costs or the sum of $60,000, whichever is the lesser, in satisfaction of the costs orders made in those proceedings. • Supreme Court proceedings 2017/273635 - Proceedings to be dismissed with Joseph Gabriel and DMC to pay their own costs. The above two (2) offers can be accepted independently of one another or together."
8. On 26 February 2020, the plaintiff made an offer in Calderbank form to settle the proceedings on the basis that DMC pay 90% of its costs on appeal and in the Local Court.
9. By email sent at 7.42pm on 3 March 2020, DMC made an offer in Calderbank form to settle the proceedings as follows: "We are instructed to reject the Plaintiff and the Third Defendant's offer and to make a counteroffer whereby the second defendant agrees to walk away and pay its own costs of the Local Court and the Supreme Court proceedings on the basis that the Plaintiff also walks away and pays its own costs of the Local Court and the Supreme Court proceedings including whatever costs the Plaintiff is liable to the Defendant (Grech) in the Local court proceedings. The offer is open for acceptance until 10am tomorrow morning noting that the appeal is due to commence at that time. If this offer is not accepted and the Plaintiff does not do better on the appeal than the terms of this offer then the second defendant intends to rely upon this offer upon the question of costs in accordance with the principle espoused in Calderbank v Calderbank."
10. On the morning of 4 March 2020, before 10am, the plaintiff made an offer in Calderbank form to settle the proceedings on the basis that DMC would pay 70% of its costs of the proceedings in the Local Court and in this Court as agreed or assessed.

The parties' submissions on the costs in this Court

1. The plaintiff contended that he was entitled to indemnity costs in this Court, from particular dates, based on the Calderbank offers made on 1 December 2017, 5 September 2019, 26 February 2020 and 4 March 2020 (referred to above). He also submitted that he was entitled to indemnity costs of the proceedings on the basis of the way in which DMC had conducted itself throughout the proceedings in this Court, which included the motion to strike out the summons and the motion for security for costs. The plaintiff contended that the motion to strike out the summons was wholly misconceived.
2. DMC contended that had the plaintiff not sought an order in respect of the cross-claim, it would not have needed to take part in the proceedings at all because it would only have been at risk if the defendant had filed a defensive appeal, which he did not: see the discussion of the principles in Berkeley Challenge Pty Ltd v Potbury [1997] NSWCA 44, as reviewed in Insurance Exchange of Australasia v Dooley (2000) 50 NSWLR 222; [2000] NSWCA 159. Thus, it submitted that the plaintiff ought pay its costs of the proceedings in this Court and that the costs of the two motions brought by DMC ought be costs in the cause, to the effect that there ought be no order as to costs, since the plaintiff was unsuccessful in the cause. Further, DMC submitted that, on the proper construction of the amended summons, the plaintiff had not actually sought an order that DMC pay its costs of the proceedings in the Court below.
3. In response, the plaintiff submitted that the claim for indemnity under the cross-claim was dwarfed by DMC's interest in protecting the costs order made by the Local Court in its favour which required the plaintiff to pay 50% of DMC's costs on the ordinary basis. The plaintiff argued that costs were the principal issue in this Court since his principal claim was only $15,900 but DMC alleged that its costs of the Local Court proceedings amounted to $365,000 (on the ordinary basis). The dispute about the principal claim was, accordingly, only important because of its effect on costs. The plaintiff contended on this basis that DMC had a substantial reason to contest the plaintiff's claim to have the costs order set aside, irrespective of whether the plaintiff sought orders on the cross-claim. The plaintiff submitted that it had been plain throughout the hearing in this Court that it sought costs against DMC directly and not merely by way of indemnity of Mr Grech's liability for costs and relied on an express acknowledgement to that effect made by Mr Barham at the conclusion of the hearing on 4 March 2020.

Consideration

1. Before embarking on a consideration of the various arguments, it is important to recall that costs are in the discretion of the Court: s 98 of the Civil Procedure Act 2005 (NSW). I am grateful for the parties' submissions on the questions of costs but ultimately the orders to be made depend on an analysis of how the proceedings in the Court below and in this Court were conducted and the relative success achieved by each party, measured in absolute terms and also in relative terms by reference to the various offers made by them to settle the proceedings.

Costs of the Local Court proceedings

1. I do not accept that the offer referred to in Mr Bamback's email to Barakat Lawyers on 10 April 2012 is relevant to the issue of costs. It was not put on the basis that it was a Calderbank offer and was plainly not a Calderbank offer. Its terms, as reflected in the email of 10 April 2012 were uncertain. It was not clear for how long it would be open or what amount would be payable. Further, there was a response to it, referred to in a subsequent email, which is not in evidence. Its relevance was dubious. It is not necessary to say more about this evidence or her Honour's finding as to its significance set out above, since her Honour's costs order as between the plaintiff and DMC must fall away in any event as the result in the Local Court has been reversed by this Court.
2. It is apparent from the letter dated 9 October 2017 extracted above, that DMC's costs in the Local Court, on the ordinary basis, were in the order of $365,000, including disbursements of $115,000. This sum was wholly disproportionate to the amount in issue. As the correspondence extracted above indicates, the principal reason for the amount was the considerable sums spent by DMC to seek to establish that the accident was staged and that the claim by the plaintiff was fraudulent. DMC was unsuccessful on this issue (and the issue of ownership) and ought, in any event, bear the costs associated with these issues.
3. DMC was joined to the proceedings on 28 August 2014 when Mr Grech filed a cross-claim against it. It did not allege fraud in its initial defence to the cross-claim, which was filed on 4 November 2014. However by amended defence to the first cross-claim, which was filed on 9 November 2015, it denied that the collision had occurred as alleged and alleged that the claim was fraudulent.
4. I am not persuaded by DMC's submission that the plaintiff had not actually sought an order that DMC pay its costs of the proceedings in the Court below. While there is a degree of awkwardness in the wording of the relief claimed in the amended summons, it was plain from the way in which the matter was conducted, that this was what the plaintiff sought and that such an order fell within this Court's jurisdiction under s 41 of the Local Court Act 2007 (NSW). Any infelicity in the wording of the prayers in the summons was not such as to obscure the nature of what the plaintiff sought against DMC. Indeed, it was expressly (and properly) conceded by Mr Barham at the conclusion of the hearing on 4 March 2020 that it was open to me to make an order against DMC with respect to the costs of the proceedings in the Court below if I allowed the plaintiff's appeal.
5. As is evident from the transcript of the proceedings in the Court below, and in this Court, DMC was the main contradictor to the plaintiff's claim. It was the party that caused the proceedings to go for the time they did in the Local Court and the party which required the plaintiff to incur significant costs in pressing his claim and defending himself against the allegation of fraud. I am satisfied that DMC was amply on notice that the plaintiff sought an order that DMC pay its costs at first instance and on appeal.
6. I am persuaded that DMC's conduct of the proceedings was such as to warrant an order for costs against it. Even though the amount claimed by the plaintiff ($65,793.16, inclusive of GST) was in excess of the amount ultimately found by the Local Court ($15,900) and ordered by this Court, it is significant to note that the plaintiff was the successful party in litigation where he claimed damages for loss occasioned by the front vehicle engaged in a rear-end collision. DMC prolonged the proceedings beyond all proportion, thereby causing the plaintiff to incur costs which grossly exceeded the amount in issue: Degmam Pty Ltd (in liq) v Wright (No 2) [1983] 2 NSWLR 354 (Degmam) at 358E (Holland J). The principle expressed in Degmam is even stronger having regard to the obligations of the parties and the Court provided for in Part 6 of the Civil Procedure Act. Ultimately, the only real issue in dispute was the quantum of the plaintiff's loss. DMC's conduct of the proceedings served to obscure the real issue, delay the resolution of the real issues in dispute and cause an egregious disproportionality between the amount at issue and the costs incurred.
7. For these reasons, I am persuaded that DMC, although successful in having the cross-claim dismissed, ought pay the plaintiff's costs of the proceedings from 4 November 2014 when it filed its defence to the cross-claim. It was unsuccessful in defeating the plaintiff's claim. Although the conduct of the proceedings by DMC did little to facilitate the just, quick and cheap resolution of the real issues in the proceedings, I am not persuaded that it ought pay the plaintiff's costs on an indemnity basis since account must also be taken of the circumstance that the plaintiff's claim for damages was inflated.

Costs of the proceedings in this Court

1. The plaintiff has been successful in this Court in that he has had the dismissal of his claim against the defendant reversed and obtained judgment against the defendant. I reject DMC's submission that the plaintiff conducted the appeal on a different basis than the way in which it conducted the proceedings in the Court below. My reasons for finding that the issue of ownership had been admitted on the pleadings by Mr Grech are set out in the principal judgment. It is unnecessary to repeat them here.
2. The plaintiff was also successful in both interlocutory matters: the application for the summons to be struck out and for security for costs, in respect of both of which costs were reserved. The plaintiff's Calderbank offer of 1 December 2017 involved a payment to DMC of $10,000 on the basis that each party would pay their own costs of the proceedings in the Local Court and in this Court. Had it been accepted, it would have brought all disputes between the parties to an end since it left no room for disputes about costs. The plaintiff forewent the prospect that it would succeed in this Court (for what it was worth), be relieved of the costs order against it in the Local Court and be awarded costs in its favour in the Local Court and in this Court.
3. The plaintiff has, however, been unsuccessful in disturbing the dismissal of the cross-claim and ultimately did not press his claim for relief in prayers 1B(c) and (d) of the amended summons which sought, in lieu of the orders made by the Local Court: "(c) Judgment in favour of the cross-claimant against the cross-defendant; (d) The cross-defendant to indemnity the defendant/cross-claimant in respect of the judgment in favour of Mark Gabriel and Joseph Gabriel's costs below."
4. The unavailability of this relief at the suit of the plaintiff flowed inexorably from the initial absence of, and subsequent discontinuance of, the summons filed by the defendant, who was the only party who had standing to challenge the judgment against him on the cross-claim. I do not accept the plaintiff's submission that it was entitled to assume that Mr Grech would support him. Mr Grech plainly had little or no interest in the proceedings. Although he belatedly filed a summons, he filed a notice of discontinuance relatively soon after it had been filed. In any event, matters relating to the cross-claim occupied relatively little time, until the point was conceded or abandoned. Thus, I am not persuaded that this point is entitled to substantial weight on the question of costs although I have taken it into account as a relevant factor.
5. I reject DMC's submission that but for the inclusion of the claim for relief on the cross-claim, there would have been no need for it to appear to contest the appeal at all. DMC chose to contest the proceedings not only on the basis that no order could be made which affected its liability under the cross-claim, but also on more substantive bases which affected the costs order in favour of DMC, the money value of which substantially exceeded the principal claim. It also relied on a notice of contention, which contained five separate grounds and included reliance on the plaintiff's "untruthful statements".
6. Paragraph 16 of DMC's written submissions dated 25 February 2020 by which it alerted the plaintiff to its submission on standing said: "It is also unclear how orders 1B(c) and (d) of the Amended Summons could ever be made, and there are no submissions about them. Moreover, Mr Grech has not appealed the decision to dismiss the cross-claim. Thus, there is no basis to set aside judgment on the cross-claim. There is no standing for the plaintiff to seek orders which were not sought in the court below, and no power under s 41 of the Local Court Act 2007 for this Court to make such orders."
7. This paragraph comprised a small proportion of DMC's overall submissions which contested ownership, quantum and pressed the allegation that the claim was fraudulent.
8. I am not persuaded that the costs of the two motions brought by DMC ought be costs in the cause. I consider that the costs of the motions ought follow the event in accordance with the general rule: UCPR, r 42.1.
9. It is unnecessary to address the several Calderbank offers put by DMC referred to above since none was as beneficial to the plaintiff as the ultimate result of these proceedings.
10. In my view the appropriate order, in the circumstances set out above, is that DMC pay the plaintiff's costs of the two notices of motion and 75% of the plaintiff's costs of the proceedings.
11. I note for completeness that the parties, in their written submissions, have raised many issues which are not germane to costs or to this Court's jurisdiction. For example, they have made submissions on the effect of the magistrate's findings on Mr Grech's trustee in bankruptcy, if a sequestration order is made against him. Matters such as this are neither for my determination nor comment. For that reason, I do not propose to address them in my reasons.

Orders

1. For the reasons given above, I make the following orders: 1. Fix the amount of the judgment ordered in favour of the plaintiff on 11 March 2020 by this Court in the sum of $21,942.77 being $15,900.00 plus pre-judgment interest up to 10 March 2017 in the sum of $6,042.77. 2. Set aside the following orders made by Atkinson LCM on 11 August 2017: "3. Order that Joseph Gabriel [the plaintiff] pay Paul Grech's [the defendant's] costs on the ordinary basis as agreed or assessed. 4. Order that Joseph Gabriel [the plaintiff] to [sic] pay 50% of DMC's [the cross-defendant's] costs on the ordinary basis as agreed or assessed." 1. In lieu of order 3 made by Atkinson LCM on 11 August 2017, order Paul Grech (the defendant) to pay Joseph Gabriel's (the plaintiff's) costs of the proceedings in the Local Court. 2. In lieu of order 4 made by Atkinson LCM on 11 August 2017, order Drive My Car Rentals Pty Ltd (the cross-defendant in the Local Court) to pay the plaintiff's costs of the proceedings in the Local Court from 4 November 2014. 3. Order DMC to pay the plaintiff's costs of DMC's notice of motion to strike out the proceedings and DMC's notice of motion for security for costs and 75% of the plaintiff's costs of the proceedings in this Court.

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