Gooley v Colley (No 2)

Judgment

1. These reasons concern the costs of these proceedings, in which the principal judgment was published on 7 August 2025: Gooley v Colley [2025] NSWSC 875.

2. In the principal judgment at [89]-[96], I expressed a preliminary view that the overall outcome of the proceedings warranted the costs discretion being exercised by ordering the plaintiffs and the defendants to pay their own costs of the proceedings.

3. After considering the written submissions subsequently received from the parties in relation to costs, I have determined that the costs discretion should be exercised in a manner that follows the event of each individual plaintiff’s distinct claim for declaratory relief relating to specific invoices that the defendants issued to that plaintiff for fees for accounting and taxation services, [1] taking into account the plaintiffs’ rejection of a Calderbank offer [2] made by the defendants on 27 February 2025. The defendants rely on that offer as warranting an order that the plaintiffs (collectively) pay the defendants’ costs of the proceedings. The defendants do not submit that the whole or any part of their costs should be paid on an indemnity basis. Any costs order in the defendants’ favour will apply only to legal costs incurred by the defendants during the period in which they were legally represented in these proceedings. The defendants were not legally represented at the time of the final hearing.

4. As recorded in the principal judgment at [18], the three plaintiffs collectively sought a declaration that was not referable to any particular invoice issued by the defendants in terms that “no sum is owing by the plaintiffs, or any of them, to the defendants, or any of them” (prayer 4 of the Amended Summons). In opening submissions, that claim was advanced as the central issue in the proceedings. It was submitted that the plaintiffs had chosen to commence proceedings in this Court for that declaratory relief, rather than defending any claims that the defendants may commence in the District Court or the Local Court to recover fees said to be owing to them, in order to end what the plaintiffs regarded as a “campaign of harassment” by the defendants. That claim was abandoned in closing submissions because the plaintiffs had not adduced evidence of the nature and scope that would have been required to establish the factual and legal basis for a declaration in such sweeping terms in circumstances where the defendants had provided services to the plaintiffs (and other associated entities) over many years. That being the case, the claim in prayer 4 had not occupied any time at the final hearing, and I do not consider that it is likely to have caused the defendants to incur legal costs prior to the hearing. The defendants’ evidence and written opening submissions were focussed on the specific disputed invoices that were the subject of the plaintiffs’ claims for relief in prayers 1, 2 and 3 of the Amended Summons.

5. In prayer 1 of the Amended Summons, the first plaintiff sought a declaration to the effect that fees itemised in specific invoices issued by the defendants to the first plaintiff were not due and payable by him. That claim for declaratory relief succeeded in respect of fees totalling $49,420 itemised in those invoices (including GST), but failed in respect of the balance of the fees itemised in those invoices.

6. In prayer 2 of the Amended Summons, the second plaintiff sought a declaration that fees itemised in specific invoices issued by the defendants to the Gooley Family Trust were not due and payable by the second plaintiff. That claim failed.

7. In prayer 3 of the Amended Summons, the third plaintiff sought a declaration that fees itemised in a specific invoice issued by the defendants to the third plaintiff were not due and payable by the third plaintiff. The defendants’ fees itemised in that invoice related to their work in collating and producing documents in response to a subpoena issued to them by the third plaintiff in other proceedings in this Court. Those other proceedings remain on foot, and the third plaintiff’s claim in these proceedings for a declaration that those fees are not due and payable was dismissed as an abuse of process for the reasons explained at [86] of the principal judgment.

8. I reject the plaintiffs’ submission characterising these outcomes collectively as an “overall positive outcome” and “substantial success”. The first plaintiff had a mixed result, while the second and third plaintiff failed.

9. The submission that the plaintiffs’ claims (viewed collectively) substantially succeeded was founded in part on a contention that the doctrines of issue estoppel and/or Anshun estoppel operate to preclude the defendants from making any future claim against any of the plaintiffs in respect of any invoice that was the subject of these proceedings, even where the relevant plaintiff’s claim for a declaration has failed. As recorded in the principal judgment at [19], I explained to the defendants in broad terms the substance of those doctrines and their potential application to any future proceedings commenced by the defendants to recover their professional fees itemised in the invoices the subject of these proceedings. I did so for the purpose of facilitating the first defendant, who was appearing for himself and (with leave) for the second defendant, making an informed decision about matters relating to the conduct of these proceedings. That explanation does not open the door for the plaintiffs to submit that this Court should now make a binding determination that the doctrines operate to preclude the defendants from maintaining potential future proceedings which have not yet been commenced for the purpose of determining the costs of these proceedings.

10. In exercising the costs discretion under s 98 of the Civil Procedure Act 2005 (NSW) in respect of each plaintiff’s claim, it is appropriate to have regard to the defendants’ Calderbank offer made on 27 February 2025. That offer was made eight business days before the commencement of the final hearing on 11 March 2025. The offer set out an explanation of the defendants’ contentions in relation to each disputed invoice the subject of these proceedings. Notwithstanding their contention that they were entitled to press for the fees charged in at least some of those disputed invoices, the defendants offered in clear terms to settle the proceedings on terms that the parties enter into a deed releasing one another from all claims, suits and demands in respect of the disputed invoices, following which the proceedings would be dismissed with no orders as to costs. The offer was stated to be open for acceptance until 9:00am on 3 March 2025. That gave the plaintiffs one or two business days to consider the offer (depending on the time at which it was sent on 27 February 2025), and decide whether to accept or reject it.

11. At the time the offer was made, all of the parties had served all of their evidence. Given the long history of the defendants providing accounting and taxation services to the plaintiffs, it must have been obvious to the plaintiffs that they had not adduced evidence capable of discharging their onus of proving the legal and factual basis for the declaration sought in prayer 4 of the Amended Summons, and that their claim in prayer 4 would therefore fail. The period of one or two business days was sufficient time for the plaintiffs to acknowledge that reality after taking such advice as they required, and to assess that acceptance of the defendants’ offer would achieve by deed the same outcome that each plaintiff sought in respect of the specific disputed invoices in prayers 1, 2 and 3 of the Amended Summons. Acceptance of the offer would have avoided the costs for all parties of the final hearing and preparation for hearing. The costs incurred prior to the date of the offer would not have been significant. There were no expert witnesses. The affidavits served by the parties were not complex. The volume of documentary evidence exhibited to those affidavits was attributable principally to the duplication of many documents, including lengthy email chains, within individual exhibits and between exhibits. The parties had not yet filed their submissions, chronologies or lists of authorities. The court book had not yet been prepared. For those reasons, I consider that the plaintiffs acted unreasonably in rejecting the defendants’ offer. [3]

12. The letter of offer did not refer to an intention on the part of the defendants to seek an order for indemnity costs in the event that the plaintiffs rejected the offer and did not achieve a more favourable outcome at final hearing. Rather, the letter stated that the defendants may seek to vacate the hearing date and file a cross-summons if the offer was not accepted. As recorded in the principal judgment at [19], the defendants ultimately chose not to take that course.

13. There is no reason why the costs of the first plaintiff’s claim in prayer 1 of the Amended Summons should not follow the “event” of the success of that claim up to the date of the defendants’ Calderbank offer. [4] From the date of that offer, the first plaintiff should be ordered to pay the defendants’ costs of the first plaintiff’s claim by reason of his rejection of the offer, which was unreasonable for the reasons explained above. The order requiring the first plaintiff to pay the defendants’ costs of that claim from that date will be on the ordinary rather than the indemnity basis. That represents a departure from conventional principles governing the exercise of the costs discretion where a Calderbank offer has been unreasonably rejected by a plaintiff who has succeeded at trial by achieving an outcome less favourable to them than the terms of the defendant’s offer. I consider that departure is appropriate in the present case because the defendants’ offer did not foreshadow an application for indemnity costs, and no such application was made in the defendants’ costs submissions. It is likely to make little (if any) difference in real terms because the costs order applies only to legal costs, and the defendants had no legal representation very soon after making the offer. The defendants’ written opening submissions were prepared and filed by the first defendant personally and the defendants were not legally represented at the final hearing.

14. For those reasons, there will be an order that the defendants are to pay the first plaintiff’s costs of the claim in prayer 1 of the Amended Summons up to 27 February 2025 in such amount as may be agreed or assessed, and that the first plaintiff is to pay the defendants’ costs of that claim on and from 27 February 2025.

15. There is no reason why the costs of the second and third plaintiffs’ claims in prayers 2 and 3 of the Amended Summons should not follow the event of the dismissal of those claims in accordance with rule 42.1. For the reasons explained above in relation to the costs of the first plaintiff’s claim, that order will be for the payment of the defendants’ costs on the ordinary basis rather than on an indemnity basis.

16. For completeness, I acknowledge the plaintiffs’ submission that the defendants increased the costs of the proceedings by filing and serving affidavit evidence that was inadmissible or of little relevance, and by unnecessarily preparing two sets of submissions. I do not consider that those matters warrant depriving the defendants of the costs orders outlined above. The defendants’ two sets of submissions were prepared by the first defendant personally. The first set provided a very high-level outline of the defendants’ position, and was only two pages in length. The second set provided the defendants’ detailed response to the plaintiffs’ claims by reference to the evidence. I can discern no reasonable basis for the submission that the filing of these two sets of submissions by the defendants caused the plaintiffs to incur increased costs in the conduct of the proceedings. I regret to say that the plaintiffs’ complaint about the inadmissibility of the defendants’ affidavit evidence is ironic. The plaintiffs’ affidavits included a great deal of material that would have been inadmissible if the defendants had been legally represented at the final hearing and had formulated objections to that evidence. The plaintiffs’ legal representatives involved in the preparation of those affidavits did not see fit to exclude that material or draft it in admissible form. Although the plaintiffs’ affidavits were read without objection, much of that evidence was treated as carrying little or no weight, as I indicated to counsel for the plaintiffs during the hearing.

17. For all of those reasons, the orders of the Court are as follows:

18. In relation to the costs of the first plaintiff’s claim for relief in prayer 1 of the Amended Summons:

(a) the defendants are to pay the first plaintiff’s costs of that claim up to 27 February 2025 on the ordinary basis as agreed or assessed; and (b) the first plaintiff is to pay the defendant’s costs of that claim on and from 27 February 2025 on the ordinary basis as agreed or assessed.

2. Order that the second plaintiff is to pay the defendants’ costs of the second plaintiff’s claim for relief in prayer 2 of the Amended Summons on the ordinary basis as agreed or assessed.
3. Order that the third plaintiff is to pay the defendants’ costs of the third plaintiff’s claim for relief in prayer 3 of the Amended Summons on the ordinary basis as agreed or assessed.
4. Order that the plaintiffs are to pay their own costs of the claim for relief in prayer 4 of the Amended Summons abandoned during closing submissions.

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Endnotes

Oikos Constructions Pty Ltd v Ostin (No 2) [2021] NSWCA 98 at [10]-[16] (White JA, Basten and Macfarlan JJA agreeing).

Calderbank v Calderbank [1976] Fam 93.

Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd (No. 2) [2024] NSWCA 274 at [6].

Uniform Civil Procedure Rules 2005 (NSW), r 42.1.