Guiney v Australand Holdings Ltd & Ors; Castlehaven Sales No 2

In CA 40483/06 - Lorraine Guiney - Appellant Australand Holdings Ltd - First Respondent Real Estate Franchises Pty Ltd (trading as Castlehaven Realtors) - Second Respondent John Ten Berge - Third Respondent PARTIES: In CA 40573/06 - Castlehaven Sales No 2 Pty Ltd (trading as Castlehaven Realtors) - First Appellant John Ten Berge - Second Appellant Lorraine Guiney - First Respondent Australand Holdings Ltd - Second Respondent

In CA 40483/06 - S Norton SC & M Fraser - Appellant J G Stewart - First Respondent D Howarth (Solr) - Second and Third Respondents COUNSEL: In CA 40573/06 - D Howarth (Solr) - First and Second Appellant S Norton SC & M Fraser - First Respondent J G Stewart - Second Respondent

Brydens Law Office, Liverpool - Lorraine Guiney SOLICITORS: Ebsworth & Ebsworth - Australand Holdings Pty Ltd Lee & Lyons - Real Estate Franchises (trading as Castlehaven Realtors) Moray & Agnew - Castlehaven Sales No 2 Pty Ltd (trading as Castlehave Realtors) and John Ten Berg

LOWER COURT DATE OF DECISION: 7 July 2006; 18 August 2006 (Costs)

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40483/06 CA 40573/06

MASON P GILES JA EINSTEIN J

Lorraine GUINEY v AUSTRALAND HOLDINGS LTD & ORS CASTLEHAVEN SALES No 2 PTY LTD (t/a CASTLEHAVEN REALTORS) & ANOR v Lorraine GUINEY & ANOR (No 2) JUDGMENT 1 THE COURT: On 1 April 2008 this Court published reasons and made orders that disposed of the appeal: see [2008] NSWCA 44. 2 The appellant succeeded in obtaining a verdict against the first respondent (of $96,100). But her inability to displace the first instance damages award meant that her appellate success was Pyrrhic because she already had verdicts against the second and third respondents. 3 The second and third respondents did not contest the liability findings made against them at first instance. They did, however, challenge the Bullock order that required them to reimburse the plaintiff for the costs payable by her to the first defendant. When the appellant succeeded in her appeal as regards the first respondent's liability, she obtained a costs order against that party for the costs at first instance. In those circumstances, the second and third respondents' appeal against the Bullock order fell away. 4 As regards the costs of the appeal, the appellant secured an order against the first respondent, but (having failed in her challenge as to the quantum of damages) was ordered to pay the costs of the second and third respondents. 5 The appellant has sought a Sanderson order to the effect that the first respondent be ordered to pay the second and third respondents' costs of the appeal. We refuse this application. We also refuse the second and third respondent's parasitical application that those costs be assessed on the indemnity measure. 6 The parties have filed written submissions on the basis that the application would be decided on the papers. 7 The appellant's costs application implicitly (and in our view correctly) accepted that nothing in the conduct of the trial or the appeal generated a claim to the Sanderson costs order sought in the appeal. Rather, the appellant based her claim upon an unaccepted settlement proposal made during the appeal proceedings. Significantly, that proposal did not emanate from the appellant. 8 On 27 April 2007, during the pendency of the two appeals, the second and third respondents made an Offer of Compromise and an Offer of Contribution. They offered to settle the proceedings for $100,000 plus costs conditional upon the first respondent agreeing to share one third of the ultimate burden. The Offers were open for acceptance for 28 days. 9 The appellant accepted this Offer on 16 May 2007, ie within time and well before the hearing of the appeal on 21 September 2007. 10 The first respondent did not accept, with the consequence that the other respondents' offers lapsed. 11 The appellant made no settlement offer of her own. 12 On 23 May 2007 the first respondent made its own settlement offer, by way of letter that was without prejudice save as to the costs (ie a Calderbank offer). The first respondent offered to contribute its own costs to date in full settlement of all claims against it by the other respondents and the appellant. The offer was contingent upon either (a) the other respondents satisfying in its entirety the 2007 offer of compromise served on the appellant in the sum of $100,000 plus costs; or (b) the other respondents agreeing to indemnify the first respondent in relation to the appellant's claim and abandoning their appeal against the Bullock order. This offer was not accepted by anyone. 13 The first respondent resists the proposed Sanderson order on the following grounds:

(a) The dismissal of the appellant's appeal as to quantum meant that her position was less favourable than provided for by the 2007 Offer of Compromise. That Offer was not hers in any event. Accordingly, nothing about the 2007 Offers generated any right under the Rules to a special costs order in the appellant's favour.

(b) Furthermore, it would be unjust to visit the burden of the proposed special costs order on the first respondent in light of the non-acceptance by the second and third respondents of the first respondent's own Offer of Contribution made at first instance.

(c) On 15 March 2006, ie about six weeks before the trial, the first respondent served on the second and third respondents an Offer of Contribution under the Rules. The offer was to contribute 50% of any verdict or settlement in favour of the plaintiff up to a total of $150,000; and to contribute 50% to the plaintiff's costs.

(e) The outcome of the appeal was therefore more favourable to the first respondent than had the 2006 Offer of Contribution been accepted by the second and third respondents.

(f) It is further submitted that the costs orders made by the Court of Appeal reflected the finding of the discrete issue of liability as between the appellant and the first respondent and the fact that the appellant failed against all respondents on the issue of quantum. 14 We accept these submissions. 15 The second and third respondents support the appellant. As indicated, they go further and seek costs against the first respondent on an indemnity basis in relation to their own costs incurred after 27 April 2007. They submit that the appeal only ran to conclusion due to the first respondent's "dogged but ultimately futile attempts to retain an unsustainable verdict entered in the court below". 16 The submissions of the second and third respondents may be summarised as follows:

(a) By the time the appeal was heard, the damages (of $96,100) and costs ordered below had long since been paid to the appellant by the second and third respondents.

(b) Although the appellant challenged the finding of liability with respect to the first respondent and the quantum of damages with respect to all respondents, the appellant's acceptance of the 2007 settlement offer of $100,000 plus costs made during the proceedings in the Court of Appeal showed that she was in truth willing to abandon her appeal as to quantum. It showed that she was willing to do this if she ceased to be at risk of losing the benefit of the Bullock order made at trial that was under challenge by the second and third respondents in their separate appeal. 17 These propositions do not establish the grounds for the special costs orders sought respectively by the appellant and by the second and third respondents. 18 The appellant's acceptance of the 2007 Offer went nowhere in the absence of the first respondent's acceptance. It may indicate that the appellant was willing to abandon her appeal for a sum slightly higher than the first instance verdict if her costs were paid, but no more than that. Neither the provisions of the Uniform Civil Procedure Rules 2005 nor the principles stemming from Calderbank enable the appellant's lone acceptance of the Offer to generate a basis for the special costs orders that are sought. 19 The appellant's application should be dismissed. She should pay one half of the first respondent's costs of this application and the second and third respondents should pay the other half. **********

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