Gurbiel Holdings Pty Limited v Braune

Commonwealth of Australia v Gretton [2008] NSWCA 117 Gurbiel Holdings Pty Limited v Braune [2009] NSWSC 904 CASES CITED : Jones v Bradley (No 2) [2003] NSWCA 258 Leichhardt Municipal Council v Green [2004] NSWCA 341 Turkmani v Visvalingan (No 2) [2009] NSWCA 279 Waters v P C Henderson (Aust) Pty Limited NSWCA 6 July 1994 unreported

Gurbiel Holdings Pty Limited (plaintiff - 5445/07) Kurt Braune (defendant - 5445/07) PARTIES : MBar Newcastle Pty Limited (first plaintiff - 15089/08) 23 Watt Street Pty Limited (second plaintiff - 15089/08) Gurbiel Holdings Pty Limited (defendant - 15089/08)

COUNSEL : Mr K G Odgers (plaintiff - Gurbiel) Ms V McWilliam (defendant - Braune parties)

SOLICITORS : Attwaters Solicitors (plaintiff - Gurbiel) Crown Partners (defendant - Braune parties)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

15089/08 MBar Newcastle Pty Limited & Anor v Gurbiel Holdings Pty Limited

JUDGMENT (ex tempore) 1 HIS HONOUR: Before me this morning for orders and costs are two sets of proceedings which I heard together and in which I delivered my substantive judgment on 16 September 2009: Gurbiel Holdings Pty Limited v Braune [2009] NSWSC 904. 2 In proceedings 5445/07, Gurbiel Holdings Pty limited ("Gurbiel") was awarded judgment for the modest sum $14,867. This represented success on its part in three out of seven separate claims arising out of a contract for sale of land and a lease. It is also to have an order in its favour for some $2,339 interest on rental arrears of $6,772, which is one of the one of the three claims in which was successful. 3 In proceedings 15089/08, Gurbiel succeeded in having the claims of two plaintiffs against it dismissed and was, therefore, totally successful in those proceedings. There is no dispute that Gurbiel should be awarded the costs of proceedings 15089/08 in which it was completely successful. 4 So far as proceedings 5445/07 are concerned, arguments are put to me on behalf of the defendant arising from Gurbiel having had only partial success in those proceedings and also arising from offers of settlement that were made by the defendant in the course of those proceedings, which are said to have offered Gurbiel a result at least as good as that which it ultimately obtained. The date of the most relevant offer was 12 September 2007 so, while it is conceded that the plaintiff should have its costs up to that time, it is submitted that the defendant should have his costs of the proceedings from then onwards on the indemnity basis. 5 The question of departure from the ordinary rule that costs follow the event in cases that involve multiple issues, where some are decided one way and some the other, was recently reviewed in the Court of Appeal in Turkmani v Visvalingan (No 2) [2009] NSWCA 279. Hodgson JA there cited the well known passage from the judgment of Mahoney JA in Waters v P C Henderson (Aust) Pty Limited NSWCA 6 July 1994 unreported as follows: "Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless, unless a particular issue or group of issues is clearly dominant or separable, it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed."

6 Hodgson JA further cited from his own judgment in Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121], the following passage: "In my opinion, underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs. Costs follow the event generally because, if a plaintiff wins, the incurring of costs was the defendant's responsibility because the plaintiff was caused to incur costs by the defendant's failure otherwise to accord to the plaintiff that to which the plaintiff was entitled; while if a defendant wins, the defendant was caused to incur costs in resisting a claim for something to which the plaintiff was not entitled: cf Ohn v Walton (1995) 36 NSWLR 77 at 79 per Gleeson CJ. Departures from the general rule that costs follow the event are broadly based on a similar approach." His Honour described this passage as embodying the idea of fairness underlying the making of costs orders. 7 As I have said, in 5545/07, Gurbiel succeeded on three and failed on four out of seven claims. The four on which it failed included the largest single claim relating to the value of items let with the premises and not returned at the end of the lease. 8 The situation in this case is complicated by the fact this was a joint trial. While Gurbiel lost on four out of seven claims in one set of proceedings it succeeded completely in the other set of proceedings. The proceedings were interlocked by the fact that the amounts claimed by the plaintiffs in 15089/08 were also put forward as providing a set off in 5445/07. They were thus directly relevant also to that set of proceedings and they are to be included among the issues on which Gurbiel was successful in those proceedings. The greatest amount of the trial at the time was taken up by the issue of whether or not it was reasonable that Gurbiel should be allowed to retain the deposit paid under the contract for sale of land and, as I have said, on that issue Gurbiel succeeded. 9 The conclusion I have come to overall is that, in the circumstances, it is not possible easily to separate or divide out for separate costs treatment portions of the proceedings or the trial on which the Braune interests were successful. Bearing in mind all I have said about the overall conduct of the proceedings, I do not think that fairness requires that the generality of the order for costs in Gurbiel's favour in 5445/07 should be detracted from. 10 I turn then to the question of whether or not that result should be altered by reason of the Calderbank offer or offers that were made. It is well established that, to warrant departure from the ordinary rule on the basis of a Calderbank offer, the question is whether it was unreasonable for the offeree to refuse the offer: Jones v Bradley (No 2) [2003] NSWCA 258; Leichhardt Municipal Council v Green [2004] NSWCA 341. 11 I have already referred to the fact that the largest item on which the defendant in 5445/07 was successful was the claim in respect of items of equipment let with the premises and not returned. That claim exceeded all the other claims in the proceedings put together. It was not a claim on which the result was clear even at the commencement of the trial. It was a matter of some factual complexity and some legal complication and it was only after careful consideration that I came to the conclusion that the claim should fail. 12 Bearing this in mind, in all of the circumstances I do not come to the view that it was unreasonable for Gurbiel to refuse the offer made. As has been pointed out by counsel for Gurbiel, it is difficult to come in any event to come to the conclusion in the context of the complicated history of the proceedings that the offer which was made inclusive of costs was in fact better than the result ultimately achieved. 13 The result in all the circumstances is that I propose to order in each set of proceedings that Gurbiel should have an order for its costs of proceedings. Having determined those matters, I now proceed to make what I consider to be the appropriate orders in the proceedings.

1. Judgment for the plaintiff against the defendant in the sum of $14,867.00 made up as follows:

Costs thrown away in relation to contract for sale of land...........$7,738.00; Costs re notice to complete.........................................................$357.00; Rental arrears.............................................................................$6,772.00; ....................................................................................................$14,867.00.

2. Order that the defendant pay the plaintiff interest on the amount awarded for rental arrears in the sum of $2,339.77.

3. Order that the defendant pay the plaintiff the above sums on or before 19 October 2009.

4. Order that the defendant pay the plaintiff's costs of the proceedings.

1. Order that the proceedings be dismissed. 2. Order that the plaintiffs pay the defendant's costs of the proceedings.

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