Lawrence v Gunner; Gunner v Lawrence

Costs

As to costs, I have rejected Mr and Mrs Lawrence's claims and upheld most, but not quite all, of Mrs Gunner's claims. Mr King accepted today that, accordingly, costs must follow the event.
However, Mr King submitted that "a very significant proportion of the costs in the matter should in any event be borne" by Mrs Gunner, for reasons he set out in detail in his written submissions of 24 August 2015. Mr King submitted that, accordingly, I should make a proportional costs order, and that the appropriate order would be that Mr and Mrs Lawrence pay 75 per cent of Mrs Gunner's costs.
In my opinion, most of the matters that Mr King raised are matters appropriate to be dealt with by a costs assessor.
However, Mr King did draw attention to the fact that a number of affidavits were served on behalf of Mrs Gunner by witnesses who were not ultimately called. One of those was the affidavit of Mr Marshall to which I referred at [434] of my reasons of 16 July 2015. Before me today, Mr Hourigan accepted that the costs of that affidavit should not be included in any costs order in favour of Mrs Gunner. Mr Marshall also swore a number of other affidavits, some (if not all) of which were directed to interlocutory applications made in the proceedings. Because of the manner in which those interlocutory applications were dealt with, some of those affidavits were not formally read. There were also affidavits of other witnesses that went to matters of substance, but were not read as those witnesses were not called.
What I propose to do is to exclude from the costs order in favour of Mrs Gunner any affidavit of any witness not ultimately read, unless such affidavit was sworn exclusively in support of an application for interlocutory relief.
Mr King also pointed out that some costs were thrown away due to the timing and content of Mrs Gunner's submissions in response to those served on behalf of Mr and Mrs Lawrence on 21 January 2015. Mr Hourigan accepted that there were "some issues" with those submissions. In effect, they had to be recast. I take that matter into consideration.
Otherwise, the costs of Mr and Mrs Lawrence's claim against Mrs Gunner must follow the event.
The two substantial issues raised by Mrs Gunner in her cross-claim were in respect of the breach of fiduciary duty that she alleged concerning the Beecroft property and the question of possession of 134 Clontarf Street. Although I cannot make a final order concerning the second of those issues, Mrs Gunner was in substance successful in relation to both. Mrs Gunner was not successful in relation to the remaining issues on the cross-claim (land tax and loss of rent in respect of 134 Clontarf Street, the claim concerning the Old Bar Agreement, and the issues arising in respect of the Deutz tractor and other equipment). However, those issues took little time at the hearing.
Taking all of those matters into consideration, my conclusion is that I should make a proportional costs order. However, in my opinion, Mr King's proposal of 75 per cent is too low. I propose to order that Mr and Mrs Lawrence pay 95 per cent of Mrs Gunner's costs of the proceedings, with those costs not to include the affidavits to which I have referred.
Mr Hourigan sought a special order for costs and pointed to two "Calderbank" letters sent to Mr and Mrs Lawrence by Mrs Gunner's solicitors in August 2013. During submissions this morning, Mr King tendered other correspondence to complete the chain of correspondence in August 2013.
What emerges is that on 2 August 2013, Mrs Gunner's solicitors made a Calderbank offer which in substance involved her paying $300,000 to Mr and Mrs Lawrence in full satisfaction of their claims. That offer was expressed to be open for 21 days; that is, until 4pm on 23 August 2013. The offer was not accepted in that period.
On 23 August 2013, Mrs Gunner's solicitors received an email from Mr and Mrs Lawrence's then solicitor, Mr George Anastasi, stating that he had terminated his retainer and had served on Mr and Mrs Lawrence a notice of ceasing to act.
Sometime after that, evidently on 26 August 2013, Mr Lawrence sent Mrs Gunner's solicitors, and also Mr Anastasi, an email which contained a response of sorts to the 2 August 2013 Calderbank offer, which had by then expired.
It is not entirely clear from Mr Lawrence's email what he was proposing. However, one reading of the email is that he wished a contract for the sale of Mrs Gunner's Old Bar Property to be exchanged (which he expected to occur that week), for that sale to proceed as a "normal sale", for the proceeds of the sale to be paid into Court, for Mrs Gunner's solicitors to "confirm the acceptance of the quantum amount of $500,000 to the plaintiffs" (whatever that meant), and for negotiations to continue.
On 26 August 2013, Mrs Gunner's solicitors wrote to Mr and Mrs Lawrence referring to "your Offer of Compromise" (which I infer to be Mr Lawrence's email), and stating that the "Offer of Compromise" was rejected. Mrs Gunner's solicitors went on to make a counter offer of $500,000 open until 4pm the following day, 27 August 2013. A letter from Mrs Gunner's solicitors dated 28 August 2013 records that Mr and Mrs Lawrence rejected the $500,000 offer on that day.
If a Calderbank offer is made, but not accepted, the Court's discretion to make a special order is enlivened. The Court's discretion is an open one, but is commonly enlivened if (a) the party that made the offer achieves a better result than the amount offered, (b) the offer was a genuine offer of compromise, and (c) it was unreasonable of the offeree not to accept: for example Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [7] to [8].
Mr King submitted that the only offer I should have regard to is that of 26 August 2013, which was, as Mr King pointed out, only open for a very short time. However, it appears to me that I can also take into account the 2 August 2013 offer. This offer, although overtaken and bettered by the second offer, was nonetheless open for acceptance for three weeks, during which time Mr and Mrs Lawrence had legal representation.
It is clear that Mrs Gunner has achieved a result very much better than she offered. The offer was plainly a substantial compromise on her part, and the reasons I have given in my judgment of 16 July 2015 make it clear, in my opinion, how unreasonable it was of Mr and Mrs Lawrence not to accept that offer and end the proceedings there and then.
In any event, I accept the broader submission made by Mr Hourigan in his written submissions of 21 August 2015, that the nature of the case that Mr and Mrs Lawrence brought against Mrs Gunner is such that an order for indemnity costs is warranted, at least from 2 August 2013. Mr Hourigan has prepared a schedule of the findings that I made about the credibility of Mr and Mrs Lawrence and the merits of the various, often scandalous, allegations they made in these proceedings. I annexe that schedule to these reasons.
I have found, in substance, that there was no basis upon which Mr and Mrs Lawrence could, or should, have brought these proceedings. In those circumstances, my opinion is that Mrs Gunner is entitled to be exonerated for the costs she has incurred, subject to the particular matters that I have set out above. Mrs Gunner is therefore entitled to an order for indemnity costs. I propose to make such an order from 2 August 2013.
Mr Hourigan and Mr King have included in their written submissions their competing contentions as to the other orders that should be made. Neither counsel sought to address those orally before me.
In those circumstances, and for those reasons, I enter the following judgment and make the following orders: 1. The further amended statement of claim be dismissed. 2. Judgment that the plaintiffs/cross-defendants pay the defendant/cross-claimant $315,000. 3. Order, pursuant to s 100 of the Civil Procedure Act 2005, that the plaintiffs/cross-defendants pay interest to the defendant/cross-claimant on the judgment referred to in order 2 at the rates set forth in Uniform Civil Procedure Rules r 36.7 from 1 March 2012. 4. Order that the proceedings RT 12/15580 and RT 12/09391 transferred to the Court from the CTTT by reason of the order made by the CTTT on 12 September 2012 and remitted NCAT to be dealt with by NCAT in light of the reasons given in these proceedings on 16 July 2015 in Lawrence v Gunner; Gunner v Lawrence [2015] NSWSC 944. 5. Grant liberty to the parties to apply for such further orders as may be required arising out of NCAT's consideration of the matter. 6. Order that the further amended cross-claim be otherwise dismissed. 7. Order that the plaintiffs/cross-defendants pay 95 per cent of the defendant/cross-claimant's costs of the proceedings (other than the costs of preparation of affidavits of any witness not called to give evidence other than affidavits prepared solely for the purpose of an interlocutory application) on a party-party basis until 2 August 2013 and on an indemnity basis thereafter. 8. Grant leave to the defendant/cross-claimant to apply to the Registrar, on seven days' notice, in respect of the funds paid into Court by the plaintiffs/cross-defendants as security for costs, such notice not to be exercised until the defendant's/cross-claimant's costs have been assessed or agreed. 9. Order that order 2 be stayed up to and including 5pm on 7 September 2015. 10. The exhibits and subpoenaed material be returned forthwith; any exhibits returned must be retained intact by the party or person that produced the material until the expiry of the time to file an appeal, or until any appeal has been determined.

Amendments 29 April 2019 - Catchwords on Coversheet corrected. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 29 April 2019

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