LCM Operations Pty Ltd v Rabah Enterprises Pty Ltd

Supreme Court of NSW|2023-07-28|Before: Rees J

These proceedings

These proceedings were commenced on 9 September 2020. The plaintiff sued Rabah for $14.8 million as an outstanding debt said to arise from a contract between 316 Group and Rabah for the provision of construction services in relation to the Burwood development. Relevantly, the Commercial List Statement included the following contentions: 3. On 14 August 2019, the Company, the Liquidator and the Plaintiff entered into an Assignment Deed, by which the Liquidator and the Company assigned the claims which are the subject of these proceedings to the Plaintiff. … The Contract 6. The Company and the Defendant entered into a contract which included a term that the Company would provide construction services to the Defendant in relation to the development of the property located at 316 Parramatta Road, Burwood NSW 2134 (the Property), being Lot 101 in DP1215370 (the Contract). Particulars (a) The contract is implied from the course of conduct carried on by the Company and the Defendant as follows: (i) The Defendant entered into a Progress Draw Facility with Australia and New Zealand Banking Group Limited (the ANZ Facility). (ii) On the instructions of the Defendant, the ANZ paid from the ANZ Facility funds in the amount of $2,632,459 to the Company's bank account. (iii) The payments particularised in subparagraph (ii) above were in part payment of the work the subject of the Contract. (iv) The Defendant made regular reports to the ANZ on the progress of the Development. (v) The Company carried on the Development of the Property by: (A) Contracting the builder; (B) Obtaining private funding to complete the Development; and (C) Paying building and development costs, including purchasing building materials and paying insurance. (the Construction Services). (b) Further particulars of the Contract will be provided following discovery. … 9. On or around 30 March 2016, the Company charged a fee of $14,800,00[0] to the Defendant for construction costs in relation to the development of the Property and the Contract. Particulars (a) In its draft financial statements for the year ended 30 June 2016, the Company reported that: (i) It earned revenue of $13,631,804.95 for the year ended 30 June 2016; and (ii) It had a current asset listed as "Receivables" totalling $14,800,000 as at 30 June 2016.

Providing documents to defendant

The defendant's submissions rely on the suggested inadequacy of particulars and documents provided at the time of the offer. This correspondence was adduced at trial and I take it to be relied on by the defendant on this application.
On 25 September 2020, the defendant sought copies of documents referred to in the Commercial List Statement, being the development approval, any tax invoice for the $14.8 million fee, the winding up application, the Assignment Deed, the ANZ facility agreement, 316 Group's draft financial statements and income tax return for the 2016 financial year, together with 316 Group's BAS statement for the March 2016 quarter.
On 27 October 2020, the plaintiff provided the documents sought, "Notwithstanding that all the documents relating to your client are in your client's possession, power or control." The plaintiff did not have a copy of the development approval or ANZ facility agreement. The request for any tax invoice was said to be a request for evidence. The plaintiff's solicitors advised that they were seeking instructions as to whether confidentiality issues arose in respect of the Assignment Deed and would revert in due course (the deed was later provided). All other documents were provided.
The defendant's solicitor immediately advised that it was not prepared to review the documents provided unless and until the plaintiff confirmed that it had been released from its Harman undertaking and was permitted to use documents and information obtained from the Federal Court proceedings in these proceedings.

Providing particulars

On 22 October 2020, Hammerschlag J made orders by consent for the defendant to request, and for the plaintiff to provide, further particulars, following which the defendant would file a Commercial List Response.
On 23 October 2020, the defendant sought the following further and better particulars: 1. With regards to Contention 3 of the [Commercial List Statement], please provide a copy of the Deed of Assignment referred to. 2. With regards to Contention 6 of the [Commercial List Statement], please provide the following: (a) the date of entry into contract referred to; (b) in so far as the contract referred to is in writing please provide a copy of same; (c) if the contract referred to is oral, please provide the names of the persons who it is alleged made the contract on behalf of each party. (d) When did 316 Group cease rendering services to the Defendant pursuant to the contract referred to? 3. In relation to Contention 9, please advise how the fee of $14,800,000 is calculated.
On 2 November 2020, the plaintiff provided further and better particulars. As to the request for particulars of the contract, the plaintiff asserted that the contract was entered into in or around 2014. The contract was implied from the course of conduct carried on between the parties, "Further particulars will be provided following discovery." As to when the 316 Group ceased rendering services to Rabah pursuant to the contract, this was said not to be a proper request for particulars. As to how the fee of $14.8 million was calculated, the plaintiff's solicitors advised that this was not a proper request for particulars, but in any event the fee was recorded in the defendant's own books and records, particulars of which were set out in the Commercial List Statement.
Further, the plaintiff's solicitor set out in detail why the Harman undertaking did not apply, where the plaintiff's use of the documents was entirely consistent with the expressly stated purpose for which the documents were obtained and therefore could not constitute use for a collateral or ulterior purpose. If the defendant maintained this position, then the plaintiff would apply to the Federal Court for orders clarifying the plaintiff's obligations and, if the Court determined that no release was required, a costs order would also be sought.
On 13 November 2020, the defendant's solicitors replied, "You have not provided adequate replies to the request for particulars. Our client reserves its rights to seek orders for proper particulars to be provided." Beyond this broad statement, no particular deficiency was identified.
Further correspondence ensued, largely relating to the question of the Harman undertaking. The plaintiff filed an application in the Federal Court to seek a declaration that no release from any Harman undertaking was required or, alternatively, for such a release.

Commercial List Response

The defendant sought an extension of the time to file its Commercial List Response until after determination of the plaintiff's application in the Federal Court proceedings to be released from its Harman undertaking. On 27 November 2020, Hammerschlag J considered that it was not appropriate to delay the proceedings on the basis, but extended the time for service of the Commercial List Response.
On 18 December 2020, the Commercial List Response was filed: Rabah simply denied the existence of a contract, the debt and the quantum meruit claim. Justice Hammerschlag later noted his preliminary view that the Commercial List Response did not comply with Practice Note Eq 3 in that it did not disclose in any meaningful way the issues which the defendant believed were likely to arise but rather stated the general issue: LCM at [138].
On 9 February 2021, the plaintiff filed a motion for discovery, supported by an affidavit of Justin Ward. A portion of Mr Ward's affidavit was read at trial. In short, Mr Ward set out the plaintiff's difficulties in obtaining documents from Rabah, either at the request of the liquidator of 316 Group, or in answer to summonses for examination and orders for production made in relation to the examinable affairs of that company in the Federal Court. The plaintiff then considered that the documents produced did not include all documents relevant to investigating and establishing the debt owed to 316 Group by Rabah, such as documents evidencing the terms of any arrangement between 316 Group, Rabah and ANZ in relation to the loan facility, or invoices issued by 316 Group for $14.8 million or any amount.
On 11 February 2021, the defendant filed a motion seeking to stay these proceedings pending determination of the plaintiff's application in the Federal Court. On 19 February 2023, Stevenson J stood over these proceedings, together with the plaintiff's motion for discovery and the defendant's motion for a stay, until the Federal Court had dealt with the plaintiff's application.
On 1 April 2021, Stewart J declared that the plaintiff was permitted to use information and documents obtained pursuant to orders for production and examination summonses issued in the Federal Court in these proceedings: LCM Operations Pty Ltd, In the matter of 316 Group Pty Ltd (in liquidation) [2021] FCA 324. In short, his Honour held that "the purpose for which the documents are sought to be used is the very purpose for which they were obtained under the compulsory process of the Court. On that basis, no leave is required." Rabah was ordered to pay the plaintiff's costs of the application.

Offer of compromise

It was in these circumstances that the plaintiff served an offer of compromise on 7 April 2021, offering to accept $2 million in respect of its claim. The plaintiff proposed that judgment be entered in its favour in that sum, with no order as to costs. The offer was open for 28 days and stated to be made in accordance with rule 20.26 and Part 42 of the Uniform Civil Procedure Rules.
The defendant does not suggest that the offer was non-compliant with the rules save, perhaps, in this respect. The defendant submitted that the plaintiff's debt claim was always a liquidated claim in the amount of $14.8 million. The offer of compromise "sought orders by way of Judgment at a point in time when it was inconsistent with the terms of the original Summons". The Summons then sought damages in the amount of $14.8 million. I reject this submission. The offer of judgment in favour of the plaintiff likely reflected rule 20.26(2)(a)(ii), which required the offer to identify the proposed orders for disposal of the claim "including, if a monetary judgment is proposed, the amount of that monetary judgment." The fact that the Summons then sought damages in that amount, rather than judgment, does not, I think, prevent the plaintiff from serving an offer in a form required by the rules.
Later that day, further correspondence ensued between the parties' solicitors in respect of proposed directions, including categories for pre-evidence discovery. The defendant's solicitor advised that the defendant considered the Commercial List Statement was not adequately particularised and that the further and better particulars provided were inadequate. The defendant's solicitor suggested that directions should include the provision of particulars and any consequential amendments to the pleading which flowed from either discovery or further particulars. The plaintiff's solicitor re-joined, maintaining that the plaintiff had provided all particulars and documents sought, "There are no other outstanding requests for particulars. If you say there are any, please identify them so they can be addressed by our client."
On 9 April 2021, Hammerschlag J made orders for pre-evidence discovery, noting that the categories sought by the plaintiff were too wide whilst those proffered by the defendant were "plainly too narrow." Orders were made for limited discovery, being documents in respect of any contract between 316 Group and Rabah to provide services in relation to the Burwood development, documents evidencing Rabah's acknowledgement that a fee of $14.8 million was a debt payable to 316 Group and documents referring to the value of the services provided by 316 Group. On 30 April 2021, Rabah provided discovery of 26 documents, none of which related to the matter of interest to the plaintiff. The documents did not include any verified financial records for Rabah.
On 22 April 2021, the defendant's solicitor replied to the offer of compromise, advising that its client was not in a position to consider the offer where it did not have sufficient particulars of the plaintiff's claim and gave notice under rule 20.26(4) of the Uniform Civil Procedure Rules. The defendant's position was said to be further supported by the plaintiff's application for pre-evidence discovery.
On 3 May 2021, the plaintiff's solicitor replied to the defendant's notice under rule 20.26(4), suggesting that the notice was outside the 14 days required by the rule, but in any event, rejected the assertion of a lack of particularity. Whilst the notice was a day late - being 15 days after the offer - the plaintiff responded to the notice at the time, and I will treat it as a valid notice for the purposes of this application.
There was no reply to the plaintiff's letter of 3 May 2021, although on 6 May 2021, the defendant's solicitor separately corresponded in respect of the adequacy of the defendant's disclosure and suggested that the matter be adjourned to allow the plaintiff to consider the material which had been produced and provide further particulars in light of that material. The offer of compromise expired, without acceptance.

Amended pleadings

As earlier noted, Hammerschlag J considered the Commercial List Response to be inadequate and, on 24 May 2021, gave leave to the plaintiff to file an application to strike it out. In June 2021, the defendant filed an Amended Commercial List Response, which pleaded a more detailed agreement between Nouredeen and Youssef by which Rabah would appoint 316 Group to act as project manager for the Burwood development. Orders were also made for the service of evidence, which was progressively filed.
In August 2021, the plaintiff filed an Amended Summons and Amended Commercial List Statement, effectively re-asserting some of the suggested arrangements between 316 Group and Rabah, as pleaded in the Amended Commercial List Response, by adding those arrangements to the terms of the contract pleaded by the plaintiff.
In addition, the plaintiff contended that the proper characterisation of the arrangement between the brothers was that an original incorporated joint venture via Rabah was modified such that there was an unincorporated joint venture between Rabah and 316 Group, with each brother controlling one company. As such, 316 Group and Rabah were each entitled to half of the net proceeds of the development. The plaintiff sought, in the alternative, a half share in the net proceeds of the development.
In addition, the plaintiff pleaded that the defendant was estopped from denying that it was obliged to pay the fee or, alternatively, half of the net proceeds of the development or, alternatively, a reasonable sum representing the value of the work.
On 21 March 2022, Hammerschlag J made further orders for discovery. Rabah provided further discovery of six documents. Even by trial, Rabah had produced little by way of documentation, either in discovery or evidence, albeit that the evidence indicated that Rabah may have had records which it did not collate or adduce: LCM at [15]. The lack of documentation was stark, where Rabah appeared to have used a bookkeeper and both Rabah and 316 Group used an external accountant: LCM at [16]. It is perhaps curious in these circumstances that the defendant now relies on the lack of such material as a reason why the Court should exercise its discretion not to order indemnity costs.

CONSIDERATION

Where an offer of compromise has been served in accordance with the rules, an order for indemnity costs follows, unless the Court otherwise orders: New South Wales Insurance Ministerial Corp v Reeve (1993) 42 NSWLR 100 at 102 (per Gleeson CJ); Morgan v Johnson (1998) 44 NSWLR 478 at 581-82. The onus lies on the defendant to establish good reason why the Court should "otherwise order": Hungry Jack's Pty Ltd v Fourtounas (No 2) [2011] NSWCA 26 at [11] (per Basten and White JJA).

Rule 20.26(4)

Rule 20.26(4) of the Uniform Civil Procedure Rules provides: (emphasis added) 20.26 Making an offer ... (4) If the offeror makes an offer before the offeree has been given such particulars of the offeror's claim, and copies or originals of such documents available to the offeror, as are necessary to enable the offeree to fully consider the offer, the offeree may, within 14 days of receiving the offer, give notice to the offeror that - (a) the offeree is unable to assess the reasonableness of the offer because of the lack of particulars or documents, and (b) in the event that rule 42.14 applies to the proceedings, the offeree will seek an order of the court under rule 42.14(2).
As the learned author of Dal Pont on Costs observe at [13.22]: (citations omitted) The stage in the proceedings at which an offer is made can be relevant to the discretion to 'otherwise order'. An offer, if made early, may dictate that the offeree lacks sufficient information relevant to assessing its reasonableness, and so refusing it may, at that time, be reasonable, which may incline the court to 'otherwise order'. After all, '[a]n offeree should not be obliged to consider an offer whilst ignorant of required detail of the offeror's case'. The position may be otherwise if … the offeree could have discovered that information by making reasonable inquiries.
Hiscox v Woods [2002] QSC 64 is cited for the last proposition, where the plaintiff offered to accept an amount "clear of all statutory refunds." The defendant submitted that it did not know what those refunds were. Moynihan J ordered indemnity costs, noting "There is no basis for concluding that the defendant's solicitors could not have readily ascertained what refunds would have to be made and the relevant amount": at [10].
An example of the application of rule 20.26(4) is in Ross v Suncorp Metway Insurance Ltd [2002] QCA 93, where the plaintiff, in a personal injury case, served an offer of compromise contemporaneously with the statement of claim. No medical reports were to hand. Douglas J (with whom Davies and Thomas JJA agreed) observed at [30]: In fact at the time the offer was made, the only basis upon which the defendant could assess the claim was upon the allegations made in the plaint. The nature of the case was not clearly made out until all the medical reports had been obtained after the time for accepting the offer expired.
By contrast, in Jones v Dapto Leagues Club Ltd (No 2) [2008] NSWCA 111, the plaintiff in a personal injury case served an offer of compromise mid-trial. Mason P (Beazley and Bell JJA agreeing) considered that the offer complied with rule 20.26(4) where the defendant then had access to the plaintiff's medical reports, had heard and tested the plaintiff's oral evidence, and had had the plaintiff examined by its own doctor. Although the plaintiff served a supplementary medical report the day before the offer expired, this was necessitated by the defendant's late-served medical report. In any event, the defendant had sufficient time to consider the further report before the offer expired: at [8], [11].
The defendant submitted that at the time the offer of compromise was made, no evidence had been filed in relation to the plaintiff's claim. There were active pre-evidence discovery disputes. As the affidavit of Mr Ward filed in support of the motion for discovery made plain, the plaintiff did not then have sufficient documentation to address the issues in dispute. The defendant gave notice under rule 20.26(4). The plaintiff's contention that it had provided adequate particulars was said to have lost any weight when the plaintiff amended its claim in August 2021. The facts ultimately relied upon by the plaintiff at the hearing, which post-dated the offer, were not entirely made out; the factual matrix came to light as of the result of the evidence given at the hearing. In these circumstances, it was submitted there was insufficient material available to allow the defendant to assess the reasonableness of the offer.
As mentioned at the outset, the plaintiff was a stranger to the events the subject of these proceedings, whilst Rabah was centrally involved in what happened. The documents and particulars provided by the plaintiff had been gathered by 316 Group's liquidator and the plaintiff over a protracted period, including by the compulsory processes of the Federal Court.
As to whether the defendant had been given copies of documents necessary to fully consider the offer, rule 20.26 only obliges the offeror to provide documents "available to the offeror". There is no suggestion that the plaintiff withheld any documents which it then had. The only document sought by the defendant which was not provided and might be thought significant was any tax invoice in respect of the $14.8 million fee. I note that no tax invoice was ever located; Nouredeen and Youssef denied any invoice existed, even though the relevant taxation legislation required that there be one: LCM at [76], [86]. Of course, if such an invoice had been rendered at the time, it would have been issued to Rabah.
As to whether the defendant had been given such particulars of the plaintiff's claim as were necessary to fully consider the offer, the particulars sought were minimal (extracted at [19]). The defendant requested the names of the persons alleged to have made the contract, when 316 Group ceased rendering services to Rabah, and how the fee was calculated. To the extent unanswered, these were matters were uniquely within the knowledge of Rabah or persons on whom Rabah could call to provide this information, being Rabah's director, Nouredeen, Rabah's accountant, Mr Hassan, or Nouredeen's brother, Youssef. That is, the offeree could have discovered the information by making reasonable inquiries, in this case, of its officers, associates and records: Dal Pont on Costs at [13.22], citing Hiscox v Woods.
Noteworthy, while the defendant sought an extension of time to file its Commercial List Response until after determination of the plaintiff's application in the Federal Court in respect of the Harman undertaking, the defendant did not suggest that it was unable to file a Commercial List Response for want of adequate particulars. Rabah proceeded to file a Commercial List Response. Whilst the defendant's solicitors stated, from time to time, that the particulars were not adequate, this contention was a broad assertion. Rather, it appears that the plaintiff provided the best particulars it was able to provide at the time. I expect that the defendant understood the case made against it; the defendant's enquiries were directed to ascertaining the extent to which the plaintiff was likely to be able to prove it. Having been provided with the documents and particulars at the plaintiff's disposal at the time, I consider that the defendant had the information necessary to enable it to fully consider the offer. I decline to "otherwise order" on this basis.

Genuine compromise

Relatedly, the defendant submitted that the genuineness of the offer, in the sense of its timing, should attract some scrutiny. The offer was served with the intention of offering the plaintiff costs protection, as opposed to being a genuine attempt at resolving the proceedings at the time. The plaintiff did not proffer any explanation for the offer, given it sought $14.8 million in its debt claim, or why the defendant should accept the offer and pay $2 million at such an early stage of the proceedings: Dean v Stockland Property Management Pty Ltd [2010] NSWCA 141 at [14] (per Giles JA, Handley AJA and Whealy J).
I reject this submission. Whether there is a real element of compromise is determined objectively according to the circumstances of the case viewed at the time the offer was made: Koprivnjak v Koprivnjak (No 2) [2023] NSWCA 62 at [30] (per Griffiths AJA, Leeming and Mitchelmore JJA agreeing). It cannot seriously be suggested that an offer to accept $2 million in respect of a claim for $14.8 million did not involve an element of compromise. Rule 20.26 does not oblige the offeror to give an explanation, when serving an offer, as to the basis on which the figure has been fixed or why it should be accepted. A fairly obvious candidate for the selection of $2 million would be 316 Group's outstanding debt to the ATO. Additionally, the characterisation of an offer as a 'tactical weapon' does not necessarily undermine its genuineness: Zealley v Liquorland (Australia) Pty Ltd (Costs Ruling) [2015] VSC 133 at [24] (per Forrest J); Evans v Baddock (No 2) [2015] NSWSC 518 at [50] (per Hallen J). As Forrest J observed in Zealley, "to some extent any offer of compromise or Calderbank offer is necessarily a tactical weapon. At the heart of a Calderbank offer are two factors - settlement of the case and protection on costs if the offer is ultimately regarded as reasonable": at [24].
As to the timing of the offer, the pleadings had now closed after the provision of documents and particulars. The defendant's complaint in respect of the Harman undertaking had been resolved such that there was no doubt that the plaintiff could rely on the documents served to advance its claim in these proceedings. Whilst the proceedings remained at an early stage, the timing of the offer was not inopportune but enabled the defendant to resolve the proceedings before determination of the motion for pre-evidence disclosure. In the event that the defendant was ordered to give discovery, the defendant would be required to provide further documents. This may have strengthened the plaintiff's claim. I do not consider that the timing of the offer was inappropriate. I decline to "otherwise order" on this basis.

Change in case after the offer

Whether it was unreasonableness to reject an offer of settlement is to be judged by reference to the circumstances facing the offeree at the time of the offer, and not with the benefit of hindsight: CGU Insurance Ltd v Corrections Corporation of Australia Staff Superannuation Ltd [2008] FCAFC 173 at [75] (per Moore, Finn and Jessup JJ); Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [11] (per Basten JA, McColl and Campbell JJA agreeing).
As to whether the offer should be assessed by reference to circumstances which unfolded after the offer was made, the Court may 'otherwise order' if the offeror's case changed substantially after the offer was rejected: Dal Pont on Costs at [13.22] citing Rolls Royce Industrial Power (Pacific) Ltd v James Hardie & Co Pty Ltd [2001] NSWCA 461; (2001) 53 NSWLR 626 at 642 (Stein JA). The change in the plaintiff's case must, however, be substantial, as explained by Perry J in Shaw v Jarldorn [1999] SASC 529; (1999) 76 SASR 28 at [36], [38]: (emphasis added) … The circumstances which … might justify relieving a defendant from the obligation to pay solicitor and client costs, will be those where there is such a significant change in the manner in which the plaintiff's case is presented at the trial, or the manner in which the evidence emerges at the trial, that it might fairly be said that the full dimensions of the plaintiff's entitlement could not possibly have been foreseen before the hearing commenced. … But the fact that the defendant is caught by surprise by some development at the trial, standing alone, would not ordinarily be sufficient, as it is symptomatic of litigation that the course taken by a trial will often be unpredictable. It will only be in an extreme case that such considerations would avail a defendant. It is not necessary or appropriate, in the context of argument as to the application of the rule, for the Court to embark on a nice comparison between the material discovered before trial, and the evidence as it emerged at the hearing. In considering their response to an offer, defendants must allow for the fact that the course of evidence may turn significantly and unexpectedly against them at the trial. That is an ordinary hazard of litigation which no properly advised defendant should fail to allow for. See likewise Doyle CJ at [8].
The defendant submitted that the Court should "otherwise order" as, after the offer of compromise expired, the pleadings were amended. In particular, the plaintiff amended its Commercial List Statement to further particularise the contract between the defendant and 316 Group, relying on parts of the agreement as pleaded by the defendant. Additional causes of action were pleaded, including claims based on a fiduciary relationship between the parties by reason of a joint venture arrangement and estoppel. By way of the Amended Summons, the plaintiff amended the relief sought to seek judgment or equitable compensation, as opposed to damages, "in circumstances where the plaintiff rightly could seek Judgment." Further claims for relief were added, including a declaration that the defendant held property on a constructive trust for the plaintiff. The amendments were said to materially alter the case to be met by the defendant and it could not reasonably have assessed the strength of the plaintiff's claim at the time the offer of compromise was served. The plaintiff now pleaded its standing to bring the claim pursuant to a deed of assignment and the resolution that 316 Group enter into the assignment deed. (I do not consider this last matter to be a material amendment, where the same matter was already pleaded at paragraph 3, extracted at [12]).
The amendments made by the plaintiff in August 2021 did add further detail to the alleged contract between 316 Group and Rabah, but by re-asserting characteristics and arrangement as pleaded by Rabah in its Amended Commercial List Response. The joint venture claim did not add additional facts but contended that the proper characterisation of the arrangement as now pleaded by Rabah was that of a joint venture. Where this additional detail emanated from Rabah, it is difficult to see how the defendant now had to meet a new case; the case was one which Rabah itself proposed to advance in its defence. I do not consider that the amendments led to a substantial change in the plaintiff's case, in the sense described in Shaw v Jarldorn, such that the Court should "otherwise order."

Apportionment

Finally, the defendant submitted that the Court should take into account that the plaintiff was not successful on key and separable claims on the basis of a joint venture or estoppel made by it in its amended pleadings. The Court has wide discretionary powers to apportion costs and a separable issue can relate to any disputed question of fact or law, notwithstanding a party is ultimately successful: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34] (per Beazley, Tobias and McColl JJA). The Court should not depart from the costs order made on 2 June 2023, or in the alternative should apply its discretion to apportion costs (in what portion was unstated).
Whilst I accept that the Court may apportion costs to the extent that a party has succeeded on part only of its claims, I see no reason to do so in this case. The plaintiff succeeded on its primary claim, pleaded from the outset. True it is that the plaintiff amended its particulars of the contract in August 2021, but it did so by re-asserting the characteristics of the arrangement as pleaded by Rabah in its Amended Commercial List Response. To the extent that the terms of the agreement between Rabah and 316 Group were found to differ from the terms asserted by the defendant and partially re-asserted by the plaintiff, the evidence on which those terms relied was adduced by the defendant, albeit not ultimately accepted in its entirety: LCM at [174].
The plaintiff's alternative claims added in August 2021 in respect of a joint venture (which failed) and estoppel (not pressed) were otiose. Importantly, neither claim pleaded additional facts. The plaintiff's joint venture claim simply contended that the proper characterisation of the arrangement described by Rabah was that of a joint venture. These alternate claims overlapped with the evidence in respect of the primary claim and occupied little of the written or oral submissions. The plaintiff devoted four paragraphs to the joint venture claim in both its opening and closing submissions. The defendant responded in four paragraphs. No oral submissions were made on the subject. The plaintiff did not refer to the estoppel claim in its submissions. The defendant addressed the estoppel claim briefly in opening (two paragraphs) and closing (three paragraphs), noting that it was assumed that the estoppel claim was no longer pressed. No oral submissions were made on this subject. I do not consider an order apportioning costs to be appropriate in the circumstances of this case.

ORDERS

For these reasons, I make the following order: 1. Pursuant to rule 42.14(2) of the Uniform Civil Procedure Rules 2005 (NSW), vary order 3 made on 2 June 2023 such that the defendant is to pay the plaintiff's costs of the proceedings on the following bases: 1. costs assessed on the ordinary basis up to 7 April 2021; and 2. costs assessed on an indemnity basis on and from 7 April 2021.

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: 28 July 2023

JUDGMENT

HER HONOUR: I gave judgment in this matter on 2 June 2023, giving judgment in favour of the plaintiff in the sum of $14.8 million together with interest: LCM Operations Pty Ltd v Rabah Enterprises Pty Ltd [2023] NSWSC 590. On 28 June 2023, I gave a second judgment in respect of interest and varied the judgment sum to $20,218,949: LCM Operations Pty Ltd v Rabah Enterprises Pty Ltd (No 2) [2023] NSWSC 722.
The plaintiff now seeks an order for indemnity costs under rule 42.14 of the Uniform Civil Procedure Rules 2005 (NSW), where the defendant did not accept an offer of compromise in the amount of $2 million. Such an order is opposed, primarily on the basis that the defendant was then unable to assess the reasonableness of the offer because of a lack of particulars or documents, relying on rule 20.26(4).
The plaintiff relied on an affidavit by its solicitor, Clayton Davis. The defendant provided submissions attaching, and referring to, further correspondence and pleadings. This judgment assumes familiarity with my primary judgment; the same terms are used.

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