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[2007] NSWCA 283
Court of Appeal (NSW)
2007-10-15
Hodgson JA, McColl JA, Gzell J, Campbell J
Original judgment source is linked above.
CITATION: Leda Pty. Limited v. Weerden & Anor. (No.2) [2007] NSWCA 283
HEARING DATE(S): Matter dealt with on written submissions in Chambers
JUDGMENT OF: Hodgson JA at 1; McColl JA at 1; Handley AJA at 1
DECISION: The Court makes the following additional orders:3. Costs of the appeal to be assessed on an indemnity basis.4. In this order: X equals the total amount of costs and disbursements paid or liable to be paid to the respondent's legal advisers in connection with these proceedings; Y equals the total amount of costs and disbursements allowed on assessment to the respondent in connection with these proceedings; and The Allowed Percentage equals ((Y/X) x 100)%. Appellant to pay to the respondent interest on costs and disbursements, at the rates set out in Schedule 5 to the Uniform Civil Procedure Rules, on the Allowed Percentage of each amount for or on account of costs and disbursements actually paid to his legal advisers by or on behalf of the respondent, from the date of payment of each such amount until the first to occur of: (a) such time as the appellant has paid the costs due to the respondent under order 3 above, or (b) any further order relating to interest on costs in these proceedings. 5. Reserve liberty to apply on 7 days' notice for any further order pursuant to paragraph 4(b).
CATCHWORDS: COSTS - Offer of compromise below rejected - Offer of compromise on appeal also rejected - Indemnity costs of appeal extends to period before offer made where offer also made below - ASSESSMENT OF COSTS - Interest - Where only part of the total costs are awarded - Interest calculated in same proportion as costs allowed to total costs
Leda Pty. Limited - appellant PARTIES: John Weerden - respondent/cross-appellant Leisure Management Pty. Limited - cross-respondent
SOLICITORS: Paul Bard Lawyers, Sydney for appellant and cross-respondent Blake Dawson Waldron Lawyers, Sydney for respondent/cross-appellant
LOWER COURT JURISDICTION: Supreme Court - Common Law Division
IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40231/06 ED 3503/05
HODGSON JA McCOLL LJA HANDLEY AJA
Monday 15 October 2007 LEDA PTY. LIMITED V. WEERDEN & ANOR. (NO.2) Judgment 1 THE COURT: On 18 July 2007, the Court of Appeal gave judgment in which it dismissed Leda's appeal with costs, and dismissed Mr. Weerden's cross-appeal with no order as to costs. 2 Pursuant to directions given on that day, Mr. Weerden has applied for orders that his costs be assessed on an indemnity basis, and that there be interest on costs and disbursements from the time they were paid. 3 Mr. Weerden had made an offer of compromise below, in substance that there be a verdict for Mr. Weerden with each party bearing its own costs. Following the first instance judgment given on 29 March 2006 and the bringing of an appeal, Mr. Weerden on 18 July 2006 served an offer of compromise to the effect that Mr. Weerden should retain the verdict in his favour, but each party should bear its own costs of the first instance proceedings and the appeal. He also served a Calderbank letter to similar effect. These offers were not accepted. 4 In those circumstances, in our opinion Mr. Weerden is plainly entitled to the costs of the appeal on an indemnity basis from 19 July 2006: Uniform Civil Procedure Rules Pt.42 r.15A. 5 In circumstances where there had been a similar offer of compromise at first instance, and where the offer of compromise in relation to the appeal was lodged at an early stage of the appeal, in our opinion Mr. Weerden should also have the costs of an appeal on an indemnity basis prior to 19 July 2006. 6 The evidence shows substantial amounts of costs progressively paid in respect of the appeal from May 2006 to July 2007. 7 In Lahoud v. Lahoud [2006] NSWSC 126 at [78] and [82]-[87], Campbell J said this: 78 Section 101 Civil Procedure Act 2005 provides: "(4) The court may order that interest is to be paid on any amount payable under an order for the payment of costs. (5) Interest under subsection (4) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from: (a) the date or dates on which the costs concerned were paid, or (b) such later date as the court may order." … 82 In my view it is appropriate to make an order for the payment of interest on costs. There is no requirement, before an order for payment of interest on costs is made, for the Court to be satisfied that the circumstances of the case are out of the ordinary: Grogan v Thiess Contractors Pty Ltd & Anor [2000] NSWSC 1101 at [10] per Barr J; Australian Development Corporation Pty Ltd v White Constructions (ACT) Pty Ltd (in liquidation) & Ors [2002] NSWSC 280 at [23]-[25] per Einstein J; Puntoriero & Anor v Water Administration Ministerial Corporation [2002] NSWSC 217 at [10] per Grove J; Davies v Ku-ring-Gai Municipal Council [2003] NSWSC 1010 at [7] per Austin J. 83 To the extent to which the plaintiffs have been out of pocket as a result of having to pay their lawyers' costs and disbursements, it is appropriate that the compensation which is recognised in the Court's order for costs take into account the fact that the plaintiffs have been out of pocket in that way: Hughes Bros v The Trustees of the Roman Catholic Church [1999] NSWSC 1051 at [60]; Grogan v Thiess Contractors Pty Ltd & Anor [2000] NSWSC 1101 at [12]; Woods v Woods [2001] NSWSC 1108 at [29]; Australian Development Corporation Pty Limited v White Constructions (ACT) Pty Ltd (in liquidation) & Ors [2002] NSWSC 280 at [17]; Puntoriero & Anor v Water Administration Ministerial Corporation [2002] NSWSC 217 at [10]; Optus Networks Pty Ltd & Ors v Leighton Contractors Pty Limited & Ors [2005] NSWSC 156 at [9]; Roads and Traffic Authority v Cremona (No 3) [2005] NSWCA 13 at [34]. Given the length of time the proceedings have been on foot and the extensive preparation, the amount by which the plaintiffs have been out of pocket could be large. It is relevant that the plaintiffs, and the defendants, each conduct businesses and so the amounts which the plaintiffs have had to pay to finance the litigation is likely to be money which otherwise could have been put to a productive use. Conversely, the defendants, by not being required to pay costs until some time in the future when the costs are agreed or assessed, are likely to have been able to retain, for their own productive use, the amount of those costs. 84 The form of the order for interest on costs has occasioned me some concern. As the plaintiffs have succeeded in obtaining an order for indemnity costs in relation to only one issue in the proceedings, it is possible that there will be some costs and disbursements which the plaintiff has paid from time to time as the litigation progressed, but which are not allowed on assessment. It might sometimes be possible to cast an order in the form of allowing interest only on such costs as the plaintiff has paid as are allowed on assessment - but such an order would require the assessor to conduct what would amount to a separate assessment in relation to each payment that the plaintiffs had made. While the making of such a series of costs assessments would be within the scope of section 353 Legal Profession Act 2004, adopting such a procedure has the potential for making the costs assessment itself more complex and expensive. Further, it sometimes happens in the course of litigation - and the evidence does not tell me whether it has happened in the course of this litigation - that a litigant makes payments to his lawyers from time to time of lump sums on account of costs, without purporting to allocate those payments to particular memoranda of fees or items of work performed. If that had happened in the present case, one could not tell whether the whole or any part of such a payment had been allowed on assessment. 85 In all the circumstances, the appropriate way of calculating interest on costs is to ascertain the total of the amounts which the plaintiffs have paid and are liable to pay for costs and disbursements, ascertain the total amount of costs and disbursements allowed on assessment, calculate the percentage which the total amount allowed on assessment bears to the total costs and disbursements which the plaintiffs have paid or are liable to pay, and allow the plaintiffs interest on that percentage of each payment which they have made from time to time on account of costs and disbursements. 86 I recognise that that method of proceeding contains within it the possibility that the plaintiffs might have paid for some items of work which the assessor discounts considerably or totally. If the plaintiffs had paid such an amount comparatively early in the course of the litigation, and interest was allowed on the percentage of that amount which seems to me to be appropriate, then the plaintiffs would be somewhat overpaid interest, by comparison to the amount that the plaintiffs would receive if individual assessments of each payment made were carried out. Conversely, if the plaintiffs paid for such an item of work comparatively late in the course of the litigation, the method of proceeding which I am proposing to adopt could result in the plaintiffs being underpaid interest, by comparison to the amount that the plaintiffs would receive if individual assessments of each payment made were carried out. However, it seems to me that those possibilities are ones which fall within the ambit of the degree of approximation and estimation which is frequently involved in assessing compensation. I do not regard them as a reason for not following that method. 87 I see no reason for ordering interest to accrue at any rate other than the rate set out in Schedule 5 of the Rules . 8 We would adopt a similar approach in this case. 9 For those reasons, we make the following additional orders: 3. Costs of the appeal to be assessed on an indemnity basis. 4. In this order: X equals the total amount of costs and disbursements paid or liable to be paid to the respondent's legal advisers in connection with these proceedings; Y equals the total amount of costs and disbursements allowed on assessment to the respondent in connection with these proceedings; and The Allowed Percentage equals ((Y/X) x 100)% Appellant to pay to the respondent interest on costs and disbursements, at the rates set out in Schedule 5 to the Uniform Civil Procedure Rules, on the Allowed Percentage of each amount for or on account of costs and disbursements actually paid to his legal advisers by or on behalf of the respondent, from the date of payment of each such amount until the first to occur of: (a) such time as the appellant has paid the costs due to the respondent under order 3 above, or (b) any further order relating to interest on costs in these proceedings. 5. Reserve liberty to apply on 7 days' notice for any further order pursuant to paragraph 4(b). **********
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