Leda v Weerden [2006] NSWSC 220 | Case summary

3503/05 LEDA PTY LTD v JOHN WEERDEN (NO 3) EX TEMPORE JUDGMENT 1 I published my reasons in this matter on 10 March 2006. I found that Mr Weerden owed a duty of care to Leda which was breached, but I found that that breach did not materially contribute to Leda's loss and on that basis, Leda failed. As I said at [84] of my reasons: "But in this case, I do not see Mr Weerden's failures in his advice as having materially contributed to Leda's loss. Leda had the unqualified advice of Mr Weerden but they also had vendors' warranties and they had advice that they could sue the vendors and Price Waterhouse if the losses were not available to be offset against assessable income of the Tuggeranong Trust. And Leda was aware of the risks it said Mr Weerden failed to bring to its attention and went ahead despite the alleged shortcomings in his advice. Even if it could be said, and I doubt that it could, that Mr Weerden's failures played some part in the losses suffered by Leda, they were trifling. They could not, in my view, be regarded as material." 2 The plaintiff argues that this was a case of discrete issues and the ordinary order for costs under the Uniform Civil Procedure Rules 2005, r 42.1 should not be followed. Reference was made to a number of decisions in which this issue has been discussed, including the recent decision of the Court of Appeal in James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296. At [31] and following the court analysed the authorities. 3 What is said on behalf of Leda is that the issue of causation and reliance played a very small part in the proceedings, and those issues should be regarded separately from the other issues in the trial. 4 In a case in which it is alleged that negligent advice was given, or that there was a failure to comply with the requirements of the Fair Trading Act 1987, I find it difficult to conceive that one could separate out from the question of the existence of a duty and its breach, the questions of causation and reliance. And in this case I am of the view that there were no discrete issues that could be isolated separately. Indeed, it is my recollection that a considerable part of the cross-examination went to establish knowledge on the part of Leda of the very issues that were said to give rise to a breach of duty. 5 I therefore reject the submission on behalf of Leda that this matter should be approached on the basis of discrete issues, and I reject the submission that an order should be made that Leda pay only 23% of Mr Weerden's costs. 6 An offer of compromise was made on 30 January 2006 by Mr Weerden. It was stated that the offer was open for acceptance until 4.00 pm on 3 February 2006, four days later. The offer was that there be a verdict for Mr Weerden and that he and Leda should bear their own costs save in respect of costs already the subject of an order. 7 Rule 20.26 of the Uniform Civil Procedure Rules 2005 deals with such offers. Leda submitted that the offer did not comply in that r 20.26(7)(b) provides that if an offer is limited as to the time it is open for acceptance, it must be left open for such time as is reasonable in the circumstances in a case where an offer is made less than two months before the date set down for the commencement of the trial. It was said that a four day period in the week immediately prior to the commencement of the trial fails to comply with the requirement. It was said that a reasonable time within the contemplation of the rule ought to have regard to the two months mentioned in it. 8 It was also submitted that since Leda made an offer on 11 January 2006 and it took Mr Weerden until 30 January 2006 to make his offer, that interval was an indication of what should be regarded as a reasonable time in the circumstances. 9 I reject those submissions. In my view, the two month period does not give any indication of what is regarded as a reasonable time because in the Uniform Civil Procedure Rules 2005, r 42.15(2)(b)(ii), which deals with the cost consequence of a failure to accept a defendant's offer, reference is made to an offer being made after the commencement of the trial. It provides that the defendant is entitled to indemnity costs from 11.00 am on the day following the offer if made after the first day of the trial. 10 In my view, the parties will be in the best position to assess an offer when it is made shortly before the commencement of the trial. By that stage preparation for the trial will be well in hand and the legal advisers will, therefore, be armed with sufficient information to make a reasoned judgment of the offer. 11 It was said that the plaintiff was in the throes of significant preparation for trial and was not in a position to give consideration to the offer. The whole point about offers of this nature is to encourage the proper compromise of litigation in the private interests of litigants and in the public interest in the prompt and economic disposal of litigation. Recent reference to these matters was made by Hunt AJA in South Eastern Sydney Area Health Service & Anor v King [2006] NSWCA 2 at [83]. 12 In my view, the offer was in compliance with the Uniform Civil Procedure Rules 2005, r 20.6 with the consequence that r 42.15(2)(b)(i) applies and, unless the court orders otherwise, Leda is entitled to an order against Mr Weerden for its costs in respect of the claim, to be assessed on the ordinary basis, up to the beginning of the day following that on which the offer was made and Mr Weerden is entitled to an order for costs on an indemnity basis thereafter. I propose to make orders in accordance with that provision. I do not see any basis upon which I should make an order to the contrary. 13 A Calderbank type offer was also made but in the circumstances it is unnecessary for me to deal with it. 14 The cross-claim by Mr Weerden against one of the companies acquired by Leda, Leisure Management, was predicated upon liability in Mr Weerden. The cross-claim alleged a failure of Leisure Management to provide proper instructions. There is no dispute that the proper order with respect to the cross-claim, it having been dismissed, is that Mr Weerden pay Leisure Management's costs. 15 What is in contention is the submission that Leda should indemnify Mr Weerden in respect of his liability for Leisure Management's costs. 16 Leda and Leisure Management were, as I have said, related. Leisure Management became a wholly owned subsidiary of Leda. At one stage it was itself a plaintiff in the proceedings. Both parties were represented at trial by the same counsel. If the issues raised by the cross-claim had been analysed, my judgment was likely to have been in favour of Mr Weerden because the instructions came from Leisure Management's then officers to members of Price Waterhouse for the purpose of their giving advice to that company. 17 In those circumstances, it appears to me to be appropriate for an order to be made that Leda indemnify Mr Weerden in respect of his obligation to pay Leisure Management's costs. 18 The final issue for determination is whether an order should be made for the payment of interest on the costs paid by Mr Weerden to his solicitors under the Civil Procedure Act 2005, s 101(4). It provides that the court may order that interest is to be paid on any amount payable under an order for the payment of costs. Section 101(5) provides that such interest is to be calculated at the prescribed rate or such other rate as the court may order as from the date or dates on which the costs concerned were paid or such later date as the court may order. 19 In Joseph Lahoud & Anor v Victor Lahoud & Ors [2006] NSWSC 126, Campbell J considered this issue. At [82] his Honour cited a number of authorities for the proposition that it was appropriate to make an order for the payment of interest on costs and there was no requirement for the court to be satisfied that the circumstances of the case were out of the ordinary. 20 His Honour, at [81], referred to proceedings before him being in the nature of commercial proceedings in which it was unusual for work to be performed on a speculative basis. And notwithstanding what his Honour described as the parsimonious nature of the evidence, he was prepared to infer that considerable sums had been paid from time to time to the successful party's solicitors for the purpose of prosecuting the proceedings. 21 In an affidavit read before me on this application, a schedule of amounts paid by Mr Weerden to his solicitors was annexed. It showed that in excess of $750,000 had been paid with outstanding invoices taking that amount to in excess of $1 million. It showed that payments commenced on 30 June 1997 and from the end of 1999 or early 2000 the amounts paid were considerable in amount and in frequency. 22 It seems to me that this is an appropriate case in which an order for interest on costs should be made. 23 Campbell J at [85] in Lahoud adopted a pragmatic approach to the calculation of interest. I respectfully adopt that approach and what his Honour said about it: "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." 24 I make orders in terms of the order document initialled by me, dated by me and placed with the papers.

Leda v Weerden

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Judgment (12 paragraphs)

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