Maroubra Pool Café Pty Ltd v Fedele

Judgment

1. Judgment in this commercial lease matter was delivered on 12 December 2017 (see Maroubra Pool Café Pty Ltd v Fedele [2017] NSWSC 1722). By reference to the six principal issues identified in the judgment (at [2]), the plaintiff succeeded on three issues (issues 1, 3 and 5), was partly successful on one issue (issue 4), and was unsuccessful on two issues (issues 2 and 6). The parties have reached agreement on the form of orders to give effect to the Court's reasons, but remain in dispute as to costs.
2. The Court made directions for written submissions, with a view to the question of costs being determined on the papers. Submissions have now been received from each side. As neither side has indicated that a further oral hearing is necessary, the Court will proceed to deal with costs on the papers.
3. The parties take very different positions on costs. The plaintiff submitted that indemnity costs should be awarded in its favour from 20 October 2017 because the defendants unreasonably failed to accept a Calderbank offer which contained a genuine offer of compromise (see Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [8]). In respect of the period up to 20 October 2017, the plaintiff seeks costs on the ordinary basis but, in recognition of its partial success, accept that the defendants should only have to pay 75% of its costs for that period.
4. The defendants submitted that because the plaintiff was on balance the less successful party (and on one issue should have to bear the costs in any event), the appropriate order for costs was that the plaintiff pay two-thirds of the defendants' costs. The defendants also disputed the plaintiff's claim for indemnity costs on the basis that the Calderbank offer referred to matters "outside the litigation" and was hence ineffective to trigger the Calderbank principles.
5. I will deal first with the indemnity costs question.
6. The Calderbank offer made on 20 October 2017 was in the following terms: The Defendants withdraw their Notice of Termination and to Quit dated 7 March 2016. The parties enter into a Deed of Settlement and Release acknowledging that the Lease remains in operation and that the Plaintiff has not at any time prior to the date of the Deed been in breach of the Lease or if it has, the Defendants waive any entitlements under the Lease in respect of the said breaches. The Lease be varied to demise the Courtyard area to the Plaintiff on the same terms as the balance of the Lease, save that other tenants be permitted access to the Courtyard area for the purpose of storage of rubbish bins, and removal and replacement of their rubbish bins to and from that area. The Defendants do all acts and sign all things necessary to align the Café's indoor (DA 689/2012) and outdoor (DA 792/2014) trading hours to 7:00am - 10:00pm Monday to Sundays. Proceedings to be dismissed. Each party to pay its/their own costs. Any existing costs orders to be vacated.