Synergy's submissions as to indemnity costs
43Synergy's overriding contention was that Norths acted unreasonably by rejecting no less than four offers which were more favourable than the judgment. Their submissions may be summarised as follows:
(1)By letter dated 20 October 2008 (second affidavit, p.14) Synergy made an offer (the " First Offer ") in the following terms:
"Our client offers to settle the whole proceedings on the basis that the Respondent pay Synergy the sum of $200,000, together with its party and party costs of the proceedings below, with each party to bear its own costs of the appeal.
If such terms were acceptable to your client, appropriate orders would need to be made dismissing the appeal, with no order as to costs.
This offer is made in accordance with the principles enunciated in Calderbank v Calderbank [1975] 3 All ER 333 and is open for acceptance 28 days from the date of this letter, being 17 November 2008."
There was no response to this offer from North.
(2)By reason of the judgment recently given in this matter, damages payable in the proceedings are in an amount of $334,547.51 plus pre judgment interest. By Synergy's calculations the interest (putatively pre-judgment interest), as at 20 October 2008, equates to $65,575.54: See affidavit A O'Dea sworn 8 June 2011 at [5]. Accordingly, the sum of damages and interest, as at the date of Synergy's offer would have been $400,123.05, double the amount of the offer.
(3)As this offer was made after the first hearing, Norths were fully apprised of the case that Synergy sought to make in relation to damages, including the detailed schedules of damages which had formed part of Synergy's case. It was accordingly well placed to consider the offer being made.
(4)Synergy's offer, open for 28 days, was genuine and unreasonably ignored when considered in light of the amount of $400,123.05 that would have been payable if orders, consistent with those now agreed upon by the parties, had been made on the date of the offer: Arnott v Choy (No 2) [ 2010] NSWCA 336 at [10] per Basten and McColl JJA . An incident of that offer was that each party pay their own costs of the appeal. Again, this offer was both genuine and unreasonably ignored when considered in light of the fact that Synergy was successful on that appeal and Norths was ordered to pay Synergy's costs of the appeal.
(5)If a further offer be needed, then by its letter dated 13 March 2009 (second affidavit, 15), Synergy offered to settle the proceedings on a "walk away" basis (the " Second Offer "). That entailed each party paying their own costs and there being no relief sought from the Court. This offer was open for 10 days and was also unreasonably rejected.
North's response to the Second Offer, on 23 March 2009 (second affidavit, 16), was as follows:
"Your client's offer for a "walk away settlement" is rejected outright.
...
Our client has invited your client on numerous occasions to put forth an acceptable offer to avoid the incurrence of further costs in these proceedings. Our client has also invited your client, prior to filing its application of review of the cost determination, to advise if there are any prospects of settlement of this matter by negotiation. To date, your client has failed, refused or neglected to attempt to settle these proceedings sensibly.
In the event your client is serious about settling, we recommend that your client put forth a sensible offer for our client's consideration which takes into account the decision of the Supreme Court, the orders made by the Supreme Court and our client's costs associated with the filing of a review application of the cost determination."
(6)These remarks are said to point up the unreasonableness of North's approach to settlement of the proceedings. The fact that the First Offer was ignored by Norths and the Second Offer was refused with such vehemence supports that contention. Norths has now been found liable to pay damages and interest well in excess of $400,000 when they could have settled for $200,000 plus costs in October 2008 or for nothing in March 2009. These offers suggest that Synergy had not "failed, refused or neglected to attempt to settle these proceedings sensibly" in making the First Offer or Second Offer. Those offers were sensible and constituted an offer by Synergy of a genuine compromise . They were unreasonably refused by North.
(7)If these offers fail to persuade the Court, Synergy relied on a series of further offers. On 8 September 2009, North's offered (second affidavit, pp.18-21) to pay Synergy $70,000 (for damages and interest) with Norths to pay Synergy's costs of the summons dated 8 December 2006 (already dismissed by the Court of Appeal) and each party paying their own costs in relation to the cross summons dated 29 March 2007. North's offered to pay Synergy's costs of appeal, notwithstanding that the Court of Appeal had already made an order to that effect. Again, the quantum of that offer further highlights the unreasonableness of Norths conduct in settlement negotiations.
(8)Here again if a further alternative to the second of be needed, then by its letter dated 24 February 2010 Synergy offered to settle the proceedings on the basis that Norths pay Synergy damages of $333,000 plus $97,000 in interest (less a discount of $10,000) and costs (the " Third Offer "). This offer was open for 21 days and was, again, rejected.
(9)On 11 March 2010 Norths made a counter offer of $200,000 (inclusive of interest) plus costs of the summons in an amount of $40,000 plus costs of the appeal in the amount of $60,000 plus each party to pay their own costs of the cross summons dated 29 March 2007. The counter offer was open for 5 days. As Synergy was the effective plaintiff in the case, the costs of the cross-summons, were likely to be the lion's share of the costs of the trial, and so the costs offer of $40,000 in relation to the trial was clearly less favourable than a party-party order for the costs of the trial.
(10)Finally and if an alternative to the third Offer be needed, then by its letter dated 21 April 2010 Synergy offered to settle proceedings for $250,000 plus party / party costs of the proceedings (the " Fourth Offer "). That offer was open for 21 days and was rejected on 18 May 2010. On that day Norths made a counter offer of $100,000 (including interest) plus Synergy's costs of the appeal (already ordered by the Court of Appeal) provided Synergy paid Norths costs on an indemnity basis from 8 September 2009 and each party pay their own costs of the remainder of the proceedings.