Notaras & Anor v Hugh & Ors

[2003] NSWSC 919

Supreme Court of NSW|2003-02-27|Before: Sperling J, Davies J, Mr J

View original source

At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2003-02-27

Before

Sperling J, Davies J, Mr J

Source

Original judgment source is linked above.

Judgment (69 paragraphs)

[1]

CITATION : Notaras & Anor v Hugh & Ors [2003] NSWSC 919 17-20, 24-27 February 2003 3-6, 10, 11, 13, 17-21 March 2003 HEARING DATE(S) : 4, 14, 28-30 April 2003 1, 5-9 May 2003 23 July 2003 15 August 2003 JUDGMENT DATE : 17 October 2003 JURISDICTION: Common Law JUDGMENT OF : Sperling J at 1 DECISION : The plaintiffs are ordered to pay the defendants' costs of the proceedings on an indemnity basis.

[2]

CATCHWORDS : Costs - indemnity costs - grounds for awarding costs of the proceedings on an indemnity basis - offer of compromise served by a wholly successful defendant - grounds for awarding indemnity costs consequent upon such an offer of compromise LEGISLATION CITED : Supreme Court Rules 1970, Pt 52A r 22 CBA Investments Ltd v Northern Star Ltd (No.2) [2002] NSWCA 146 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Coshott v Learoyd [1999] FCA 276 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1998) 81 ALR 397 CASES CITED : Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425 Notaras & Anor v Hugh & Ors [2003] NSWSC 440 Ragata Developments Pty Ltd v Westpac Banking Corp (Federal Court of Australia, Davies J, 5 March 1993, unreported) SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 Wentworth v Rogers [1999] NSWCA 403 Irene Notaras PARTIES : Enijar Pty Ltd Robert Duncan Hugh, Justin Simon Adam, Robert Warwick Anderson, Michael John Astill, John Ashton Beardow, Jeremy James Bingham, Brian Harvey Davidson, Christopher Lee Davies, Sandra Katherine Dibella, Roger Andrew Fitzsimmons, Ronald William Forster, Andrew Dymock Forsyth, Ross Walter Forsyth, Terence Brian Grace, Robert Gordon Haines, Edward Lindsay Roux Houghton, Heather Patricia Irish, Stanley Simon Kalinko, Paul Joseph Larbalestier, Richard Geoffrey Lewis, Donald Gordon Mackay, Andrew John Tunmer Martin, Russell Victor Miller, Robert Keith Newton, Warwick Philip O'Rourke, Neal Findlay Shirras Parkinson, Mahla Liane Pearlman, Timothy George Peken, Warren James Pengilly, Martin Cassimer Przybylski, Graham Leonard Raffell, Michael Bernard Reymond, Barry Gordon Richardson, Peter Ronald Rigg, Paul William Robinson, Ross Edward Seller, Margaret Siddis, Ruth Lindsay Stringer, Mark Ferdinand Treffers, John Frederick Warburton, John Bede Weber, Jennifer Helen Wily, Ian Stuart Wylie & Michael Rodney Wynter t/a Sly & Weigall Solicitors (20217/98) Graeme Solomon Newman & Kosmas Psaltis t/a Newman Psaltis & Co (20212/98) FILE NUMBER(S) : SC 20217/98; 20212/98 Mr R Evans with Mr J Whyte for the Plaintiffs COUNSEL : Mr J Sackar QC with Mr R Hollo for the Defendants in 20217/98 Mr D Davies SC with Mr J Downing for the Defendants in 20212/98 McKells Solicitors for the Plaintiffs SOLICITORS : Minter Ellison for the Defendants in 20217/98 Ebsworth & Ebsworth for the Defendants in 20212/98

[5]

Judgment on costs 1 His Honour: The defendants have applied for an order that the plaintiffs pay the costs of the proceedings on an indemnity basis; alternately, on a party and party basis up to the date specified for acceptance in their respective notices of compromise and indemnity costs thereafter. 2 The notices of compromise served by the respective defendants were in identical terms, namely, that each set of defendants would pay $10,000 with costs on a party and party basis, time for acceptance 28 days. The Newman Psaltis notice was dated 12 June 2002 and was sent under cover of a letter bearing that date. The Sly & Weigall notice was undated. It was sent under cover of a letter dated 9 July 2002. The respective dates of expiry of the notices were 10 July and 6 August 2002. 3 Indemnity costs may be awarded where proceedings have been brought and prosecuted with no real prospect of success: Colgate-Palmolive Co v Cussons Pty Limited (1993) 46 FCR 225; Fountain Selected Meats (Sales) Pty Limited v International Produce Merchants Pty Limited (1998) 81 ALR 397; or where the opposite party has been guilty of conduct in relation to the proceedings which has caused unreasonable delay and expense: Ragata Developments Pty Limited v Westpac Banking Corp (Federal Court of Australia, Davies J, 5 March 1993, unreported); Wentworth v Rogers [1999] NSWCA 403 at [85]. 4 Part 52A r 22 has no application where a wholly successful defendant has served an offer of compromise. Indemnity costs may, however, be ordered as from the date of expiry of a notice of compromise served by a wholly successful defendant if, in the circumstances of the case, not accepting the offer was unreasonable: CBA Investments Ltd v Northern Star Limited (No 2) [2002] NSWCA 146; SMEC Testing Services Pty Limited v Campbelltown City Council [2000] NSWCA 323 at [37]; Multicon Engineering Pty Limited v Federal Airports Corporation (1996) 138 ALR 425 at 451-452; Coshott v Learoyd [1999] FCA 276 at [37]-[50]. 5 Part 52A r 22 should be amended so that the rule applies where a wholly unsuccessful plaintiff has failed to accept an offer of compromise served by the defendant. Such a plaintiff should be in no better position as to costs than a plaintiff who has recovered less than the amount specified in an offer of compromise served by the defendant. The operation of the rule discriminates irrationally against wholly successful defendants.

[6]

No real prospect of success 6 The defendants assert that there was no real prospect of the plaintiffs succeeding in the proceedings. It should be assumed that the plaintiffs had no real prospect of succeeding in any of the ways pleaded but abandoned in the course of the hearing. The only case for consideration is the way the plaintiffs put their claim in final address. That was that the plaintiffs lost a chance, being not less than a negligible chance, of retaining the properties as a result of an allegedly negligent failure by the defendants to apply for an injunction to restrain the sales. At the core of that case was the assertion that, if such an injunction had been granted, the plaintiffs would have been able to retain the properties by raising alternative finance on them to pay out the bank at an available $3.3m. 7 I held that a breach of duty on the part of the defendants in not advising and applying for an injunction had not been established. I also held that it had not been established that there was more than a negligible chance that such an injunction would have been granted if applied for, nor that there was more than a negligible chance that the plaintiffs would have obtained such alternative finance if such an injunction had been granted, nor that there was more than a negligible chance that the plaintiffs could have serviced the alternative borrowings if such alternative finance had been obtained. 8 Those findings do not determine the present issue in favour of the defendants. However, whatever be the situation in relation to other elements of the plaintiffs' claim, the plaintiffs had no real prospect of establishing the last of those elements, namely, that there was more than a negligible chance that the plaintiffs would have been able to service alternative finance. The implications of that finding are that the plaintiffs had no real prospect of establishing that there was more than a negligible chance of avoiding the sale of the properties or the sale of property of equivalent value, irrespective of anything the defendants could and should have done. In other words, there was no real prospect of the plaintiffs establishing that the damage of which they complained (being loss of the chance of holding the properties without losing properties of equivalent value) would have been avoided by action on the part of the defendants. 9 My findings concerning the financial situation of the plaintiffs appear in my principle judgment at [151]-[161]. 10 Further to the findings in [161] of my principle judgment, there was no real prospect of establishing more than a negligible chance of receiving income from Oxford St beyond the rental income in fact received, in view of the considerations mentioned in my principle judgment at [83] and [162]-[164]. As to possible revenue from Bourke St at $130 per square metre, the vague evidence adduced in that regard is referred to in my principle judgment at [165]. There was no real prospect of establishing a more than negligible chance of receiving rental income at that rate or at any other rate on that evidence.

[39]

PROCEDURAL CHRONOLOGY Date 24 July 1998 28 February 2002 1 March 2002 6 June 2002 Mediation 12 June 2002 17 February 2003 Hearing commences 20 February 2003 25 February 2003 T 401/402 4 March 2003 10 March 2003 10 March 2003 T 1025 13 March 2003 T 1172 17 March 2003 Letter 18 March 2003 T 1353.23 18 March 2003 T 1358 18 March 2003 T 1407/1408 20 March 2003 T 1457 26 March 2003 29 April 2003 T 1595-1601 1 May 2003 5 May 2003 T 1713 5 May 2003 T1713-1716 5 May 2003 T 1716/1717 6 May 2003 T 1729 6 May 2003 T 1730, T1733 Document/Transcript/Event Nature of Change Statement of Claim filed Report of Mr Gower served on Plaintiffs Report of Mr Boyce served on Plaintiffs Offer of Compromise served on Plaintiffs Abandonment of claims by letter Particulars (ii), (iii), (iv), (vi), (vii), & (x) concerning the conduct by Newman Psaltis of the defence of the Plaintiff in the State Bank proceedings were abandoned Acceptance that amount of overcharging was about $600,000 Conclusion of the evidence of Ms Notaras Conclusion of the non-expert witnesses called by Newman Psaltis No challenge to the evidence of Mr Jucovic QC The Plaintiffs abandoned reliance on much of Mr Shaw's evidence The Plaintiffs raised a new claim that they lost an opportunity to conclude a deal with the bank at $3.3 million Concession that the Bank was entitled to retire the bill for the overdraft account The Plaintiffs abandoned reliance on much of Mr Shaw's evidence No challenge to Mr Gower's evidence Abandonment of the claim for the loss of opportunity to redevelop Oxford Street Second Further Amended Statement of Claim Omitting allegation that if the true debt had been identified the Plaintiff either would not have been in default or could have remedied the position prior to sale No challenge to most of Mr Landy's evidence Conclusion of evidence Abandonment of the claim that Newman Psaltis failed to obtain documents in relation to the Bon Trading and Enijar accounts The Plaintiffs abandoned the claim that Newman Psaltis should have used Mr Clarke's calculations to determine the level of bank overcharging Acceptance that the Bank would simply have issued fresh section 57 Notices to replace those issued in May 1991 if invalid The Plaintiffs abandoned the claim that Newman Psaltis should have applied for an adjournment of the State Bank proceedings All matters concerning the claim against Newman Psaltis for the conduct of the defence of the State Bank proceedings were abandoned