Nu Line Construction Group Pty Ltd v Fowler

Judgment 1HER HONOUR: On 31 May 2012, I published my reasons for judgment in this matter, dismissing the claim by Nu Line Construction for restitutionary and other relief (in respect of moneys said to have been paid by it, or on its behalf, to Mr Fowler in the period between June 2000 and February 2001 in anticipation of the proposed purchase by Nu Line Construction of industrial land at Wetherill Park, which purchase did not proceed). In essence, the defence succeeded on the basis that the action to recover moneys paid to the defendant was statute barred. It was established that at least some of the moneys claimed by Nu Line Construction ($60,000) had been paid to Mr Fowler on behalf of the plaintiff company in June 2000 in anticipation of the then proposed purchase. However, I held that the time at which the consideration for that payment failed, and the restitutionary action for recovery of that amount, accrued was in mid 2002, more than 6 years before the commencement of the proceedings. (As to the remaining sums claimed (in the order of around $100,000) I was not satisfied on the evidence that those moneys had been paid out by Nu Line Construction on Mr Fowler's behalf, with the possible exception of an amount of $9,075, but in any event a claim to recovery of any such amounts would also have been statute barred.) 2I noted at [19] of my reasons for judgment that, had I been of the view that the claim was not statute-barred, I would have found for Nu Line Construction in the sum of $69,075 and awarded restitutionary interest on that amount as from the date on which the contemplated state of affairs had failed to materialise (which, on the hypothesis on which a conclusion that the claim was not statute barred would then have been based, would have been from July 2006) and statutory interest from the date the proceedings were commenced. 3The question of costs was left to be dealt with on the papers, once written submissions as to costs were served. Those submissions have now been received and I have had an opportunity to consider them. 4Broadly, the parties' respective positions as to costs may be summarised as follows. Nu Line Construction accepts that, subject to any other costs orders, it must pay the defendants' costs but it submits that there is no justification for a departure from the ordinary basis for the assessment of costs. The defendants, however, seek an order for indemnity costs of the proceedings sought on two bases: first, in reliance on the principles in Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586 (having regard to an offer made by the defendants, some two years before the commencement of the proceedings, to compromise the claim for an amount of $100,000 - an offer that was clearly more favourable than the ultimate result) and, second, on the basis that the way in which the case was conducted was in direct contravention of the regime for the conduct of litigation in this Court as provided for in ss 56, 57, 58 and 59 of the Civil Procedure Act 2005 (NSW). Legal Principles 5The applicable legal principles when determining the costs of contested proceedings may be briefly stated and are not in dispute. 6The power to award costs pursuant to s 98(1) of the Civil Procedure Act 2005 (NSW) is (subject to the Rules of Court and to statute) discretionary and the discretion is recognised to be a very wide one (Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72; (1998) 152 ALR 83; Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 322). The discretion must be exercised judicially (having regard to its statutory context, established principle and the circumstances of the relevant case). 7The overriding statutory context in which this discretion falls to be exercised is that for which provision is made in the Civil Procedure Act, including the statutory mandate for the just, quick and cheap resolution of the real issues in dispute imposed by s 56 of that Act (that being part of the statutory regime on which the defendants rely as the second basis for their claim for indemnity costs). 8As noted earlier, Nu Line Construction accepts that the general rule (for which provision is made in Rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW)) is that costs follow the event. In turn, it is accepted that by the defendants that costs orders are compensatory in nature (to reflect the vindication of the successful claim or defence thereof) not punitive (Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534; (1990) 97 ALR 45; Ohn v Walton (1995) 36 NSWLR 77). 9The rationale for the principles applied in relation to Calderbank offers was outlined in Commonwealth v Gretton [2008] NSWCA 117 by Beazley JA, her Honour noting (at [41]) that the public policy considerations underpinning the making of favourable costs orders where a Calderbank offer has been made (and not accepted) are the encouragement of settlement of disputes as soon as possible and the discouragement of wasteful and unreasonable behaviour by litigants. 10The Court of Appeal in Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 recently reiterated the public policy objectives of special costs orders in the context of offers of compromise. Basten JA (with whom McColl and Campbell JJA agreed) referred at [6] to the objects underlying the formal offer of compromise procedures under the then court rules that were identified in Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 as including:

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