Outerbridge trading as Century 21 Plateau Lifestyle Real Estate v Hall

District Court of NSW|2020-02-07

Solicitors: Jemmeson & Fisher (Plaintiffs) Heydons Lawyers (Defendants) File Number(s): 2018/00154851

Judgment

On 3 December 2019, the court handed down its reasons for decision following the final hearing of the proceedings: Outerbridge trading as Century 21 Plateau Lifestyle Real Estate v Hall [2019] NSWDC 724 ("the Judgment"). The plaintiffs unsuccessfully sought to recover commission which they alleged was owed to them in relation to acting as real estate agents for the defendants concerning the sale of a valuable property. It is assumed for the purposes of these reasons that a reader of them has read the Judgment.
When the reasons for decision were handed down, Mr Southwick of counsel, who appeared for the defendants, indicated that the defendants wished to make an indemnity costs application pursuant to the service of an offer of compromise. A letter dated 2 July 2019 from the solicitors for the defendants to the solicitors for the plaintiffs enclosing what purported to be a formal offer of compromise under the Rules was made Exhibit 1 on the application.
The plaintiffs opposed the application for indemnity costs and sought alternative orders as to costs.
Orders were then made setting out a timetable for the service of submissions. This timetable was later extended.

Applicable legislation

Section 98(1)-(4) of the Civil Procedure Act 2005 (NSW) provides as follows: "98 Courts powers as to costs (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. (2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court. (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount."
Part 42.1 of the Uniform Civil Procedure Rules 2005 ("UCPR") provides as follows: "42.1 General rule that costs follow the event Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs."
Part 20.26 of the UCPR provides as follows: "20.26 Making of offer (1) In any proceedings, any party may, by notice in writing, make an offer to any other party to compromise any claim in the proceedings, either in whole or in part, on specified terms. (2) An offer under this rule - (a) must identify - (i) the claim or part of the claim to which it relates, and (ii) the proposed orders for disposal of the claim or part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment, and (b) if the offer relates only to part of a claim in the proceedings, must include a statement - (i) in the case of an offer by the plaintiff, as to whether the balance of the proceedings is to be abandoned or pursued, or (ii) in the case of an offer by a defendant, as to whether the balance of the proceedings will be defended or conceded, and (c) must not include an amount for costs and must not be expressed to be inclusive of costs, and (d) must bear a statement to the effect that the offer is made in accordance with these rules, and (e) if the offeror has made or been ordered to make an interim payment to the offeree, must state whether or not the offer is in addition to that interim payment, and (f) must specify the period of time within which the offer is open for acceptance. (3) An offer under this rule may propose - (a) a judgment in favour of the defendant - (i) with no order as to costs, or (ii) despite subrule (2)(c), with a term of the offer that the defendant will pay to the plaintiff a specified sum in respect of the plaintiff's costs, or (b) that the costs as agreed or assessed up to the time the offer was made will be paid by the offeror, or (c) that the costs as agreed or assessed on the ordinary basis or on the indemnity basis will be met out of a specified estate, notional estate or fund identified in the offer. (4) If the offeror makes an offer before the offeree has been given such particulars of the offeror's claim, and copies or originals of such documents available to the offeror, as are necessary to enable the offeree to fully consider the offer, the offeree may, within 14 days of receiving the offer, give notice to the offeror that - (a) the offeree is unable to assess the reasonableness of the offer because of the lack of particulars or documents, and (b) in the event that rule 42.14 applies to the proceedings, the offeree will seek an order of the court under rule 42.14(2). (5) The closing date for acceptance of an offer - (a) in the case of an offer made two months or more before the date set down for commencement of the trial - is to be no less than 28 days after the date on which the offer is made, and (b) in any other case - is to be such date as is reasonable in the circumstances. (6), (7) (Repealed) (8) Unless the notice of offer otherwise provides, an offer providing for the payment of money, or the doing of any other act, is taken to provide for the payment of that money, or the doing of that act, within 28 days after acceptance of the offer. (9) An offer is taken to have been made without prejudice, unless the notice of offer otherwise provides. (10) A party may make more than one offer in relation to the same claim. (11) Unless the court orders otherwise, an offer may not be withdrawn during the period of acceptance for the offer. (12) A notice of offer that purports to exclude, modify or restrict the operation of rule 42.14 or 42.15 is of no effect for the purposes of this Division."
Part 42.15 of the UCPR provides as follows: "42.15 Where offer not accepted and judgment no more favourable to plaintiff (1) This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the plaintiff obtains an order or judgment on the claim no more favourable to the plaintiff than the terms of the offer. (2) Unless the court orders otherwise - (a) the plaintiff is entitled to an order against the defendant for the plaintiff's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and (b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, assessed on an indemnity basis - (i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and (ii) if the offer was made on or after the first day of the trial, as from 11am on the day following the day on which the offer was made."
Part 42.15A of the UCPR provides as follows: "42.15A Where offer not accepted and judgment no less favourable to defendant (1) This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim no less favourable to the defendant than the terms of the offer. (2) Unless the court orders otherwise - (a) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and (b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, assessed on an indemnity basis - (i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and (ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made."

Principles applicable

The powers of the court as to costs are located in s 98 of the Civil Procedure Act 2005 (NSW) and Part 42 of the UCPR which are set out above.
The appropriate order in any matter as to costs is in the discretion of the court. However, it is established that the power to award costs, whilst discretionary, "is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation": Northern Territory v Sangare [2019] HCA 25 at [24]. The usual order in any matter is that costs follow the event and are awarded on the ordinary basis: Parts 42.1 and 42.2 of the UCPR. There are possible exceptions to the general rule as to costs in the case of compliant offers of compromise or Calderbank offers. These may result in an award of indemnity costs in favour of a successful party, depending on the circumstances, from a specific date.
Where there is a valid offer of compromise made to a party, it is for the offeree to establish a proper basis for depriving the offeror of the prima facie entitlement to indemnity costs: Nominal Defendant v Hawkins [2011] NSWCA 93 at [53] and [56] per Hodgson JA (with whom Beazley JA agreed). Exceptional circumstances are not necessary to be established before the court may "otherwise order": Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [15]. The discretion to "otherwise order" should be exercised having regard to all the circumstances of the case: Perisher Blue Pty Ltd v Nair-Smith (No 2) [2015] NSWCA 268 at [32].
In Toyota Finance Australia Ltd v Gardiner (No 2) [2016] NSWCA 181 the Court of Appeal stated at [13]-[15] as follows. "13. Rule 42.15A of the UCPR applies when a defendant has made an offer which is not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim no less favourable to the defendant than the terms of that offer. In those circumstances, the defendant is entitled to a special costs order from the time the offer was made, unless the Court orders otherwise. This rule is applicable to appeals: UCPR rr 51.47 and 51.48. 14. The making of a valid offer of compromise does not, however, guarantee a special costs order. This is a matter for the Court's discretion. 15. It is clear that "where no significant compromise at all is made by a party to an appeal, the default position provided for in the rules will not be applied": Mega-top Cargo Pty Ltd v Moneytech Services Pty Ltd [2016] NSWCA 3 at [5]; Taheri v Vitek (No 2) [2014] NSWCA 344 at [9]-[11]."
In Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [40] and [43], McColl JA (with whom Gleeson JA and Sackville AJA agreed), in considering the position under Part 42.15A, stated as follows: "40. The consequence is that a prima facie entitlement arose in favour of the respondent to have costs awarded in accordance with UCPR 42.15A: New South Wales Insurance Ministerial Corporation v Reeve (1993) 42 NSWLR 100 (at 102) per Gleeson CJ (Clarke and Cripps JJA agreeing); Leichhardt Municipal Council v Green [2004] NSWCA 341 (at [19]) per Santow JA (Stein JA agreeing). This is because, from "the time of non-acceptance 'notionally the real cause and occasion of the litigation is the attitude adopted by [the party] which has rejected the compromise'": Morgan v Johnson (1998) 44 NSWLR 578 (at 581-582) per Mason P (Sheller JA agreeing). … 43. In my view in the circumstances of this case, the Offer did constitute a genuine offer of compromise. The opportunity to offer any compromise for the respondent was limited. The substantive issue on appeal was an all or nothing determination on the liability issue. There was no range of verdicts as in the case of a challenge to an award of damages or to an assessment of contributory negligence or contribution between tortfeasors: cf Leichhardt Municipal v Green (at [22] - [26]); Regency Media Pty Ltd v AAV Australia Pty Ltd (at [29]). Thus the only room for compromise was in relation to costs, in which respect the respondent was prepared to forego the costs order it had been awarded by the primary judge and any costs order it might ordinarily obtain in this Court by the operation of UCPR 42.1. That constituted a "real concession": Clark v Commissioner of Taxation [2010] FCA 415 (at [90] - [92]) per Greenwood J."
In some cases, where the party which has been successful in the proceedings failed on significant issues, it is appropriate to vary the usual costs order.
In Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 McColl JA (with whom Macfarlan JA agreed) stated as follows at paragraphs 10-14: "10. Where there are multiple issues in a case the court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. This recognises the proposition that justice may not be served if parties are dissuaded by the risk of costs from canvassing all issues which might be material to the decision in the case. 11. However there is a tension between that proposition and the proposition that, "[i]f parties come to realise that they will not necessarily recover the whole of their costs, even though they have unsuccessfully raised a discrete issue, they are likely better to consider whether the raising of that issue is a justifiable course to take." 12. Further, even where there are multiple issues, unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between the particular issues on which it was successful and those on which it failed. 13. However, a court can mould a costs order to take account of the partial success of the party against whom orders have been made at trial insofar as that party identifies particular issues or groups of issues on which it succeeded at the trial. This requires consideration of whether there were "clearly discrete issues for determination" or, rather, whether "all issues are inseparable, or at least sufficiently linked, with respect to the overall disposition of a particular matter". A separable issue can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter. 14. Where there is a mixed outcome in proceedings, the question of apportionment of costs between issues on which the party who has overall been successful, and those on which that party has failed, is very much a matter of discretion, and mathematical precision is illusory."
In Network Ten Pty Ltd v TX Australia Pty Ltd (No 2) [2019] NSWCA 51 Bathurst CJ (with whom Meagher and Gleeson JJA agreed) stated as follows in paragraph [13]: "13. One circumstance where the discretion may be exercised differently is where the successful party has been unsuccessful on discrete issues raised by it in the proceedings. However, generally speaking, an apportionment to take account of that fact will only be made when the issues on which the successful party was unsuccessful were clearly dominant or separable: Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [64]; Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 at [10]- [14]."

Submissions

In his written submissions dated 17 December 2019, as amended by his email stating that the application was made under Part 42.15A of the same date, counsel for the defendants submitted, in general summary, as follows: 1. On 2 July 2019 the defendants served an offer of compromise pursuant to Part 20 of the UCPR: see Part 20.26; 2. An offer of compromise under Part 20.26 may propose a judgment in favour of the defendant with no order as to costs: Part 20.26(3)(a)(i); 3. No notice was given by the plaintiffs to the defendants under UCPR Part 20.26(4); 4. The terms of the Judgment are no more favourable to the plaintiffs than the terms of the offer. The terms of the judgment are less favourable to the plaintiffs than the offer; 5. A relevant point is that the costs implications in the matter are disproportionately "significant" as the plaintiffs' claim was only for an amount not far exceeding $100,000; 6. The plaintiffs by their reply made frivolous claims including an allegation that there was a deliberate attempt to usurp the plaintiffs' commission claim contrived by the defendants and potentially the purchaser. Although the claims were not pursued by the plaintiffs at the hearing, they were not withdrawn: see paragraphs 5 and 6 of the written submissions; 7. There was a prima facie entitlement in the defendants to an order for indemnity costs pursuant to the Rules: see Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [40]; 8. The case was effectively an "all or nothing" determination on the liability issue and the only scope for compromise was in relation to costs. The defendants' offer to forego costs up to the date of the offer was a real offer of compromise in all the circumstances.
Counsel for the plaintiffs, in general summary, submitted as follows in his written submissions dated 23 December 2019: 1. Even if the offer of compromise served constituted a valid offer of compromise, the failure to accept it merely creates a prima facie entitlement to an order for costs on an indemnity basis and the court retains the discretion to "otherwise order"; 2. The court should "otherwise order" in the present case as the length and cost of the proceedings were very substantially increased by matters put in issue by the defendants on which the defendants were unsuccessful; 3. The majority of the hearing time was taken up with the issue of whether the various handwritten annotations to the agency agreement constituted some form of conjunction agreement and whether these had any relevant effect. Time was also taken up with the estoppel issue; 4. The defendants should not have their costs of these issues. Had the effective cause of sale issue been the issue to be determined, the matter could have been disposed of in a one day hearing. In the circumstances, the plaintiff should not be required to pay more than a quarter or, in the alternative, one third of the defendants' costs; 5. In exercising the costs discretion, the court should have regard to the fact that the offer was a "walk-away" offer in relation to an "all or nothing" case. The offer amounted to an invitation to surrender as opposed to a commercial compromise and should not trigger indemnity costs. It was in effect an invitation to capitulate. The evidence was not clear that the plaintiffs were bound to fail and it cannot be said that the plaintiffs were unreasonable for not accepting the offer. The offer should not be regarded as a genuine attempt to compromise but rather as an attempt to trigger a cost sanction in the event that the defendants were ultimately to succeed: Leichhardt Municipal Council v Green [2004] NSWCA 341 at [39]. There was nothing in the pleadings or evidence to show that the plaintiffs were certain to lose on the question of the effective cause of sale. The plaintiffs' non-acceptance of the defendants' offer was not unreasonable; 6. The offer of compromise relied upon by the defendants was not a valid offer of compromise in any event as it did not comply with mandatory requirements for valid offers of compromise under the Uniform Civil Procedure Rules; 7. First, Rule 20.26(1) empowers a party to make an offer to compromise "any claim in the proceedings". The defendants' offer was not expressed to be in relation to the plaintiffs' claim but in relation to the defendants' defence. As the offer was not expressed as an offer to compromise a "claim" and did not "identify the claim or part of the claim to which it relates" it did not constitute a valid offer of compromise under Part 20.26(1); 8. Secondly, under Part 20.26(2)(d), the offer of compromise "must bear a statement to the effect that the offer is made in accordance with these rules". The offer of compromise served by the defendants erroneously stated that the document was made pursuant to "Part 20 Division 4 of the Uniform Civil Procedures Code". Accordingly, the document did not comply with Part 20.26 and as such did not constitute an offer of compromise: Kain v Mobbs (No 2) [2008] NSWSC 599 at [7]; 9. If the Court accepts that the document served does not constitute a valid offer of compromise, there is no alternative argument available to the defendants that the document constitutes a Calderbank offer.

Consideration

The offer of compromise dated 2 July 2019 and the covering letter of the same date were in evidence as Exhibit 1 on the application. The following matters are noted: 1. The covering letter by its date shows that the offer was made over two months before the final hearing in the matter: see Part 20.26(5)(a); 2. The covering letter refers to the attached offer of compromise being "pursuant to Rule 20.26 of the UCPR in this matter;" 3. The offer of compromise was in writing: see Part 20.26(1); 4. The offer of compromise related to the whole of the defendants' defence. It did not refer to the plaintiffs' claim. There is an issue whether it complied with Part 20.26(2)(a)(i) of the UCPR; 5. The proposed orders for disposal of the defendants' "defence" are identified in the offer; 6. The offer of compromise notes that the offer is made pursuant to Part 20 of the "Uniform Civil Procedures Code" not the UCPR. There is a question whether this satisfies Part 20.26(2)(d) of the UCPR; 7. The offer specifies the period of time within which the offer is open for acceptance: Part 20.26(2)(f). The period indicated, being 28 days after the date on which the offer is made, complies with Part 20.26(5)(a) of the UCPR; 8. The offer proposes a judgment in favour of the defendant with no order as to costs. This complies with Part 20.26(3) of the UCPR.
The plaintiffs did not rely on any notice issued pursuant to Part 20.26(4) of the UCPR.
It should also be noted that the matter proceeded by way of affidavit. The relevant affidavits relied upon and read at the trial were all dated with various dates in 2018, well before the offer of compromise was made and the final hearing in the matter. Accordingly, all parties were aware of the affidavit evidence to be relied upon well before the offer of compromise was made.

Whether the offer can be relied upon as a Calderbank offer

I accept the submission that the defendants cannot rely on the offer of compromise as a valid Calderbank offer. There was nothing in the letter or the surrounding circumstances to indicate that the purported offer of compromise was also intended to amount to a Calderbank offer: see Whitney v Dream Developments Pty Ltd [2013] 84 NSWLR 311; [2013] NSWCA 188 at [42]-[43] per Bathurst CJ.

The defendants' failure on two issues

The plaintiffs point to the fact that the defendants were unsuccessful on two of the three significant issues in the case, being the contractual issue and the estoppel issue. They submit that the plaintiffs should not be ordered to pay in excess of one quarter or in the alternative one third of the defendants' costs of the proceedings.
In Chawla v FAL Healthy Beverages Pty Ltd (No 2) [2017] NSWDC 304, I stated as follows in paragraphs 16-19: "16. In some circumstances, it may be appropriate to make a proportionate finding as to the time spent on the issues on which the successful party has failed: Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85 at [25]. 17. Generally, however, the Court will not apportion costs where a party has been successful on some issues and not on other issues, unless there are exceptional or unusual circumstances. In McLaughlin v Dungowan Manly Pty Ltd [2010] NSWSC 306 at [21] Ward J stated as follows: [21] It has been said that the discretion to apportion costs is one to be exercised only in the most exceptional of circumstances (Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 28 ALR 201 ; (1979) 42 FLR 213; (1979) ATPR 40-141) and, as noted above, in Cretazzo v Lombardi (1975) 13 SASR 4, at 12, Jacobs J recognised the need for the court to be mindful not to discourage litigants from canvassing all material issues for fear of an adverse costs order (and see Stena Rederi Aktiblag v AustalShips Sales Pty Ltd [2007] FCA 1141, at [12]). 18. Later her Honour stated the following at [43]: [43] Overall, I am not satisfied that this is a case in which fairness demands an apportionment of the costs referable to separate issues in the proceedings and, in saying this, I am mindful of the caution that the ultimate ends of justice may not be served if a party is dissuaded by risk of costs from canvassing all issues which may be material to the determination of the case, to paraphrase from what was said by Jacob J in Cretazzo (at 12). 19. McLaughlin has been referred to with approval in later cases. However, of course, each case needs to be considered on its facts: see the comments of Davies J in AAP Industries Pty Ltd v Rehau Pty Ltd (No 2) [2017] NSWSC 1136 at [64]. In some cases a reduction in a party's costs because some issues were not established is appropriate: see Misek v McBride (No 2) [2017] NSWSC 796 at [35]."
As stated above (which I repeat for convenience), in Network Ten Pty Ltd v TX Australia Pty Ltd (No 2) [2019] NSWCA 51 Bathurst CJ (with whom Meagher and Gleeson JJA agreed) stated as follows in paragraph 13: "13. One circumstance where the discretion may be exercised differently is where the successful party has been unsuccessful on discrete issues raised by it in the proceedings. However, generally speaking, an apportionment to take account of that fact will only be made when the issues on which the successful party was unsuccessful were clearly dominant or separable: Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [64]; Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 at [10]-[14]."
In my view, there should be no apportionment of costs in the matter even though three issues were raised and the plaintiffs were in substance successful on two of them. That is because in my opinion the issues relating to the contract between the parties and the estoppel argued were not "clearly dominant or separable". In order to consider the contract argument, the court had to determine the hotly contested factual issue as to when Mr Outerbridge signed the relevant contractual documents. On that issue, the defendants were successful. The estoppel argument also did not require any additional facts to be determined. The submissions relating to it were limited. The matters which took time factually to present and determine at the trial were the issues about when the contract was signed and the acts and omissions of Mr Outerbridge and Unique in relation to bringing about the ultimate sale to Ms Weis. On these matters, the defendants were successful.
Further, it was also always necessary for the court to determine the contractual position between the parties to consider the terms applicable to the plaintiffs' claim for commission.
I am also of the view that the case would have gone into a second day even if the issues in dispute were more limited.
Accordingly, I do not see there being any circumstances warranting an apportionment of costs or that fairness demands an apportionment of the costs referrable to separate issues in the proceedings, having regard to the time spent in arguing the objections to the affidavits, in the oral evidence and in submissions. The issues on which the defendants failed were in my view not clearly dominant or separable.

Whether the offer was a valid offer of compromise

In my view, the plaintiffs' submissions in relation to whether the offer of compromise served was a valid offer of compromise within the Rules have substance and should be accepted.
First, under Part 20.26, sub-rule (1) states the context of the Rule as being any party wishing to make an offer to any other party "to compromise any claim in the proceedings".
Under sub-rule (2) there is a requirement to identify "the claim or part of the claim to which it relates". The offer of compromise in question in the present case does not refer to the plaintiffs' claim or part of the claim but to the defendants' "defence".
It may be argued that indirectly the whole of the defendants' defence refers in the present case to the whole of the plaintiffs' claim. However, that is not what the offer of compromise states and Part 20.26(2)(a)(i) is in mandatory terms. For this reason, the offer of compromise does not comply with the UCPR.
Secondly, paragraph 3 of the offer of compromise states that it is made pursuant to Part 20 Division 4 of the "Uniform Civil Procedures Code". Under Part 20.26(2)(d) of the UCPR, the offer of compromise "must bear a statement to the effect that the offer is made in accordance with these rules" (emphasis added). It is true that the covering letter to the offer of compromise served refers to it being an offer of compromise "pursuant to Rule 20.26 of the UCPR". However, the offer of compromise incorrectly does not refer to the UCPR and accordingly does not bear a statement to the effect that the offer is made "in accordance with these rules". The important consequences of a valid offer of compromise require an offer to be in precise terms: Kain, above. In my view, the offer was not compliant with the UCPR for this additional but somewhat less significant reason.
For the above two reasons, in my view the offer of compromise served with the letter dated 2 July 2019 which was Exhibit 1 on the application did not comply with the UCPR and was thus not a valid offer of compromise for the purposes of the Rules.

Whether the court would in any case "otherwise order"

Although the last point determines the indemnity costs application, I will proceed to consider the additional argument in case I am in error.
In my view, the parties were well aware at the time the offer was made of the issues arising in the proceedings due to the extensive pleadings and the affidavit evidence which had been served.
I can see no relevant factors determining there being a need as a matter of justice to "order otherwise" under Part 42.15A(2) of the UCPR. An offer was made by the defendants which was not accepted by the plaintiffs and the defendants have clearly obtained an order or judgment on the claim no less favourable to the defendants than the terms of the offer. There was a clear substantial compromise by the defendants. By the time the offer was made, as the affidavits had been prepared and the plaintiffs' affidavit had been reviewed by the defendant Mr Hall, the defendants had incurred substantial legal costs which they were willing to compromise for the purposes of the offer.
I do not see the offer made as effectively an invitation to "surrender" or "capitulate" as submitted by the plaintiffs. Whilst I accept that the "effective cause" issue was well arguable, I also accept the submission from both parties that this was an "all or nothing" case. The parties were well aware of the risks involved in the proceedings by the time the offer was made and should be taken to have made their decisions accordingly. I do not consider the offer as merely an attempt to trigger an indemnity costs sanction as opposed to a genuine offer to compromise.

Conclusion

For these reasons, as the offer of compromise did not comply with the UCPR, the application for indemnity costs is rejected.
In relation to the costs of the application, as both parties have had some success, in my view each of the parties should pay their own costs of the application. If an alternative order is sought, I grant leave to approach my Associate to relist the matter.

Determination

Accordingly, I make the following orders: 1. Order (2) made on 3 December 2019 is confirmed subject to order (2) below. 2. The parties are each to pay their own costs in relation to the costs application. 3. Liberty to approach the Associate to Dicker DCJ within seven days to relist the matter if an alternative order to order (2) is sought.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 February 2020

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Judgment (13 paragraphs)

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Legislation Cited (2)

Cases Cited (27)

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