Paul & Labuzin Lawyers (First & Second Defendants)
File Number(s): 2018/00106299
[2]
Judgment
On 30 April 2021, I delivered the Principal Judgment in this matter (Perry v Kinnear & Ors (No. 5) [2021] NSWDC 145) with the following Orders.
1. Judgment for the defendants
2. Plaintiff to pay the defendants' costs.
I also made the following Orders:
1. On or before Tuesday 11 May 2021 the defendants serve the plaintiff with any notice of application for costs and any affidavit in support of application in relation to costs.
2. On or before 18 May 2021 the plaintiff to serve any evidence on the application in relation to costs.
3. I return the matter before me for hearing in relation to costs on Thursday 27 May 2021, with an estimate of one day.
The defendants move for Orders "by reason of application of Rule 42.15A(2)(a) and (b)" that the plaintiff pay the defendants' costs as agreed or as assessed on the Ordinary basis up to 22 April 2019, and thereafter on an indemnity basis.
The defendants submit that on 22 April 2019 the defendants forwarded a letter to the plaintiff making an offer on a "without prejudice" basis, which offer the plaintiff rejected by letter on the 5th July 2019. The defendants submit that the terms of the Judgment are no less favourable to themselves, it is submitted secured a result "no less favourable than the term of the offer". The defendants do not seek to put into evidence the correspondence of the making and rejection of the offer because the defendants "conceive that the there is no dispute about the exchange of these communications".
Perry v Kinnear & Ors [2021] NSWDC 273 | Case summary | Zoe
The plaintiff's written submissions were received on 18 May 2021. The plaintiff also does not rely on any evidence. Specifically, the plaintiff also does not put the correspondence of 22 April 2019 and 5 July 2019 into evidence. Indeed, to the opposite, the plaintiff submits the defendant is not entitled to rely on that correspondence in its application for indemnity costs. The plaintiff submitted:
1. "The Defendants' only settlement offer was made informally and enclosed in 'Without Prejudice' correspondence dated 22.04.19
2. The Plaintiff has not been requested to, and does not, waive the privilege attached to that correspondence.
3. The offer as set out in the closed correspondence is according unavailable for use in a Costs Applications and the Application for special costs is made without admissible support."
I take it from the plaintiff's reference to the informality of the settlement offer and from the defendants not enclosing a formal Offer of Compromise or otherwise referring to the requirements of UCPR 20.26; that, the dispute concerns a letter headed "Without Prejudice". Section 131(1) of the Evidence Act 1995 (NSW) provides:
"(1) Evidence to be adduced:
(a) a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute or
(b) a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute."
However, Section 131(2)(h) of the Evidence Act 1995 (NSW) relevantly provides:
"Subsection (1) does not apply if -
(h) the communication or document is relevant to determining liability for costs".
Obviously, had either party tendered the correspondence, it would have been admissible in the application.
The plaintiff's submissions 2) and 3) are, with respect, misconceived. Uniform Civil Procedure Rules 2005 (NSW) ('UCPR') 42.13 provides that Division 3, of which UCPR 42.15 and UCPR 42.15A form part, applies to proceedings in respect of which the Offer of Compromise (the Offer) is made under Rule 20.26 with respect to the plaintiff's claim. Accordingly, the defendants' application advanced on the basis of UCPR 42.15A is misconceived because it is made in absence of an offer made in compliance with the requirements of UCPR 20.26. A non-complying offer does not attract the potential cost consequences provided for in UCPR 42.14-15A.
I observe that on a common law basis - not advanced by the defendants' written submission - in the absence of evidence of the correspondence; it is not available for me to consider whether the terms of the offer contained in the defendants' letter of 22 April 2019, in the surrounding circumstances, indicated that the defendant proposed to rely upon the offer on the question of costs or otherwise how the making of the offer and rejection by the plaintiff did or did not comply with what is generally referred to as Calderbank principles.
The plaintiff's submission advances a counterargument that there should be allowance in the Order made 30 April 2021, on account of the plaintiff's success in five interlocutory applications. I deal with them in turn;
1. 'The Interlocutory Application for which Judgment was delivered on 25 August 2020'
Ruling: This was an interlocutory contest instigated by the plaintiff's need to amend her Statement of Claim in regard to pleading an allegation of a duty of care owed by the second defendant. In that application the Court was required to determine the defendants' objection that the plaintiff's application. The defendant argued that there was not an extant duty of care known to the law. My Judgment is Perry v Kinnear & Ors (No. 1) [2020] NSWDC 897. In the circumstances of the plaintiff's lateness of her application to amend the Statement of Claim, and where the defendants' unsuccessful opposition was made principally in written submissions of law and incurred relatively little hearing time thrown away; the appropriate Order is that the costs of the application follow the result in the proceedings.
1. 'The Interlocutory Application for which Judgment was delivered on 27 August 2020.'
Ruling: My Judgment in Perry v Kinnear & Ors (No. 2) [2020] NSWDC 898 dealt with the disappointingly late objection by the defendant to the plaintiff's tender of statements of complaint evidence of witnesses, Turner, Scofield and Morris. At [3] my Judgment records that the application took about 1 and ½ hours, but because the Court sat through the morning adjournment only 1 hour of hearing time was lost. In the context of this long hearing, that was not a significant loss of time. The plaintiff, at the making of the application, was in cross-examination and the application was required to be dealt with for that cross-examination to continue with defence counsel knowing the position in relation to the statement evidence of those witnesses. Ms Morris was not ultimately called. Cross-examination of the plaintiff continued for another two days. In my opinion, whilst it was disappointing that this contest was left to the hearing, given that the Courtbook which contained the statements had been created by the parties four months beforehand; nevertheless, the time lost was not significant given the length of the hearing and in my opinion the appropriate order is that costs follow the result in the proceedings.
1. 'The Interlocutory Application for which Judgment was delivered on 21 September 2020'
Ruling: The defendants objected to the cross-examination of Brock Kinnear as to his character. I allowed the cross-examination. My Judgment is Perry v Kinnear & Ors (No. 3) [2020] NSWDC 899. Again this was an evidentiary contest which occupied a period of time which was not significant in the context of the long hearing. In my opinion, the plaintiff's success in the objection does not warrant departure from the normal Order, as was ultimately made, for costs to follow the result in the proceedings.
1. 'The Interlocutory Application for which Judgment was delivered on 23 September 2020'
Ruling: I ruled in favour of the plaintiff against the defendants' objection to the plaintiff's re-examination of the witness, Ms Turner. Ms Turner's evidence was taken in voir dire and ultimately admitted. My Judgment is Perry v Kinnear & Ors (No. 4) [2020] NSWDC 890. In my opinion, this was a ruling on evidence and in the circumstances of the evidence in the voir dire becoming evidence in the hearing and argument made principally by written submission, hearing time occupied was not significant in the context of the long hearing. The appropriate Order is that the costs be included in the ultimate Order for costs following the event in the proceedings.
1. 'For the Present Application'
Ruling: In my opinion, each party's written submissions were of little assistance. The defendant has been unsuccessful in the application; but the plaintiff's counter claims have been equally unsuccessful. It cannot be simply put that had the defendants' application not been made, costs of the plaintiff would not have been incurred. The plaintiff unsuccessfully advanced her opposing claims (a) to (e). The appropriate Order, in my opinion, is that each party pay its own costs of the competing applications.
At [7] of her written submissions the plaintiff seeks that in the event of her being successful in (e); costs of the defendants' application be awarded to her on an indemnity basis because "having regard to the improper attempt to rely on closed correspondence. It is essential to the conduct of litigation that litigants can confidently communicate settlement offers on a 'Without Prejudice' basis and without fear of just this application."
My further response that costs, if awarded in her favour, be on an indemnity basis is misconceived. Costs are not punitive. The discretion to order costs employs compensatory principles. There is no submission before me which would warrant costs be ordered on an indemnity basis, had she succeeded in opposing the defendants' application.
[3]
Orders
I make the following orders:
1. I note the defendant's undertaking to file a notice of motion and pay the appropriate fee in regard to this application;
2. The notice of motion embodying the defendant's application for a special order for costs is dismissed;
3. Each party is to pay their own costs of the motion.
[4]
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Decision last updated: 23 June 2021