Prestige Residential Marketing Pty Ltd v Depune Pty Ltd

CATCHWORDS: COSTS - indemnity costs offer of compromise under the Rules

Civil Procedure Act 2005 (NSW) District Court Rules (1973) LEGISLATION CITED: Legal Profession Act 2004 (NSW) Supreme Court Rules 1970 Uniform Civil Procedure Rules 2005

Baresic v Slingshot Holdings Pty Ltd (No 2) [2005] NSWCA 160 Calderbank v Calderbank [1975] 3 WLR 586 Commonwealth v Gretton [2008] NSWCA 117 Commonwealth of Australia v McCormack [1984] HCA 57; (1984) 155 CLR 273 Ettinghausen v Australian Consolidated Press Ltd (1995) 38 NSWLR 404 Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85 Lahoud v Lahoud [2006] NSWCA 169 L Shaddock & Associates Pty Ltd v The Council of the City of Parramatta [No 2] [1982] HCA 59; (1982) 151 CLR 590 CASES CITED: Leichhardt Municipal Council v Green [2004] NSWCA 341 Morgan v Johnson (1998) 44 NSWLR 578 Penrith Whitewater Stadium Ltd v Lesvos Pty Ltd [2007] NSWCA 103 Prestige Residential Marketing Pty Ltd v Depune Pty Ltd [2008] NSWCA 179 Shellharbour City Council v Johnson (No 2) [2006] NSWCA 114; (2006) 67 NSWLR 308 The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] NSWCA 120; 67 NSWLR 706 The Commonwealth v McCormack; Production Spray Painting & Panel Beating Pty Ltd v Newnham [No 2] (1992) 27 NSWLR 659 The Uniting Church v Takacs (No 2) [2008] NSWCA 172 Tickell v Trifleska Pty Ltd (1990) 25 NSWLR 353 Timms v Commonwealth Bank of Australia (No. 3) [2004] NSWCA 25

PARTIES: Prestige Residential Marketing Pty Limited (ACN 085 594 663) (Claimant) Depune Pty Limited (ACN 003 377 115) (Opponent)

COUNSEL: Mr M Aldridge SC / Mr J Johnson (Claimant) Mr M J Cohen (Opponent)

SOLICITORS: Macedone Christie Willis, Solicitors (Claimant) Simpson Freed Lawyers (Opponent)

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CA 40413/07 DC 1371/05

BEAZLEY JA BELL JA MATHEWS AJA

Monday 8 December 2008 Prestige Residential Marketing Pty Ltd v Depune Pty Ltd (No 2) Judgment 1 BEAZLEY JA: I agree with Bell JA. 2 BELL JA: On 14 August 2008 this Court allowed the appeal brought by Prestige Residential Marketing Pty Ltd (Prestige), set aside the verdict and judgment given in the court below on 1 June 2007 and substituted verdict and judgment in favour of Prestige in the sum of $85,800: Prestige Residential Marketing Pty Ltd v Depune Pty Ltd [2008] NSWCA 179. The Court made consequential orders including: "… 5. Award interest on the judgment sum from 23 June 2004 to 15 August 2008; 6. The respondent is to pay the appellant's costs of the appeal and of the trial; 7. Liberty to the parties to file consent orders to give effect to order 5; 8. Liberty to apply to Bell JA within 14 days of the date of these orders in the event of any dispute as to the quantum of interest to be paid in accordance with order 5." 3 At the time the orders were pronounced, Mr Prowse, who appeared on behalf of Prestige, sought leave to file submissions in support of a special costs order. The parties were given leave to file submissions as to the form of the costs order.

Correction of Order 5 4 Attached to the submissions filed on behalf of Prestige were copies of offers of compromise and the accompanying correspondence. As a result of reviewing this material, the Court raised with the parties the question of whether Order 5 contained an error in the specification of the date from which interest was to run. The parties were invited to make submissions addressed to this issue. 5 MCW Lawyers, acting for Prestige, responded by letter dated 24 September 2008, submitting that Order 5 reflected the pleaded claim and, accordingly, was not in error. It was acknowledged that the pleading, "may have claimed interest from an inappropriate date in accordance with the Contract entered between the parties". This is because the agency agreement provided for the agent's fee to be due and payable on completion of the sale (clause 6). It was noted that there was no evidence of the date of completion, save that the Contract for Sale made provision for completion on 1 March 2005 (Annexure E to the affidavit of John Priddle). It was submitted that the judgment, including the total amount of interest ordered by the Court, had been satisfied in full, pursuant to consent orders, as provided in Order 7. For this reason, Prestige submitted that it was not appropriate that there be any variation to the orders. 6 Simpson Freed, the solicitors acting for Depune, submitted that Order 5 did contain an error and that interest should have been ordered to run from 1 March 2005, being the date fixed for completion in the Contract for Sale. Depune submitted that Order 5 should be corrected by the substitution of 1 March 2005 as the date from which interest on the judgment sum is to run and that Prestige should be ordered to repay the amount of $5,331.36 to Depune, being the amount of interest that had been overpaid by reason of the error. The sum was calculated on the basis of 252 days at $21.1562 per day. 7 Depune did not move the Court formally for the correction of Order 5 under the "slip rule" in r 36.17 of the UCPR and for restitution of the amount of the overpayment. Rule 36.17 permits the amendment of a perfected order where the error arises from an accidental slip or omission. 8 On the hearing of the appeal, no attention was directed by counsel for either party to the question of the date from which interest should run. It is common ground that completion was not before 1 March 2005 and that Prestige's entitlement to its commission did not arise until completion. Prestige accepts that the pleading of the claim for interest from 23 June 2004 was "inappropriate". Had the matter been drawn to the Court's attention at the time, there can be no doubt that in the absence of other evidence as to completion, 1 March 2005, the date specified in the contract for completion, would have been fixed as the date from which interest was to run. Rule 36.17 permits the court of its own motion, at any time, to correct the mistake or error. In my opinion, it is appropriate to do so in this case: L Shaddock & Associates Pty Ltd v The Council of the City of Parramatta [No 2] [1982] HCA 59; (1982) 151 CLR 590. 9 The Court has power to make an order for restitution of the overpayment made in consequence of the error, notwithstanding that formal orders have been taken out: Commonwealth of Australia v McCormack [1984] HCA 57; (1984) 155 CLR 273 at 277. As noted, Depune did not move the Court for correction of the error or for an order for restitution of the overpayment, but sought both orders in submissions. The amount involved is relatively small. The order for repayment is consequential on the correction of the error. In the circumstances, I consider that it is appropriate to make an order for repayment of the amount of the overpayment.

Claim for indemnity costs 10 I turn now to the issue of the costs of the appeal. 11 On 15 December 2005, Prestige served an offer on Depune which was expressed to be made in accordance with r 20.26 of the UCPR to compromise its claim on the following terms: 1. Payment by Depune to Prestige of the sum of $81,510.00; 2. Payment by Depune of interest on $81,510.00 between 23 March 2005 and 15 December 2005 pursuant to s 100 of the Civil Procedure Act 2005, totalling $5386.37 and continuing to accrue until payment at the rate of $20.10 per day.

The offer was stated to be open for 28 days. 12 Under r 42.14 of the Uniform Civil Procedure Rules 2005, in a case in which the plaintiff obtains a judgment no less favourable to it than the terms of its offer, unless the Court orders otherwise, the plaintiff is entitled to an order against the defendant for its costs on an indemnity basis from the day following the date on which the offer was made. Prestige submitted that it is entitled to an order that Depune pay its costs on the indemnity basis from 16 December 2005. In its submission, its offer involved a compromise of almost five per cent of its claim and there were no exceptional circumstances that would justify a departure from the rule: Morgan v Johnson (1998) 44 NSWLR 578. 13 Depune submitted that the offer of 15 December 2005 was no compromise at all. The discounted amount of the principal sum depended upon payment of interest at court rates in an amount of $5,386.37, bringing the total amount to $86,896.37. It contended that the offer was a stratagem designed to trigger an entitlement under the rules: Tickell v Trifleska Pty Ltd (1990) 25 NSWLR 353 per Rogers CJ Comm D at 355 D-G. 14 Depune submitted that there was no evidence that the offer complied with r 20.26(4) of the UCPR, which requires that the defendant has been given such particulars of the plaintiff's claim, and copies or originals of such documents available to the plaintiff, as are necessary to enable the defendant to fully consider the offer. This was a statement of liquidated claim for payment of commission under the agency agreement. In the absence of any complaint that the particulars of the claim did not permit Depune to fully consider the offer, I approach Prestige's claim on the basis that the offer of 15 December was made in accordance with the rules, as it purported to be. 15 In submissions in reply, Prestige put that its claim was for $85,800 with interest calculated in accordance with the Rules and that as at 15 December 2005 the total amount of interest, calculated in accordance with s 100 of the Civil Procedure Act 2005 (NSW), for the period between 23 June 2004 and 15 December 2005 amounted to $11,445.48. Its total claim was said to be for $97,245.48 and, hence, the offer represented a real element of compromise. This submission calculated the entitlement to interest from the date pleaded in the claim of 23 June 2004, which Prestige acknowledges was not an entitlement under the agency agreement. 16 The three cases considered in Morgan v Johnson (1998) 44 NSWLR 578 were ones in which offers had been made under Pt 39A r 25(6) of the District Court Rules (1973). At the time the rule was in similar terms to Pt 52A r 22(6) of the Supreme Court Rules 1970. Relevantly, where a plaintiff obtained a judgment not more favourable than the terms of an offer made by the defendant, the defendant was entitled to an order against the plaintiff for the defendant's costs assessed on a party and party basis from the day after the offer was made. Each of the claims was for damages for personal injuries arising out of a motor vehicle accident in which the plaintiff had obtained a modest verdict, well below the amounts offered by the defendant. Mason P (Sheller JA agreeing) analysed the authorities under the SCR and the DCR and distilled the following principle (at 581-582): (1) The purpose of the rule is to encourage the proper compromise of litigation, in the private interests of individual litigants and the public interest of the prompt and economical disposal of litigation. (2) The aim is to oblige the offeree to give serious thought to the risk involved in non-acceptance (3) The prima facie consequence of non-acceptance will be that the rule will be enforced against the non-accepting party. 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". (4) Lying behind the rule is the common knowledge that "litigation is inescapably chancy". For this reason, the ordinary provision is expected to apply in the ordinary case. The mere fact that it was reasonable for the litigant to take the view that he or she did in rejecting the offer is not enough to displace the rule. (5) The discretion to displace the rule is a judicial one, requiring the private and public purposes of the rule to be borne in mind. (Citations omitted) 17 In its submissions in reply Prestige referred to Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 and the judgment of Beazley JA (with whom Mason P and Bryson JA agreed) in Baresic v Slingshot Holdings Pty Ltd (No 2) [2005] NSWCA 160 at [13] and [14]. 18 In Hobartville Stud the plaintiff claimed $500,000 under a policy of insurance and interest. The plaintiff made two offers of compromise under Pt 22 of the Supreme Court Rules 1970 (the SCR). The second was an offer for one dollar less than the amount of its claim. The defendant submitted that this was not a true offer of compromise. The plaintiff's response was to ask why should a plaintiff with a strong claim have to abandon a significant part of it in order to overcome the suggestion that its offer of compromise was no more than colourable. His Honour said this (at 368): The answer to the plaintiff's questions is, in my view, that the scheme for offers of compromise and their cost consequences was intended to promote compromise - what Gleeson CJ in Baltic Shipping Co v Dillon "The Mikhail Lermontov" (1991) 22 NSWLR 1 at 9 called the "… particular policy of the law to encourage resolution of litigation by settlement … ". Compromise connotes that a party gives something away. A plaintiff with a strong case, or a plaintiff with a firm belief in the strength of its case, is perfectly entitled to discount its claim by only a dollar, but it does not in any real sense give anything away, and I do not think it can claim to have placed itself in a more favourable position in relation to costs unless it does so. 19 In Baresic an award had been made by an arbitrator in favour of the plaintiff for $318,267, which the parties were agreed was the appropriate quantum of damage. The issue between them was the defendant's liability in negligence. Prior to the trial the plaintiff made an offer of compromise in accordance with Pt 39A r 25(4A) of the DCR in an amount $43,000 less than the award. The rule had been amended to include the words, "unless the Court in an exceptional case and for the avoidance of substantial injustice otherwise orders", although nothing appears to have turned on this change. The contention in Baresic was that the offer was not a true offer of compromise because the trial had been limited to the question of liability. Beazley JA said this: [13] In Leichhardt Municipal Council v Green [2004] NSWCA 341, Santow JA at [23] distinguished between a genuine offer of compromise and what his Honour described as an offer " with no real element of compromise in it, which is designed merely to trigger the costs sanctions " provided for by the Rules of Court. His Honour held at [27] that whether an offer was a "genuine" compromise offer was a question to be answered in light of the circumstances, but affirmed the statement of Giles J in Hobartville Stud (at 368) that " compromise connotes that a party gives something away ", in that a party's compromise offer must reasonably reflect the relative strength and weaknesses of their particular claim.

[14] In my opinion, there is nothing to indicate that the appellant's offer was other than genuine. The appellant offered a considerable discount with respect to the quantum of damages to which she was entitled, if successful on her claim. In those circumstances, it could not be said that the offer was merely advanced to enliven the costs sanctions under the Rules." 20 Leichhardt Municipal Council v Green [2004] NSWCA 341 was concerned with a Calderbank offer (Calderbank v Calderbank [1975] 3 WLR 586). The plaintiff succeeded in the District Court on a claim for damages for personal injuries but the judgment was reversed in this Court. At issue was whether the defendant's offer, that judgment to be entered for the defendant on the basis that each party pay their own costs, amounted to a genuine offer of compromise. Santow JA noted the distinction between Calderbank offers and offers made under the rules, which give the party making the offer a prima facie entitlement (at [19]). 21 In Shellharbour City Council v Johnson (No 2) [2006] NSWCA 114; (2006) 67 NSWLR 308 the plaintiff in an action for damages for personal injuries made an offer under the rules to compromise his claim for $45,000. He was awarded $48,785.60. Hunt AJA (with the concurrence of Beazley and Tobias JJA) noted that the onus was on the defendant to persuade the Court that an order should not be made that the costs be assessed on an indemnity basis. His Honour referred to Hobartville Stud and to the need for the plaintiff to "give something away". The personal circumstances of the plaintiff were taken into account in concluding that the plaintiff's willingness to forgo an amount of $4000 was of significance to him and that the offer was properly to be regarded as an offer of compromise (at 315 [23]).

22 In The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] NSWCA 120; 67 NSWLR 706 the appellant had made three formal offers, each involving a Calderbank letter, the last two being accompanied by formal offers under the rules. Basten JA (with whom Santow JA and Young CJ in Eq agreed) said that it is well established that an offer which does not involve a real and genuine element of compromise, will not be taken into account in relation to costs, either under the general law principles established by Calderbank v Calderbank, or under the rules of Court (at 708 [8]). His Honour commented that in personal injury cases, offers by plaintiffs which have only been marginally below the judgment obtained have been treated as involving an element of compromise, and to say that it does not follow that a similar approach should be adopted in relation to commercial litigation (at 708 [9]). 23 In The Uniting Church v Takacs (No 2) [2008] NSWCA 172 the defendant made an offer to settle the plaintiff's claim for personal injuries in the sum of $20,000. The judgment in favour of the plaintiff was overturned on appeal. The plaintiff contended that the offer had not been a genuine offer of compromise. Hodgson JA (McColl JA agreeing) approached the question by consideration of the merits of the claim; the plaintiff could have succeeded on either of two issues on which reasonable minds could differ. In the circumstances having regard to the severity of the plaintiff's injuries the offer of $20,000 was not an offer of a genuine compromise (at [11]). His Honour said that this consideration did not prevent the offer being one that engaged the rules; the issue was whether the court should otherwise order (at [12]). Basten JA considered that the authorities, (Leichhardt Municipal Council v Green (at [23]) and Baresic (at [13])) in characterising an offer as not a "genuine offer of compromise" because it contained "no real element of compromise" were directed to whether the offer complied with the rules. His Honour identified some practical difficulties in making such an assessment ([22] - [28]). He noted Hodgson JA's observation in Commonwealth v Gretton [2008] NSWCA 117 at [113] that the terms of the rules have changed and that it may be necessary to consider the significance of those changes in relation to the application of earlier authority. The change to which Hodgson JA referred was that formerly where a defendant's offer enlivened the rules the entitlement to costs from the day following the offer was on a party and party basis and that it is now on an indemnity basis.

24 Prestige's claim was for the principal sum, $85,800.00, with interest, which at the date of the offer amounted to approximately $5,625.00. On 15 December 2005 therefore it was a claim for the sum of approximately $91,425.00. The offer to accept $86,896.00 was to compromise the claim by an amount of approximately $4,529.00; a discount of almost five percent of the total. In my opinion the offer is not to be characterised as a stratagem to trigger entitlement under the rules. Depune did not point to any circumstance which would justify the Court withholding from Prestige its entitlement under the Rules for an order that its costs be paid on the indemnity basis from 16 December 2005. The Notice to Admit Facts and the Authenticity of Documents 25 Prestige served a Notice to Admit Facts and the Authenticity of Documents dated 22 September 2005. The documents the authenticity of which it sought to have admitted were the Selling Agency Agreement signed on behalf of Prestige on 2 February 2004 and by Depune on 4 February 2004, the Leasing Agency Agreement between Prestige and John F Priddle dated 2 February 2004 and signed by Mr Egan and Mr Priddle, and a letter from Richardson and Wrench Commercial Sutherland Shire of 2 February 2004. Depune served a Notice Disputing Facts and Authenticity of Documents dated 5 October 2005. By its Notice, Depune disputed each of the facts specified within Prestige's Notice of 22 September 2005 and it disputed the authenticity of each of the documents specified in the Notice of 22 September 2005. 26 Pursuant to r 42.8 and 42.9 of the UCPR, Prestige claims its costs in relation to the proof of the facts and documents referred to in the Notice on an indemnity basis. Depune submitted that the Notice to Admit Facts had not been proved at the trial and, accordingly, that no order under r 42.8 or r 42.9 could have been made in the court below. This is not correct. The primary judge referred to the Notice to Admit Facts and Authenticity of Documents, which was exhibit D in the proceedings before her. (Judgment 1 June 2007 [15]) 27 Depune submitted that Prestige's Notice to Admit Facts was not a proper use of the Rule, because it required Depune to admit a series of facts which established its case on liability. In the circumstances it submitted that its refusal to make the admissions was reasonable and that "no special order ought to lie". 28 Rule 42.8 provides: 42.8 (1) In this rule: disputing party means the party who serves a notice disputing a fact under rule 17.3 (2).

fact in dispute means the fact that is the subject of a notice served under rule 17.3 (2).

requesting party means the party who is served with a notice disputing a fact under rule 17.3 (2).

(2) Unless the court orders otherwise, the disputing party must, after the conclusion of proceedings in which a fact in dispute is subsequently proved or is subsequently admitted by the disputing party, pay the requesting party's costs, assessed on an indemnity basis, being costs incurred by the requesting party: (a) in proving the fact, or (b) if the fact has not been proved - in preparation for the purpose of proving the fact. (3) An entitlement to costs under this rule is not affected by any order as to costs unless that order makes particular reference in that regard. 29 Rule 42.9 provides: 42.9(1) In this rule: disputing party means a party who serves a notice disputing the authenticity of a document under rule 17.4 (2) or 17.5 (3).

document in dispute means a document that is the subject of a notice served under rule 17.4 (2) or 17.5 (3).

requesting party means a party who is served with a notice disputing the authenticity of a document under rule 17.4 (2) or 17.5 (3).

(2) Unless the court orders otherwise, the disputing party must, after the conclusion of proceedings in which the authenticity of a document in dispute is subsequently proved or is subsequently admitted by the disputing party, pay the requesting party's costs, assessed on an indemnity basis, being costs incurred by the requesting party: (a) in proving the authenticity of the document, or

(b) if the authenticity of the document has not been proved - in preparation for the purpose of proving the authenticity of the document. (3) An entitlement to costs under this rule is not affected by any order as to costs unless that order makes particular reference in that regard. 30 The provisions of r 42.8 and r 42.9 have effect when the fact or document, as the case may be, is subsequently proved or admitted, unless the court orders otherwise. Depune did not identify any consideration which in my opinion would make it appropriate for the Court to order that the provisions of the rules not apply. 31 In the circumstances of this litigation, it is appropriate to say something about which facts were proved. In judgment delivered on 1 June 2007, the primary judge concluded that the facts which she found were inconsistent with those that Prestige required Depune to admit (at [37]). She said that the conclusions that she had drawn both in the costs judgment and the principal judgment differed materially from Prestige's construction of documents that it required Depune to authenticate (at [37]). It is not clear what facts set out in the Notice to Admit Facts her Honour considered to be inconsistent with the factual findings that she made. The circumstance that she drew inferences from documents that differed from the construction that Prestige placed upon them does not touch on the question of whether Prestige is entitled to its costs on an indemnity basis in connection with proof of the documents. The facts stated in (1); (2); (3); (4); (5); (6); (7); (8); (9); (10); and (14) of the Notice to Admit Facts were proved at the hearing. The facts stated in (11), (12) and (13) were not proved. The inference that Mr Casaceli had made an offer in the amount of $3,950,000.00 plus GST, found by this Court, was based on the contents of Mr Rogers' letter of 18 February addressed to Mr Casaceli's solicitor. There was no finding in the terms stated in (11), (12) and (13). The costs of the costs assessment undertaken on Depune's application 32 It appears that in the period between the trial and the hearing of the appeal, Depune applied for an assessment of its costs under the Legal Profession Act 2004 (NSW) (the LPA). The application was assigned by the Manager, Costs Assessment to Peter Robert James, a costs assessor. On 4 April 2008, Mr James issued a Certificate as to Determination of Costs and a Certificate as to Determination of Costs of Costs Assessment under s 368 and s 369 of LPA respectively. The s 369 Certificate recorded Mr James' determination that the costs of the costs assessment are to be paid by the costs respondent, Prestige, in the amount of $1,337.25. This amount included $507.51, the fee paid for the application, and $875.88, Mr James' fees, which had been paid by the costs applicant, Depune, to the Manager Costs Assessment in order to obtain the release of the certificates.

33 In its submissions in support of the special costs order, Prestige attached copies of the two Certificates issued by Mr James and submitted that in addition to setting aside the orders of the trial judge, the costs of any assessment occasioned by those orders should be borne by the respondent. (WS [19]) 34 Depune submitted that its application for assessment of the costs of the trial had been orthodox and, in circumstances in which no application to stay the costs assessment had been made by Prestige pending the hearing of the appeal, that "it ought be allowed to retain the order for the costs of the application before the learned costs assessor, or alternatively, there ought be no order as to such costs in favour of the appellant by reason of such facts." (WS [32]) 35 Prestige submitted that it had not been in possession of evidence that would have justified a stay: Penrith Whitewater Stadium Ltd v Lesvos Pty Ltd [2007] NSWCA 103 per McColl JA at [19]-[21].

36 This Court's powers to restore a successful appellant to its rightful position include by ordering the repayment of costs: The Commonwealth v McCormack; Production Spray Painting & Panel Beating Pty Ltd v Newnham [No 2] (1992) 27 NSWLR 659 per Handley JA (Mahoney and Priestley JJA agreeing) at 661.G-662.A. It does not appear that Prestige has paid the amount of the costs of the costs assessment and, accordingly, no question of an order for repayment arises. The filing of a certificate of determination of the costs of costs assessment in the registry of a court having jurisdiction to order the payment of the amount of money in the certificate takes effect as a judgment of that court for the amount of the unpaid costs: s 369(7) of the LPA. Were the certificate issued by Mr James pursuant to s 369 to be filed in the registry of a court, it would be open to Prestige to move to have the judgment set aside. For abundant caution, Order 3 setting aside the judgment in the court below should be varied to provide, in terms, that the consequential orders made by the primary judge on 1 June 2007 are set aside. 37 There remains Prestige's submission that Depune should pay its costs occasioned by the assessment carried out by Mr James. It was open to Depune to proceed as it did to an assessment, notwithstanding the pendency of the appeal. It was not incumbent on Prestige to apply for a stay of the determination of the costs assessment in order to protect its position. It should not be required to bear the costs of responding to the assessment. The order that Depune pay Prestige's costs of the trial should include the costs of responding to the costs assessment undertaken by Mr James. There is no occasion for these costs to be payable on the indemnity basis.

Costs of appeal on indemnity basis 38 Prestige seeks an order that Depune pay the costs of the appeal on an indemnity basis: Ettinghausen v Australian Consolidated Press Ltd (1995) 38 NSWLR 404; Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85 and The Uniting Church v Takacs (No 2) [2008] NSWCA 172. 39 Depune made the following submission: [34] By reason of the citation of Ettinghausen it would seem to be intended that this Court ought infer that the prima facie position, that an offer made prior to judgment at the trial, remains relevant to costs orders on appeal. … [35] The real difficulty with that submission is that such a prima facie position is conditioned upon there being an effective offer of compromise which subsists, so as to attract the exercise of the discretion of the appellate court on review of the exercise of that discretion by the trial court. 40 Depune's submission is inconsistent with the reasons in the joint judgment in Ettinghausen, which point out that many parties are adversely affected by an offer of compromise that it is no longer open to them to accept (at 409). 41 It remains, as Hodgson JA pointed out in Takacs, that appeal proceedings are properly to be treated as distinct proceedings for the purposes of r 42.13 of the UCPR. Offers of compromise made prior to trial remain relevant to the exercise of this Court's discretion with respect to the costs of the appeal. In Takacs it was considered reasonable for the plaintiff to have sought to maintain the judgment obtained at first instance in circumstances which included that no offer had been made by the appellant in the appeal proceedings: Hodgson JA (McColl JA agreeing) at [16] Basten JA at [34]. 42 Given the passage of time since the offer of 21 September 2006, and that the respondent had obtained judgment in the District Court, in the absence of an offer in respect of the appeal, I am not persuaded that the costs of the appeal should be paid on other than the ordinary basis. Interest on costs 43 The appellant submits that it should have an order for interest on its costs pursuant to s 101(4) and s 101(5)(a) of the Civil Procedure Act 2005 (NSW): Timms v Commonwealth Bank of Australia (No. 3) [2004] NSWCA 25; Lahoud v Lahoud [2006] NSWCA 169. 44 In written submissions, Depune contended that: [43] In the circumstances that the costs have not been assessed or agreed, the question is begged as to what proportion of the costs properly would be allowed. [44] This Court cannot enter into the realm of assessment of costs. 45 Section 101 of the CPA relevantly provides as follows: … (4) The court may order that interest is to be paid on any amount payable under an order for the payment of costs. (5) Interest under subsection (4) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from: (a) the date or dates on which the costs concerned were paid, or (b) such later date as the court may order. 46 The power to make an order for interest on costs, including from the date or dates on which the costs were paid, does not involve the Court "entering into the realm of costs assessment". 47 Annexed to the submissions filed by Prestige is an affidavit sworn by Mr Prowse on 19 August 2008 to which is annexed a transaction report relating to the file maintained by MCW Lawyers on behalf of Prestige in relation to the proceedings for the period 6 July 2004 to 10 April 2004, showing invoices rendered to Prestige and payments made by it, together with a copy of a transaction report in respect of the file maintained in relation to the appeal for the period 5 October 2007 to 10 April 2008 and a further transaction ledger for the appeal in the period from 7 May 2008 to date. Mr Prowse states that the appellant has from time to time paid fees rendered by counsel in relation to both the trial and the appeal. 48 Prestige has been out of pocket in respect of the payment of some of its costs since July 2004. The discretion to order the payment of interest on costs recognises that the other party has had the use of the money in the interim. This is commercial litigation albeit involving a relatively small sum. In my opinion Prestige is entitled to be compensated for not having the use of its money and should have the benefit of an order for interest on its costs calculated in accordance with Schedule 5 to the UCPR from the date on which they were paid. 49 For these reasons, the orders that I propose are:

1. Vary Order 3 to insert after the words "verdict and judgment" the words "and consequential orders made on 1 June 2007".

2. Vary Order 5 by deleting the date "23 June 2004" and substituting the date "1 March 2005".

3. Prestige is to pay to Depune the sum of $5331.36, being the amount of the overpayment of interest on the judgment sum under Order 5 as varied.

4. Vacate Order 6 and substitute Order 6 in these terms: ( i) The respondent is to pay the appellant's costs of proving the facts and the documents specified in the appellant's Notice to Admit Facts and the Authenticity of Documents dated 22 September 2005 in accordance with these reasons on the indemnity basis;

(ii) The respondent is otherwise to pay the appellant's costs of the proceedings below on the ordinary basis until 16 December 2005 and thereafter on the indemnity basis. Such costs to include the appellant's costs of responding to the application for assessment of costs filed in the Supreme Court on or about 24 October 2007, which are to be assessed on the ordinary basis;

(iii) The respondent is to pay interest on the appellant's costs of the proceedings below at the rate prescribed in Schedule 5 of the UCPR from the date on which the costs were paid.

(iv) The respondent is to pay the appellant's costs of the appeal on the ordinary basis 50 MATHEWS AJA: I agree with Bell JA.

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