His Honour: The background to the present application is to be found in Roads and Traffic Authority of New South Wales v Barrie Toepfer Earthmoving and Land Management Pty Ltd (No 8) [2015] NSWSC 44 and Roads and Traffic Authority of New South Wales v Barrie Toepfer Earthmoving and Land Management Pty Ltd (No 7) [2014] NSWSC 1188.
Shortly stated, I delivered judgment in the substantive proceedings (Toepfer (No 7)) on 28 August 2014. Thereafter, the plaintiff filed a notice of motion seeking a further order pursuant to s 6(4) Law Reform (Miscellaneous Provisions) Act 1946 (NSW). The notice of motion was dismissed on 11 February 2015 (Toepfer (No 8)). An order as to costs was made that the plaintiff was to pay the cross-defendants' costs of the motion. It is that order which has prompted the present application.
The cross-defendants (CGU Insurance Ltd, Vero Insurance Ltd and NTI Ltd), collectively referred to as "the insurers" in the previous judgments, seek a variation of that order as follows:
"The Plaintiff is to pay the Cross-Defendant's costs of the Motion on an ordinary basis up to 16 December 2014 and on indemnity basis thereafter."
By agreement between the parties, this application has been dealt with by way of written submissions, which the parties did not wish to orally address.
Argument
The insurers found their application for indemnity costs on the letter dated 16 December 2014, written by Brent Hedges the insurers' solicitor, to the plaintiff's solicitors (annexure B to Mr Hedges' affidavit sworn 28 April 2015). In that letter Mr Hedges relevantly wrote (page 3):
"On that basis we do respectfully submit that the Motion is bound to fail but despite this, our client is willing to bear its own costs to date providing your client agrees to the Motion being dismissed."
And further:
"We do ask that you note that the offer is submitted pursuant to the principles in Calderbank v Calderbank and in the event that it is not accepted and your client's Motion is dismissed, our client will make an Application that your client pay all of our client's costs associated with the Motion as from today's date on an indemnity basis."
Roads & Traffic Authority of New South Wales v Barrie Toepfer Earthmoving &... [2015] NSWSC 828 | Case summary | Zoe
The plaintiff did not accept either offer.
The insurers also refer to the letter by Mr Hedges to the plaintiff's solicitors dated 13 February 2015 (annexure C to Mr Hedges' affidavit) asking them to obtain instructions from their client as to whether or not their client agreed, having regard to the letter (annexure B) that as from that date, the insurers' costs should be paid on an indemnity basis. The insurers point to the plaintiff's letter dated 27 February 2015 (annexure D to Mr Hedges' affidavit) whereby the plaintiff did not agree that the insurers' costs should be paid on an indemnity basis.
The insurers submit that their offer as to costs was clearly and concisely explained, that the offer was reasonable and the plaintiff's rejection of the offer was unreasonable. Another submission is that the only purpose of the plaintiff's motion "was to manufacture a situation whereby the Plaintiff if it had succeeded would be in a position to appeal the Court's judgement (sic) in relation to the indemnity and presumably in that case it would have sought to argue that despite the original judgement (sic) being delivered in August, it was not out of time because until the Section 6 had to be determined, time did not commence to run" (CDS 05.05.15 [15]).
It is the insurers' contention that the utility of the plaintiff's motion was questionable, as the first defendant had lodged an appeal against the Court's determination in favour of the insurers on the indemnity issue by the time the plaintiff's motion was filed. A further argument was that there was no prospect of the motion succeeding because procedurally it was out of time.
The plaintiff submits that the only appropriate power to vary an order in the present circumstances is found in r 36.16 (3A) and r 36.16 (3B) of the Uniform Civil Procedure Rules 2005 (NSW) ('UCPR') which permits the Court to vary a judgment on application by way of a notice of motion of a party, or on its own motion within 14 days of judgment being entered. It is submitted that although the Court has dispensed with the requirement to file a notice of motion, the application could only be seen to have commenced on 3 March 2015 and the time for bringing the application expired on 25 February 2015. The plaintiff argues that there being no other appropriate power on which the insurers could rely, the application would not succeed.
Another contention is that the offer was not a genuine offer of compromise, but a simple demand for capitulation. The insurers, the plaintiff argues, had not discharged the onus of showing the rejection of the Calderbank offer was unreasonable or plainly unjust.
An alternative submission is that the insurers had not established a sufficient basis to vary the order.
In submissions in reply, the insurers refer to emails passing between the solicitors in February 2016 and observed that at no stage during the correspondence passing between the solicitors, did the plaintiff's solicitors mention that their client would seek to rely on r 36.16(3) and r 36.16 (3C) of the UCPR.
The insurers, however, wrote (FCDS 05.06.15 [7]):
"Accordingly whilst the Cross-Defendants acknowledge that particularly in light of their submissions in relation to the Plaintiff's original application, they should have foreshadowed that this may have been an argument which was ultimately raised, in light of the fact that it was never the subject of any correspondence passing between the solicitors, it was something which was overlooked by the Cross-Defendants in terms of the nature of the application being made, that being that there be a variation of the Court's order insofar as it relates to costs."
The insurers submit that if the Court does not have power to amend or vary the order in relation to costs as the time within which any application for the court to do so has expired, the Court can still entertain a fresh application on an interlocutory basis based on the evidence now before the Court. The insurers ask the Court to do so.
Decision
The correspondence as to costs between the solicitors was not brought to my attention prior to judgment being delivered in Toepfer (No 8).
Judgment was entered on 11 February 2015.
By a letter dated 3 March 2015, Mr Hedges wrote to the Court advising that he had instructions to make an application to have the costs order varied.
The requirement to file a notice of motion was dispensed with by the Court and directions were made as to written submissions.
The insurers do not cavil with the plaintiff's submission that the application to vary the costs order was commenced on 3 March 2015, which was 22 days after judgment was entered.
The power to set aside or vary a judgment or order, is found in r 36.16 of the UCPR which relevantly is as follows:
"36.16 Further power to set aside or vary judgment or order
(1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order. …
(3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it:
(a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or
…
(3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered.…(3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B)."
In Malouf v Prince (No 2) [2010] NSWCA 51, the Court of Appeal considered a Court's power to vary an order which was not sought within 14 days after an order had been entered. The Court (McColl JA, Macfarlan JA and Nicholas J) said at [15] - [17]:
"Bennette v Cohen (No 2) and Deputy Commissioner of Taxation v Meredith (No. 2) establish that the Court has no power to entertain an application pursuant to UCPR 36.16 where the notice of motion seeking relief is filed outside the 14-day window. The question this Court has to determine is whether the UCPR 36.16 power the Court has when a notice of motion is filed within the 14-day window, extends to an application to vary or set aside an order which was not sought within the 14-day window.
In our view the Court does not have that power. Nothing in the language of UCPR 36.16 supports such a construction. Rather, the language of the rule makes it plain that the matter the Court is empowered to determine is the question raised by a notice of motion filed within time for the setting aside or variation of a judgment or order."
As the application was not filed within the 14-day window, the Court does not have the power to vary the costs order pursuant to r 36.16 of the UCPR.
The insurers, however, ask that, if as a consequence of r 36.16 of the UCPR, there is no capacity in the Court to vary the order, that the Court proceeds on the basis that there is a fresh application for costs being paid on an indemnity basis as from 16 December 2014, as opposed to a variation of an existing order.
In my view, that submission must be rejected. The 14-day time limit reflects the need for judgments and orders to be final and certain as to their operation: Deputy Commissioner of Taxation v Meredith (No 2) [2008] NSWCA 133, per Basten JA at [15]. To side-step the time limitation by re-badging the application as "fresh", would defeat the principle of finality to which the 14-day window found in r 36.16 (3A) of the UCPR creates an exception.
I do not have the power to make the order sought by the insurers.
In any event, whilst it is unnecessary for me to express this opinion, the insurers' application for indemnity costs would not have succeeded as the insurers have not satisfied me that the offer involved a real and genuine element of compromise: Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344. In reality, it was a demand for capitulation.
Accordingly, I make the following orders:
Orders
1. The cross-defendants' application made on 3 March 2015 is dismissed.
2. The cross-defendants are to pay the plaintiff's costs of the application.
[2]
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Decision last updated: 25 June 2015
Parties
Applicant/Plaintiff:
Roads & Traffic Authority of New South Wales
Respondent/Defendant:
Barrie Toepfer Earthmoving & Land Management Pty Ltd