On 9 April 2020 the Court delivered a judgment in this matter in respect of a number of questions that were ordered to be determined separately from and in advance of all other questions in the proceedings (see Rogers v Rogers [2020] NSWSC 392).
The questions were answered adversely to the plaintiff. In those circumstances, an order was made that the proceedings be otherwise dismissed. An order was also made that a cross-claim, brought by the first defendant against the plaintiff and the second defendant, be dismissed. None of the other parties played an active role in the hearing of the separate questions.
In relation to costs, directions were made for the parties to endeavour to reach agreement as to the appropriate orders to be made, failing which brief written submissions were to be provided by 30 April 2020. Agreement was not reached, and the Court has received submissions on costs from the plaintiff and the first defendant. No submissions were provided by the second defendant. The second defendant was represented at the hearing by Counsel, but aside from giving evidence, the second defendant played an insignificant role in the hearing.
In brief, the plaintiff accepts that an order for costs should be made in favour of the first defendant on the ordinary basis, but that the order should not extend to the costs of the cross-claim.
The first defendant seeks an order that the plaintiff pay her costs of the proceedings (including the cross-claim) on the ordinary basis up to 21 February 2019 and on an indemnity basis thereafter. The claim for indemnity costs is based upon the plaintiff's failure to accept a Calderbank offer that was made by letter dated 21 February 2019. The offer was to agree to an order that the proceedings be dismissed with no order as to costs. The offer was expressed to be open for acceptance for 21 days. The first defendant submitted that, for the reasons set out in the letter, it was unreasonable of the plaintiff not to accept it.
Rogers v Rogers [2020] NSWSC 574 | Case summary | Zoe
In essence, it was stated in the letter that, based on various enquiries made by the first defendant, it was clear that the plaintiff had no interest in the first defendant's property in Ermington, and continuation of the proceedings would accordingly be an abuse of process.
The plaintiff, in response, submitted that it was not unreasonable to not accept the "walk away" offer in the circumstances, including:
1. it appeared that the first defendant had signed the Loan Agreement and Charge intending it to have legal effect;
2. the plaintiff had no direct knowledge of the circumstances in which the first defendant signed the instrument; and
3. neither the first defendant nor the second defendant had by that time served any evidence in the proceedings.
It may be stated as a general proposition that for a valid Calderbank offer to be a basis for indemnity costs, the offer must represent a genuine compromise which the recipient unreasonably failed to accept, taking into account all the relevant circumstances of the case (see Commonwealth of Australia v Gretton [2008] NSWCA 117 at [44]-[46]).
The plaintiff did not expressly assert that the "walk away" offer made on 21 February 2019 did not entail a genuine compromise. However, the offer was made at a relatively early stage in the proceedings. The first defendant had by that time filed a Defence and an Amended Defence, and her Cross-Claim was filed on 8 March 2019 (during the period the offer remained open for acceptance). The first defendant would have thereby incurred a not insignificant amount of costs, and I am thus prepared to accept that the offer involved a genuine compromise, albeit that the magnitude of the costs incurred was not established on the evidence.
Nevertheless, I am not satisfied that it was unreasonable of the plaintiff to fail to accept the offer. The terms of the letter firmly suggested that the plaintiff's claim would ultimately be defeated by evidence to be adduced from various persons, and it was pointed out that the Loan Agreement and Charge had not been provided to the plaintiff to sign. The last mentioned point was clearly significant, but it needs to be viewed in the light of the fact that the transaction took place whilst the plaintiff was living overseas and the second defendant had apparently made use of a Power of Attorney from the plaintiff in relation to the transaction. In 2015, Mr Settle, solicitor, who acted in relation to the transaction, informed the plaintiff that a Power of Attorney had been used in relation to a caveat, but his only copy of the agreement had not been signed by the second defendant "as your attorney at that point" (see Rogers v Rogers (supra) at [49]-[50]). Moreover, as pointed out in the submissions of the plaintiff, evidence from the defendants was not served until April 2019. A full account of the transaction, including what had been done on the plaintiff's behalf, was thus not available to the plaintiff when the Calderbank offer was open for acceptance. In addition, even if the plaintiff should have known that the monies he provided in relation to the Parramatta property had not been advanced by way of loan, the position in relation to the $260,000 that had been paid out of the funds held on trust for the plaintiff was far from clear. In this regard, it should be noted that in 2015 the first defendant provided information to her trustee in bankruptcy which suggested that the plaintiff was one of her creditors.
Given the incomplete picture available to the plaintiff as at February-March 2019, I do not think that it was unreasonable for him not to accept the "walk away" offer made by the first defendant. I accept the plaintiff's submission to that effect.
I also accept that the plaintiff should not have to bear the costs of the first defendant's cross-claim. The cross-claim was dismissed as it ultimately did not arise. The only aspect of the cross-claim that was pressed at the hearing was found to have no application on the facts as found (see Rogers v Rogers (supra) at [73]). In these circumstances, I do not think that the plaintiff should have to bear any of the first defendant's costs of the cross-claim.
For the above reasons, it seems to me that the appropriate exercise of the Court's discretion as to costs under s 98 of the Civil Procedure Act 2005 (NSW) is to order that the plaintiff pay the first defendant's costs of the proceedings (not including her costs of her cross-claim) on the ordinary basis. There will be no order as to costs of the cross-claim, to the intent that each party to the cross-claim bear its own costs of it.
The second defendant has not made any submissions in support of any costs order in his favour. It is not necessary to say anything further on that score, but I observe that in view of the fact that the second defendant had no apparent financial interest in the outcome of the proceedings, and played very little part in the hearing (other than as a witness), it is difficult to see why any costs should be awarded in his favour. That is particularly so in light of the role played by the second defendant in the transaction that spawned the litigation (see Rogers v Rogers (supra) at [71]).
There remains one final matter. That concerns the caveat (AJ572979) lodged by the plaintiff in relation to the first defendant's Ermington property in June 2015. The first defendant seeks an order for the removal of the caveat. Such an order was not sought in the cross-claim, but it is accepted by the plaintiff that an order should now be made for the caveat to be withdrawn. The Court will so order.
The orders of the Court will be:
1. Order that within 7 days the plaintiff withdraw caveat No AJ572979 lodged by the plaintiff upon the title to the land in Certificate of Title Folio Identifier 10/30464;
2. Order that the plaintiff pay the first defendant's costs of the proceedings (not including the first defendant's costs of the cross-claim) on the ordinary basis;
3. Order that there be no order as to costs of the cross-claim to the intent that each party to the cross-claim bear its own costs of the cross-claim.
[2]
Amendments
15 May 2020 - Catchwords Amended - typographical error
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Decision last updated: 15 May 2020