S&P Gomes Pty Ltd ta Cohuna Hotel Motel v Sundar ta Sun Legal (No 2)

Representation: Counsel:
A Avery-Williams (First Defendant)
I Griscti (Second Defendant)
Solicitors:
Gilchrist Connell (First Defendant)
Minter Ellison (Second Defendant)

File Number(s): 2021/00087950

Publication restriction: Nil

EX TEMPORE JUDGMENT

1. On 7 February 2025, I gave judgment for the first plaintiff against the first defendant in the sum of $1,216,615.17, judgment for the first defendant against the second plaintiff, and judgment for the second defendant against the plaintiffs. I ordered the first defendant pay the plaintiffs’ costs as agreed or assessed. Within 14 days of that judgment being entered, the defendants filed a motion seeking a variation of those costs’ orders.

2. The first defendant seeks an order, in effect, that the plaintiffs, pay their own costs of all those expert reports and expert evidence relating to issues on which they clearly failed, being the costs of rectification (as opposed to the diminution in value claim) and the personal injury claim. Mr Gomes opposes any variation in the costs order.

3. The second defendant seeks a variation of the costs order, relying on two offers served on behalf of the second defendant, being an offer made on 18 October 2022 in the nature of a Calderbank offer (Calderbank v Calderbank [1975] 3 All ER 333); and secondly, an Offer of Compromise served pursuant UCPR r 20.26 on 2 December 2024. The plaintiffs also oppose any variation of the costs order in favour of the second defendant.

The Second Defendant’s Application

4. The second defendant seeks to rely on a Calderbank offer which is set out in the letter from Minter Ellison dated 18 October 2022 to the former solicitors for the plaintiff. In that letter, the second defendant made an offer, the effect of which was that the plaintiffs discontinue the proceedings and the second defendant would pay its own costs, and that in addition the plaintiffs would be required to sign a release with the usual terms including confidentiality and a denial of liability from the second defendant.

5. Then on 2 December 2024, the second defendant served an Offer of Compromise in terms that there be judgment for the second defendant against the plaintiffs and there be no order as to costs. The offer was open until Sunday 8 December 2024. The proceedings commenced on 9 December 2024.

6. Put shortly, I do not accept that the offer of 18 October 2002 represented any real compromise on the part of the second defendant. Indeed, in addition to offering to pay its own costs at a time when the matter had not even yet been listed for hearing, the second defendant sought that the plaintiff sign a deed of release.

7. The plaintiffs could never have been required to sign a deed of release at the end of the case. The second defendant chose not to serve an Offer of Compromise at that time. I am not satisfied in the circumstances that the offer made on 18 October 2022 represented any real compromise (see Fabre v Lui (No 2) [2015] NSWCA 312).

8. On the other hand, by the time of the Offer of Compromise of 2 December 2024, the second defendant must have incurred substantial costs, and determined to make an offer in accordance with the Offer of Compromise principles.

9. There were no additional requirements or conditions imposed on the plaintiffs. The plaintiffs did not accept that offer. I acknowledge that, by this time, the plaintiffs were not legally represented but that does not diminish the force or effect of the Offer of Compromise served by the second defendant.

10. In the circumstances, order 5 will be varied. The order I now make in respect of costs between the plaintiff and the second defendant is that the plaintiffs pay the second defendant’s costs as agreed or assessed on the ordinary basis to 2 December 2024, and on an indemnity basis after 2 December 2024.

The First Defendant's Application

11. The first plaintiff succeeded against the first defendant, being his former solicitor. The basis of the first defendant's application to vary order 4 is that, whilst the plaintiffs succeeded in establishing negligence, they did not succeed in recovering a substantial component of the damages they sought, being the cost of rectification of the Cohuna Hotel Motel, and the second plaintiff, that is Mr Gomes, did not succeed at all in recovering damages for personal injury.

12. As set out in the affidavit of Shayma Suhaylaha Sorefan, the plaintiff relied on a number of expert reports in respect of the issues relating to rectification and personal injury. The first defendant now seeks an order that the plaintiffs bear their own costs of and incidental to the issues of rectification, loss of profit and personal injury.

13. The plaintiff represented himself on the hearing. I am not satisfied that any legal costs incurred when the plaintiff was legally represented, either by solicitors or barristers, could be severed. However, the fees charged by each of those experts for the preparation of their reports and the cost of attending the hearing to give evidence are clearly severable. That is, because on any assessment, it will be necessary for the plaintiffs to provide invoices in respect of the costs charged by each expert, and the costs of their attendance on the hearing.

14. Mr Gomes’ response to the first defendant's application is to suggest that he only pursued these arguments, that is, for rectification, personal injury and economic loss because his former solicitor advised him to do so. That may be so but, as I explained to him, that does not necessarily provide him with any basis for resisting the application for a variation in costs.

15. Mr Gomes said at the outset that if he had been properly advised by his solicitor, he would not have purchased the hotel motel. That squarely raised the issue of how he could recover both the costs of diminution in value of the hotel and the cost of fixing up the hotel as if he was going to keep it on a long-term basis. Further, the same might be said about his claim for economic loss. As for the claim for personal injury, put simply, he lost on that point. As I said in my judgment, I did not consider there was any proper basis to award damages for personal injury.

16. In the circumstances, I am satisfied that the fees incurred by the experts in preparing reports and attending court are severable, and that the first defendant should not be required to pay those fees.

17. I make the following orders:

18. I set aside orders 4 and 5 made on 5 February 2025.

19. The first defendant is to pay the plaintiffs’ costs as agreed or assessed, except that the first defendant is not liable to pay the fees and costs charged by and incurred by each of the experts set out in para (1)(a) and para 1(b) of the first defendant's motion, both in respect of preparing reports and attending in court to give evidence.

20. The plaintiffs pay the second defendant's costs as agreed or assessed on the ordinary basis to 2 December 2024, and on an indemnity basis after 2 December 2024, including the costs of this motion.

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