Singh v Singh

1804/03 - MAHENDRA PRATAP SINGH v MANOJ BAALMAN SINGH & ANOR (NO 2)

JUDGMENT 1 In these proceedings, the plaintiff claimed that he was entitled to an interest in a property at Mount Druitt of which the defendants were the registered proprietors. In a judgment delivered on 3 March 2004 (Singh v Singh [2004] NSWSC 109], I dismissed that claim with costs. It remains to address two matters: first, whether, as the defendants submit, assessment of the costs awarded to them should be on the indemnity basis; and, second, whether there exists an undertaking as to damages given at an earlier stage of the proceedings in respect of which an inquiry by a Master should now be ordered. 2 The proposition that costs should be assessed on the indemnity basis is advanced by reference to two letters written by the defendants' solicitors to the plaintiff's solicitors. The letters are dated 21 February 2003 and 29 September 2003 respectively. Each conveyed an offer or proposal which was not accepted by the plaintiff. 3 The relevant part of the letter of 21 February 2003 is as follows: "6. As a result the son [defendant] considers that his father [plaintiff] has no moral or legal right to anything. However in the spirit of compromise he is prepared to offer your client $40,000.00 in full and final settlement of all claims arising out the subject matter covered by the caveat and/or correspondence between your office and the son and/or this office. 7. This offer is to lapse at 5pm on Tuesday 25/02/03. If accepted you should fax through a copy of an appropriate withdrawal of caveat in registrable form prior to this deadline." 4 The plaintiff's solicitors' response dated 24 February 2003 was: "We refer to your letter dated 21 February, 2003 which we received by fax on 24 February, 2003 at 12.56 p.m. Your deadline therefore is a little optimistic! We are referring this letter to our client for his instructions.

In the meantime, will you please let us have copies of documents and file as requested. We need these papers urgently to advise our client." 5 On 25 February 2003, the plaintiff's solicitors wrote to the defendants' solicitors as follows: "We refer to our letter dated 24 February 2003. We note that we originally wrote to you on 29 January 2003. This letter was faxed and marked urgent. We did not receive a reply until 24 February 2003.

Our letter dated 29 January 2003 requested copies of all papers relating to the conveyance of our clients half-share to your clients. We also enclosed an authority from your client.

Before we can advise our client further, please let us have all the documents as requested in our letter dated 29 January 2003 and confirm in the third paragraph of our letter dated 24 February 2003.

As requested in that letter please let us have your urgent response." 6 On 26 February 2003, the defendants' solicitors replied and gave the requested information. 7 The plaintiff does not seek to argue that the defendants' solicitors' letter of 21 February 2003 was not a letter in terms of Calderbank v Calderbank [1976] Fam 93 admissible as such on the question of costs. What the plaintiff does challenge, however, is the reasonableness of the time allowed for acceptance. The plaintiff's solicitors in their letters say that the offer was not received until 24 February 2003, that is, the day immediately before that on which the offer conveyed by the letter was expressed to expire unless accepted in the meantime. The plaintiff's solicitors were thus given only one day in which to seek instructions from their client and, if those instructions favoured acceptance of the offer, to prepare and have executed the form of withdrawal of caveat delivery of which was necessary to constitute acceptance of the offer in accordance with its terms. The defendants have not sought to argue that the offer was received earlier than 24 February 2003 and I am satisfied that the timing was as stated in the plaintiff's solicitors' reply of that date. 8 The plaintiff also says that it was reasonable for his solicitors to request further information dealing with the claims made by the defendants and, having regard to the correspondence, I agree. 9 I am satisfied that the plaintiff's rejection of the defendants' offer of compromise conveyed by their letter of 21 February 2003 (received on 24 February 2003) was not unreasonable given the unduly brief time allowed for acceptance and the reasonable requests for information so that the plaintiff's solicitors could properly advise their client. The offer conveyed by the letter of 21 February 2003 (received on 24 February 2003) and its rejection therefore do not constitute a basis for the making of an order for costs on the indemnity basis. 10 The alternative foundation for the defendants' claim to have costs assessed on the indemnity basis is the letter of 29 September 2003 from the defendants' new solicitors to the plaintiff's solicitors. That letter reads as follows: "We refer to previous correspondence and in particular to your letter dated 6th August, 2003. We note that it enclosed a letter dated 18th July, 2003 by which your client offered to settle on the basis that he receive one-third of the monies held in trust. We note that you sought a response to this offer by 18th August, 2003.

We would advise that we consider this offer to have lapsed. However, we are instructed by our client to formally reject this offer.

We are instructed by our client to propose that your client withdraw the claim against our client, and that he bear our client's costs to date. We seek a response by 13th October, 2003.

We seek to remind your client that should he be unsuccessful in his claim against our clients, he may be liable for damages suffered by our clients together with the costs of the Hearing. We advise that we would be seeking costs on an indemnity basis. We note that in this regard, your client has given to the court an undertaking in respect of damages, which our clients relied on in agreeing to place half of the proceeds of sale in trust." 11 It will thus be seen that the "compromise" on which the defendants seek to rely, for costs purposes, was their proposal that the plaintiff abandon his claim altogether and pay the defendants' costs - in other words, that the plaintiff effectively capitulate. The plaintiff says that the proposal cannot be regarded as a "compromise" at all in the sense relevant for present purposes. 12 In this respect, it is pertinent to quote from the judgment of Dunford J in McKerlie v New South Wales (No 2) [2000] NSWSC 1159: "Orders for indemnity costs following the rejection of the offer of compromise pursuant to SCR Pt 52A r 22 and 'Calderbank' letters are becoming increasingly frequent. However, in my view such order should not be made as a matter of course, and certainly should not be made where there is no offer of a real or genuine compromise: Tickell v Trifleska Pty Ltd & Anor (1990) 25 NSWLR 353; Hobartville Stud Pty Limited v Union Insurance Co Ltd (1991) 25 NSWLR 358." 13 His Honour also said: "I dealt with a similar application on 17 November last in the matter of Bishop v State of New South Wales (unreported - Dunford J - 17 November 2000) a defamation case where the plaintiff had been wholly unsuccessful and there was no existing order for costs, but the effect of the offer required the plaintiff to abandon his proceedings and avoid the risk of an anticipated order for costs. In refusing the application I said: 'There was not in any real sense an offer to compromise the proceedings, but merely an offer to induce the plaintiff to abandon his claim; and in my view orders for indemnity costs should not be used to defer persons from bringing proceedings which they feel they are entitled to bring, even if those proceedings are ultimately unsuccessful. It is different if there is a compromise involved, such as by offering part of what the plaintiff claims or can reasonably expect to receive if successful.'" 14 The observations of Dunford J are apposite in this case. A defendant's proposal that the plaintiff simply capitulate is not to be regarded, for costs purposes, as an offer of compromise which may form the foundation for an order for indemnity costs. This is such a proposal. 15 Neither of the bases on which the defendants claim an entitlement to an order for costs on the indemnity basis has been made out. Costs awarded to the plaintiff will therefore be assessed on the party and party basis. 16 The second matter to be dealt with is whether there should be referred to a Master for inquiry the question of the damages to be paid by the plaintiff in accordance with an undertaking as to damages. This matter may be dealt with shortly. In his summons as originally filed on 10 March 2003, the plaintiff claimed a declaration as to his beneficial interest in the property at Mount Druitt and an injunction restraining the defendants from selling the property (including by completing a contract for sale then on foot). In his affidavit filed in support of the summons, the plaintiff said at paragraph 26 (the last paragraph): "I am prepared to give the usual undertaking as to damages." 17 In due course the parties agreed upon a regime under which the contract for sale was completed and the proceeds of sale were held in an interest bearing account pending determination of the proceedings. Those arrangements were consensual and were made outside the court context. The court played no part in their formulation and implementation. At no point did the plaintiff press his application for an injunction restraining the sale and at no point did he, personally or by his counsel or solicitor, actually proffer to the court an immediate and operative undertaking as to damages. Paragraph 26 of his affidavit was no more than a statement of willingness. No occasion ever arose for the plaintiff actually to do that which he had expressed himself willing to do. 18 No undertaking as to damages was ever given to the court. There is accordingly nothing to be referred to a Master. **********

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