These proceedings concerned ownership of a property in Petersham. Judgment was given in the matter on 11 November 2016 (see Strel v Cordia [2016] NSWSC 1596). The Court found that the plaintiff (Ms Strel), as administrator of her late father's estate, was entitled to become the registered proprietor of the property (see judgment at [60]-[61]). The Court further found that the first defendant (Mr Cordia) had failed to establish that he had been in adverse possession of the property for more than 12 years such that the plaintiff's title to the property was extinguished (see judgment at [86]). Final orders were made on 1 December 2016 on all issues other than costs. That issue remains for determination.
Ms Strel seeks an order that Mr Cordia pay her costs of the proceedings on an indemnity basis. Mr Cordia resists any indemnity costs order.
Directions were made for the making of written submissions on costs. Both parties provided written submissions in accordance with the directions. In the absence of any suggestion that a further oral hearing was necessary, the Court considers it appropriate to proceed to determine the matter "on the papers".
Ms Strel's application is put on two bases. First, it is submitted that Mr Cordia should pay all of her costs on an indemnity basis due to what is said to be Mr Cordia's unreasonable conduct in connection with the proceedings. Secondly, it is submitted in the alternative that Mr Cordia should pay her costs from 27 November 2015 when offers of compromise (which were not accepted by Mr Cordia) were made. In that regard, reliance is placed upon Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") r 42.14 and 42.15A, or alternatively the principles in Calderbank v Calderbank [1975] 3 All ER 333 if the offers were found not to have effect under the rules.
Ms Strel raises various matters in support of the contention that Mr Cordia's conduct warrants an indemnity costs order. She submits that Mr Cordia, who had been entrusted with the stewardship of the property and had been permitted to use it for many years, cynically challenged her entitlement on a false basis which he knew (or ought to have known) had no reasonable prospects of success. It was further put that Mr Cordia changed his evidence (about when he first believed Ms Strel had abandoned the property) to overcome a "known fatal weakness in his case", and had unreasonably failed, at least initially, to admit certain facts that were the subject of a Notice to Admit Facts.
It is true that Mr Cordia's claim to possessory title was not accepted by the Court due, in part, to the rejection of Mr Cordia's affidavit evidence to the effect that he formed the belief in 2001 that Ms Strel had abandoned the property. Mr Cordia's evidence on that matter was held to be unimpressive. However, those conclusions were reached following an extensive cross-examination of Mr Cordia, and against a background that included that Ms Strel had gone to the property on only a few occasions following her father's death in 1987, and had not been to the property at all, nor had any contact with Mr Cordia, from late 1998 until 2015.
I am not prepared to conclude that the assertion and maintenance of Mr Cordia's claim, or the manner in which he advanced it, was so unreasonable or lacking in merit as would justify an order for indemnity costs. Neither was Mr Cordia's failure to admit certain facts. It was not shown (or suggested) that such failure caused Ms Strel to incur additional costs of any significance. Viewed overall, I do not think that the conduct of Mr Cordia in connection with these proceedings is of a character that would warrant the making of an indemnity costs order.
I turn now to the claim for indemnity costs based upon the offers of compromise. Two offers were made: one in respect of Ms Strel's claim against Mr Cordia, and one in respect of Mr Cordia's cross-claim against Ms Strel. The offers were made on 27 November 2015. Ms Strel offered to compromise her claim against Mr Cordia on the basis that she obtain the substantive relief as sought against him in the Summons, and would pay him the sum of $10,000. Ms Strel offered to compromise the cross-claim on the basis that she obtain judgment in her favour with no order as to costs.
The offers appear to comply with the requirements of UCPR r 20.26. Mr Cordia did not contend to the contrary.
As noted earlier, neither offer was accepted. Further, it seems to me that in relation to each offer, Ms Strel has obtained orders on the relevant claim no less favourable to her than the terms of the offer. In these circumstances UCPR r 42.14 (in relation to her claim) and UCPR r 42.15A (in relation to Mr Cordia's cross-claim) operate so that, unless the Court orders otherwise, Ms Strel is entitled to an order for indemnity costs in respect of the relevant claim from 28 November 2015. It is well established that in this situation an onus is cast upon Mr Cordia to persuade the Court that it should "order otherwise" (see Leach v The Nominal Defendant (No 2) [2014] NSWCA 391 at [29] and [45] per McColl JA, with whom Gleeson JA and Sackville AJA agreed).
A number of matters were raised by Mr Cordia. First, he submitted that there were circumstances which took the case outside of the ordinary. In particular, it was emphasised that neither Ms Strel nor her father were ever registered on the title to the property, so regardless of the attitude of Mr Cordia she would need to bring proceedings (against the registered proprietor and the Registrar-General) in order to get on the title. Next, it was submitted that the offers did not involve any genuine element of compromise, and were thus not offers that served the purpose of encouraging settlement. It was also pointed out that the offers were made at an early stage before all of Ms Strel's evidence had been served and before Ms Strel had amended the Summons to include additional claims including her own claim based on adverse possession against the registered proprietor.
Ms Strel submitted that there was no basis for the Court to order otherwise. She submitted that the offers were not "offers to capitulate" but involved a real and substantial financial compromise. It was submitted that much of the evidence had been served when the offers were made, such that Mr Cordia was in a good position to make the assessment that he had no reasonable prospect of success.
Ms Strel's offer in relation to her claim against Mr Cordia involved only a modest element of compromise. If the offer was accepted, she would prevail against him upon the payment of only $10,000. It nonetheless remains for Mr Cordia to show reasons why the Court should depart from the usual position stated in UCPR r 42.14.
In my opinion there is reason to order otherwise in this case. This is primarily due to the circumstance that a considerable (at least a not insignificant) component of the costs incurred by Ms Strel on her claim against Mr Cordia would likely have been incurred in any event if she was to obtain orders enabling her to become the registered proprietor of the property. The evidence adduced by Ms Strel on the question whether her father had completed his purchase obligations falls into that category. That circumstance, coupled with the modest element of compromise offered, leads me to conclude that the appropriate order for costs in relation to Ms Strel's claim against Mr Cordia is that he pay those costs on the ordinary basis. Application of the principles in Calderbank v Calderbank (supra) would lead to the same result.
I have not overlooked the submission made by Mr Cordia that the proper order would be that each party should pay their own costs of the Summons. However, as Mr Cordia placed in issue practically all aspects of the Summons, I do not think that an order that each party pay their own costs would be appropriate. Ms Strel, having succeeded on her claims, should have her costs. In my view it is appropriate that Ms Strel's costs of the Summons (including the Further Amended Summons) be paid by Mr Cordia on the ordinary basis.
Ms Strel's offer in relation to the cross-claim was a "walk away" offer. Whilst such offers are capable of triggering the indemnity costs provisions of UCPR r 42.15A (see Taheri v Vitek (No 2) [2014] NSWCA 344 at [8] per Bathurst CJ with whom Emmett and Leeming JJA agreed), the degree of compromise remains a relevant matter to take into account. Indeed, there is authority to the effect that a derisory offer, or an invitation to surrender, would result in a successful triggering of the indemnity costs provisions under the rules only if the claim or defence approached something of the character of being frivolous or vexatious (see Regency Media Pty Limited v AVA Australia Pty Limited [2009] NSWCA 368 at [31]). Whilst the Court of Appeal did not lay down any rigid rule in this regard (see Prospect Resources Limited v Molyneux [2015] NSWCA 171 at [94]), it is clear that an offer that involves little in the way of compromise and does little to serve the purpose of encouraging settlement may be regarded as insufficient to warrant an indemnity costs order.
I have come to that conclusion in relation to Ms Strel's offer to compromise the cross-claim. The offer was a "walk away" offer, made at a relatively early stage of the proceedings, in respect of an "all or nothing case" (compare Regency Media Pty Limited v AVA Australia Pty Limited (supra) at [31]). The offer did little to serve the public policy of encouraging settlement. I have already said that I do not think Mr Cordia's claim was so lacking in merit that an order for indemnity costs would be justified. I do not think it could fairly be described as a frivolous or vexatious claim. In all the circumstances, I do not think that Mr Cordia's failure to accept what was really an invitation to capitulate should result in an order for indemnity costs. In my view, it is appropriate that Mr Cordia pay Ms Strel's costs of the cross-claim on the ordinary basis. Application of the principles in Calderbank v Calderbank (supra) would lead to the same result.
Ms Strel and Mr Cordia were the only active parties in the proceedings. In the light of the conclusions I have reached as set out above, the Court will simply order that the first defendant/cross-claimant pay the plaintiff/first cross-defendant's costs of the proceedings (other than the costs of this application) on the ordinary basis. Ms Strel should bear her own costs of the application for costs.
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Decision last updated: 31 January 2017