Sydney Attractions Group Pty Ltd v Frederick Schulman

Principles as to whether the court should "order otherwise" 10On 7 November 2012 the defendant served on the plaintiff an offer of compromise pursuant to rule 20.26 of the Uniform Civil Procedure Rules 2005 (UCPR) offering to compromise the whole of the summons and cross-claim on terms that the plaintiff pays to the defendant $4 million. Subject to some disagreement about whether the period of time during which the offer could be accepted was reasonable and whether the offer was expressed with sufficient specificity, it is otherwise not contested that the offer was in compliance with the UCPR. The defendant ultimately obtained judgment in his favour for $4,313,867.73. 11Since the offer was made less than two months before the date set down for commencement of the trial, the offer must be left open for such time as is "reasonable in the circumstances" (r 20.26(7)(b)). The offer was open for acceptance between 7 and 16 November 2012 (i.e. nine days), and the trial commenced on 19 November 2012. 12The circumstances relevant to the assessment of what constitutes "reasonable time" will include all the information available to the parties. In Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85 (at [20]), Basten JA (with whom Giles and Tobias JJA relevantly agreed) identified three factors relevant to assessing whether an offer was open for a "reasonable time" where it is made at the commencement of preparation for the trial. The first is that, given the stage at which the offer was made, both parties may reasonably be expected to have had a clear perception of the strengths and weaknesses of their positions, so that the reasonableness of a particular offer may be speedily assessed. Secondly, because significant costs will be accruing on a daily, even an hourly basis, there is a heightened incentive to respond within the time permitted. Thirdly, and counterbalancing the first factor, the need to address the terms of an offer, provide advice and obtain instructions will often be a significant distraction from final preparation. 13It is true, as the plaintiff submitted, that the proceedings involved voluminous evidentiary material and raised difficult questions of construction. However, in my view, this consideration raised by the plaintiff is heavily outweighed by the first of the three factors identified above, namely that as the defendant's offer was made only days before the trial commenced, the plaintiff must have come to grips with the content of the evidentiary materials and with the strengths and weaknesses of both its case and the defendant's case. This is especially so where the parties, as here, are sophisticated, and represented by experienced counsel and solicitors. The significance of this was emphasised by McColl JA (with whom Spigelman CJ and Beazley JA agreed) in County Securities Pty Limited v Challenger Group Holdings Pty Limited (No 2) [2008] NSWCA 273 (at [35]), where her Honour observed that the period leading up to the trial is precisely when parties are often in the best position to consider an offer, and that the further the process of preparation for trial has advanced, the better will the recipient of an offer be able to assess its prospects of success. Although in that case the Court of Appeal was considering a Calderbank offer, McColl JA's observations are applicable in the present context. In that case, the Court of Appeal found that an offer made eleven days before the trial and left open for four days was open for a reasonable time. Accordingly, I do not think that the duration of time for which the present offer was left open for acceptance should, in the circumstances, detract from the indemnity cost consequences otherwise prescribed under the rules. 14The plaintiff alleges the offer failed to specify "what is the compromise of any of the three claims made in the plaintiff's summons", that it failed to specify even in broad terms how the figure offered was arrived at, that it failed to specify "the fate of the plaintiff's claim for release of the share sale mortgage", that it did not propose that the plaintiff's summons be dismissed (although that is what the defendant's short minutes of order proposed), and that it did not specify the order that should be made on the defendant's cross-claim for damages. 15I cannot accept the plaintiff's submission that the offer is invalid on the ground of ambiguity or uncertainty. The plaintiff has not cited, nor am I aware of, any authorities that would support its submission that there must be in the offer specification of how the offer was arrived at, or allocation of particular amounts to particular claims. In Vagg v Mcphee (No 2) [2013] NSWCA 126, Basten JA said (at [6]) [6] ... [the offer] was not served on 4 July but on 5 July and accordingly the 28th day was 2 August. In fact, the notice was ambiguous in that it stated both a period and a date as to the end of the period, which proved to be inaccurate. Competent legal advisors on both sides would have known that the offer, to comply with the rules under which it was made, was required to be open for 28 days. It was expressly stated to be open for that period. Ambiguity should be resolved in favour of validity. If the appellants had been uncertain and it mattered to them, they could have sought clarification. They did not, nor did they seek to rely on the ambiguity in resisting the present application. The court should not decide the issue on this basis unless the proper application of the law relating to practice and procedure requires it. In this case it does not. 16Ward JA said (at [15]): [15] I agree with Basten JA that ambiguity introduced by the inclusion in the Notice of Offer of Compromise by the words "that is, until 1 August 2012" (arising because, though dated 4 July 2012, it appears that the offer was not transmitted until 5 July 2012) should be resolved in favour of the validity of the offer, at least in circumstances where there was no evidence that the appellants had been uncertain as to the operation of the offer. In a different context, in Vieira v O'Shea (No 2) [2012] NSWCA 121 this court said (at [22]) that "it would require a significant element of uncertainty to render the offer one which did not comply with r 20.26" (the question there being whether an offer to settle proceedings on the condition that a particular sum be paid could be understood as a compromise of the offeror's claim for damages and challenge to the costs order made at trial). Their Honours noted that there was no evidence that the offer had been understood in any other way. 17In my view, the purport of the offer in the present case is clear, and certainly without "a significant element of uncertainty" - it was to end the entirety of the proceedings as between the parties, by the payment of $4 million by the plaintiff to the defendant. If that offer was accepted, "any party to the compromise may apply for judgment to be entered accordingly" (r 20.27(3)). I do not consider the failure to specify the fate of the share sale mortgage to have introduced such a level of uncertainty as to render the offer invalid or non-compliant with the rules. Whether or not the plaintiff is entitled to a discharge of the share sale mortgage depends on its rights and obligations under the relevant instrument creating the mortgage, properly construed. If, under the instrument, the plaintiff was entitled to a discharge of the mortgage upon payment of the amounts sought by the defendant in his cross-claim, then as a matter of course, the disposal of the proceedings by acceptance by the plaintiff of the offer of compromise made by the defendant would, it appears, have entitled the plaintiff to a discharge of the mortgage once the payment specified in the offer was made. 18Although it is my view that the offer of compromise was compliant with the rules, the relevant indemnity cost consequences under rules 42.14 and/or 42.15A of the offer of compromise regime will not flow if the court "orders otherwise". In Ritchie's (at [42.14.10]) it is noted that particular instances in which it has been recognised that a court will "order otherwise" include where a party succeeds at trial on a case that significantly changed after the date of the offer, or where costs incurred are wholly disproportionate to the judgment amount and the proceedings were pursued for an extraneous political purpose, or where costs are attributable to the party's own unreasonable conduct. 19The more general guiding principles as to the circumstances in which a court may order otherwise have received various formulations, perhaps, in part, due to differences in statutory language over time and across different courts. In Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721, the relevant statutory language (the Supreme Court Rules 1970, Part 52, r 17) provided: Where an offer is made by a plaintiff and not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim to which the offer relates no less favourable to him than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall ... be entitled to an order against the defendant for his costs in respect of the claim from the day on which the offer was made, taxed on an indemnity basis in addition to his costs incurred before and on that day, taxed on a party and party basis. 20In a joint judgment, Kirby P, Mahoney JA and Samuels AJA said (at 724, 725 and 727): ... The obvious purpose ... is to facilitate the proper compromise of litigation... ... ... The decision to award or withhold indemnity costs where a plaintiff's settlement offer has been made but not accepted, involves a discretion to be exercised by reference to all of the circumstances of the case, not by applying a fixed mathematical formula. ... The rule does no more than to oblige litigants, and those advising them, to consider realistically, upon the best information available to them, the prospects of success and the likely outcome of the litigation. Where, in the particular circumstances, the litigant or its advisers mis-judge the prospects of success or mis-calculate the outcome, their mistake may be warranted on the material which they had available. Alternatively, it may be no more than a mis-calculation in a case with large imponderables where the course they took was nonetheless perfectly reasonable. Litigation is inescapably chancy. The purpose of the rule is to put a premium on realistic assessment of cases. It is not to demand perfect foresight which is denied even to the judges. That is why a discretion is retained, under the rule, for the Court to order otherwise than as the rule provides. But the ordinary provision is expected to apply in the ordinary case. 21In New South Wales Insurance Ministerial Corporation v Reeve (1993) 42 NSWLR 100, Gleeson CJ (with whom Clarke and Cripps JJA agreed) said (at 102), in relation to the same statutory language considered in Maitland Hospital v Fisher (No 2): The authorities to which I have referred contain some discussion of the availability of the discretion which is conferred by Pt 52, r 17(4), but this is done in the context of a recognition that in an ordinary case where an offer of compromise has been rejected by a defendant and the plaintiff has subsequently obtained more than the amount for which the plaintiff was prepared to compromise, the defendant should pay indemnity costs from the time specified in the rule. It is impossible exhaustively to state the circumstances in which a discretion to contrary effect might be exercised, and it would be imprudent to attempt any such exhaustive statement. However, I do not read Maitland Hospital v Fisher [No 2] as authority for the proposition that a discretion should be exercised against making an order for indemnity costs in any case in which it was reasonable for the defendant to take the view that it had a good chance of successfully defending the action. The prima facie consequence, which will apply in the ordinary case, is that in the circumstances postulated by the rule an order for indemnity costs will be made. 22In Hillier v Sheather (1995) 36 NSWLR 414, the court was considering statutory language which provided a discretion to relevantly "order otherwise". Kirby P cited the decision of Heerey J in Wills v Bigmac Pty Ltd and Ford Motor Co of Australia Ltd (Federal Court of Australia, Heerey J, unreported, 9 December 1994), where, in considering a similar issue but in the context of the Federal Court Rules as they then stood, Heerey J said that "compelling and exceptional circumstances" are required before a court can order otherwise. In this context, Kirby P said, in relation to the relevant (and different) provisions in New South Wales (at 422 and 423): At least in the context of Pt 19A, r 9 of the District Court Rules, I would not import the requirement to establish "compelling ... circumstances" to obtain an order, otherwise than as provided by the rule, to relieve a party from the costs consequences of failure to accept an offer of compromise. Certainly, the notion of a "compelling" reason is absent from the language of Pt 19A, r 9 of the District Court Rules. It is enough to say that the case needs in some way to be exceptional. It must be exceptional because the general rule is that provided for in the rule itself. ... Calculating damages verdicts is inescapably inexact because of the many imponderables which must be taken into account ... In exercising the discretion, courts will not overlook the particular features of a case and the difficulty of putting an accurate estimate on its value in advance of the litigation. Yet the general considerations of chance and risk would have been known to the rule-maker when Pt 19A, r 9 of the District Court Rules was introduced into the District Court Rules. Without more, they could not provide a basis for ordering otherwise than as the rule will ordinarily provide. If this puts plaintiffs' legal representatives in an impossible position and, in practice, forces the settlement of cases for sums less than they are worth because the costs of litigation cannot be wagered against their risks, the complaint must be against the terms of the rules and the apparently narrow provision for exempting orders. 23Cole JA said (at 431) "[t]here must be some judicial reason for the making of a contrary order". 24In Morgan v Johnson (1998) 44 NSWLR 578, Mason P (with whom Sheller JA and relevantly Powell JA agreed) said (at 582): ... the ordinary provision is expected to apply in the ordinary case ... The mere fact that it was reasonable for the litigant to take the view that he or she did in rejecting the offer is not enough to displace the rule ... As Clarke JA expressed it in Houatchanthara (at 2-3): "The rule lays down the general principle that should be applied, and the order provided for in that rule should only be departed from for proper reasons which, in general, only arise in an exceptional case..." 25In South Eastern Sydney Area Health Service and Anor v King [2006] NSWCA 2, the relevant rule considered by the Court of Appeal provided that where a plaintiff makes a complying offer of compromise which is not accepted by the defendant, and the plaintiff obtains a judgment no less favourable than the terms of the offer, then, unless the court otherwise orders, the plaintiff will be entitled to an order against the defendant for costs on an indemnity basis in relation to his costs incurred from the day after the offer was made. Hunt AJA (with whom Mason P and McColl JA agreed) said (at [83]-[84], some citations omitted): [83] The onus is on the defendant to persuade the Court that indemnity costs should not be ordered. He must demonstrate the basis on which an order should be made denying the plaintiff's entitlement to indemnity costs. He must establish that he had given serious thought to the risk involved in non-acceptance of the offer, and that he had assessed the plaintiff's case properly and in the context of the rule and the achievement of its purpose - to encourage the proper compromise of litigation, in the private interests of the litigants and in the public interest of the prompt and economical disposal of litigation. Generally, exceptional circumstances are required to justify such an order denying the plaintiff's entitlement. [84] Although the Court may take into account the particular features of a case and the difficulty of putting an accurate estimate on its value in advance of the litigation, those considerations do not provide a basis by themselves for denying the party making the offer an order for indemnity costs: Hillier v Sheather (at 423). In Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721 at 725, it was said that a miscalculation in a case with large imponderables, where the course taken by the party to whom the offer was made may have been perfectly reasonable, would provide a basis for denying an order, but the subsequent decision in Hillier v Sheather suggests that, whilst "large" imponderables may be a relevant factor in the particular case in denying an order for indemnity costs, in the general case a party's reasonable belief as to his own chances of success does not alone provide a basis for denying an order for indemnity costs. 26In Caine v Lumley General Insurance Ltd (No 2) [2008] NSWCA 109, the Court of Appeal was considering statutory language not dissimilar to that which is presently before me. McColl JA (with whom Mason P and McClellan CJ at CL agreed) cited Morgan v Johnson (at 581-582) and said (at [35]): [35] The onus is on the respondent to demonstrate why the Court should not order ... costs on an indemnity basis. In particular, the respondent must establish that it had given serious thought to the risks involved in not accepting the offers, had assessed the appellants' case properly and in the context of the relevant rules and the achievement of their purpose as outlined in Morgan. Generally, exceptional circumstances are required to justify such an order denying the appellants' entitlement: South Eastern Sydney Area Health Service v King [2006] NSWCA 2 (at [83]) per Hunt AJA (Mason P and McColl JA agreeing). 27The Court of Appeal in Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 was again considering statutory language relevantly identical to that which is before me. Spigelman CJ, Beazley and McColl JJA delivered a joint judgment where their Honours said (at [15]): The relevant provisions of these rules do not specify that exceptional circumstances or the avoidance of substantial injustice must be established before the court will make a different order to the prima facie order for which the rules provide and, in our opinion, the rule should not be so construed. Rather, the discretion is one that has to be exercised having regard to all the circumstances of the case. 28In Nominal Defendant v Hawkins (2011) 58 MVR 362 (at [56]-[57]), Hodgson JA (with whom Beazley JA and broadly Sackville AJA agreed) accepted the submission that: [56] ... it is not enough to justify ordering otherwise for a person who refused an offer of compromise to show that he/she acted reasonably in doing so. Generally, exceptional circumstances are required. [57] I note that in the Uniting Church v Takacs (No 2) [2008] NSWCA 172, Basten JA (in dissent) suggested at [33] that the justification for making orders otherwise in relation to indemnity costs should properly be found in considerations that would be deemed relevant for the purpose of otherwise ordering in relation to the general rule that costs follow the event. I think that may set the standard too high; and it does seem a little at odds with what was said and done in South Eastern Sydney Area Health Service v King. 29Finally, in Barakat (t/as Keddies Lawyers) v Bazdarova (in her capacity as executrix of the estate of the late Bazdarov) [2012] NSWCA 140, Tobias AJA (with whom Bathurst CJ and Whealy JA agreed) noted that there appeared to be a conflict of opinion in the Court of Appeal authorities as to whether a court can otherwise order for the purpose of the indemnity costs rule in the absence of exceptional circumstances, but his Honour indicated, without concluding, that the statutory language "would seem to favour" the proposition that exceptional circumstances are no longer required to be shown. The apparent conflict in the authorities was again noted by Tobias AJA in Macourt v Clark [2012] NSWCA 367 (at [154], Beazley and relevantly Barrett JJA agreeing). 30The authorities I have cited would appear to indicate that in order for a court to order otherwise, the party against which indemnity costs is sought must show more than that they acted reasonably in refusing the offer or that it was difficult to value the case, or that the case involved "imponderables" and the rejection of the offer was reasonable. The corresponding principle in respect of Calderbank offers is therefore different, as generally, a relevant Calderbank offer will not justify an indemnity costs order in favour of the offeror unless the rejection of the offer was unreasonable (Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [8] per Basten JA with whom McColl and Campbell JJA agreed; SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37] per Giles JA, Russell v Edwards and Anor (No 2) [2006] NSWCA 52 at [7] per Ipp JA with whom Beazley JA and Hunt AJA agreed). That may explain why Kirby P observed that there may be reason for "complaint ... against the terms of the rules and the apparently narrow provision for exempting orders" (Kirby P in Hillier v Sheather at 423). 31Although it is suggested in a number of authorities that there must be "exceptional circumstances" before a court may order otherwise, I think the use of that expression in the earlier authorities is simply to recognise that there does exist a general rule providing for indemnity cost consequences, and therefore "the case needs in some way to be exceptional ... because the general rule is that provided for in the rule itself" (Kirby P in Hillier v Sheather at 422). In my view, the words "exceptional circumstances" used in the earlier cases indicate that there must be some reason or ground for a court to make an order departing from the general indemnity cost consequences, but those words do not suggest that the case must be extraordinary, nor do they suggest a particular degree of difficulty in persuading a court to "order otherwise". 32Putting the debate to one side, it is clear that there are no strictly defined categories within one or more of which a case must fit before a court may order otherwise. It is impossible and imprudent to attempt to exhaustively state all the circumstances in which a court would order otherwise (New South Wales Insurance Ministerial Corporation v Reeve at 102), and regard must be had to all the circumstances of the case (Regency Media Pty Ltd v AAV Australia Pty Ltd at [15]). If, and to the extent that, "exceptional circumstances" are required before a court may "order otherwise" under r 42.14 and/or 42.15A, the content of that requirement was generally considered in a different statutory context in San v Rumble (No 2) [2007] NSWCA 259; (2007) 48 MVR 492 (at [66] per Campbell JA), but has been applied to other statutory contexts (see the numerous cases cited by Gzell J in Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2012] NSWSC 913 at [12]-[14]), and I think is applicable in this context. In Yacoub v Pilkington (Australia) Ltd [2007] NSWCA 290, Campbell JA (with whom Tobias JA and Handley AJA agreed) said (at [66]): [66] Another question of construction concerned "exceptional circumstances" in r 31.18(4). In San v Rumble (No 2) (2007) NSWCA 259 at [59]-[69], I gave consideration to the expression "exceptional circumstances" in a different statutory context to the present. Without repeating that discussion in full, I shall state such of the conclusions as seem to me applicable in the construction of r 31.18(4). (a) Exceptional circumstances are out of the ordinary course or unusual, or special, or uncommon. They need not be unique, or unprecedented, or very rare, but they cannot be circumstances that are regularly, routinely or normally encountered: R v Kelly (Edward) [2000] 1 QB 198 (at 208). (b) Exceptional circumstances can exist not only by reference to quantitative matters concerning relative frequency of occurrence, but also by reference to qualitative factors: R v Buckland [2000] 1 WLR 1262 ; [2000] 1 All ER 907 (at 1268; 912-913). (c) Exceptional circumstances can include a single exceptional matter, a combination of exceptional factors, or a combination of ordinary factors which, although individually of no particular significance, when taken together are seen as exceptional: Ho v Professional Services Review Committee No [2007] FCA 388 (at [26]). (d) In deciding whether circumstances are exceptional within the meaning of a particular statutory provision, one must keep in mind the rationale of that particular statutory provision: R v Buckland (at 1268; 912-913). (e) Beyond these general guidelines, whether exceptional circumstances exist depends upon a careful consideration of the facts of the individual case: Awa v Independent News Auckland [1996] 2 NZLR 184 (at 186). 33In my view, the comments made by Hodgson JA in Uniting Church v Takacs (No 2) [2008] NSWCA 172 are particularly apt to this case. That case concerned a damages claim arising from injuries suffered by the plaintiff. The plaintiff was successful at first instance, but the defendant was entirely successful on appeal. The defendant offered, by way of compromise, in accordance with the relevant rules, to pay to the plaintiff the sum of $20,000. Hodgson JA observed that insofar as the offer suggests that the defendant was confident of winning the case, the result vindicates that confidence. The defendant was therefore justifiably confident in its case. Hodgson JA was of the view that this was an appropriate case to order otherwise. Basten JA disagreed, and McColl JA agreed with Hodgson JA. 34Despite Hodgson JA's view that the ultimate outcome in the substantive proceedings vindicated the defendant's confidence of winning, his Honour said (at [9]-[15], selected portions only): [9] ... in my opinion, the offer of compromise did comply with the relevant rules. [10] It was ... submitted by the plaintiff that the offer, being for a nominal amount in the circumstances, was not a genuine offer of compromise. [11] In my opinion, there is force in that submission, understood as being a submission to the effect that the offer was not an offer of a genuine compromise. The plaintiff could have succeeded in the case on either of two issues, on both of which reasonable minds could differ, as indicated by the judgments at first instance and on appeal. While I would not suggest that, in these circumstances, a genuine compromise would necessarily need to be in the order of fifty per cent of estimated damages, it would I think need to be for a substantial sum. The offer in this case would not have afforded the plaintiff any appreciable compensation for his very serious injuries. [12] I do not suggest that this consideration would prevent the offer from being one that engages the relevant rules and one that, in the circumstances, entitled the [defendant] to indemnity costs unless the court otherwise orders. The question is whether the court should otherwise order. [13] In a case such as this, it is in my opinion possible and appropriate for a court to reach a view as to whether there is justification for ordering otherwise, on the basis of its own assessment of the characterisation and merits of the offer and its refusal, without receiving evidence as to the motivations and understandings of the parties. In the present case, insofar as the offer suggests the [defendant] was confident of winning the case, the result vindicates that confidence. On the other hand, it cannot be denied that the offer was one that invites substantial capitulation by the plaintiff. [14] I do not make any adverse findings as to the bona fides of the [defendant]; but the offer in this case does have the appearance more of a procedural move to trigger costs consequences than of a genuine attempt to reach a negotiated settlement ... [15] Having regard to that consideration, and to my view that the plaintiff did not act unreasonably in refusing the offer, I would in this case order otherwise, by leaving costs at first instance on the ordinary basis. 35The factors which occasioned an exercise of the court's discretion to "order otherwise" in that case are, in my view, present in the case now before me. In this case, there were questions of construction of considerable difficulty on which reasonable minds could differ. The offer made by the defendant effectively called for a capitulation by the plaintiff without providing to the plaintiff any compensation for its grievances. By reference to the ultimate outcome of the case, the defendant appears to have been justified in the formulation of his offer, but nonetheless I consider the offer to be, to some extent, lacking in genuine compromise, as the plaintiff clearly had incurred significant Skywalk Capital Expenditure (although for technical reasons the evidence did not permit a finding of a particular figure). The plaintiff acted reasonably in taking the position it did, and in refusing the offer, not least because of the difficulties involved in the questions of construction, and because of the lack of genuine compromise in the defendant's offer. 36There are, in this case, additional factors favouring an exercise of the court's discretion to "order otherwise". The case had some unusual features, in that it was undeniable that the plaintiff incurred Skywalk Capital Expenditure in respect of which it sought, in accordance with its contractual rights, some remedy. The plaintiff, for technical evidentiary reasons, was unable to quantify that amount. The plaintiff therefore found itself in a situation where it had undoubtedly incurred sums by way of Skywalk Capital Expenditure, but, due to its inability to quantify that amount, was unable to exercise its right to bring that sum to account under the relevant formulae in the Deed. 37Having regard to these factors, I consider this to be an appropriate case in which to "order otherwise". It is, in my view, a case involving "a combination of ordinary factors which, although individually of no particular significance, when taken together are seen as exceptional" (Yacoub v Pilkington (Australia) Ltd at [66(c)]). For the reasons given above, the defendant should not be entitled to his costs on an indemnity basis. 38Although perhaps unnecessary to do so, I add the observation that there were several issues raised by the defendant in his cross-claim on which he was unsuccessful. For example, many folders were compiled and tendered in support of an expert report prepared by Ms Bensley, but I found the usefulness of her evidence to be inversely proportionate to its volume. Given my view that this is an appropriate case in which to apportion costs, and that the defendant was unsuccessful on more than one discrete issue, it would be unjust to permit the defendant to recover his costs, on an indemnity basis, on all issues, some of which were raised by him by way of a cross-claim. The defendant was unable to direct me to an authority which permitted the court to "vary" the indemnity cost consequences prescribed under the UCPR by only ordering indemnity costs in respect of some of the issues, in circumstances where the offer of compromise purported to compromise the entirety of the proceedings.

Interest on costs 39The Civil Procedure Act 2005, s 101(4) provides that the court may order that interest is to be paid on any amount payable under an order for the payment of costs. In Joseph Lahoud and Anor v Victor Lahoud and Ors [2006] NSWSC 126 (at [79]-[83]), Campbell J said: [80] The evidence in support of that application [for interest on costs] is quite parsimonious. The plaintiffs provide no evidence of having actually made payments to their lawyers from time to time on account of costs and disbursements, and no evidence of any special arrangements between themselves and their lawyers which might bear upon the exercise of the discretion to award interest on costs. [81] Mr Gyles submits that this lack of evidence means that there is an insufficient evidentiary foundation for the making of the order. I do not agree. The various proceedings which were determined by Palmer J are ones which, now, were commenced over five years ago. The plaintiffs have been represented by various firms of solicitors, and various counsel, in that time. There has been extensive preparation, including by making interlocutory applications to the Court. The litigation is commercial litigation, a species of litigation concerning which there is no regular practice of lawyers accepting work on a speculative basis. In my view it is more likely than not that the plaintiffs have had to pay some amounts of costs and disbursements as the litigation has progressed. Further, even if I were wrong in drawing this inference, the form of order which the plaintiffs seek is one which makes interest on a particular amount of costs run only from the date when an actual payment of that amount is made. If an order in that form were to be made, it would contain its own safeguard against the plaintiffs being able to recover interest concerning amounts of costs and disbursements which they had not actually paid. [82] In my view it is appropriate to make an order for the payment of interest on costs. There is no requirement, before an order for payment of interest on costs is made, for the Court to be satisfied that the circumstances of the case are out of the ordinary [extensive citations omitted]. [83] To the extent to which the plaintiffs have been out of pocket as a result of having to pay their lawyers' costs and disbursements, it is appropriate that the compensation which is recognised in the Court's order for costs take into account the fact that the plaintiffs have been out of pocket in that way [extensive citations omitted]. Given the length of time the proceedings have been on foot and the extensive preparation, the amount by which the plaintiffs have been out of pocket could be large. It is relevant that the plaintiffs, and the defendants, each conduct businesses and so the amounts which the plaintiffs have had to pay to finance the litigation is likely to be money which otherwise could have been put to a productive use. Conversely, the defendants, by not being required to pay costs until some time in the future when the costs are agreed or assessed, are likely to have been able to retain, for their own productive use, the amount of those costs. 40Campbell J's observations were cited with approval by Macfarlan JA (with whom Tobias JA agreed) in Drummond and Rosen Pty Ltd v Easey and Ors (No 2) [2009] NSWCA 331 (at [4]). 41The plaintiff contends that no interest should be awarded on costs because there has been a "near parity between the parties in their successes". I cannot accept that submission. I cannot identify any countervailing consideration to deprive the defendant of an award of interest on his costs. However, such interest should of course only be imposed on the costs to which the defendant is entitled (taking into account the apportionment exercise), not on the costs of the proceedings in their entirety.

Other matters 42I note that the parties agreed that the orders ultimately made by the court should provide for a stay of execution for 28 days. I also note that the parties agreed to consider including an order, crafted in mutually appropriate language, preserving the plaintiff's right to receive a discharge of the relevant share mortgage once the plaintiff's relevant obligation/s under the Deed is/are performed. I therefore further note that the plaintiff should not (by reason of an Anshun estoppel or otherwise) be prevented from seeking a discharge of the share sale mortgage, as and when it is entitled to do so. 43I invite the parties to prepare and send to my Associate short minutes of order giving effect to my reasons.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 October 2013