Ware v Amaral Pastoral Pty Ltd

ex tempore Judgment 1On 14 December 2012 I published my principal judgment in these proceedings (Ware v Amaral Pastoral Pty Ltd (No 5) [2012] NSWSC 1550). I found that the plaintiff, Mr Ware, succeeded on three of his four claims against the first defendant, Amaral Pastoral Pty Ltd ("Amaral Pastoral"), and that Amaral Pastoral's cross-claim against him succeeded in only a small respect (Ware (No 5) at [227]). The Court had previously been advised that Mr Ware's claim against the second defendant, Mr Amaral, would not be pressed (Ware (No 5) at [45]). 2At the conclusion of Ware (No 5) I made orders directing the parties to file submissions and draft orders concerning the quantification of the judgment sum, costs and the appropriate orders necessary to give effect to the judgment (Ware (No 5) at [230]). The parties duly complied. 3The first matter to resolve is the quantification of the judgment sum. To their credit the parties have been able to agree on the appropriate figures. They proposed to deal with the amount owing to Amaral Pastoral pursuant to its limited success on its cross-claim by way of a reduction in Mr Ware's judgment amount. The agreed sum including interest to 21 February 2013 is $508,790.92. I note that this is comprised of:

• $15,654.69 for wages and interest owing at the time of his dismissal (Ware (No 5) at [227(ii)]);
• $37,267.73 for an amount owing in lieu of notice of his dismissal, with interest (Ware (No 5) at [227(iii)]);
• $462,767.37 for amounts owing in respect of tractor hire with interest (Ware (No 5) at [227(v)]); and
• An offsetting amount of $6,898.87 concerning Amaral Pastoral's claim for repayment in respect of the cost of a water bore with interest (Ware (No 5) 227). 4The interest calculations supporting these figures are contained in the annexures to Mr Ware's submissions which will be retained with the court papers. 5It is accepted by Mr Ware that he must bear a costs order in favour of Mr Amaral arising out of his not pressing his claim against Mr Amaral. The form of order proposed by Mr Ware is that he pay Mr Amaral's "costs of the proceedings that directly and exclusively relate to" Mr Ware's claim against Mr Amaral. The intention behind an order so framed is to ensure that there is a clear separation of the costs incurred by Mr Amaral in defending the claim against him and the costs incurred by Amaral Pastoral. 6Given the relatively minor role of the claim against Mr Amaral that approach seems appropriate, subject to the following caveat. In the case of costs incurred for the conduct of both Amaral Pastoral and Mr Amaral's cases, in respect of which the relevant invoice may not distinguish between the work done on the two cases, such as counsel fees, then the order is not to be understood as precluding the recovery by Mr Amaral of an appropriate proportion of those costs. If the parties cannot agree on what that proportion is then the determination will ultimately be a matter for the assessor. My initial impression is that one eleventh of such costs might be an appropriate portion referable to Mr Amaral's defence of the case made against him personally, but I should indicate that that is a very rough impression. 7A number of issues arise in relation to Mr Ware's application that Amaral Pastoral pay his costs. At the outset Amaral Pastoral contends that there should be no order as to costs for two reasons. First, it points to the conduct of Mr Ware in maintaining the claim against Mr Amaral and then only announcing that it was abandoned on the first day of the hearing. It was said this involved a breach of his duties as a litigant. 8I have already addressed Mr Amaral's costs. I do not accept that the discontinuance of the proceedings against him should somehow preclude Mr Ware from recovering his costs from Amaral Pastoral. The cases against the two defendants were quite distinct. I note that it was always open to Mr Amaral to obtain greater protection for his costs position by making a Calderbank offer concerning the case that was brought against him. 9The second matter pointed to by Amaral Pastoral is that Mr Ware could have and should have pursued the proceedings in the District Court. Mr Ware initially commenced proceedings in the District Court in 2007. He subsequently discontinued them and commenced proceedings in this Court. I was advised that the reason for this was that there was a concern about effecting service out of the District Court on Mr Amaral, given that he resides overseas. Counsel for Mr Amaral stated that there was no request to his solicitors to accept service, which is a step, which if it was taken and agreed to, would have obviated the need for refiling. 10The inappropriate choice of the Supreme Court as a forum for proceedings can affect a party's right to recover costs. In a case such as this that principle is reflected by r 42.34 of the Uniform Civil Procedure Rules 2005 (the "UCPR") which provides: "Costs order not to be made in proceedings in Supreme Court unless Court satisfied proceedings in appropriate court (1) This rule applies if: (a) in proceedings in the Supreme Court, other than defamation proceedings, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $500,000, and (b) the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants. (2) An order for costs may be made, but will not ordinarily be made, unless the Supreme Court is satisfied the commencement and continuation of the proceedings in the Supreme Court, rather than the District Court, was warranted." 11However, in this case Mr Ware recovered a judgment in excess of the $500,000 referred to in UCPR 42.34(1)(a). I do not see any reason to go behind the apparent policy of this rule, which appears to be to scrutinise the choice of jurisdiction in cases where judgment is less than $500,000, but to not necessarily embark on such an analysis if the amount of the judgment is above that figure. 12The amount recovered was substantial. In the end result it has not been demonstrated that the Supreme Court was either an inappropriate forum to litigate for that amount or over the subject matter or that the costs that were incurred in this court would have been less if the same proceedings were pursued in the District Court. 13Accordingly I consider that Mr Ware should recover his costs from Amaral Pastoral. In that regard four further matters arise. 14First, Mr Ware seeks an order for indemnity costs and relies on an offer of compromise served by him on 26 June 2012 seeking to resolve the proceedings against Amaral Pastoral by a judgment of $280,000 in his favour with costs. The offer was left open until 12 July 2012 but it was not accepted. It is common ground that he has obtained a result that is substantially better than the offer. 15Amaral Pastoral opposes the making of an order for indemnity costs. It advances the same matters that were put forward in support of its resistance to the making of an order for costs in Mr Ware's favour. For the reasons I have already stated I find neither of them persuasive. They do not suggest to me any basis for "otherwise" ordering under r 42.14(2) (see South Eastern Sydney Area Health Service v King [2006] NSWCA 2 at [73], per Mason P and McColl JA agreeing). 16Subject to the points that will next be considered there will be an order that Mr Ware recover his costs from Amaral Pastoral up to 26 June 2012 on the ordinary basis and on an indemnity basis thereafter. 17Second, the form of costs order against Amaral Pastoral proposed by Mr Ware includes a carve out for "any costs that directly and exclusively relate to" his claim against Mr Amaral". I accept that such a carve out is appropriate, except that it is subject to the same caveat that I expressed in relation to Mr Amaral's costs. Thus, if it is the case that Mr Ware incurred some costs in the conduct of both of his cases against Amaral Pastoral and Mr Amaral, and the relevant invoice does not distinguish between the work done on the two claims, then the costs order is not to be understood as enabling the recovery by Mr Ware of the entirety of that cost. I expect that there would, in that event, need to be some small deduction from those costs to reflect the relative size and scope of the claim against Mr Amaral compared with the claims made against and by Amaral Pastoral. 18Third, it follows from my recitation of the fact that Mr Ware initially commenced proceedings in the District Court which he later discontinued before refiling in this Court that he should not recover any costs directly related to that discontinuance. 19Fourth, Mr Ware seeks an order pursuant to s 101(4) of the Civil Procedure Act 2005 to the effect that Amaral Pastoral pay interest to him on the costs and disbursements that he has paid to date from the date of payment until he is paid the costs due to him or pending further order. 20An affidavit from his solicitor reveals that he has paid considerable sums in costs and disbursements to pursue the case since the beginning of 2007. Given the length of time the proceedings have been on foot and the considerable preparation involved I consider it appropriate to make that order (see Joseph Lahoud v Victor Lahoud [2006] NSWSC 126 at [83] per Campbell J). I will adopt the form of orders made by Campbell J in Lahoud and later endorsed by the Court of Appeal in Leda Pty Ltd v Weerden (No 2) [2007] NSWCA 283. This form of orders will ensure that Mr Ware does not receive interest on any disallowed portion of his costs (Lahoud at [84]). 21It follows from the above that I will make orders in the form proposed by Mr Ware except that I will add an additional order 2A to the effect that the cross-claim be otherwise dismissed. I will also annotate order 3 by the addition of the words "and any costs directly relating to the discontinuance of proceedings in the District Court" after the word "defendant" and before the comma in the second last line of proposed order 3. 22I make orders in accordance with those short minutes, which I have initialled and placed with the Court papers. 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: 02 March 2013