Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Tati v Stonewall Hotel Pty Ltd (No 2) [2012] NSWCA 124
• Hearing dates: 26 September 2011
• Decision date: 08 May 2012
• Before: Bathurst CJ at [1]; Allsop P at [15]; Beazley JA at [16]

Decision

1. Motion dismissed.

2. No orders as to costs of the motion.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: COSTS - where Calderbank letter - no presumption as to indemnity costs - genuineness of offer - reasonableness of rejection.
• Legislation Cited: Uniform Civil Procedure Rules 2005, r 42.1
• Cases Cited: Ambulance Service of NSW v Whirly (No 2) [2006] NSWCA 236; (2006) 67 NSWLR 719; Calderbank v Calderbank [1976] Fam 93; Jones v Bradley (No 2) [2003] NSWCA 258; Leichhardt Municipal Council v Green [2004] NSWCA 341; Macquarie Radio Network Pty Limited v Arthur Dent (No 2) [2007] NSWCA 339; Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344
• Category: Costs
• Parties: Antonino Tati (Appellant); Stonewall Hotel Pty Ltd (Respondent)
• Representation: Counsel; S Campbell SC and G Wilson (Appellant); M Windsor SC and J Chapman (Respondent); Solicitors; Slater & Gordon (Appellant)Yeldham Price O'Brien Lusk (Respondent)
• File Number(s): 2005/269424

Decision under appeal

• Citation: Al Mousawy v Howitt-Stevens Constructions Pty Ltd & Ors [2010] NSWSC 122
• Date of Decision: 2010-03-08 00:00:00
• Before: Hoeben J
• File Number(s): 20247/04; 20247/04; 20246/04; 3701/05

Judgment

1 BATHURST CJ: The appeal in these proceedings was heard by this Court concurrently with the appeal in Turjman v Stonewall Hotel Pty Ltd [2011] NSWCA 392. By a majority the appeal was dismissed with costs.

2 By Notice of Motion filed on 22 December 2011, the successful respondent sought indemnity costs against Mr Tati for the period from 19 April 2011.

3 The claim for indemnity costs from that date was based on a settlement offer of that date expressed to be made pursuant to Calderbank v Calderbank [1976] Fam 93. The offer relevantly was in the following terms:

"6.1the appeal be dismissed.

6.2the plaintiff [Mr Tati] and the fourth defendant [Stonewall Hotel Pty Ltd] each pay their own costs of the lower court proceedings [the proceedings at first instance before Hoeben J].

6.3the appellant and the respondent each pay their own costs of the appeal."

4 It should be noted that Mr Tati was unsuccessful at first instance and was ordered to pay Stonewall's costs of the proceedings. The offer, although initially rejected by the solicitors for Mr Tati on 13 May, was extended (or more accurately remade) and finally lapsed on 6 June 2011.

5 Judgment on the appeal was given in favour of the respondent on 21 December 2011. On that occasion Giles JA indicated to the parties that in the event that any motion in respect of costs was brought it would be determined by three members of the Bench nominated by the President. The President nominated himself, Beazley JA and myself, to determine the motion.

The parties' submissions

6 The respondent contended that it gave Mr Tati sufficient time to consider the offer and that the offer reflected a genuine compromise, as it was prepared to forego its costs of the hearing before Hoeben J and the costs of the appeal. It submitted the offer in those circumstances was one of real benefit to the appellants.

7 It submitted that there were no exceptions or circumstances warranting the deviation from what it described as the general rule, that where an offer is not accepted and the appellant did not obtain an order or judgment as favourable or more favourable than the terms of the offer, then the respondent is entitled to indemnity costs.

8 The appellant submitted first, that a mere offer to forego costs was not a genuine compromise and, second, that even if it was, in the circumstances of the present case it was not unreasonable for him to reject it and thus the order sought by the respondent should not be made.

Consideration

9 To the extent that the respondent contends that the appellant had to show exceptional circumstances to justify an order for indemnity costs not being made, that contention is incorrect. This Court has consistently held in the context of Calderbank offers that there is no presumption that an offeree who does not accept an offer and does not obtain a more favourable judgment will necessarily pay indemnity costs from the date of the offer: Leichhardt Municipal Council v Green [2004] NSWCA 341 at [19]; Jones v Bradley (No 2) [2003] NSWCA 258 at [6]-[9]; Ambulance Service of NSW v Whirly (No 2) [2006] NSWCA 236; (2006) 67 NSWLR 719 at [18]; Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [8]. The authority cited by the respondent in support of the contrary proposition, Macquarie Radio Network Pty Limited v Arthur Dent (No 2) [2007] NSWCA 339 involved an offer of compromise under UCPR r 42.14, not a Calderbank offer. The above should not be taken as indicative of any view on the meaning or content of UCPR r 42.14.

10 The principles on which indemnity costs will be ordered as a consequence of non-acceptance of a Calderbank offer have been considered on many occasions by this Court. The authorities were summarised in the judgment of Basten JA in Miwa Pty Limited v Siantan Properties Pte Ltd (No 2) supra. His Honour stated (at [8]) that the approach frequently adopted is to ask two questions:

(a) Whether there was a genuine offer of compromise.

(b) Whether it was unreasonable for the offeree to accept it.

11 In my opinion the offer in the present case was a genuine offer of compromise. The respondent by its offer agreed that if the offer was accepted it would forego an existing entitlement to costs. Whilst those costs were of course at risk on the appeal that does not mean in my view that there was not a genuine offer of compromise. A genuine offer of compromise in this context can only mean a real compromise and the offer in the present case falls within that expression.

12 However, in the present case I do not think it was unreasonable for Mr Tati not to accept it. The offer did not confer a significant benefit on him in return for giving up an appeal which was undoubtedly arguable. The fact that two judges of this Court would have found in favour of Mr Tati provides ample evidence of this fact.

13 In these circumstances in my view it was not unreasonable for Mr Tati to reject the offer and as such no order for indemnity costs should be made.

14 It follows, in my view, that the motion should be dismissed. I do not think it appropriate to make an order on the costs of the motion.

15 ALLSOP P: I agree with the Chief Justice.

16 BEAZLEY JA: I agree.

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Decision last updated: 08 May 2012