93 GSP Pty Ltd v Advent 8 Pty Limited (No 2)

[2013] NSWDC 138

District Court

New South Wales

Medium Neutral Citation:	93 GSP Pty Ltd v Advent 8 Pty Limited (No 2) [2013] NSWDC 138
Hearing dates:	14 May 2013
Decision date:	31 July 2013
Jurisdiction:	Civil
Before:	P Taylor SC DCJ
Decision:	Confirm my earlier order 2 made on 14 May 2013, and decline to order that any of those costs be assessed on an indemnity basis.
Catchwords:	COSTS - offer of compromise - indemnity costs - offer of verdict against one defendant - not "no less favourable" than judgment against two defendants - need for defendant to be able to accept offer
Legislation Cited:	Corporation Acts 2001 (Cth), s 471 Uniform Civil Procedure Rules 2005, r 20.26, r 42.14, r 51.47, r 51.48
Cases Cited:	Barakat v Bazdarova [2012] NSWCA 140 Crisp v Keng [1993] NSWCA 78 Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141
Category:	Costs
Parties:	93 GSP Pty Ltd (ACN 139 586 119) (plaintiff/cross-defendant) Advent 8 Pty Limited (ACN 104 886 106) (first defendant/cross-claimant) David Chee Tin Soo (second defendant)
Representation:	Mr N Newton (plaintiff/cross-defendant) Mr M Zammitt (second defendant) Thomsons Lawyers (plaintiff/cross-defendant) No appearance (first defendant/cross-claimant) Leigh Adams Lawyers (second defendant)
File Number(s):	2012/175992
Publication restriction:	No

Judgment

1. On 14 May 2013 93 GSP Pty Ltd (the landlord) obtained judgment against David Soo as guarantor for $142,555.34, and an order in respect of costs.

1. Pursuant to leave granted, the landlord made further submissions on costs based on an offer of compromise, seeking an order for indemnity costs. That order is refused.

1. On 3 October 2012 the landlord served an offer upon the defendants containing, relevantly, the following terms:

"The Plaintiff/Cross-Defendant offers to compromise all of the Plaintiffs and the Cross-Claimant's claim in the proceedings on the following terms:

1. Verdict for the Plaintiff on the Statement of Claim in the sum of $120,000.

2. Verdict for the Cross-Defendant on the Cross-Claim.

This offer is made in accordance with rules 20.25 to 20.32 of the Uniform Civil Procedure Rules 2005 (NSW).

This offer is open for acceptance for 28 days from receipt of this offer."

1. Neither the tenant nor the guarantor, Mr Soo, (the two defendants in the proceedings) accepted the offer.

1. Uniform Civil Procedure Rule 42.14 provides:

"42.14 Where offer not accepted and judgment no less favourable to plaintiff

(cf SCR Part 52A, rule 22; DCR Part 39A, rule 25)

(1) This rule applies if the offer is made by the plaintiff, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim no less favourable to the plaintiff than the terms of the offer.

(2) Unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff's costs in respect of the claim:

(a) assessed on the ordinary basis up to the time from which those costs are to be assessed on an indemnity basis under paragraph (b), and

(b) assessed on an indemnity basis:

(i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and

(ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made".

1. The offer of compromise satisfies the formalities required for an offer of compromise to fall within Part 20. The closing date for acceptance was not less than 28 days after the offer was made (r 20.26(7)(a)). Because no reference was made to costs, I would infer that it was exclusive of costs, (r 20.26(2), see Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141 at [26] and Barakat v Bazdarova [2012] NSWCA 140 at [39]). There was a real and genuine element of compromise as the offer to settle was for a sum not insignificantly less than that claimed and awarded, subject to the matter discussed below.

1. Accordingly, if the result achieved was no less favourable to the landlord then the offer, the landlord is entitled to an order that costs be assessed on an indemnity basis from the beginning of the day following the date the offer was made.

1. I do not think that any significance should attach to the reference to "verdict" in the offer of compromise, where the court orders refer to a "judgment" (see eg Uniform Civil Procedure Rules 51.47(2)(f) and 51.48(1)(g)). Nor do I think that the offer should fail because it seeks a "verdict" on the cross-claim, when the cross-claim was not pursued by the liquidator and was dismissed. Mr Soo was not a party to the cross-claim.

1. However, contrary to the landlord's submissions (at [1]), the orders made in favour of the landlord in the proceedings were against Mr Soo alone. No order was made against the tenant. Those proceedings were stayed by virtue of s 471B of the Corporation Acts 2001 (Cth).

1. The terms of the offer of compromise do not specify in express terms that there be a "verdict" against both defendants. However, I would infer that such a result was intended particularly given that in the accompanying covering letter the landlord indicated that it "will seek an order that the Defendants/Cross-Claimants pay the...costs" (underlining added).

1. The Uniform Civil Procedure Rule 42.14 is concerned with the position of the plaintiff - did "the plaintiff [obtain] an order or judgment...no less favourable to the plaintiff". The plaintiff's offer proposed a verdict against both defendants but it obtained an order against only one. In those circumstances, at least without further evidence, I cannot be satisfied that obtaining judgment for a greater amount against one defendant is "no less favourable" than obtaining a smaller judgment against both defendants.

1. Secondly, the offer does not entitle the second defendant alone to accept the offer. It required acceptance by both defendants. This seems to me to preclude a special order against the second defendant because acting alone he could not accept the offer. He needed also to procure acceptance from the first defendant. The position may have been different if the offer allowed the second defendant alone to accept the offer.

1. A similar issue arose in Crisp v Keng [1993] NSWCA 78. Kirby P found it unnecessary to resolve the issue but the majority (Priestley and Cripps JJA) in the penultimate paragraph of the judgment relied on the circumstance that only one of the two defendants was successful.

1. For these reasons, and for those indicated in my earlier judgment on costs, I confirm my earlier order 2 made on 14 May 2013, and decline to order that any of those costs be assessed on an indemnity basis.

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