Supreme Court New South Wales Medium Neutral Citation: Moore v Gillis and Ors [2022] NSWSC 1161 Hearing dates: 26 August 2022 Date of orders: 26 August 2022 Decision date: 26 August 2022 Jurisdiction: Common Law Before: Campbell J Decision: (1) I vary order 2 pronounced on 25 March 2022 and substitute an order in the following terms, "(2) the plaintiff to pay the defendant's costs up to and including 5 pm on 24 July 2019 on an ordinary basis and thereafter on an indemnity basis as agreed or assessed." (2) The plaintiff to pay the defendant's costs of the motion of 8 April 2022. Catchwords: CIVIL PROCEDURE – costs – application for a special order as to costs – indemnity costs sought in circumstances where offer to compromise made – application of r 42.15A Uniform Civil Procedure Rules 2005 (NSW) Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), rr 20.26, 42.15A Cases Cited: Moore v Gillis and Ors [2022] NSWSC 14 Texts Cited: Nil Category: Consequential orders Parties: Stuart Moore (Plaintiff) Michael Joseph Gillis (First Defendant) Gana Holdings Pty Ltd (Second Defendant) Gana Holdings Pty Ltd as trustee for Gana Holdings Trust trading as Gillis Delaney Lawyers (Third Defendant) Representation: Counsel: T. Harris-Roxas (Defendant) Solicitors: File Number(s): 2017/00170694 Publication restriction: Nil JUDGMENT 1. This is the judgment in the Moore v Gillis and Ors. This is the second judgment in a series of matters which I am dealing with today relating to the claims of five plaintiffs against a legal practice for professional negligence. In each matter I delivered judgment on 25 March 2022, rejecting the claims. In Mr Moore's case my orders were: 1. Judgment for each defendant as against the plaintiff; 2. The plaintiff to pay the defendant's costs; 3. Liberty to apply on short notice. 1. By notice of motion originally filed on 8 April 2022, the defendant seeks a special order as to costs in the nature of indemnity costs after the rejection or lapsing of formal offers of settlement. By amended notice of motion filed in Court today but dated 24 August 2022, the defendant seeks in the alternative an order for indemnity costs after a Calderbank offer of 22 May 2019 lapsed and, alternatively, an order for indemnity costs from 24 July 2019 on the basis of the rejection of an offer of compromise made under the under r 20.26 Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"). 2. I have already today given a judgment in the matter of Lawson v Gillis and Ors ("Lawson") during which I set out the relevant provisions of the rules applicable and the principles to be applied when considering whether to exercise a discretion to make a special cost order on either basis. I do not propose to restate those matters and this decision will proceed on the basis that the reader is familiar with the earlier judgment in the matter of Lawson. 3. The Calderbank offer in the present case, was in the sum of $383,000, plus costs in the sum of $110,000. For what it is worth, I record that in my judgment ([2022] NSWSC 14) I made a contingent assessment of the damages which would have been payable to Mr Moore in the sum of $877,469. As in Mr Lawson's case, that figure was net of the costs unpaid and payable to the defendant law firm. As in Mr Lawson's case, I accepted that the certificate of assessment had not been filed as a judgment in this Court (see [196]) and I would have treated the liability of Mr Moore for those costs as a loss that would have been caused by the negligence of the law firm had it been established. 4. Having said that, I have no doubt that the Calderbank offer of May 2019 was a genuine attempt to settle the litigation and not tactical posturing in an attempt to set up a scenario where indemnity costs would be payable. However, as in the Lawson case, I am of the view that the failure to mention the important matter of the legal practice's claim to an undiminished entitlement to additional costs yet to be assessed, and for similar reasons, did not make it unreasonable for Mr Moore to reject the offer. 5. I turn then to offer of compromise of 24 July 2019. It was in the slightly increased sum of $390,000 plus uncapped costs as agreed or assessed on the ordinary basis. again, as in Mr Lawson's case, it was subject to various conditions. Importantly, I should record the following condition: "Payment is conditional upon the execution by the plaintiff of a deed of release in favour of the defendant's, which: … (e) preserves, the defendant's legal rights and entitlements to enforce any judgment registered in their favour arising any out of any certificate of determination issued by the Supreme Court of New South Wales in costs assessment, 2016/383335" It was this condition which led me in Mr Lawson's case to decide that I should "otherwise order" for the reasons I then gave. Ms Harris‑Roxas of learned counsel, who appears for the defendant, has pointed out that the evidence and therefore the facts in the present case are somewhat different from the facts as I found them to be in Mr Lawson's case. 1. By letter dated 31 July 2019, Mr Moore's solicitors rejected the offer of compromise. I interpolate, I am satisfied for the reasons I gave Mr Lawson's case that the letter of 24 July is an offer of compromise under r 20.26. Apart from rejecting the offer, Mr Moore made a counter-offer in the sum of $825,000 exclusive of and in addition to his costs as agreed to assess on the ordinary basis. Pertinently, a condition in the following terms was proposed: "(1) an irrevocable direction from Mr Moore to pay $275,000 of the settlement sum to [the legal practice] upon availability of funds in full and final settlement of its costs claim; (2) a release in favour of Mr Moore extending inter alia to any liability resulting from costs assessment number 2016/383335 or any other liability that could be claimed by [the legal practice] (or associated entities or persons) relating to costs and disbursements purportedly owed by Mr Moore to [the legal practice] in relation to the Westpac Federal Court proceedings." 1. Clearly in this case, Mr Moore and those advising him were able to deal with unfinalized costs assessment in a matter satisfactory to them and were prepared to secure a settlement on condition of paying an amount to the legal practice to discharge any putative costs liability provided they obtained a release from the legal practice in respect of any other potential liability arising out of these proceedings or the Federal Court proceedings. I accept Ms Harris‑Roxas' submission that the content of the letter of 31 July 2019 clearly distinguishes this case from the approach I took to the case of Lawson. It does seem to me that the letter evinces a clear understanding on the part of Mr Moore and those advising him in relation to the costs assessment, the likely outcome and a preparedness to make a rational decision to settle the case and forego any assertion at that time that his liability to the legal firm should be treated as a head of damages recoverable in his case. This being so, he was at no disadvantage in relation to assessing, considering and deciding whether to accept or reject the offer of compromise. 2. In those circumstances I accept that the presumptive effect of the rejected offer so far as costs are concerned in accordance with the provisions of r 42.15A of the UCPR ought to be given effect to. I am not satisfied on the evidence in this case that there is any "rational basis" for ordering otherwise. For these reasons, 1. I vary order 2 pronounced on 25 March 2022 and substitute an order in the following terms, "(2) the plaintiff to pay the defendant's costs up to and including 5 pm on 24 July 2019 on an ordinary basis and thereafter on an indemnity basis as agreed or assessed". 1. The plaintiff to pay the defendant's costs of the motion of 8 April 2022. ********** 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: 30 August 2022