EAGLAND v FAVRETTO [NO 2] [1996] NSWCA 165

EAGLAND v FAVRETTO [NO 2] SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL

PRIESTLEY, CLARKE and SHELLER JJA 20 February, 11 March, 18 July 1996

[1996] NSWCA 165

INDEMNITY COSTS — Calderbank letter

Priestley JA, Clarke JA and Sheller JA. (INDEMNITY COSTS)

The appellants appealed against a decision of Bainton J which was solely concerned with the resolution of the separate question whether the respondents or either of them had ceased to be directors of Barlile Corporation Limited. This turned upon whether the respondents had ever been full time executives of the company or a related corporation. Bainton J concluded that the appellants had not discharged the onus of showing that the respondents had ever been full time executives of the company or a related corporation. In the course of doing so, his Honour made findings of fact against the first appellant which the appellants claimed were reached in circumstances which involveddepartures from the fundamental principles of fair trial. On 11 March 1996 this Court upheld these submissions, set aside his Honour's judgment and remitted the proceedings to the Commercial [sic] Division to be re-tried. The Court ordered the respondents to pay the costs of the appeal and to have a certificate under the Suitors Fund Act.

On 11 March 1996 when the Court announced its decision, counsel for the appellants applied for an order that the costs of the appeal be awarded on an indemnity basis. The respondents opposed this application. Both sides filed written submissions.

The application was based on a Calderbank letter dated 13 October 1995 from the appellants" solicitors to the respondents" solicitors. The letter referred to findings adverse to the first appellant on numerous issues which, it was said, were not issues in the case, could not conceivably have been relevant and were not subject to any advance notice by the Judge or of any argument. This was quite apart from the appellants" contention that the findings on relevant facts were against overwhelming evidence. The writer acknowledged that in a real sense the matters complained of were not the fault of the respondents and continued: