AMWAY OF AUSTRALIA PTY LTD v VERNALL (NO 2) [1998] NSWCA 15

AMWAY OF AUSTRALIA PTY LTD v VERNALL (No 2)

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MEAGHER, BEAZLEY and STEIN JJA 13 February 1998

[1998] NSWCA 15

Costs — indemnity costs — offer of compromise — certainty — Calderbank offer — discretion

Meagher JA I agree with Stein JA Beazley JA I agree with Stein JA

Stein JA On 18 December 1997 the appeal by Amway was dismissed. Following a request by the respondent (Vernall) for indemnity costs, the parties delivered written submissions on the issue.

The respondent submits that it is entitled to indemnity costs on the basis of offers of compromise made on her behalf to the appellant after the judgment was given in the trial. PtS2A 122(4) provides as follows:

Where an offer is made by a plaintiff and not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim to which the offer relates that is no less favourable to the plaintiff that the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall, subject to R33, be entitled to an order that against the defendant for the plaintiff's costs in respect of the claim from the day on which the offer was made, assessed on an indemnity basis in addition to his costs incurred before and on that day, assessed on a party and party basis.

Following the jury verdict the trial judge gave judgment in favour of the plaintiff for $534, 034.91 on 25 May 1995, from which the defendant lodged an appeal to this court. On 8 April 1997, the respondent made an offer of compromise open for 28 days, proposing that judgment be entered for a sum of $20,000 less than the judgment sum, but not dealing with the question of interest on the verdict. The appellant did not respond to the offer.

In respect of the offer of compromise, the appellant submits that it was not a valid offer because it did not resolve the issue of interest. Accordingly, it was void for uncertainty. Reliance was placed on Whitehouse Properties v Bond Brewing (NSW) (1992) 28 NSWLR 17 which applied general contract law principles to an offer of compromise. In that case, the offer was not void for uncertainty because it specified that an act was to be performed within a 'a reasonable time'. However, in the instant case, since the offer did not include any mention of, nor mechanism for determining, what the respondent intended with respect to interest on the judgment, I do not consider that the appellant should be penalised for failing to respond to the purported offer by paying indemnity costs from its receipt.