New South Wales District Court CITATION: AAV Australia Pty Limited v Regency Media Pty Limited (No. 2) [2008] NSWDC 115 HEARING DATE(S): 4/7/08 JUDGMENT DATE: 4 July 2008 JURISDICTION: Civil JUDGMENT OF: Rolfe DCJ DECISION: See paragraph 8 of Judgment CATCHWORDS: Offer of Compromise - Prima facie entitlement under the Rules - Pre-Judgment interest consideration - No exceptional circumstances LEGISLATION CITED: Uniform Civil Procedure Rules Caine v Lumley General Insurance Limited (No. 2) (2008) NSW CA at 109 at (32) CASES CITED: Hillier v Sheather (1995) 36 NSW LR 414 at 422-3 Falkner v Bourke (1990) 19 NSW LR 574 at 576 PARTIES: AAV Australia Pty Limited (Plaintiff) Regency Media Pty Limited (Defendant) FILE NUMBER(S): 2577/07 COUNSEL: C N Bova for the Plaintiff P Silver for the Defendant JUDGMENT 1 By offer of compromise dated 5 September 2007 the plaintiff offered to settle proceedings for $550,592.44 plus costs on the ordinary basis. 2 On 26 June 2008, in accordance with the Court's reasons for Judgment published on 19 June 2008, Judgment was entered in favour of the plaintiff in the amount of $677,328.97 comprising damages of $567,744.40 and interest of $109,584.57. 3 Given the outcome, the plaintiff seeks an order pursuant to Rule 42.14 (2) of the Uniform Civil Procedure Rules requiring the Defendant to pay its costs on the ordinary basis up to 5 September 2007 and from 6 September 2007 to date on an indemnity basis. 4 The Court has received the parties written submissions on the matter and it is therefore not necessary to set them out. In a nutshell, the defendant says if a comparison is made of the amount in the offer of compromise with the amount of damages awarded (not taking into account any interest), the plaintiff is only marginally better off. Therefore the plaintiff's offer was not a real and genuine element of compromise and so in the exercise of the Court's discretion the orders sought by the plaintiff should not be made. 5 In response the plaintiff correctly submits that having obtained a Judgment no less favourable than the terms of its offer it is prima facie entitled to the order for indemnity costs which it seeks: Caine v Lumley General Insurance Limited (No. 2) (2008) NSW CA at 109 at (32). Secondly, the onus is on the defendant to show that there are exceptional circumstances which would justify a Court to exercise its discretion and depart from the plaintiff's prima facie entitlement under the Rules: Hillier v Sheather (1995) 36 NSW LR 414 at 422-3. 6 In order to support its submission the defendant has focused on the amount in the offer of compromise as a capital sum. In truth, the offer of compromise has to be considered with the covering letter of 5 September 2007 attached to it. The letter made it clear that the plaintiff was prepared to forego at that point in excess of $60,000 of interest if the defendant accepted its offer. Moreover, the defendant would have been well and truly alive to the fact that pre-judgment interest would most likely be awarded in a case of this sort: Falkner v Bourke (1990) 19 NSW LR 574 at 576. 7 I accept the plaintiff's submission that for determining this matter the relevant comparison is to be made between the offer on 5 September 2007 in the sum of $550,592.44 and the Judgment amount of $677,328.97. In any event, if one were to compare the damages plus interest thereon as at 5 September 2007, it would be seen that the defendant would have been better off to the tune of $85,000 (round figures) if it had accepted the plaintiff's offer. In other words, the plaintiff's offer can hardly be characterised as a demand for payment of the full amount claimed. It was a real and genuine offer of compromise. Furthermore, the defendant has failed to explain why it rejected the plaintiff's offer. 8 In the result the Court is not satisfied that there are circumstances which would justify it not making the orders sought by the Court. Accordingly, the Court's order is as follows: 1. Order the Defendant to pay the Plaintiff's costs of the proceedings, such costs to be agreed or assessed on the ordinary basis up to and including 5 September 2007 and thereafter on an indemnity basis. ********** 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.