Land and Environment Court of New South Wales CITATION : Coundrelis v Roads and Traffic Authority of NSW (No 2) [2008] NSWLEC 107 APPLICANTS: Perry Coundrelis and Richelle Anne Coundrelis PARTIES : RESPONDENT: Roads and Traffic Authority of New South Wales FILE NUMBER(S) : 30313 of 2006 CORAM: Biscoe J KEY ISSUES: Costs :- Indemnity costs awarded on basis of Calderbank offer - proceedings for compensation for compulsory acquisition of land. LEGISLATION CITED: Land Acquisition (Just Terms Compensation) Act 1991 (NSW) Black v Lipovac (1998) 217 ALR 386 CASES CITED: Brymount Pty Limited (t/a Watson Toyota) v Cummins (No 2) [2005] NSWCA 69 Coundrelis v RTA [2008] NSWLEC 72 Dais Studio Pty Limited v Bullet Creative Pty Limited [2008] FCA 42 DATES OF HEARING: 29 February 2008 EX TEMPORE JUDGMENT DATE : 29 February 2008 APPLICANT: Mr I Hemmings, barrister SOLICITORS Peter Bouzanis & Associates LEGAL REPRESENTATIVES: RESPONDENT: Ms H Younan, barrister SOLICITORS Henry Davis York JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES BISCOE J 29 February 2008 30313 of 2006 PERRY COUNDRELIS & ANOR v ROADS AND TRAFFIC AUTHORITY OF NEW SOUTH WALES (No 2) EX TEMPORE JUDGMENT 1 HIS HONOUR: Yesterday I delivered judgment in these proceedings in which I awarded the applicants compensation for resumption of their land by the Roads and Traffic Authority of New South Wales (RTA): Coundrelis v RTA [2008] NSWLEC 72. 2 The applicants now seek an order that their costs be paid on an indemnity basis from 13 September 2007 or alternatively from some later date within a reasonable time after 30 November 2007. The RTA resists an order for indemnity costs and submits that it should only be ordered to pay costs on the ordinary basis. 3 The application for indemnity costs is founded on a Calderbank offer in a letter from the applicants' solicitors to the RTA's solicitors dated 13 September 2007. That was an offer to compromise in the total amount of $260,000, which was broken down as follows: (a) $51,000 for market value pursuant to s 55(a) of the Land Acquisition (Just Terms Compensations) Act 1991 (NSW); (b) $9000 for disturbance (inclusive of GST) pursuant to s 55(d); (c) $200,000 for injurious affection pursuant to s 55(f). 4 The applicants have bettered the offer. In my judgment yesterday I awarded them compensation in the sum of $309,000, which was broken down as follows. (a) $48,000 for market value pursuant to s 55(a); (b) $9,000 for disturbance (inclusive of GST) pursuant to s 55(d); (c) $252,000 pursuant to s 55(f). 5 The RTA submits that it must be shown that its conduct in rejecting the Calderbank offer was unreasonable if there is to be a departure from the ordinary rule that costs are to be paid on a party and party basis: Dais Studio Pty Limited v Bullet Creative Pty Limited [2008] FCA 42. There Jessup J referred at [9] to Black v Lipovac (1998) 217 ALR 386 where the Full Court of the Federal Court referred to a line of authority in the court which supported the proposition that the mere refusal of a Calderbank offer does not, of itself, warrant an order for indemnity costs and that the offeror needs to show that the conduct of the offeree was unreasonable. 6 The applicants drew attention to Brymount Pty Limited (t/a Watson Toyota) v Cummins (No 2) [2005] NSWCA 69. In that case the successful appellants, who were the defendants in a negligence action brought by Mrs Cummins, applied for an order that the costs of the trial and the appeal be on an indemnity basis as each had made a Calderbank offer to Mrs Cummins prior to trial. The offer of one of the appellants was made in 2002 and was expressed to be open for fourteen days. The other appellant's offer was made in early 2003 and no time period in which to accept or reject the offer was stipulated. The appellants ultimately did better than their respective Calderbank offers. Mrs Cummins did not respond to either offer. Beazley JA (Ipp and McColl JJA agreeing) pointed out that there is a clear policy in the courts to encourage the early settlement of claims: [at 10]. Her Honour said at [20]-[21]: Although I have already remarked that the time in which to accept the Council's offer was abbreviated when compared to the Rules of Court, it was not unduly short. Both offers were made at a significant time prior to the hearing. Mrs Cummins could have sought an extension of the council's offer or counter-offer in the same or similar terms. In circumstances where she had fair warning of the case that was going to be run against her, and the Council was successful on that basis, it should have its costs of the trial on an indemnity basis. Although this Court decided Brymount's liability on a different basis, that is, that there was no duty of care, it too should have its costs on an indemnity basis. In my opinion, the cases were not borderline and the Calderbank offers were made responsibly at an early stage in the proceedings. As no time was specified in Brymount's offer, it presumably would have remained open until it was withdrawn. It was neither accepted nor withdrawn but as the appellant did not respond to the offer, the time for which it was open is of no relevance to the matter under consideration. In my opinion, Mrs Cummins' failure to accept the offers of compromise was unreasonable and the appellants should have the benefit of those offers, at least insofar as they relate to the trial, from the date on which each was made. 7 The Calderbank offer was made during an adjournment of the hearing from August 2007 to December 2007. It was expressed to be open for fourteen days. It was rejected in a letter from the RTA's solicitors dated 24 September 2007. There had been earlier Calderbank offers made by the RTA on 15 May 2007 and 19 July 2007 in lesser amounts, which were rejected or not accepted. 8 The RTA submits that at the time that the applicants' Calderbank offer was made, it was not unreasonable for the RTA not to accept it, because it was not then in a position to properly assess the chance of doing better than the applicants' offer. The RTA points to the following matters in aid of that proposition: (a) the hearing commenced on 14 August 2007 and proceeded on 15 and 16 August 2007 before an adjournment was granted. The hearing continued on 3 and 4 December and concluded on 17 December 2007; (b) when the offer was made, no expert evidence had been adduced in relation to the nuisance flooding issue, which was the main point of contention and the predominant component of the award of compensation; (c) a significant part of the applicants' evidence in relation to nuisance flooding was only filed on 30 November 2007 in an affidavit of Mr Coundrelis which annexed photographs. 9 The RTA also notes that the settlement amount in the Calderbank offer well exceeded the Valuer General's statutory offer, which led to the commencement of the proceedings, of $41,000, and says that the expert evidence upon which it relied did not suggest that there was anything unreasonable about its case that there was no injurious affection. 10 When the Calderbank offer was made the RTA had quite good knowledge of the case against it. The offer was made responsibly. The applicants have bettered the offer. The RTA itself had made earlier Calderbank offers. In the circumstances, in my opinion, the applicants should have costs on an indemnity basis. 11 However, the late service of Mr Coundrelis' affidavit of 30 November 2007 bears on the discretion as to the date from which indemnity costs should run. In that affidavit, Mr Coundrelis referred to two nuisance flooding events on 9 June and 20 August 2007 on the applicants' property. This evidence was not communicated to the RTA until well after the applicants' Calderbank offer was made. My finding that there was an increase in nuisance flooding was critical to the amount of compensation that the applicants were ultimately awarded. Mr Coundrelis' observations of post-road works flooding events was important in that regard. He referred in all, in his evidence, to five such events, all of which pre-dated his Calderbank offer. Two of them were referred to for the first time in his affidavit of 30 November 2007. 12 In the circumstances, I think it is appropriate that the RTA pay indemnity costs, not from the date of the Calderbank offer, 13 September 2007, but from a reasonable time after the affidavit was served on 30 November 2007. The applicants submitted that that reasonable time should be no later than the recommencement of the hearing on 3 December 2007. The RTA submitted that it should be later than that because at that time there had not been an opportunity to test Mr Coundrelis' evidence through cross-examination. I propose to accede to the applicants' submission given that the parties were fully geared up to resume the hearing when the affidavit was served and would have been giving it the closest attention. I do not think it is significant that it had not yet been tested in cross-examination. I therefore propose to order the RTA to pay the applicants' costs on the ordinary basis up to and including 2 December 2007, and on the indemnity basis thereafter. 13 I make final orders to dispose of the proceedings, including as to costs, in accordance with the short minutes of order dated 29 February 2008, initialled by me and placed with the papers. The exhibits on the costs application may be returned. 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.