Palmer Bruyn & Parker Pty Ltd v Parsons (No 2) [2000] NSWCA 102

New South Wales Court of Appeal

CITATION : Palmer Bruyn & Parker Pty Ltd v Parsons (No 2) [2000] NSWCA 102 FILE NUMBER(S) : CA 40550/98 HEARING DATE(S) : Decided on written submissions JUDGMENT DATE : 28 April 2000

PARTIES : Palmer Bruyn & Parker Pty Ltd (Appellant) Keith Parsons (Respondent) JUDGMENT OF : Stein JA at 1; Heydon JA at 2; Foster AJA at 16

LOWER COURT JURISDICTION : District Court LOWER COURT DC 283/96 FILE NUMBER(S) : LOWER COURT Taylor DCJ JUDICIAL OFFICER :

COUNSEL : C Evatt (Appellant) T Molomby (Respondent) SOLICITORS : Hunt & Hunt (Appellant) McDonald Johnson (Respondent) CATCHWORDS : Costs (ND) CASES CITED: Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425 DECISION : The respondent's application for indemnity costs is dismissed

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CA 40440/98

STEIN JA HEYDON JA FOSTER AJA

Friday, 28 April 2000

PALMER BRUYN & PARKER PTY LTD v KEITH PARSONS (No 2) JUDGMENT (On Costs)

1 STEIN JA: I agree with Heydon JA. 2 HEYDON JA: On 29 March 2000 the appeal was dismissed and the appellant was ordered to pay the respondent's costs of the appeal. 3 The respondent now seeks an order that the appellant pay his costs of the appeal on an indemnity basis. 4 The respondent relies on three offers of compromise. The first was made before the trial. The second and third were made after the trial but before the appeal. 5 It is convenient to concentrate on the second and third offers. The second purported to be an offer pursuant to Division 1 of Part "2C" of the Supreme Court Rules: "2C" was a slip for "22", and the appellant takes no point about that. Each offer was to the effect that the respondent offered to compromise the appeal on the following terms: "1. Appeal dismissed. 2. Each party pay its own costs." 6 The respondent correctly submits: "The compromise offered by the respondent was thus the value of his costs of the appeal up to the time of the offer, which at the time of the offer of 23 February 2000 included the costs of the leave application heard on 22 February 1999." 7 The relevant rule dealing with the consequences of an unaccepted offer of compromise made by the defendant is Pt 52A r 22(6). It provides: "Where an offer is made by a defendant and not accepted by the plaintiff, and the plaintiff obtains an order or judgment on the claim to which the offer relates not more favourable to him than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall, subject to rule 33, be entitled to an order against the defendant for the plaintiff's costs in respect of the claim up to and including the day the offer was made, assessed on a party and party basis, and the defendant shall be entitled to an order against the plaintiff for the defendant's costs in respect of the claim thereafter assessed on a party and party basis." 8 The appellant submits that Pt 52A r 22(6) "would have no effect in the instant case because the Court has ordered the Appellant to pay the entire costs of the Respondent in respect of the Appeal". The only apparent point of this submission is that the court became functus officio when the presiding judge pronounced the costs order on 29 March 2000. This is not correct: see Pt 40 r 9. 9 However, the appellant put a further submission to the effect that only a plaintiff is entitled to indemnity costs. It submitted that the entitlement accrues where the defendant does not accept the plaintiff's compromise and the plaintiff achieves a more favourable outcome: Pt 52A r 22(4). The respondent submitted that a defendant could not receive indemnity costs despite having enjoyed greater success at the hearing than that involved in the offer of compromise. 10 That submission is correct. Pt 52A r 22(6) has no effect here. The plaintiff did not obtain any "order or judgment on the claim … not more favourable to [it] than the terms of the offer": it obtained no order or judgment at all. And even if Pt 52A r 22(6) did operate, it would not result in an indemnity costs order as distinct from a party-party costs order. 11 It is curious that offers of compromise can be used by plaintiffs to obtain indemnity costs orders, but not defendants. Rolfe J described the position as "anomalous" in Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425 at 451. Perhaps the explanation is that it may have been thought potentially unjust to allow a defendant to recover indemnity costs merely because that defendant offered the plaintiff some accommodation on costs: it would become very common for defendants to do this and, faced with the threat of having to pay indemnity costs if their claims fail, plaintiffs might too readily be coerced into accepting such offers. Perhaps also it may have been thought that a plaintiff who fails completely may be sufficiently exposed to the risk of an indemnity costs order under the general law, outside Pt 22 and Pt 52A r 22, to protect the interests of defendants as a class. 12 However that may be, the only avenue available to the respondent in these proceedings is under the general law. The respondent does not rely on the general law, but in any event nothing in the appellant's conduct of the appeal or in the relative strengths of the parties' cases would support an indemnity costs order on that basis. 13 Accordingly the respondent's application for indemnity costs should be rejected. There should be no order as to the costs of the application. 14 The respondent's submissions also refer to the trial judge's costs order. No ground of appeal challenged it and it is unnecessary to say anything more about it. 15 The following order is proposed: