New South Wales Court of Appeal CITATION : GRAY (CONSTRUCTIONS) PTY LTD v HOGAN (No 2) [2000] NSWCA 68 FILE NUMBER(S) : CA 40365/98 HEARING DATE(S) : 28 March 2000 JUDGMENT DATE : 30 March 2000 PARTIES : W C GRAY (CONSTRUCTIONS) PTY LTD v NOELENE HOGAN JUDGMENT OF : Mason P at 1; Sheller JA at 13; Heydon JA at 14 LOWER COURT JURISDICTION : District Court LOWER COURT DC 5906/94 FILE NUMBER(S) : LOWER COURT Mahoney DCJ JUDICIAL OFFICER : COUNSEL : Appellant: R W Seton Respondent: M S Jacobs QC SOLICITORS : Appellant: Symons & Co Respondent: Gillis Delany Brown CATCHWORDS : Costs [ND] DECISION : Decided on the papers. Costs order varied. THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40365/98 MASON P SHELLER JA HEYDON JA Thursday 30 March 2000 GRAY CONSTRUCTIONS PTY LTD v HOGAN (No 2) JUDGMENT 1 MASON P: Following delivery of this Court's judgment on 3 March 2000 (Gray Constructions Pty Ltd v Hogan [2000] NSWCA 26) the parties have exchanged written submissions relating to costs. The appellant seeks costs on a solicitor and client basis for certain stages of the proceedings below and for the whole of the proceedings in this Court. 2 On 19 November 1996 the plaintiff (appellant) made an offer pursuant to Pt 19A of the District Court Rules offering to accept the sum of $45,000 plus costs. At that stage the pleadings were complete, although there were to be later amendments. There was a defended claim and a defended cross-claim. 3 The substantive and formal effect of the offer was quite clear. The plaintiff was proposing that the claim and cross-claim be netted off, with a verdict being entered in its favour in the sum proposed. This was exactly the situation contemplated by Pt 20 r5(2). 4 The offer was made more than 28 days before the commencement of the hearing and remained unaccepted at the expiration of that period. According to Pt 39A r25(4), as it then stood, if the plaintiff obtained judgment no less favourable to it than the terms of the offer, then the plaintiff was to have its costs assessed on a solicitor and client basis "unless the Court otherwise orders". 5 Allowing for pre-judgment interest to the date of the offer, the offer made by the plaintiff on 19 November 1996 was less favourable to the plaintiff than the judgment which it ultimately obtained in consequence of its successful appeal. 6 The principles governing the exercise of the judicial discretion to "otherwise order" are discussed in Morgan v Johnson (1998) 44 NSWLR 578. 7 I am not persuaded to displace the prima facie effect of the sub-rule. The parties had joined issue on the pleadings. There was nothing to take this case outside the ordinary (bitterly contested) building dispute. 8 The respondent submits that she was at a relevant disadvantage in assessing her prospects and in making an informed response to the settlement proposal because witness statements had not been exchanged at the time of the plaintiff's offer. She also relies upon the substantial disagreement between the experts that was to emerge in 1997 as reflecting bona fide and reasonable disagreement. These matters do not displace the subrule in the particular circumstances (see Morgan at 581-2). There was in the circumstances no breach of Pt 19A r2(2). 9 Accordingly, order 3(4) pronounced on 3 March 2000 should be amended by adding the words "on a solicitor and client basis". 10 The appellant also seeks its costs of the appeal on a solicitor and client basis. In effect it relies upon the respondent's continued intransigence in resisting the appellant's claim, including the way in which it conducted the proceedings in this Court by effectively confessing the trial judge's error and seeking to avoid the consequences by advancing alternative grounds for supporting. 11 I would reject the appellant's application to vary the costs order on the appeal. The Court retains its general discretion as to costs (see Fotheringham v Fotheringham (No 2) (1999) 46 NSWLR 194). I am far from convinced that the distinction between the two types of costs is other than academic in its application to the costs of the present appeal. The method whereby costs are currently assessed suggests that a successful party is more likely to recover actual costs incurred than would formerly have been the case. Be that as it may, the principles discussed in Huntsman Chemicals Co Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 indicate that it is proper to exercise the discretion as to the costs of the appeal by making the usual order. It is relevant that the appellant did not issue a fresh offer of compromise in relation to the appeal itself. 12 The costs of the present application should be treated as costs in the appeal. 13 SHELLER JA: I agree with Mason P. 14 HEYDON JA: I agree with Mason P. ************ 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.