New South Wales Court of Appeal CITATION : Delaney & Ors. v. Short [2001] NSWCA 181 FILE NUMBER(S) : CA 40129/00 HEARING DATE(S) : In Chambers JUDGMENT DATE : 18 June 2001 PARTIES : P.J. Delaney, P.N. Coumbis, J.P. Rouen, P.T. Hayson, J.S. Currie, G. Miles & J.S. Goldstein - appellants Lesley Lorraine Short - respondent JUDGMENT OF : Heydon JA at 1; Hodgson JA at 2; Davies AJA at 14 LOWER COURT JURISDICTION : Supreme Court - Common Law Division LOWER COURT CL20465/94 FILE NUMBER(S) : LOWER COURT Adams, J. JUDICIAL OFFICER : COUNSEL : Mr. D. Grieve QC with Mr. B. Knox for appellants Mr. D. Murr SC with Mr. J. Miller for respondent SOLICITORS : Phillips Fox, Sydney for appellants Rockliffs, Sydney for respondent CATCHWORDS : COSTS - Offer of compromise - Calculation of minimum time for acceptance - Whether rule complied with - Relevance to discretion. D. LEGISLATION CITED : Supreme Court Rules Part 2 r.5, Part 22 r.3, Part 52A r.22 DECISION : See par.13 of judgment IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA40129/00 CL20465/94 HEYDON JA HODGSON JA DAVIES AJA Monday 18th June 2001 DELANEY & ORS. V. SHORT JUDGMENT (On Costs) 1 HEYDON JA: I agree with the judgment of Hodgson JA as set out below. 2 HODGSON JA: It is necessary to deal with some incidental matters arising from the principal judgment in this matter given on 14th May 2001 ([2001] NSWCA 138). 3 It is common ground that the appellants paid $575.000.00 to the respondent on 21st February 2000 on account of their liability in this case, and that accordingly interest on $220,000.00 should cease as at that date. It is agreed that interest to that date is $286,579.45, and that this sum should be substituted, as being interest to 21st February 2000, for $315,101.00 in Order 3 in the principal judgment. I propose also to note that $575,000.00 was paid on 21st February 2000 and that this was a payment of $68,420.55 in excess of the judgment amount, and to order that this sum be repaid together with interest at Supreme Court rates. 4 It is also common ground that the trial judge's order for indemnity costs should be vacated. However, the respondent still seeks party and party costs of the first instance proceedings. 5 The appellants rely on an offer of compromise served on 23rd December 1998, offering to settle the matter for $575,000.00 plus costs as agreed or taxed. They claim that, pursuant to Pt.52A r.22(6) of the Rules, they are entitled to costs on a party and party basis from 24th December 1998. 6 This is resisted by the respondent on the following grounds: 2.2 However, the respondent submits that the notice referred to in paragraph 3.7 of the Appellants' Submissions does not comply with Part 22 rule 3 of the Supreme Court Rules, because: (1) Part 2 rule 5(1) provides: 5(1) In the reckoning of the time fixed by the rules or any judgment or order for the doing by a party of any act: (a) the period from the beginning of 25 December until the end of 9 January next following; .......... shall, unless the Court otherwise orders, be excluded ... (2) Part 22 rule 3 provides that a person serving a notice of compromise may limit the time it is open to be accepted but the time shall be not less than twenty-eight days after it is made. Part 22 rule 5(a) provides, in effect, that if no time is specified by notice, the party on whom the notice is served may accept it before the expiration of twenty-eight days after the offer is made. Both rules contemplate that, whether the time is limited in a notice or not, the party on whom it is served will have the same minimum period within which to accept it. (3) That minimum period is a "time fixed by the rules ... for the doing by a party of any act", i.e., the acceptance of an offer contained in an offer of compromise. In the case of rule 3, the rules "fix" the period by authorising the offering party to specify that time and by requiring the party to whom the offer is made respond within the specified time if it is to avoid the consequences of non-acceptance. In the case of rule 5, the rules "fix" the time directly. (4) The respondent's notice in the present case was served at 5:18 pm on 23 December 1998 and specified that it remained open to be accepted until 29 January 1999. After making allowance for the period from 25 December to 9 January inclusive, it allowed only twenty-one days for acceptance. 2.3 Accordingly, Part 52A rule 22(6) has no application to the notice. 2.4 The Court should make the usual order that costs at first instance follow the event, because: (1) The respondent, both at first instance and on appeal was successful in recovering a substantial verdict; and (2) The respondent was wholly or substantially successful on the major issues in the proceedings, including: (a) The fact that she would not have settled the family law proceedings on the terms she did if she had been aware of the husband's undisclosed assets; (b) The fact that the Newport land and the Ryde service station should have been brought to account in the family law proceedings; (c) The values at which those assets should have been brought to account; (d) The respondent's reasonableness in commencing and maintaining proceedings to have the property settlement set aside; and (e) The respondent's entitlement to the costs of those proceedings. 7 In response, the appellants provided a copy of a Calderbank offer to settle the matter for $575,000.00 plus costs, served on the respondent's solicitor on 24th December 1998; and pointed out that at no time did the respondent either challenge the validity of the offer of compromise or seek an extension of time. The appellants submitted that Pt.22 r.3(3) did not fix a time for doing an act, so that Pt.2 r.5 did not apply to that provision; while Pt.22 r.3(5) dealt only with a situation where the notice did not limit a time, so that provision did not apply to this notice. The appellants also submitted that the offer of compromise also applied in relation to the costs of the appeal, so that the appellants should get the costs of appeal on an indemnity basis: see Ettingshausen v. Australian Consolidated Press (1995) 38 NSWLR 404. 8 Part 22 r.3 and Pt.52A r.22 are in the following terms: 22.3(1) An offer may be made at any time before the time prescribed by subrule (8) in respect of the claim to which it relates. (2) A party may make more than one offer. (3) An offer may be expressed to be limited as to the time it is open to be accepted but the time expressed shall not be less than 28 days after it is made. (4) (Repealed) (5) An offeree may accept the offer by serving notice of acceptance in writing on the offeror before: (a) the expiration of the time specified in accordance with subrule (3) or, if no time is specified, the expiration of 28 days after the offer is made; or (b) the time prescribed by subrule (8) in respect of the claim to which the offer relates, whichever is sooner. (6) An offer shall not be withdrawn during the time it is open to be accepted, unless the Court otherwise orders. (7) An offer is open to be accepted within the period referred to in subrule (5) notwithstanding that during that period the party to whom the offer (the "first offer") is made makes an offer (the "second offer") to the party who made the first offer whether or not the second offer is made in accordance with this Division. (8) The time prescribed for the purposes of subrules (1) and (5) and Part 52A rule 22 (3) is: (a) where the trial is before a jury - after the Judge begins to sum up to the jury; (b) where the proceedings have been referred under section 76B (1) of the Act for determination pursuant to the Arbitration (Civil Actions) Act 1983 - after the conclusion of the arbitration hearing; or (c) in any other case - after the Judge or master gives his decision or begins to give his reasons for decision on a judgment (except an interlocutory judgment). (9) Where an offer is accepted under this rule, any party to the compromise may enter judgment accordingly. 52A.22(1) Upon the acceptance of an offer of compromise in accordance with Part 22 rule 3 (5), the defendant shall, unless the Court otherwise orders, pay the costs in respect of the claim by the plaintiff against the defendant up to and including the day the offer was accepted. (2) If a notice of offer contains a term which purports to negative or limit the operation of subrule (1), that offer shall be of no effect for any purpose under Part 22 or this rule. (3) Subrules (4)-(6) apply to an offer which has not been accepted at the time prescribed by Part 22 rule 3 (8). (4) 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 no less favourable to the plaintiff 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 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. (5) For the purpose of subrule (4), where the offer was made on the first or a later day of the trial of the proceedings, then, unless the Court otherwise orders, the plaintiff shall be entitled to the plaintiff's costs in respect of the claim from 11 a.m. on the day following the day on which the offer was made, assessed on an indemnity basis, in addition to the plaintiff's costs incurred before that time, assessed on a party and party basis. (6) 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. (7) For the purpose of subrule (6), where the offer was made on the first or a later day of the trial of the proceedings, then, unless the Court otherwise orders, the plaintiff shall be entitled to his costs in respect of the claim up to 11 a.m. on the day following the day on which the offer was made, assessed on a party and party basis, and the defendant shall be entitled to his costs in respect of the claim thereafter, assessed on a party and party basis. (8) Where a plaintiff obtains an order or judgment for the payment of a debt or damages and: (a) the amount payable under the order or for which judgment is given includes interest or damages in the nature of interest; or (b) by or under any Act the Court awards the plaintiff interest or damages in the nature of interest in respect of the amount, then, for the purpose of determining the consequences as to costs referred to in subrules (4) and (6), the Court shall disregard so much of the interest or damages in the nature of interest as relates to the period after the day the offer was made. (9) For the purpose only of subrule (8), the Court may be informed of the fact that the offer was made, and of the date on which it was made, but shall not be informed of its terms. (10) If, a reasonable time before the Court makes an order under subrule (4) or subrule (6), the party to whom the offer is made requests the party making the offer to satisfy the Court that the party making the offer was at all material times willing and able to carry out the offer: (a) if the Court is so satisfied - the party making the request shall pay the costs of the party to whom the request is made occasioned by the request; or (b) otherwise: (i) subrules (4) and (6) shall not apply; and (ii) the party to whom the request is made shall pay the costs of the party making the request occasioned by the request, unless the Court otherwise orders. (11) Unless the Court otherwise orders, any application for an order for costs under subrule (4) or subrule (6) must be made immediately after the order or judgment giving rise to the entitlement to the order for costs is made or given. (12) This rule is subject to section 151 of the Motor Accidents Compensation Act 1999. 9 I accept the appellants' submission that the period of 28 days referred to in Pt.22 r.3(3) is not itself a "time fixed by the rules or any judgment or order for the doing by a party of any act" within Pt.2 r.5(1). However, in my opinion the period of 28 days referred to in Pt.22 r.3(5)(a) is such a time; and in my opinion, Pt.22 r.3 discloses an intention that the two periods of 28 days, referred to respectively in r.3(3) and r.3(5)(a), should be co-extensive. Accordingly, in my opinion, the period of 28 days referred to in Pt.22 r.3(3) is indirectly affected by the provisions of Pt.2 r.5(1). Those provisions, excluding the period between (and including) 25th December and 9th January, thus apply indirectly to the notice in this case, so that the minimum period of 28 days expired on 5th February 1999. 10 However, the notice gave 37 days for acceptance, if one ignores the adjustments required by the rules, or 21 days, if one makes those adjustments. There is no suggestion that the non-compliance was other than accidental. There is no suggestion that it made any difference as regards the acceptance or non-acceptance of the offer. The offer was followed very quickly by a Calderbank letter, with no explicit time limit. 11 In my opinion, it is appropriate that the Court proceed on the basis that it was unreasonable for the respondent not to have accepted the offer by 15th January 1999; and accordingly, I think the Court, in the exercise of its discretion as to costs, should order that the appellants pay the respondent's costs up to and including 15th January 1999, and the respondent pay the appellants' costs thereafter. Even if the offer had been a valid offer of compromise, I think an offer of compromise given so close to Christmas would not carry costs from its date, but rather from a date around mid-January, in any event. 12 As regards the costs of the appeal, Pt.52A r.22 does not provide for indemnity costs in favour of defendants, and I do not think a ground is shown for ordering the costs of the appeal other than on the usual party and party basis. 13 The orders I propose are: 1. Order 3 made on 14th May 2001 vacated, and in lieu thereof judgment for the respondent against the appellants for $220,000.00 plus $286,579.45 interest to 21st February 2000. 2. Note that the appellants paid to the respondent $575,000.00 on 21st February 2000 on account of their liability in this case, being $68,420.55 in excess of the judgment and interest. 3. Order that that respondent repay to the appellants $68,420.55 plus interest at Supreme Court rates from 21st February 2000. 4. Trial judge's orders as to costs set aside. 5. Order that the appellants pay the respondent's costs of the proceedings up to and including 15th January 1999, and that the respondent pay the appellants' costs of the proceedings thereafter. 14 DAVIES AJA: I agree with Hodgson JA. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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