Clarkson v State Bank of New South Wales Ltd - Costs [2006] NSWSC 1275

New South Wales Supreme Court

CITATION : Clarkson v State Bank of New South Wales Ltd - Costs [2006] NSWSC 1275

22/05/06, 23/05/06 HEARING DATE(S) : Judgment - 08/09/06 Submissions on costs - 13/09/06, 11/10/06

JUDGMENT DATE : 27 November 2006

JURISDICTION : Equity Division

JUDGMENT OF : Barrett J

DECISION : Costs orders as per paragraph 17

CATCHWORDS : PROCEDURE - costs - whether successful defendant should be deprived of costs - whether unsuccessful plaintiff should be ordered to pay costs on indemnity basis after rejecting settlement offer

LEGISLATION CITED : Civil Procedure Act 2005, s.98 Uniform Civil Procedure Rules 2005, rule 42.1

Clarkson v State Bank of New South Wales Ltd [2006] NSWSC 903 CASES CITED : LMI Australia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74 Nobrega v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (No 2) [1999] NSWCA 133

PARTIES : John Robert Clarkson - Plaintiff State Bank of New South Wales Limited - Defendant

FILE NUMBER(S) : SC 5488/01

COUNSEL : Plaintiff in person Mr M.T. McCulloch SC/Mr D.F. Villa - Defendant

SOLICITORS : Plaintiff in person Mr J.K. O'Sullivan - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

MONDAY, 27 NOVEMBER 2006

5488/01 JOHN ROBERT CLARKSON v STATE BANK OF NEW SOUTH WALES LIMITED - COSTS

JUDGMENT

1 I am dealing with the question of costs in consequence of my judgment of 8 September 2006 (Clarkson v State Bank of New South Wales Ltd [2006] NSWSC 903) which resulted in dismissal of all the plaintiff's claims. I said at paragraph [113]: "There is no apparent reason why costs should not follow the event. If the Bank seeks an order for costs, it should so notify my Associate in writing within seven days, together with a copy to Mr Clarkson. Any submissions on costs by Mr Clarkson should reach my Associate within 14 days after service of any such written notification by the Bank." 2 The Bank afterwards gave notice that it did seek an order for costs. In fact, the Bank seeks two orders: first, an order that Mr Clarkson pay the Bank's costs up to and including 30 April 2006 on the ordinary basis; and, second, an order that Mr Clarkson pay the Bank's costs from and including 1 May 2006 on the indemnity basis. 3 Mr Clarkson resists these orders and maintains that the Bank should pay his costs. 4 For Mr Clarkson to succeed in the way he seeks, he must show that there is some basis on which the ordinary rule that costs follow the event is properly displaced in this case. This is because s.98 of the Civil Procedure Act 2005 and rule 42.1 of the Uniform Civil Procedure Rules 2005. The former states that costs "are in the discretion of the court" – "[s]ubject to the rules of court"; while the latter (being one of the rules of court) says that the court "is to order that costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs". 5 In contending that the Bank, as successful party, should not only be deprived of a costs order in its favour but should also be ordered to pay his costs, Mr Clarkson points to "confusion deliberately generated by" the Bank, including "failure by the [Bank] to follow equitable and standard process". Under this heading, Mr Clarkson refers to a number of particular matters which are critical of counsel for the Bank whose cross-examination of him, Mr Clarkson says, was, as to one matter, "conducted in such a fashion that I finally did not know what I was agreeing to". He says that he will "deal at length" with this "in my appeal". Mr Clarkson's submissions on costs then go on at some length to re-agitate the merits of a number of factual and other matters that have been determined adversely to him by the court and his grievances generally against the Bank. 6 There is no sound basis for the criticism made by Mr Clarkson of the cross-examiner. The cross-examination was conducted in an entirely proper way, making all due allowance for the circumstance that Mr Clarkson was a self-represented plaintiff. As for re-agitation of the merits in Mr Clarkson's submissions on costs, it is sufficient to say that the matter is quite irrelevant to the costs questions now before me. 7 In view of what I have just said and the principle that costs may be awarded against a successful party only in exceptional circumstances somehow reflective of some misconduct of that party (see Ritchie's "Uniform Civil Procedure NSW" para 42.1.25), there is no basis for departure from the general rule by way of an order that the Bank pay Mr Clarkson's costs. 8 Mr Clarkson next submits that he should not be ordered to pay the Bank's costs and that each party should be left to bear its or his own costs – in other words, that the successful party should be refused costs. A decision to impose that outcome could be made only if the Bank had been guilty of some form of unreasonable conduct in relation to the proceedings (see generally, Ritchie's "Uniform Civil Procedure NSW" para 42.1.20). Mr Clarkson relies on the same matters here. For reasons I have stated, they do not support any finding of relevant delinquency by the Bank and provide no reason for departure from the general rule. 9 It follows from what I have said in relation to Mr Clarkson's application and submissions that the rule that costs should follow the event is applicable to this case, with the result that the Bank should have an order for costs against Mr Clarkson. 10 It remains to consider the Bank's submission that costs payable to it by Mr Clarkson should be assessed on the indemnity basis from and including 1 May 2006. 11 That submission by the Bank is based on settlement offers that passed between the parties in the lead-up to the trial. By letter dated 17 March 2006, Mr Clarkson offered to discontinue the proceedings in return for payment of $85,616 (plus interest at court rates from 29 October 1996) plus "an additional $65,000 for the loss of one lot" plus $20,000 and $1,216 for certain elements of costs plus "an acceptable offer towards the balance of costs still owing to my previous solicitor". 12 By reply dated 20 April 2006, the Bank offered to pay Mr Clarkson "the sum of $60,000 in complete satisfaction of your claim against it". The considerations behind the offer were explained in the Bank's letter. The offer was expressed to remain open until 4pm on Friday 28 April 2006. There was no reply from Mr Clarkson by that time. By letter dated 16 May 2006, however, he purported to reject the Bank offer which, by then, had lapsed. 13 The question posed by the Bank's application for indemnity costs is whether Mr Clarkson, in rejecting the offer of 20 April 2006, acted so unreasonably that he should be required to afford that kind of financial protection to the Bank: see generally Nobrega v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (No 2) [1999] NSWCA 133, LMI Australia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74. As these cases indicate, the making and rejection of an offer which, after the event, is seen to have been more favourable to the rejecting party than the actual outcome is not of itself sufficient to warrant an order for indemnity costs. There may, as the LMI case shows, be circumstances of such doubt, difficulty and complexity that the party concerned cannot be criticised for not seeing the offer as meriting acceptance. 14 This is not such a case. As the judgment of 8 September 2006 shows, Mr Clarkson's claims were uniformly unmeritorious. There was no great complexity. The Bank said in its letter of 20 April 2006 to Mr Clarkson that it was satisfied that it would be successful if the matter went to hearing and that it would be found not to have any liability to him. The Bank went on to explain how a gross figure of $13,000 (which it rounded up to $20,000) might conceivably be found owing by the Bank on the basis of matters raised by Mr Clarkson. There was also an explanation of the way in which the balance of $40,000 for costs had been calculated. These two elements made up the total of $60,000 offered by the Bank and not accepted by Mr Clarkson. 15 In the circumstances of this case, the Bank's offer of 20 April 2006 was a reasonable offer and should have been recognised as such. It appears likely that Mr Clarkson's failure so to recognise it was a product of a deep-seated conviction as to the correctness of his own position that would not allow him to analyse in any objective way the proposal the Bank put to him. That, while understandable in the case of a self-represented litigant, cannot be allowed to displace the requirement that offers of compromise be assessed in an objectively realistic and reasonable way. 16 The Bank's claim for an indemnity costs order has been made out. 17 The court orders that the defendant's costs of the proceedings be paid by the plaintiff, such costs to be assessed on the ordinary basis up to and including 30 April 2006 and on the indemnity basis from and including 1 May 2006. **********