Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Almond Investors Limited v Kualitree Nursery Pty Limited & Anor (No 2) [2011] NSWCA 318 Hearing dates: 23 June 2011 Decision date: 30 September 2011 Before: Bathurst CJ at [1]; Giles JA at [14]; Handley AJA at [15] Decision: (1) Appeal allowed. (2) The orders of the District Court of New South Wales dated 29 April 2010, in proceedings No 73/2008, be set aside. (3) The respondents' claim be dismissed. (4) Verdict on the appellant's cross-claim in the sum of $173,707.60. (5) Interest to the appellant pursuant to s 100 of the Civil Procedure Act 2005 from 31 August 2007 to 27 July 2011 being the sum of $61,173.77. (6) Interest to the appellant pursuant to s 101 of the Civil Procedure Act 2005 from 28 July 2011 to the date of payment at the rate of $52.12 per day. (7) The respondents to pay the appellant's costs of the District Court proceedings and of the appeal as agreed or assessed. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: COSTS - general rule that costs follow the event - trial costs - appeal costs COSTS - indemnity costs - where Calderbank letter - reasonableness of rejection Legislation Cited: Civil Procedure Act 2005, s 98, s 100, s 101 Uniform Civil Procedure Rules 2005, r 42.1 Cases Cited: Jones v Bradley (No 2) [2003] NSWCA 258 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 Category: Principal judgment Parties: Almond Investors Limited (Appellant) Kualitree Nursery Pty Limited (First Respondent) Trading Consultants Pty Limited (Second Respondent) Representation: Counsel J Gleeson SC and E M Peden (Appellant) Solicitors Bruce Stewart Dimarco (Appellant) Walsh & Blair (Respondents) File Number(s): CA 2010/130293 Decision under appeal Citation: [2010] NSWDC 71 Date of Decision: 2010-04-28 00:00:00 Before: Norrish DCJ File Number(s): 73/08 (Wagga Wagga) Judgment 1BATHURST CJ: On 27 July 2011, the Court made the following orders in these proceedings: 1 Appeal allowed. 2 In the event that the appellant and the respondents agree on the question of costs, direct that the appellant file short minutes of order to give effect to this judgment within 7 days of the date hereof. 3 In the event that the parties are unable to agree on the question of costs: (a) Order that the appellant file any submissions on this issue within 10 days of the date hereof; (b) Order that the respondents file any submissions in reply 7 days thereafter. 2The parties were unable to agree on the question of costs and submissions were filed pursuant to the Court's order. The appellant attached to its submission a spreadsheet setting out interest calculations pursuant to s 100 and s 101 of the Civil Procedure Act 2005 and draft orders. The respondents in their submission opposed the costs orders sought by the appellant but did not make any submissions in opposition to the other orders sought by it. The Submissions 3The appellant's submissions on the question of costs may be summarised as follows: (a) The appellant's submissions on the question of construction which were made both in the Court below and in this Court were held to be correct. (b) The issues of renunciation and termination only arose if the construction contended for by the appellant was found to be correct. It occupied very little time in this Court. (c) Although the case was decided on a point different to that raised below, the respondents acknowledged that they suffered no particular prejudice by permitting the new point to be taken and no additional evidence could have been led had the point been taken before the primary judge. (d) The appellant should therefore have the costs of the trial and the appeal. (e) Having regard to the terms of a Calderbank letter dated 20 April 2011 which offered a settlement on the basis that the statement of claim, the cross-claim and the appeal be dismissed with no order as to costs, the appellant should have its costs of the appeal on an indemnity basis from 20 April 2011. It was submitted that by this time the respondents knew of the appellant's case in the appeal, it being set out in written submission in chief and in reply. 4The respondents submit that as the point on which the appellant succeeded was not taken in the Court below they should have the costs of the trial or there should be no order as to costs. They submit that had the point been taken it would have been included in their assessment of the case being put against them and would have "undoubtedly received careful consideration from the Trial Judge". 5So far as the appeal is concerned the respondents submit that the appellant's submissions on appeal did not focus on the 21 August 2007 email but on the totality of the respondents' conduct up to that time. It was contended that the submission on which the appellant was successful was first put during the hearing of the appeal. In those circumstances, the respondents submitted that it was not unreasonable for them to reject the Calderbank offer, and further, they should have either their costs of the appeal or there should be no order as to costs. A Correction 6At [48] of my judgment of 27 July 2011 I refer to an email from Mr Warner to Mr Johns of 17 August 2007. A similar reference is made at [58], [59] and [61] of my judgment. As is apparent from the judgment the email to which I have referred is the email from Mr Warner on behalf of the respondents to Mr Johns on behalf of the appellant which is set out at [34] of my judgment. My judgment of 27 July 2011 should be read subject to this correction. Decision on Costs 7The Court's power to award costs is discretionary: Civil Procedure Act 2005, s 98, although in the ordinary course costs follow the event: Uniform Civil Procedure Rules 2005 r 42.1; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [66]-[67]. The issue is whether the late raising of the point on which the appellant was successful justifies a departure from the usual order. 8So far as the trial was concerned, in my opinion, the usual rule should apply. As I pointed out in my earlier judgment (at [59]), although the appellant's pleading did not rely on the respondents' email of 21 August 2007 as constituting a repudiation of the contract, the plaintiff's inability to perform was in issue. As I also pointed out in my earlier judgment, the email of 21 August was evidence of an inability to perform as well as unwillingness to perform the contract in accordance with its terms. That fact coupled with the fact that no additional evidence on the point could have been brought means, in my opinion, that circumstances justifying a departure from the usual order for the costs of the trial have not been made out. 9Although the respondents submit that had the point been raised they would have reassessed their position, the fact remains that they contended successfully in the Court below for a construction which would have led to the conclusion that there was no entitlement of the appellant to terminate. In these circumstances, it does not seem to me that the fact that the respondents, or for that matter the trial judge, would have considered the point had it been raised justifies a departure from the usual order. 10So far as the appeal is concerned it must be remembered that ground 3 of the Notice of Appeal stated that by no later than 21 August 2007 the respondents evinced an intention that any further performance would be on terms substantially inconsistent with the correct construction of the contract. Further, in its written submissions in reply (at [23]) the appellant submitted that the email of 21 August was "an unequivocal adherence, after warning, to the wrong construction". In these circumstances, particularly having regard to the fact that the primary issue litigated was the correct construction of the contract, it seems to me that, notwithstanding the manner in which the point was raised, the appellant should have their costs of the appeal. 11However, having regard to the circumstances in which the point was raised and particularly the fact that it was neither pleaded nor raised in the Court below, it does not seem to me that in all the circumstances an indemnity costs order should be made by reason of the respondents' failure to accept the Calderbank offer. Notwithstanding the relative generosity of the offer having regard to the result achieved, it does not seem to me that in all the circumstances its rejection could be said to be unreasonable: Jones v Bradley (No 2) [2003] NSWCA 258 at [13]; SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37]. 12As I indicated above there was no opposition to any other orders proposed by the appellant. 13In the circumstances, I would make the following orders: (1) Appeal allowed. (2) The orders of the District Court of New South Wales dated 29 April 2010, in proceedings No 73/2008, be set aside. (3) The respondents' claim be dismissed. (4) Verdict on the appellant's cross-claim in the sum of $173,707.60. (5) Interest to the appellant pursuant to s 100 of the Civil Procedure Act 2005 from 31 August 2007 to 27 July 2011 being the sum of $61,173.77. (6) Interest to the appellant pursuant to s 101 of the Civil Procedure Act 2005 from 28 July 2011 to the date of payment at the rate of $52.12 per day. (7) The respondents to pay the appellant's costs of the District Court proceedings and of the appeal as agreed or assessed. 14GILES JA: I agree with Bathurst CJ. 15HANDLEY AJA: I agree with the Chief Justice. ********** 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. Decision last updated: 30 September 2011