Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Aysun Pty Ltd v Cregan (No 2) [2011] NSWCA 332 Hearing dates: On the papers Decision date: 31 October 2011 Before: Allsop P and Handley AJA at 1 Decision: Notice of motion dated and filed 8 August 2011 dismissed with costs. [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 - no question of principle. Legislation Cited: Supreme Court Act 1970 (NSW) Uniform Civil Procedure Rules 2005 (NSW), Pt 20, r 20.26, sub-r(3)(a) Cases Cited: Aysun Pty Ltd v Cregan [2011] NSWCA 203 Category: Consequential orders Parties: Aysun Pty Ltd (Appellant) Gypsy Arabella Cregan & Pollyanna Velvet Cregan (Respondents) Representation: S W Climpson (Appellant) J Oakley (Respondents) APJ Law (Appellant) Hyland Lawyers (Respondents) File Number(s): 2010/42611 Decision under appeal Jurisdiction: 9101 Date of Decision: 2009-11-18 00:00:00 Before: Charteris DCJ File Number(s): 11/2006 Judgment 1ALLSOP P and HANDLEY AJA: On 29 July 2011, in Aysun Pty Ltd v Cregan the Court made orders in the substantive aspects of this appeal ([2011] NSWCA 203). 2On 8 August 2011, the respondents/cross-appellants filed a notice of motion seeking an order that the costs orders made on 29 July 2011 be varied to provide that the appellant pay the respondents' costs at first instance and on appeal from 29 May 2009 on an indemnity basis. 3The special costs order is based on a letter dated and sent on 29 May 2009 by the solicitors for the respondents. The letter was in the following terms: "We note the intimation from the Trial Judge he may make an order your client pay our clients' costs on an indemnity basis of the trial for the third and subsequent days irrespective of the outcome of the matter because of the late service of new material on behalf of your client. Further our clients have taken the view the evidence given to date supports their defence of your client's claim and our clients have reasonable prospects of having a judgment entered in their favour. In the above circumstances and to avoid both parties incurring further legal expenses, our clients hereby offer to settle the matter on the following terms: 1. judgment be entered on the claim in favour of our clients; 2. each party pay their own costs. The above offer is open for acceptance for fourteen days from the date hereof and may be accepted by your firm's written response. If your client does not accept the above offer to settle then our clients reserve the right after judgment in the matter to bring the content of this letter to the attention of the court on the issue of costs." 4The letter was not an offer in accordance with Pt 20 r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) (the "Rules") as it did not comply with sub-r (3)(a). Under that provision the notice of offer must bear a statement to the effect that the offer is made in accordance with the Rules. This is not a technical oversight to be ignored. It is an important aspect of the offer that the parties should be aware that it is an offer made which could have the consequences set out in the Rules. 5The offer may, however, be seen otherwise than under the Rules as a communication which might be unreasonable to reject. 6The letter effectively called for a capitulation, subject to each party paying its and her own costs. 7It was argued in written submissions that this was a real compromise which it was unreasonable of the plaintiff to reject. Further, a significant criticism was made of the running of the case at first instance. 8The notice of cross appeal did not seek a special costs order, but that is not fatal. 9There was no further offer made in the conduct of or in relation to the appeal. 10The argument put forward by the cross-appellants is that from 29 May 2009 it was unreasonable to conduct the litigation in any form. 11The mere fact that a party loses a case does not mean it was unreasonable not to accept an offer which amounts to a position better than the party eventually suffered under the result of the litigation. 12Here, there was a basis to think (because it was the case) that the contractual provision in question had been breached. There was a body of damages suffered by the plaintiff. Some of these might have been debatable, but this is not the place for final resolution of these issues. The point of decision on the appeal was that the damages were not causally related to the breach. 13Looking at the matter in the broad brush way that these matters should be looked at, we are not persuaded of the view that it was unreasonable for the plaintiff to continue its action in the face of the offer and thus we would refuse the application for a special costs order. 14The motion was filed one day before the retirement of Hodgson JA. 15Section 45AA of the Supreme Court Act 1970 (NSW) is in the following form: "(1) If an appeal is commenced before 3 or more Judges of Appeal and, before the appeal is determined, one or more of the Judges dies, resigns from office or otherwise becomes unable to continue as a member of the Court of Appeal for the purposes of the appeal, the hearing and determination of the appeal may be completed by the remaining Judges of Appeal so long as at least 2 Judges remain and the parties consent. (2) If the appeal concerned is to be heard and determined by only 2 Judges of Appeal and those Judges are divided in opinion: (a) as to the decision determining the appeal-the appeal is to be reheard and determined by the Court of Appeal constituted by such 3 or more Judges of Appeal as the President of the Court of Appeal directs (including, if practicable, the 2 Judges of Appeal who completed the hearing of the appeal), or (b) as to any other decision-the decision of the Court is to be in accordance with the opinion of the senior Judge present. (3) This section has effect despite any other provision of this Division." 16On one view the appeal was determined at the time of his retirement. On another, the application by motion for variation meant that the appeal was not finally determined. 17In response to a communication from the Registrar, the respondents indicated in a facsimile dated 20 September 2011 that they consented to our dealing with the matter. The appellant has not specifically addressed the question of consent, but its submissions implicitly consented to our dealing with the matter given that it was made aware that Hodgson JA was retiring. We are prepared to proceed on the basis that the appeal was not determined and that the parties consent to our dealing with the matter. 18In any event, we are not inclined to vary our orders. Thus these questions need not be agonised over. 19The order of the Court is that the notice of motion dated and filed 8 August 2011 be dismissed with costs. ********** 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: 03 November 2011