District Court New South Wales Medium Neutral Citation: Rebecca Nemeth v Westfield Limited & P T Limited [2012] NSWDC 77 Hearing dates: 18 May 2012 Decision date: 25 May 2012 Jurisdiction: Civil Before: Judge P Mahony SC Decision: As to Costs Catchwords: Costs Legislation Cited: Legal Profession Act 2004 Uniform Civil Procedure Rules Civil Procedure Act 2005 Cases Cited: Old v McInnes [2011] NSWCA 410 Vieira v O'Shea (No.2) [2012] NSWCA 121 Mid-City Skin Cancer and Laser Centre v Zahedi-Anarak [2006] NSWSC 684 Dean v Stockland Property Management Pty Limited (No.2) [2010] NSWCA 141 Barakat & Ors v Bazdarova [2012] NSWCA 140 Category: Costs Parties: Rebecca Nemeth - Plaintiff Westfield Limited - First Defendant P T Limited - Second Defendant Representation: E Welsh - Plaintiff D Talintyre - Defendants Brydens Solicitors - Plaintiff Piper Alderman Solicitors - 1st & 2nd Defendants File Number(s): 10/426743 Publication restriction: No Judgment as to COSTS 1I delivered judgment in this matter on 11 May 2012. When I delivered the judgment the solicitor appearing for the defendants foreshadowed an application for a special order for costs in the defendant's favour and the matter was stood over to 18 May 2012 for hearing of that application. Directions were made as to filing and service of any submissions in support of any application prior to that date. 2The defendants' submissions were received on 16 May 2012. The defendants seek an order that the defendants pay the plaintiff's costs of the proceedings to be assessed on an ordinary basis up to 8 December 2011 and thereafter the plaintiff pay the defendant's costs, to be assessed on an indemnity basis from 8 December 2011, or alternatively, each party pay its own costs from the beginning of 8 December 2011. The basis of the application is an Offer of Compromise served by the defendants on the plaintiff on 7 December 2011 following a Court ordered mediation. That offer of compromise is annexed to an affidavit of the defendants' solicitor, which became Exhibit A on the application. There is no argument that the plaintiff achieved a result less favourable than the offer made by the defendants, which was couched in the following terms: "The first and second defendants offered to compromise the plaintiff's claim on the following terms: (1) Judgment for the plaintiff against the first and second defendants in the sum of $99,990 plus costs agreed or assessed." 3The offer was expressed to be made in accordance with Part 20, Division 4 of UCPR, including Rule 20.26. 4The defendants conceded that, as an offer couched in the terms set out above, it was not an offer which conformed to Rule 20.26 in accordance with the Court of Appeal's decision in Old v McInnes [2011] NSWCA 410 as it was not an offer made exclusive of costs. 5The defendants submitted that a different approach was taken by the Court of Appeal in Vieira v O'Shea (No. 2) [2012] NSWCA 121. It was submitted that in Vieira, the Court differently constituted but including one member of the court in Old v McInnes, did not regard an offer to pay the offeree's costs as agreed or assessed as outside the scope of the rules on the reasoning that such a reference to costs was not inconsistent with Part 42, Rules 14 and 15 (see [7]). It was submitted that the decision in Vieira was a conflicting authority to Old v McInnes and it was pointed out that the Court did not refer in Vieira to either Old v McInnes or an earlier decision of McDougall J in Mid-City Skin Cancer and Laser Centre v Zahedi-Anarak [2006] NSWSC 684. 6The defendants submitted that the approach of the Court of Appeal in Vieira should be adopted by me as being more consistent with the Court's obligation under s 56 of the Civil Procedure Act 2005. If I accepted the approach of the Court in Vieira, then the offer could be seen to be exclusive of costs and therefore a valid formal offer within the rules. If it did constitute a valid formal offer, then the defendants would be entitled to the orders they sought pursuant to Part 42, Rule 15 UCPR subject to the discretion in the Court to otherwise order in exceptional circumstances. 7Counsel appearing for the plaintiff on the costs application conceded that there was no basis for the Court exercising its discretion to otherwise order. However, I note that the Court of Appeal has recently acknowledged that there were conflicting authorities as to whether exceptional circumstances are required before the Court may "otherwise order" - see Barakat & Ors v Bazdarova [2012] NSWCA 140. 8Rather, the plaintiff submitted that the offer of compromise in the terms served was not a valid offer of compromise in accordance with Old v McInnes and consistent with the decision in the Court of Appeal in Dean v Stockland Property Management Pty Limited (No.2) [2010] NSWCA 141. Thereby, the plaintiff sought an order for her costs in the proceedings on an ordinary basis subject to a further application made under s 341 of the Legal Profession Act 2004. 9That application related to the circumstances in which the defendants admitted liability at the commencement of the hearing. As the plaintiff's costs were limited pursuant to the provisions of the Legal Profession Act (having achieved a verdict of less than $100,000), it was submitted that it would be unjust if the plaintiff's recovery of legal costs included costs relating to the issue of liability in addition to her other costs. Having regard to the late admission of breach of duty of care in this matter, I indicated that I was minded to make an order pursuant to s 341. The defendants, upon instructions, conceded that, provided those costs were confined to the issue of liability, they would have no objection to an order pursuant to that section, and the plaintiff was invited to provide the orders sought by it. Both parties subsequently forwarded the orders they sought in relation to costs. 10Having regard to the concession made by the plaintiff as to the "otherwise order", I indicated in Court that I was minded to grant the defendants' application for a special order as to costs in the proceedings. Having now considered the authorities provided to me in some detail, which I was not able to do in a busy Friday hearing list, I am of the view that the Court of Appeal's decision in Vieira v O'Shea (No. 2), supra, is not at odds with its earlier decision of Old v McInnes. The reason for that is that first, the appellant in Vieira conceded that its offer did not comply with UCPR because it was not "exclusive of costs". The Court went on to consider the matter, accepting that concession by the Appellant, in the context of the approach by the first defendant that the offer be treated as a Calderbank offer. I am therefore bound by Old v McInnes and I find the defendants' offer was not a valid offer of compromise pursuant to the UCPR. 11The defendants have submitted that if the offer was not valid, as I have held, I should nevertheless exercise my discretion under s 98 of the Civil Procedure Act, and make the orders sought by them. If the offer could be considered a Calderbank offer, the question to be determined according to Vieira is whether the offer was an offer "capable of acceptance" by the plaintiff (see Vieira, [10]). I find that the offer was capable of acceptance by the plaintiff and therefore I am prepared to exercise my discretion pursuant to s 98 of the Civil Procedure Act. As the offer was not a valid offer of compromise pursuant to the rules, I am not prepared to make an indemnity costs order in favour of the defendants from the beginning of 8 December 2011. Rather, I order that the defendants pay the plaintiff's costs of the proceedings to be assessed on an ordinary basis up to the beginning of 8 December 2011, and thereafter, I order each party to pay its own costs from the beginning of 8 December 2011, subject to the further order below. 12I further order that the defendant pay the plaintiff's costs in respect of the issue of liability only, up to 11 May 2012, and that pursuant to s 341 of the Legal Profession Act 2004 such costs be excluded from the operation of Division 9 of the Act. orders (1)The defendants to pay the plaintiff's costs of the proceedings on an ordinary basis up to the beginning of 8 December 2011. (2)From the beginning of 8 December 2011, order each party to pay its own costs subject to Order 3 below. (3)Order the defendants to pay the plaintiff's costs in respect of liability on an ordinary basis up to and including 11 May 2012. (4)Order the costs the subject of Order 3 are pursuant to s 341 of the Legal Profession Act 2004, excluded from the operation of Divison 9 of Part 3.2 of that Act. 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: 28 May 2012