Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Monaghan Surveyors Pty Ltd v Stratford Glen-Avon Pty Ltd (No 2) [2012] NSWCA 347 Hearing dates: On the papers Decision date: 26 October 2012 Before: McColl JA at [1]; Basten JA at [2]; Young AJA at [30] Decision: (1) Allow the appeal in part and set aside order (2) made in the District Court on 13 December 2010 giving judgment for the plaintiff against each defendant in the sum of $474,360.89. (2) In place of the order set aside, give judgment for the plaintiff against each defendant in the sum of $217,000. (3) Otherwise dismiss the appellants' appeal. (4) Order that the respondent pay 50% of the appellants' costs in this Court. (5) Grant the respondent a certificate under the Suitors' Fund Act 1951 (NSW) if not disqualified pursuant to s 6(7). [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 - costs of appeal - appeal substantially allowed - appellants made Calderbank offer - whether offer included costs of trial - whether appellants bettered their offer - whether offer provides basis for assessing appellants' success on appeal - whether respondent should pay appellants' costs of appeal COSTS - costs of trial - appeal substantially allowed - whether respondent bettered appellants' offer below - whether basis for interfering with costs order below - Uniform Civil Procedure Rules 2005 (NSW), r 20.26 COURTS AND JUDGES - constitution of Court of Appeal - judge retired between primary judgment and final orders - power to reconstitute - procedure where retired judge returns but in different capacity - discussion of Orr v Holmes [1948] HCA 16; 76 CLR 632; Cotogno v Lamb (1985) 3 NSWLR 221 - Supreme Court Act 1970 (NSW), s 43 DAMAGES - parties unable to agree on quantum - whether amount in dispute justifies precise calculation - whether basis demonstrated for rejecting respondent's calculation - calculation of interest PROCEDURE - judgments and orders - party alleged factual error in judgment - whether significance of issue justifies reopening judgment Legislation Cited: Supreme Court Act 1970 (NSW), ss 45AA, 46A, 46B Uniform Civil Procedure Rules 2005 (NSW), r 20.26 Cases Cited: Cotongo v Lamb (1985) 3 NSWLR 221 Hadley v Baxendale (1854) 156 ER 145 Monaghan Surveyors Pty Ltd v Stratford Glen-Avon Pty Ltd [2012] NSWCA 94 Orr v Holmes [1948] HCA 16; 76 CLR 632 Category: Procedural and other rulings Parties: Monaghan Surveyors Pty Ltd (First Appellant) Gregory John Monaghan (Second Appellant) Stratford Glen-Avon Pty Ltd (Respondent) Representation: D L Williams SC/L Chan (Appellants) J S Drummond (Respondent) Kennedys (Appellants) Hartmann & Associates (Respondent) File Number(s): CA 2010/415820 Decision under appeal Jurisdiction: 9101 Date of Decision: 2010-12-13 00:00:00 Before: Charteris DCJ File Number(s): DC 2005/298014 Judgment 1McCOLL JA: I agree with Basten JA. 2BASTEN JA: The Court handed down its principal judgment in this matter on 17 April 2012: Monaghan Surveyors Pty Ltd v Stratford Glen-Avon Pty Ltd [2012] NSWCA 94. The parties were directed to file short minutes of orders or, in the absence of agreement, a statement of the orders each proposed with submissions in support. No agreement was reached and, accordingly, conflicting views were set out in written submissions filed in May and June 2012. 3Shortly after judgment was delivered, Young JA retired. The parties were invited to consent to the remaining members of the bench disposing of the outstanding issues, but one declined to do so. Because the matter is not one which is capable of being disposed of by a two-judge bench absent consent (see Supreme Court Act 1970 (NSW), ss 45AA, 46A and 46B), it is necessary for the Court to be reconstituted: s 43(1). No party took the point that such a course was not available. As explained by Dixon J in Orr v Holmes [1948] HCA 16; 76 CLR 632 at 637-638, in similar but not identical circumstances arising in the Supreme Court of Queensland: "The Full Court which made the order for a new trial included E A Douglas J, but the order for costs was made after the death of that very learned judge and therefore by a court differently constituted. It is objected that it was not competent to a court not composed of the same judges to deal with the costs. The objection is mistaken. An order had been pronounced upon the appeal or application for a new trial. The order which was drawn up included a specific provision adjourning or reserving the question of costs and so treating it as a distinct matter. The case is not one of the death of a judge before the hearing and determination of a proceeding are concluded by a court of which he is a necessary member. The order had disposed of the proceeding before the court and, as a matter of jurisdiction, the Supreme Court constituted as a Full Court in any manner might hear and determine the question of costs adjourned or reserved. No doubt as a matter of convenience the court would not be differently constituted to deal with costs that are adjourned or reserved, if it could be avoided. But that consideration does not affect jurisdiction." 4That reasoning does not encompass circumstances where final orders (otherwise than as to costs) have not been made. However, in Cotogno v Lamb (1985) 3 NSWLR 221, this Court considered what steps should be taken where the interests of justice required early despatch of an appeal, but after the commencement of the argument and the determination of a preliminary matter, one member of the bench was due to take long leave. The Court reconstituted, being satisfied that it had power to do so. The joint reasons of Kirby P, Glass and Samuels JJA stated at 223C: "There is a long line of authority which stresses the importance of courts, once constituted to hear a matter, proceeding to hear all aspects of the matter to conclusion .... However, these cases deal with hearings at first instance where the court deciding the matter must have the advantage of hearing and seeing all of the witnesses. Such a consideration does not govern the hearing of appeals. The power to reconstitute an appellate court cannot be in doubt in the case where that is necessary after a judge dies, retires or is incapacitated in the midst of a hearing and before judgment is delivered. Otherwise, by reason of the statutory obligation to constitute the court with three or more judges (see Supreme Court Act 1970, s 43(1)), the facility of appeal could be entirely frustrated. Similar considerations apply in circumstances where a judge takes extended leave, although internal arrangements of an administrative kind usually avoid difficulties such as have now arisen." 5While it may be accepted that the retirement of Young JA required the Court to reconstitute, it has been possible to reconstitute the Court with the same members, although Young AJA sits in a different capacity. The fact that membership has not changed has significance for the manner in which the final outstanding issues may be determined. Young AJA being in the same practical position as the remaining members of the Court, the matter has been determined by the whole Court as presently constituted on the papers. 6The appeal was brought from judgments in the District Court, delivered on 18 November and 13 December 2010, pursuant to which the respondent was awarded damages in an amount of $474,360.89. The appellants were partly successful in reducing the amount of the award. This Court's principal judgment stated at [103] that the respondent was entitled to recover its reasonable expenditure, limited to: (a) removal and replacement of the retaining wall and fencing; costs of resurvey and preparation of a new s 88B instrument and linen plan; registration expenses; and (b) the cost of its first Supreme Court proceedings up to 28 February 2004. However, the appeal was unsuccessful with respect to an amount intended to compensate the respondent for its inability to sell the property whilst the caveat was in place, the loss being assessed at $20,000: at [108]. 7The Court indicated that the judgment should be reduced on account of: (a) the legal costs incurred after February 2004, namely: (i) the legal costs of the first proceedings from 1 March 2004 to settlement in February 2005 and, (ii) the costs of the second proceedings - at [106]; (b) the costs of engineering and construction works on the road, totalling $20,453 - at [107], and (c) the amount of interest, taking into account the reduced losses - at [109]. Alleged error in respect of damages for lost opportunity of sale 8On 15 May 2012 the appellants filed written submissions setting out the orders which they sought, together with a notice of motion seeking variation of a "factual error" contained in the principal judgment at [108]. The supposed error was a reference to a finding of the trial judge that "the respondent had put the property on the market in July 2002 and received an offer at that time", when in fact the trial judge had stated that he was "not satisfied a firm offer was made": trial judgment, p 46. 9The variation in language was of no significance. The appellants' case was not that the property was not put on the market, but that no firm offer, as opposed to an inquiry or expression of interest, was received. The amount allowed by the trial judge was $20,000, or 40% of the diminution in the value of the property over the period from 2002 to 2010. 10The appellants' complaint in respect of this head of loss was that it was not available under the second limb of Hadley v Baxendale (1854) 156 ER 145 unless the evidence demonstrated that the respondent had told the appellants of its intention to sell at the time the contract was entered into. 11The point was hardly argued in the submissions before this Court. No attention was paid to the possibility that the loss might be one which could reasonably have been found to be in the contemplation of both parties, without the need for actual knowledge of the respondent's intention. It was but one of a number of issues relating to the relationship between the respondent and the neighbouring property owners which needed to be assessed. The submissions in this Court were inadequate to establish error and did not warrant a retrial. The application to reopen the statement of the 'finding' referred to in the principal judgment should be rejected. Costs of correcting survey 12The difficulty that the Court noted in the principal judgment in respect of the head of damage allowed in this respect was that the trial judge appeared to have allowed an amount of $10,397, whereas the appellants had calculated the amount at $9,910.50. The appellants' calculation of the lower amount was justified and, although not expressly conceded, was not clearly disputed. 13Despite the fact that the Court had identified with precision the elements for which recovery was to be permitted, the respondent filed lengthy written submissions (in excess of the length permitted on a full appeal) of which the first seven pages appeared to be directed to establishing that it was entitled to recover "the costs of rectifying the roadworks in lieu of legal costs" - at paragraph 22. In addition to the submissions, six schedules were attached, supported by an affidavit totalling approximately 40 pages. Schedule A clearly identified items amounting to $9,910.50, but neither the schedule nor the submissions assisted in identifying any greater amount which would not include roadworks. Accordingly, the amount of $9,910.50 should be allowed. Cost of first Supreme Court proceeding 14The principal judgment suggested that the recoverable costs of the first Supreme Court proceedings up to 28 February 2004 had been agreed after trial in an amount of $134,049.27: at [105]. 15The appellants' submissions claimed that the appropriate figure was $87,699.83, but provided no assistance in reference to the figure referred to at [105]. By contrast, the respondent asserted that the correct figure was $102,200.87, without troubling to refer either to the submissions made by the appellants or the figure referred to by this Court. 16In their reply, the appellants conceded part of the claim made by the respondent, giving a total of $97,000. However, the bills identified in each set of submissions are not identical. As the amount in dispute is less than $6,000, and no basis is demonstrated for rejecting the respondent's figures, the amount for legal costs should be allowed at $102,200.87. Interest on legal costs 17The respondent claimed an amount of $84,855.04 in respect of interest on legal costs up to 2 February 2011. (The date chosen was the date upon which the respondent received part payment of the judgment below, as a condition of a stay ordered by this Court, in an amount of $270,000.) The appellants' calculation of interest, based on principal of $97,000, was approximately $78,000. The appellants offered alternative calculations based on an offer of compromise, to which reference will be made below, and on the matter being placed in the "inactive" list in the District Court for a period. In addition, whereas the respondent had calculated interest by reference to the rates payable for pre-judgment interest, the appellants' calculation allowed a period between the date of judgment in the District Court and the date of payment on 2 February 2011 at post-judgment interest rates. 18As the respondent's calculation of the amount payable should be accepted, so its calculation of interest should also be accepted, giving an amount of $84,855.04. Amount of judgment 19The calculations undertaken by the parties seek to achieve an unjustifiable level of precision. The result, in round figures, is a judgment in favour of the respondent in the amount of $217,000. Costs of trial 20The submissions of the parties with respect to costs were expansive. Reference was made to the rules, principles and supporting authorities. None of this need be canvassed. 21The appellants relied upon an offer of compromise served on 19 January 2010 seeking to settle the proceedings on payment of $150,000 plus costs. The offer was made pursuant to r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW). Based on the calculations set out above, but allowing for interest on legal costs accruing after the date of the offer, the respondent nevertheless bettered the offer by approximately one-third. The appellants' offer can therefore be disregarded for the purposes of assessing costs. 22In those circumstances, there is no basis established for interfering with the order for costs made in the District Court. Costs of appeal 23The appellants made a Calderbank offer to settle the appeal by way of a letter dated 7 March 2011. The offer involved payment by the appellants of an amount of $205,110 plus half of the respondent's costs. (Whether the costs included the costs of the trial and of the appeal to that time was unclear, but it may be assumed that that was the case.) 24Putting costs to one side and focussing on the amount of damages (assessed above at $217,000) the outcome, from the appellants' point of view, was worse than their offer by approximately $12,000 or 5.8%. Alternatively, the offer sought a reduction in the respondent's judgment of $269,250, but the outcome achieved a reduction of only $257,360. The reduction achieved thus failed to match the reduction proposed in the offer. On that basis the offer did not justify any special order as to costs. 25There remains a question as to whether, having reduced the damages by a little over 50%, the appellants should receive their costs of the appeal. Clearly they have had a significant degree of success, in absolute terms. On the other hand, the notice of appeal sought to reduce the judgment to $26,000 in round terms. Against that measure, the appellants have achieved approximately 60% of the reduction sought and could receive part only of their costs, or, as submitted by the respondent, the parties should bear their own costs of the appeal. 26An alternative approach is to have regard to the Calderbank offer as a guidepost for assessing success on the appeal, although, not having been bettered, it would not allow the appellants any special order as to the costs of the appeal. On that approach, it could be said that the appellants achieved a high proportion of that which they set out to achieve, and thus should receive their costs of the appeal on the ordinary basis. In response, although the argument was not articulated in quite this way, the respondent placed weight on the offer with respect to costs. Before the trial judge, the respondent had obtained an order for costs payable on the ordinary basis up to 24 August 2009 and thereafter on an indemnity basis. (The respondent had, presumably, made its own offer of compromise on or about 24 August 2009, although the details of that offer do not appear to be disclosed in the unduly voluminous material filed since delivery of the principal judgment: nor was the basis revealed in the secondary judgment of the trial judge, the costs order having been made by consent.) The offer required the respondent to forego half its entitlement to costs, an entitlement which has not been affected by the appeal. 27In order to demonstrate that it was not unreasonable to reject the appellants' Calderbank offer the respondent made submissions as to the likely financial effect of the offer to pay 50% of its costs. However, as the appellants rightly noted, the evidence to support that submission had not been read before this Court. On the other hand, the Court may infer that the true value of the Calderbank offer, which required the respondent to forgo more than half the value of its judgment and half the value of its costs orders below, involved two amounts of the same order of magnitude. Because the appellants have not obtained any variation of the orders that they pay the respondent's costs of the trial, it cannot properly be said that they have achieved more than half of that which they set out to achieve, measured against the Calderbank offer. 28In these circumstances, the appropriate course is to order the respondent to pay 50% of the appellants' costs of the appeal, assessed on the ordinary basis. Conclusions 29The Court should make the following orders: (1) Allow the appeal in part and set aside order (2) made in the District Court on 13 December 2010 giving judgment for the plaintiff against each defendant in the sum of $474,360.89. (2) In place of the order set aside, give judgment for the plaintiff against each defendant in the sum of $217,000. (3) Otherwise dismiss the appellants' appeal. (4) Order that the respondent pay 50% of the appellants' costs in this Court. (5) Grant the respondent a certificate under the Suitors' Fund Act 1951 (NSW) if not disqualified pursuant to s 6(7). 30YOUNG AJA: I agree with Basten 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. 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: 26 October 2012