Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 Hearing dates: On the papers Decision date: 21 May 2013 Before: Meagher JA [1]; Barrett JA [1]; Tobias AJA [1] Decision: (1) The appellant pay the respondent's costs of the trial before Hughes DCJ in so far as they relate to the part of the respondent's cross-claim for defects that succeeded before Olsson DCJ. (2) The respondent pay the appellant's costs of the trial before Hughes DCJ in relation to the remaining issues raised by the respondent's cross-claim, including those issues abandoned at the commencement of the hearing and the part of the claim for defects which was rejected before Olsson DCJ. (3) The appellant pay the respondent's costs of the trial before Olsson DCJ in so far as they relate to the respondent's cross-claim for defects which succeeded before Olsson DCJ. (4) The respondent pay the appellant's costs of the trial before Olsson DCJ relating to the remaining issues before Olsson DCJ. [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: PROCEDURE - costs - indemnity costs - whether conduct of respondent in maintaining cross-claim and rejecting an offer of compromise "plainly unreasonable" or involved "delinquency" - respondent did not maintain proceedings which had no real prospects of success - respondent not unreasonable in rejecting offer of compromise - indemnity costs not awarded Legislation Cited: Uniform Civil Procedure Rules 2005, r 42.2 Cases Cited: Ballard v Brookfield Australia Investments Ltd [2013] NSWCA 18 Cabport Pty Ltd v Marinchek [2013] NSWCA 51 Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 Edelbrand Pty Ltd v HM Australia Holdings Pty Ltd (No 2) [2012] NSWCA 217 Jones v Bradley (No 2) [2003] NSWCA 258 Mead v Watson [2005] NSWCA 133; 23 ACLC 718 Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 Sydney City Council v Geftlick [2006] NSWCA 280 Category: Costs Parties: Cabport Pty Ltd (Appellant) Scott Marinchek (Respondent) Representation: Counsel: R Zikmann (Appellant) T Davie (Respondent) Solicitors: Norton Rose Australia (Appellant) Gillis Delaney Lawyers (Respondent) File Number(s): 2012/84955 Decision under appeal Date of Decision: 2011-12-19 00:00:00 Before: Olsson DCJ File Number(s): 2005/296071 Judgment 1THE COURT: The Court delivered judgment in this appeal on 12 March 2013. 2In his judgment Meagher JA (with whom Barrett JA and Tobias AJA agreed) expressed tentative views as to the costs orders which should be made in relation to the costs of the proceedings in the District Court before Hughes DCJ and Olsson DCJ: Cabport Pty Ltd v Marinchek [2013] NSWCA 51 at [42]. The orders tentatively proposed were: (1)The appellant pay the respondent's costs of the trial before Hughes DCJ in so far as they relate to the part of the respondent's cross-claim for defects that succeeded before Olsson DCJ; (2)The respondent pay the appellant's costs of the trial before Hughes DCJ in relation to the remaining issues raised by the respondent's cross-claim, including those issues abandoned at the commencement of the hearing and the part of the claim for defects which was rejected before Olsson DCJ; (3)The appellant pay the respondent's costs of the trial before Olsson DCJ in so far as they relate to the respondent's cross-claim for defects which succeeded before Olsson DCJ; (4)The respondent pay the appellant's costs of the trial before Olsson DCJ relating to the remaining issues before Olsson DCJ. 3The parties were directed to lodge written submissions in relation to whether those or other orders as to costs should be made. Submissions have been received from Cabport. No submissions have been received from Mr Marinchek. 4Cabport submits that the Court should make orders in the terms foreshadowed and, in addition, make an order that Mr Marinchek pay its costs in proposed orders (2) and (4) above on an indemnity basis. 5The general rule is that costs payable under an order of the Court are to be assessed on the "ordinary basis": Uniform Civil Procedure Rules 2005, r 42.2. 6A number of circumstances have been recognised as capable of warranting the making of an order for payment of costs on an indemnity basis: see, for example, Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 at 257. They include where conduct in the proceedings of the party against whom the order is sought is "plainly unreasonable" or involves some "delinquency": Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [44]; Mead v Watson [2005] NSWCA 133; 23 ACLC 718 at [8]-[9], [156]; Sydney City Council v Geftlick [2006] NSWCA 280 at [90]; Ballard v Brookfield Australia Investments Ltd [2013] NSWCA 18 at [7]-[9]. 7In addition, where a party makes an offer of compromise and the offeree does not accept the offer, but ends up in a worse position than if the offer had been accepted, the making of the offer is a matter to which the Court may have regard when deciding whether to award costs on an indemnity basis: SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37]; Jones v Bradley (No 2) [2003] NSWCA 258 at [6]-[9]; and Edelbrand Pty Ltd v HM Australia Holdings Pty Ltd (No 2) [2012] NSWCA 217 at [9]. 8Cabport submits that the conduct of Mr Marinchek, in relation to the maintenance of his cross-claim and the rejection of an offer of compromise made prior to the hearing before Olsson DCJ, is such as to justify an order for indemnity costs. Having considered the matters raised by Cabport's written submissions, we do not consider that this is a case in which the interests of justice require a departure from the ordinary rule. The two principal matters which lead to that conclusion are as follows. First, notwithstanding Cabport's assertions that the cross-claim was vexatious, misconceived and without merit, the fact remains that it was permitted to be pressed by this Court following argument of the first appeal and was subsequently upheld by Olsson DCJ. Secondly, the offer of compromise was to pay an amount on account of the cross-claim which was less than the amount ultimately recovered by Mr Marinchek. 9In the light of these considerations, we do not consider that Mr Marinchek maintained proceedings which had no real prospects of success or acted unreasonably in rejecting an offer which was far less than the amount of the judgment entered by Olsson DCJ, and approximately 30 per cent less than the amount recovered following the second appeal to this Court. 10For these reasons, Cabport's submission that costs should be awarded on an indemnity basis is rejected. 11The costs of the appeal, which were the subject of order 5 made on 12 March 2013, do not include Cabport's costs incurred in preparing the submissions which addressed the matters dealt with by this judgment. The Court makes no order as to the payment of those 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: 21 May 2013