Supreme Court New South Wales Medium Neutral Citation: Dr Ross Gregory Pedrana v Racing NSW (No 3) [2014] NSWSC 791 Hearing dates: 17, 18, 19 December 2013, 4 February 2014, 17 February 2014, 19 March 2014, 24 March 2014 Decision date: 16 June 2014 Jurisdiction: Common Law Before: Rothman J Decision: 1. Motion dismissed; 2. Costs of the motion be costs in the cause. Catchwords: COSTS - application for indemnity costs based on purported Calderbank offer - defendant's offer essentially walk away offer with plaintiff to pay 90% of defendant's assessed costs - plaintiff already had benefit of interlocutory injunction made over opposition of defendant - no substantial compromise - not satisfied Court should depart from ordinary rule. Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) (2006) 67 NSWLR 706 Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586 Pedrana v Racing NSW (No 1) [2013] NSWSC 2000 Pedrana v Racing NSW (No 2) [2014] NSWSC 462 Singh v Singh (No 2) [2004] NSWSC 225 Category: Consequential orders Parties: Dr Ross Gregory Pedrana (Plaintiff) Dr David Russel Johnson (Plaintiff) Dr Allan Charles Frogley (Plaintiff) Dr Nicholas John Kannegieter (Plaintiff) Dr Christopher Gerard Lawler (Plaintiff) Racing New South Wales (Defendant) Representation: Counsel: TGR Parker SC/OR Jones (Plaintiff) CRC Newlinds SC/JS Emmett (Defendant) Solicitors: Holman Webb Lawyers (Plaintiff) Yeldham Price O'Brien Lusk (Defendant) File Number(s): 2013/372880 Publication restriction: None Judgment 1HIS HONOUR: On 24 March 2014, the Court issued orders dismissing proceedings, with judgment for the defendant. On 23 April 2014, the Court issued reasons for judgment, with which these reasons ought to be read: Pedrana v Racing NSW [2014] NSWSC 462 (Pedrana (No 2)). An interlocutory judgment on 18 December 2013, Pedrana v Racing NSW [2013] NSWSC 2000 (Pedrana (No 1)). 2The judgment and reasons for judgment granted leave to the parties to apply for any special or different order as to costs. Pursuant to that leave, the defendant, Racing NSW, has sought indemnity costs on and from noon Monday, 3 February 2014. This judgment deals with that application, which was agitated on the papers. Factual Background 3On 31 January 2014, prior to the scheduled hearing on 4 February 2014, Racing NSW wrote to the plaintiffs proposing what was said to be an offer made in accordance with the principles enunciated in Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586. The offer was, relevantly, in the following terms: "1. The plaintiffs claim be dismissed; 2. The plaintiffs pay 90% of the defendant's party/party costs as agreed or assessed; 3. The offer is open for acceptance until noon on Monday, 3 February 2014." 4It is accepted, appropriately, that the offer is not one that complies with an Offer of Compromise pursuant to the Uniform Civil Procedure Rules 2005 (NSW). 5Essentially, the offer required the plaintiffs to walk away from the proceeding and pay the defendant's costs to 90% of the costs agreed or assessed, in circumstances where the plaintiffs had obtained interlocutory relief over the opposition of the defendant. Consideration 6The defendant submits that the offer involved a material compromise and refers to Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) (2006) 67 NSWLR 706 at [8]. There is no doubt that, were the plaintiffs to have accepted the offer, they would be in a better position than they are as at today's date. 7There are two aspects to be considered. First, whether, in the circumstances of this particular proceeding, the offer was a reasonable one that the plaintiffs were not entitled to reject. The second aspect is whether the offer was open for a reasonable period. 8It is necessary to note that this matter proceeded on contested interlocutory proceedings on 17, 18 and 19 December 2013, at the conclusion of which the Court issued an injunction and reasons for judgment. The effect of that history was that the Court found that plaintiffs had an arguable case and that the balance of convenience was such, given the nature and arguability of the issues, that an interlocutory order should be made. 9It should be noted also that the parties were seeking to resolve the matter. The fundamental issue between the parties related to the intrusion into the civil rights of veterinary practitioners attending racehorses and attempts were made to resolve the matter at a political level. 10As a consequence, it could not be said that the plaintiffs' case was either unreasonable or unarguable. Ultimately, the issue of the intrusion into the plaintiffs' civil rights was an issue that was unnecessary to determine in concluding the issue of the validity of the Local Rule, impugned in the Summons. 11In those circumstances, the defendant's offer was made on the Friday before the final hearing (which was listed for the following Tuesday) and the offer was to close on the Monday. At the outside, the offer was made at the eleventh hour and was open for no more than one working day. 12In my view, given the history of the matter and the negotiations between the parties, the offer was not open for a reasonable period of time and was not made a reasonable period before the hearing of the proceeding. That assessment depends significantly on the nature of this particular proceeding and the relationship between the parties over a period of time. 13Ordinarily, costs are to be assessed on a party/party basis. The predominant exception to that is where an Offer of Compromise is made under the Uniform Civil Procedure Rules. This offer was not made under those Rules. 14Another exception is where a reasonable offer is made, open for a reasonable period, under the principles adopted in this State (and elsewhere) flowing from the judgment of Cairns LJ in Calderbank v Calderbank being an offer expressed to be without prejudice save as to costs. 15This offer was expressed to be without prejudice save as to costs. 16The plaintiffs submit that it was reasonable for them not to accept the offer made, not only because of the time frame in which it was open, but also because the Court had determined, at that stage, that there was "sufficient likelihood of success to justify preservation of the status quo": Pedrana v Racing NSW (No 1) at [15] and the finding by the Court that the plaintiffs' case was arguable, even though the Court in Pedrana (No 1) took the view that it did not have a strong case for invalidity. 17The defendant's offer involved a verdict for the defendant and the only element that could be described as a "compromise" was the 10% discount in the payment of the defendant's costs. 18In my view, given the history of the matter and the negotiations between the parties, together with the nature of the offer, this is little different from a "walk away" offer and is not, in the circumstances of this case, a true compromise. Rather, it is a demand to capitulate and ought not be the basis for an order for the payment of indemnity costs: see Singh v Singh (No 2) [2004] NSWSC 225, per Barrett J (as his Honour then was). 19The application for indemnity costs is refused and the motion to that effect dismissed. 20Nevertheless, the application and its argument is not one which ought to be separated in relation to the costs of the proceedings and no separate order for costs ought to issue in relation to this motion. The costs of the motion are part of the costs in the proceedings, will be in the cause and will be covered by the orders made on 24 March 2014. 21The Court makes the following orders: (1)Motion dismissed; (2)Costs of the motion be costs in the cause. ********** 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: 24 June 2014