Supreme Court New South Wales Medium Neutral Citation: Ismail v NSW Land & Housing [2014] NSWSC 1434 Hearing dates: 9 October 2014 Decision date: 09 October 2014 Jurisdiction: Common Law Before: Button J Decision: 1. Judgment for the Plaintiff. 2. The Defendant is to pay to the Plaintiff's damages of $36,664. 3. Pursuant to s 66 of the Supreme Court Act 1970 (NSW) the Defendant is to take necessary steps to remove any water entering the Plaintiff's property known as 4 Anderson Avenue, Liverpool in the State of New South Wales (with folio identifier 54/35980) through the terracotta pipe that laterally traverses the Defendant's property at 6 Anderson Avenue, Liverpool in the State of New South Wales (with folio identifier 53/35980). 4. The Defendant is to pay the Plaintiff's costs of the proceedings on the usual basis up until 17 July 2013 and on an indemnity basis thereafter. Catchwords: TORTS - trespass - private nuisance - settlement of matter on day of hearing COSTS - indemnity costs - where offer of compromise made by the plaintiff prior to hearing - no dispute that offer of compromise was genuine - whether it was unreasonable for the defendant to reject the offer of compromise Legislation Cited: Civil Procedure Act 2005 (NSW), s 98(1)(c) Cases Cited: Calderbank v Calderbank [1975] 3 All ER 333 Category: Costs Parties: Jenan Ismail (Plaintiff) New South Wales Land and Housing Corporation (Defendant) Representation: Counsel: J Jobson (Plaintiff) M Bennett (Defendant) Solicitors: Madison Marcus Law Firm Pty Ltd (Plaintiff) Moray & Agnew (Defendant) File Number(s): 2013/308832 Judgment 1This matter constituted a dispute about a broken water pipe that caused damage to the home of the plaintiff and her family. The matter was set down for hearing for one day today. This morning, counsel resolved all issues except for one aspect of costs. That resolution includes an acceptance by the defendant that it must pay the plaintiff over $36,000 in damages, and also must move promptly to repair the flooding (see the short minutes of order signed by both counsel). 2There is no dispute that the defendant must pay the costs of the plaintiff. The only remaining dispute is whether, on the basis of a letter from the solicitor for the plaintiff to the defendant, and which became Exhibit A before me, the defendant should pay indemnity costs from 17 July 2013 until today, pursuant to s 98(1)(c) of the Civil Procedure Act 2005 (NSW) and r 42.5 of the Uniform Civil Procedure Rules 2005. That contention of the plaintiff is founded upon the well-known principles in Calderbank v Calderbank [1975] 3 All ER 333, as explained by subsequent decisions of this Court. 3Counsel for the defendant did not resist such an order on the basis that the letter did not constitute a genuine effort at compromise. Nor did he dispute that, as the plaintiff's chronology that became Exhibit B demonstrates, the conduct of his client of the litigation has left something to be desired. Those failings related not only to such things as failing to answer correspondence from another solicitor reasonably timeously, but also with regard to compliance with orders of this Court. 4Nor has counsel for the defendant called into question the submission of counsel for the plaintiff that the fact that the matter has settled on the day of hearing for a sum substantially more than the sum that would have been accepted by the plaintiff some 14 months ago is a relevant (though not determinative) consideration in determining whether it was unreasonable to reject the offer at that time. 5Instead, the resistance of counsel for the defendant was based upon four factors. 6First, the letter preceded the filing of a statement of claim by three months. For that reason, the defendant did not have a clear basis for understanding the legal and factual underpinnings of the claim of the plaintiff. 7Secondly, he submitted that real questions of liability about the flow of water through the pipe, in the sense of who was truly responsible for it, had not been clarified at that stage. 8Thirdly, he submitted that questions of quantum (in the sense of whether the claim for damages was truly justifiable) were also open at that stage. In that regard, it was an agreed fact before me that, as at 17 July 2013, the defendant had received a copy of the expert report of the plaintiff, but had not obtained its own report. 9Fourthly and finally, counsel for the defendant submitted that the offer closed on 31 July 2013, and was not renewed by the plaintiff once the defendant had the statement of claim, its own expert report, and other materials that permitted it to have a clearer picture. 10The submissions of counsel for the defendant have force. However, I have come to the view, as a matter of discretion informed by principle, that indemnity costs should be allowed after 17 July 2013 for the following reasons. To be clear, although I informally read all of the exhibits in the matter at the invitation of counsel to prepare for a possible hearing of the substantive dispute, I have focused my analysis only upon the pleadings, Exhibits A and B, and the agreed fact that I have outlined above. 11First, I accept the concession of counsel for the defendant that the subsequent settlement of the matter 14 months later, on the day of the hearing, for a sum substantially larger than that sought in the offer of compromise can inform the question of whether rejection of that offer was unreasonable. Whilst the increased sum of $6,664 is not a huge one, it nevertheless constitutes over 20 per cent more than the sum that the plaintiff offered to accept. 12Secondly, it is true that the defendant did not, as at 17 July 2013, have pleadings from the plaintiff. But it surely well understood from the contents of Exhibit A that the problem was water coming from a broken pipe and damaging the property of the plaintiff. It also understood that there were "health and safety" risks to the family of the plaintiff alleged. The letter had been preceded by a "final letter of demand" of the same date. The fact that the offer spoke of the need for the defendant to take "immediate measures" to solve the problem must have impressed upon the defendant the urgency of the situation. It would have been open to the defendant, a government department, to retain an expert expeditiously in those circumstances to determine whether the complaints of the plaintiff had validity, both with regard to liability and quantum. 13In those circumstances, I do not accept that a period of 14 days for reflection upon the offer of compromise was inappropriately short. 14Thirdly, it is true that the agreed chronology that became Exhibit B does not show further attempts at compromise by the plaintiff. But to my mind that is understandable, in light of the fact that that chronology does show that, on more than one occasion, the defendant simply failed to respond to correspondence from the solicitors for the plaintiff. Indeed, the defendant was content to fail to comply with court orders, for example with regard to the provision of further and better particulars of its defence. 15Fourthly, Exhibit A expresses a desire to avoid "lengthy and costly court proceedings", no doubt exacerbated by the fact that, in seeking an injunction, the plaintiff has been compelled to proceed in this Court. And yet, because of the position adopted by the defendant, with regard to a relatively simple dispute about a broken water pipe, and a relatively small sum of money, that is exactly what has eventuated. 16In short, the plaintiff has persuaded me that, in the circumstances of this case, it was unreasonable for the defendant to reject the conceded genuine offer of compromise of 17 July 2013. It follows that I shall proceed to make the orders to which both parties consent, along with the costs order for which the plaintiff contends. 17The Court orders: (1)Judgment for the Plaintiff. (2)The Defendant is to pay to the Plaintiff's damages of $36,664. (3)Pursuant to s 66 of the Supreme Court Act 1970 (NSW) the Defendant is to take necessary steps to remove any water entering the Plaintiff's property known as 4 Anderson Avenue, Liverpool in the State of New South Wales (with folio identifier 54/35980) through the terracotta pipe that laterally traverses the Defendant's property at 6 Anderson Avenue, Liverpool in the State of New South Wales (with folio identifier 53/35980). (4)The Defendant is to pay the Plaintiff's costs of the proceedings on the usual basis up until 17 July 2013 and on an indemnity basis thereafter. 18The Court notes the agreement between the parties in relation to order 3, that the Defendant will: (a)complete the works required by that order within a reasonable time; and (b)in the shorter term undertake intermediary work on the property at 6 Anderson Avenue, Liverpool in the State of New South Wales (with folio identifier 53/35980) in order to relieve the effect on the Plaintiff's property (known as 4 Anderson Avenue, Liverpool in the State of New South Wales, with folio identifier 54/35980) of water from the relevant pipe. ********** Amendments 05 November 2014 - typographical error Amended paragraphs: coversheet, paragraph 17(4) 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: 05 November 2014