Supreme Court New South Wales Medium Neutral Citation: Leonards Pharmacy Pty Ltd v Double Up 888 Pty Ltd (No 2) [2018] NSWSC 1166 Hearing dates: On the papers Decision date: 31 July 2018 Jurisdiction: Equity Before: Emmett AJA Decision: 1. The defendants pay the plaintiff's costs on the ordinary basis up to 15 December 2017. 2. The defendants pay the plaintiff's costs on an indemnity basis on and from 15 December 2017. Catchwords: COSTS – Party/Party —Exceptions to general rule that costs follow the event — Offers of compromise/Calderbank offers – whether offer was clear in its terms – whether costs should be on an indemnity basis from the date the offer was to be accepted Legislation Cited: Uniform Civil Procedure Rules 2005, r 20.26 Cases Cited: Leonards Pharmacy Pty Ltd v Double Up 888 Pty Ltd [2018] NSWSC 974 Category: Costs Parties: Leonards Pharmacy Pty Ltd (Plaintiff and First Cross Defendant) Double Up 888 Pty Ltd (First Defendant and First Cross Claimant) Ngoc-Hien Duong (Second Defendant and Second Cross Claimant) Representation: Counsel: M J Heath (Plaintiff and First Cross Defendant) M Galvin (First and Second Defendants; First and Second Cross Claimants) Solicitors: Bennett & Philp Lawyers (Pikes & Verekers Lawyers as Sydney agents) (Plaintiff and First Cross Defendant) Dentons Australia Pty Ltd (First and Second Defendants; First and Second Cross Claimants) File Number(s): 2017/00125871 Judgment 1. On 3 July 2018, I published my reasons [1] for conclusions that I reached following a hearing that occupied some four days. On 13 July 2018, I made declarations and orders that reflected my conclusions, apart from the question of costs. 2. The plaintiff now seeks an order that the defendants pay its costs, both of its claim and the cross-claim, on the ordinary basis up to and including 23 November 2017 and on the indemnity basis on and from 24 November 2017. While the defendants accept that they should be ordered to pay the plaintiff's costs of its claim and the cross-claim on the ordinary basis, they resist any order that any part of the costs be paid on the indemnity basis. 3. The plaintiff's basis for seeking indemnity costs is an offer made by it to the defendants by letter of 24 November 2017. In the letter, after stating some of the background that led to the plaintiff incurring expenses totalling $79,286.02 in relation to stocktake, legal fees, landlord's expenses and broker's commission, and shortfall in the sale price on re-sale of $79,000 after allowing for the forfeited deposit of $271,000, the letter asserted that the plaintiff's total claim was $429,286.02 plus interest of $9,849. The letter attached a formal offer of compromise under r 20.26 of the Uniform Civil Procedure Rules 2005 (UCPR). By that offer, the plaintiff offered to compromise the whole of the proceedings on the basis that the defendants pay to the plaintiff the sum of $400,000, the cross claim be dismissed, the defendants pay the plaintiff's costs of its claim and there be no order as to the costs of the cross claim. The offer was open to be accepted no later than 4pm on 15 December 2017. The offer was not accepted. 4. The defendants contend that the offer made by the letter of 24 November 2017 was ambiguous. They assert that the letter could reasonably be understood as saying that the plaintiff disregarded any allowance for the forfeited deposit in offering to accept the sum of $400,000. They say that it was unclear as to whether the plaintiff's offer was to accept an additional sum of $400,000, over and above the forfeited deposit of $271,000. 5. The orders made on 13 July 2018 included a declaration that the deposit of $271,000 had been forfeited to the plaintiff and directed judgment for the plaintiff against the defendants in the sum of $158,286.02. The net effect was that the plaintiff was compensated to the extent of $429,286.02. In addition, the plaintiff is entitled to its costs of both its claim and the cross claim. That is clearly a more favourable result to the plaintiff than compensation limited to the sum of $400,000 and no order as the costs of the cross claim. On the other hand, if the letter of 24 November 2018 made an offer to accept $671,000 plus the cost of the claim, the result was significantly less favourable. 6. The letter of 24 November 2017 may not have been expressed as felicitously as it could have been. On the other hand, a reasonably careful reading of it makes clear that it was asserting that the plaintiff's total claim was for $429,286.02 plus interest. The letter referred expressly to an allowance for the forfeited deposit of $271,000. In the context of the letter, it is clear that the formal offer of compromise was to accept $400,000 in full settlement and that that sum had been received to the extent of the forfeited deposit of $271,000. 7. That is to say, the cross claim put in question the plaintiff's entitlement to forfeit the deposit. While that sum was held by the plaintiff pending the outcome of the litigation, it is clear that the plaintiff was offering to forego the sum of $29,286.02 together with the costs of the cross claim by way of compromise. In the circumstances, I consider that it is appropriate to order the defendants to pay the plaintiff's costs incurred after 15 December 2017 on the indemnity basis. The defendants should pay the plaintiff's costs up to and including 15 December 2017 on the ordinary basis. 8. The orders will be as follows: 1. The defendants pay the plaintiff's costs on the ordinary basis up to 15 December 2017. 2. The defendants pay the plaintiff's costs on the indemnity basis on and from 15 December 2017. ********** Endnote 1. Leonards Pharmacy Pty Ltd v Double Up 888 Pty Ltd [2018] NSWSC 974. 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: 31 July 2018