Supreme Court New South Wales Medium Neutral Citation: Meshumar v Otmy (No 2) [2018] NSWSC 1451 Hearing dates: On the papers Date of orders: 26 September 2018 Decision date: 26 September 2018 Jurisdiction: Equity Before: Robb J Decision: (1) Vacate the costs order made by the Court on 16 February 2018. (2) Order the plaintiff to pay the defendant's costs of the proceedings on an ordinary basis up to 6 October 2016 and on the indemnity basis from 7 October 2016. Catchwords: COSTS — Party/Party — Bases of quantification — Ordinary basis COSTS — Party/Party — Bases of quantification — Indemnity basis Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW). Cases Cited: Meshumar v Otmy [2018] NSWSC 125 Category: Costs Parties: Ofir Meshumar (plaintiff) Avshalom Sher Otmy (defendant) Representation: Counsel: D F Elliot (plaintiff) J O'Sullivan (defendant) Solicitors: Spectrum Legal Group Pty Limited (plaintiff) & Legal (defendant) File Number(s): 2015/366228 Judgment 1. Reasons for judgment were delivered in these proceedings on 16 February 2018: Meshumar v Otmy [2018] NSWSC 125. 2. The Court dismissed the plaintiff's claim and ordered that the plaintiff is to pay the defendant's costs of the proceedings. 3. When the judgment was delivered, the Court invited the defendant to make any application for a special costs order that he wished to make. 4. On 9 March 2018, by email from the defendant's solicitors to my associate, the Court was asked to make the following special costs order. The plaintiff is to pay the defendant's costs in the proceedings on an ordinary basis up to 6 October 2016 and on an indemnity basis from 7 October 2016 and thereafter as assessed or agreed. 1. The defendant's application was supported by an affidavit of his solicitor, Mr Darian Romano Iacono, sworn on 9 March 2018. 2. The defendant relies on a Notice of Offer of Compromise dated 6 October 2016 served on the defendant under Rule 20.26 of the Uniform Civil Procedure Rules 2005 (NSW). The covering letter under which the Offer of Compromise was served also stated that the defendant would rely upon the offer as being a Calderbank offer. The Offer of Compromise was expressed to be open for a period of 28 days. 3. The offer was in the following terms: 1. Judgment in favour of the First Defendant. 2. The First Defendant is to pay to the Plaintiff the sum of $15,000 in respect of the Plaintiff's costs. 1. Mr Iacono gave evidence that the defendant's total costs in the proceedings to 6 October 2016 were $53,904.37, and he estimated that if those costs had been assessed on a party/party basis, an assessment of approximately 75% of those costs, being $40,428.28, would have been made. 2. Consequently, had the plaintiff accepted the offer, he would have been $55,428.28 better off than he will be as a result of the Court making an order dismissing his claim with an order that he pay the defendant's costs. 3. The value of the orders sought by the plaintiff in the proceedings was not established by the evidence. The plaintiff claimed to have paid $200,000 in the complicated circumstances described in the principal judgment in order to receive a one third beneficial interest in a home unit at 11/102-106 Campbell Parade, Bondi. Unit 11 is subject to a mortgage, and the evidence did not establish the value of the equity in the property. Moreover, had the plaintiff succeeded in his claim, the value of the orders made in favour of the plaintiff would have been affected by the results of an accounting that would have had to occur in relation to receipts of rent, payment of the mortgage, and also matters such as a levy made by the owners' corporation concerning substantial work that was required to be carried out on the building for fire protection purposes. 4. It is sufficient for me to note that I am satisfied given what I consider to be the significant number of contentious issues raised by the plaintiff's claim that, notwithstanding that the offer required the plaintiff to abandon his claim, a benefit equivalent to $55,428.28 was a genuine offer of compromise. 5. I have reached that conclusion in the absence of any contrary submissions made on behalf of the plaintiff. 6. On 27 March 2018, my associate by email asked the solicitor for the plaintiff, Mr David Rod, whether a response would be made to the application by the defendant for a special costs order. 7. On 2 April 2018, the solicitor for the plaintiff apologised for his delay and explained that he had suffered a heart attack and had taken some time off work. 8. My associate, on 6 June 2018, enquired of Mr Rod as to when she could expect to receive the submissions from the plaintiff in this matter. 9. Mr Rod, on 18 June 2018, responded to my associate by advising her that he had been off work due to a heart attack, and would be returning on or about 2 July 2018. He said that he would address the matter immediately on his return. 10. On 23 July 2018, at my request, my associate sent a lengthy email to Mr Rod, with a copy to Mr Iacono, in which she referred to the history of the manner in which the costs issue was dealt with, and advised that if she did not receive an appropriate response within 14 days, the Court would proceed to deal with the issue of costs on the assumption that the plaintiff does not wish to respond to the submissions made on behalf of the defendant. The email stated that the response could be made by the delivery of submissions or an explanation as to why in Mr Rod's circumstances the plaintiff should be given a longer time. My associate's email ended by observing that it was clear that the defendant is entitled to have this issue resolved in the near future. 11. Mr Iacono responded to my associate's email on 14 August 2018, by noting that the plaintiff had not responded to my associate's 23 July 2018 email, and requesting that the Court proceed to deal with the question of costs. 12. Mr Rod responded on 14 August 2018, by apologising for the lengthy delay, referring to his health problem, and advising that he had asked a colleague from another firm to assist with the plaintiff's response. Mr Rod asked for a one week extension. 13. The Court has not received any submission on the costs issue from the plaintiff, notwithstanding that I deferred dealing with the issue to give the plaintiff the extra time sought by his solicitor. 14. The final step in the correspondence was an email from Mr Iacono to my associate dated 16 August 2018 that was copied to Mr Rod. The email pointed out that the possibility that submissions could have been prepared on behalf of the plaintiff by an alternative lawyer could have been addressed at an earlier time, and requested that the Court give the plaintiff no further extensions. Mr Iacono reasonably observed that the delay is prejudicing his client from taking the steps needed to enforce the costs order made by the Court. 15. Notwithstanding these submissions, I have given the plaintiff a short period of grace, but as the Court has heard nothing further it is now necessary that the Court deal with the defendant's application for the special costs order set out above. 16. Given the events that I have related, I am not satisfied that the problem has been caused solely by Mr Rod's health difficulties, and it appears to me that the plaintiff is avoiding addressing the need to deal with the defendant's application. 17. The plaintiff has not made any submission that the defendant's Notice of Offer of Compromise should be treated as being ineffective pursuant to Rule 42.15A(2) of the UCPR, or alternatively as an effective Calderbank offer. I do not see any obvious flaw in either basis put forward by the defendant for the Court to make the orders sought. 18. Consequently, I make the following orders: 1. Vacate the costs order made by the Court on 16 February 2018. 2. Order the plaintiff to pay the defendant's costs of the proceedings on an ordinary basis up to 6 October 2016 and on the indemnity basis from 7 October 2016. ********** 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: 28 September 2018