Lowery v Insurance Australia Limited (No 2) [2016] NSWDC 450

District Court New South Wales

Medium Neutral Citation: Lowery v Insurance Australia Limited (No 2) [2016] NSWDC 450 Hearing dates: 10 June 2016 Date of orders: 10 June 2016 Decision date: 10 June 2016 Jurisdiction: Civil Before: P Taylor SC DCJ Decision: The plaintiffs' costs of the notice of motion (filed 10 February 2016) be paid by the defendant on an indemnity basis. Catchwords: COSTS — party/party — exceptions to general rule that costs follow the event — offers of compromise - Calderbank offers Legislation Cited: Civil Procedure Act 2005, s 56 Uniform Civil Procedure Rules 2005, r 20.26, r 36.16 Cases Cited: Calderbank v Calderbank [1975] 3 All ER 333 Lowery v Insurance Australia Limited [2016] NSWDC 446 Lowery v Insurance Australia Ltd [2015] NSWCA 303 Oshlack v Richmond River Council (1998) 193 CLR 72 Category: Costs Parties: Joseph Brian Lowery - first plaintiff Paula Louise Lowery - second plaintiff Insurance Australia Limited (ABN 11 000 016 722) - defendant Representation: Counsel: Mr A Fernon - plaintiffs Mr A Ahmad - defendant

Solicitors: Yates Beaggi Lawyers - plaintiffs Holman Webb Lawyers - defendant File Number(s): 2014/139013 Publication restriction: None

Judgment 1. I previously gave judgment in this interlocutory matter setting aside subpoenas, ordering costs in favour of the plaintiffs, and staying the costs order for two weeks in case either party wished to press for a different order. [1] 2. The plaintiffs seek an order for indemnity costs. No issue was raised that the time limits imposed either by the stay order or the provisions of r 36.16 of the Uniform Civil Procedure Rules 2005 or other rules preclude that application being made. However, well outside any relevant time limit, the defendant, in submissions, pressed for an order that each party bear its or their own costs. The plaintiffs disputed the defendant's entitlement to maintain such an application. However, since the judgment was interlocutory and the costs of such an application are necessarily interlocutory, a party can, upon sufficient grounds, seek to set aside such an order, notwithstanding the passage of time, whilst the proceedings are still current. 3. Accordingly, I do not propose to restrict the defendant from making that application. However, no new evidence was filed, and no new matter was identified that would justify an order less favourable to the plaintiffs than that already made. The defendant relied upon the plaintiffs not obtaining all of the relief sought, a matter previously raised and considered. The earlier judgment determined that the plaintiffs were clearly the successful party in the application and were entitled to a costs order in their favour. 4. The plaintiffs refer to four matters in their submissions as a "relevant delinquency" [2] in the conduct of the case, each supported by authority. 5. First, it is submitted that the defendant unnecessarily prolonged the proceedings by issuing the same subpoenas twice. 6. It is not correct to say that the defendant issued the same subpoenas twice. In general terms, the defendant issued similar proceedings to the same parties, but narrowed the ambit of those subpoenas. That narrowing was, in the view expressed in my earlier judgment, insufficient to satisfy the matters raised in the judgment of the Court of Appeal [3] which set aside the first iteration of the subpoenas. 7. The second reason advanced by the plaintiffs included an assertion that the second subpoenas were issued in disregard of the decision of the Court of Appeal. That is also overstating the position. The reasons of the Court of Appeal were called in aid by the defendant - albeit unsuccessfully - to justify the redrawn set of subpoenas. 8. The redrafted subpoenas were found not to have satisfied the law as expressed by the Court of Appeal directly, and in some cases the departure by the defendant from that law was substantial. Nevertheless, I would not describe the defendant's conduct as one of "disregard" for the Court of Appeal judgment. Rather, I would say that the defendant failed to follow correctly the reasons of the decision of the Court of Appeal, and that failure was in some instances a substantial failure. 9. The third point raised by the plaintiffs is that they were put to unnecessary anxiety, trouble, and expenses by the defendant's failure to adhere to proper procedure. This point must be accepted. However, this description might be one commonly applicable to the litigious conduct of parties unsuccessful on interlocutory applications. 10. Although proper criticism can be made of these aspects of the defendant's conduct in relation to the subpoenas, I am not satisfied that these three matters of themselves justify an indemnity costs order. 11. A fourth matter was raised by the plaintiffs. Shortly after becoming aware of the existence of the second subpoenas (not by notice from the defendant, as the rules provide), the plaintiffs sent detailed correspondence to the defendant explaining why the subpoenas were too wide and proposing a manner in which various subpoenas should be narrowed. The letter concluded as follows: "Tomorrow's Return of Subpoena We appreciate that you may require time to consider the matters we have raised in this letter and as such, we consent to a further adjournment and stand over of the return of Subpoenas. However, should we not be able to agree to the form of the Subpoenas and or agreement as to first access by 4 February 2016, we are instructed to file a Notice of Motion to set aside the Subpoenas. Our client reserves the right to rely on this correspondence as to the issue of costs in respect of any such application. We invite you to contact either writer should you wish to discuss." The date of that letter was 28 January 2016. 1. The subpoenas were returnable on 29 January and 4 February 2016. The defendant's response to that letter was to do nothing. The defendant accepts that the plaintiffs, by having the subpoenas set aside, achieved a result more favourable than the plaintiffs proposed in that letter. 2. Almost two months after the letter and about a week in advance of the hearing of the application by the plaintiffs in respect of the subpoenas, the defendant wrote, proposing a narrowing of the subpoenas to a lesser extent than that proposed by the plaintiffs. That proposal did not find favour with the plaintiffs or in the judgment, and the defendant accepts that it did not achieve a more favourable result than that proposed. 3. The defendant contends that the plaintiff's letter of 28 January was not a Calderbank offer because the time period was too short to be reasonable. The time period mentioned was seven days and extended to a time after the return date of the subpoenas, given that the subpoenas would be returnable at the latest sometime during the day of 4 February 2016. 4. In my view, the looming return dates justified a relatively brief period consistent with the need for the matter as a whole to proceed expeditiously. I regard a seven‑day period in these circumstances as reasonable. 5. No other reasons were advanced as to why the letter was not a Calderbank offer. Although the letter referred to the plaintiffs' right to rely upon the letter on the question of costs, it was not marked "without prejudice save as to costs", it did not refer to the circumstance of the plaintiffs obtaining a more favourable result, it did not refer to the decision in Calderbank v Calderbank, [4] and the presence of the words "and or" in the penultimate paragraph of the letter render somewhat uncertain the precise conduct of the defendant required to accept the offer. 6. For these reasons, I am not satisfied that the proposal in the letter could properly be regarded as a Calderbank offer. However, it remains relevant to the question of costs, and may be taken into account in determining what would be the appropriate order. It proposed a means of resolution which was more favourable to the defendant than the ultimate result. 7. Modern litigation procedure, including UCPR 20.26 and s 56 of the Civil Procedure Act 2005, encourages parties to give real consideration to offers and other correspondence of parties seeking to resolve proceedings or parts of proceedings. In this case, the defendant, on its own admission, did not give any consideration to the offer of 28 January, at least until well after the period contained in the offer. To ignore offers and proposals, whether a formal offer of compromise, a Calderbank offer, or some other written offer, puts a party at some peril of a special adverse costs order. 8. The defendant also argued that the plaintiffs sought to strike out the defence or obtain summary judgment and ought not to be awarded indemnity costs since those orders were not granted. That relief was not contained in the proposal of 28 January. In my view, the plaintiffs' entitlement to a special costs order should not be precluded by reason of the consequential relief they sought, some of which they did not obtain, when their primary complaint was of the faulty subpoenas, a complaint which this Court has upheld. 9. Accordingly, for these reasons, and particularly because the plaintiffs' genuine attempt made to resolve the proceedings by the letter of 28 January 2016 was entirely disregarded by the defendant, I do propose to make the orders sought by the plaintiffs. 10. The order therefore shall be the plaintiffs' costs of the notice of motion (filed 10 February 2016) be paid by the defendant on an indemnity basis.