PACANOWSKI v SIMON WAKERMAN & ASSOCIATES (NO 2)

THE COURT : The applicants were plaintiffs in proceedings brought against the respondents (then defendants) in the District Court. The proceedings were dismissed for want of prosecution. The applicants sought leave to appeal from the order of dismissal.

On 10 November 2009 the Court dismissed the summons for leave to appeal, with costs: Pacanowski v Simon Wakerman & Associates [2009] NSWCA 402. The respondents now seek an order for costs assessed on an indemnity basis. They put forward three justifications for such an order. The first involved an offer of compromise dated 12 August 2009, filed in this Court. The second was a letter of the same date (12 August 2009) containing an offer of settlement, with an explanation of the basis on which the offer was made, and a statement that it would be relied upon to support an application for indemnity costs in the event that the appeal was dismissed, pursuant to Calderbank v Calderbank [1975] 3 WLR 586. The offer remained open until 14 September 2009. The third was said to be “the fact that the plaintiffs’ conduct of the proceedings has caused unreasonable delay and expense, including the seeking of leave to appeal from the judgment of the Judicial Registrar, which had no real prospects of success”. Offers of compromise

The terms of each offer were the same: they consented to the appeal being allowed and the orders of the Judicial Registrar being set aside, but then required that judgment be entered for the defendants in the District Court. Each party was to bear its own costs of the proceedings in the District Court and in this Court.

Whether the first offer constituted an offer for the purposes of Pt 20, Div 4 of the Uniform Civil Procedure Rules 2005 (NSW) (“the UCPR”) is doubtful: it did not bear a statement to the effect that the offer was made in accordance with the rules: r 20.26(3)(a). Further, it attempted to provide for the costs of the appeal inconsistently with the terms of r 20.26(2). It is, however, not necessary to determine those questions.

The real question is whether these offers constituted a “compromise”. Clearly the purported allowance of the appeal was not favourable to the applicants, because it merely provided the opportunity for an order more favourable to the defendants in the District Court than the dismissal of the proceedings for want of prosecution, namely a final judgment in their favour. The only real element of compromise came with respect to the question of costs. Putting to one side the question of costs in this Court, there may have been a concession with respect to the costs in the District Court, although the proposal to set aside the orders of the Judicial Registrar may have been thought to carry that consequence. There was no material before this Court which would allow the Court to assess the factual element of compromise involved. Similarly, the suggestion (in the respondents’ submissions) that the plaintiffs’ conduct of the proceedings justified an order for indemnity costs was not supported by evidence which would permit this Court to assess the accuracy of the complaint.

In the circumstances, the applicants’ description of the offers as requiring “capitulation” was accurate. Their rejection of each of the offers was not unreasonable in the circumstances. There was otherwise no basis to award indemnity costs in favour of the respondents. Accordingly the application to vary the orders made on 10 November 2009 should be dismissed. There should be no order as to the costs of this application.