Kmart Australia Limited v Marmara (No 2)

1. [1]

   THE COURT: By notice of motion filed on 27 November 2024, the respondent (Ms Marmara) applies to vary the costs order made by this Court when it dismissed the appellant’s (Kmart) appeal on 21 October 2024.

2. [2]

   The basis for the application is an offer of compromise purportedly served under r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) on behalf of Ms Marmara on 24 May 2024. The application has been determined on the papers, the parties having served written submissions on 16 and 19 December 2024.

3. [3]

   The application should be refused, both because it was brought out of time and because it lacks merit.

The application was brought out of time

1. [4]

   The notice of motion relevantly seeks the following two orders.

2. [5]

   The order made on 21 October 2024 was: “Appeal dismissed with costs.” The costs payable under the costs component of that order are to be assessed on the ordinary basis: UCPR, r 42.2.

3. [6]

   Ms Marmara does not identify, either in the notice of motion itself or in her written submissions filed on 16 December 2024, the power of the Court that she seeks to invoke to vary the costs order made on 21 October 2024.

4. [7]

   That order was a final order of the Court disposing of the appeal. By UCPR, r 36.11(2), the order is taken to have been entered when it was recorded in the Court’s computerised record system. That occurred on 21 October 2024.

5. [8]

   As a general rule, the Court has no power to vary a judgment or order once it has been entered. In the well-known passage in Bailey v Marinoff [1971] HCA 49; (1971) 125 CLR 529 at 530 Barwick CJ said:

6. [9]

   That general rule is subject to express rules of court. Significant in the context of an application to vary a final costs order is UCPR, r 36.16(3A). Rule 36.16 relevantly provides as follows:

7. [10]

   Thus, as White JA said in Oikos Constructions Pty Ltd (t/as Lars Fischer Construction) v Ostin (No 2) [2021] NSWCA 98 at [35] (Basten and Macfarlan JJA agreeing), the “general rule is that a final costs order, once entered, cannot be varied unless a notice of motion is filed within 14 days after entry”.

8. [11]

   As already noted, the order made on 21 October 2024 is taken to have been entered on 21 October 2024. Ms Marmara’s notice of motion was not filed until 27 November 2024. That was well outside the 14 day period specified in subrules (3A) and (3C).

9. [12]

   Ms Marmara’s solicitor made an affidavit on 19 November 2024 which should be treated as read on the notice of motion. Although the affidavit refers to communications between the parties, there is no suggestion that within the 14 day period Ms Marmara made any informal application to the Court to set aside or vary the order made on 21 October 2024, or that she gave notice to the Court of any intention to make such an application (cf., Oikos Constructions at [36]-[37]; Aukuso v Tahan [No 2] [2018] NSWCA 302 at [29]-[46] (Simpson AJA, Macfarlan JA agreeing)).

10. [13]

    It has not been shown that any power to set aside or vary the costs order made on 21 October 2024 is engaged.

11. [14]

    The application to vary the costs order made on 21 October 2024 should be refused.

The application lacked merit in any event

1. [15]

   However, even if the notice of motion had been filed within time, the application to vary the costs order lacked merit. It would have been refused in any event.

2. [16]

   Ms Marmara’s argument is that the 24 May 2024 offer was an offer of compromise for the purposes of UCPR, r 20.26; that Kmart failed to accept it within the period that it was open (i.e., by 26 June 2024); that Ms Marmara obtained an order or judgment no less favourable to her than the terms of the offer (i.e., dismissal of the appeal); and that she is accordingly entitled to an order against Kmart for her costs assessed in accordance with UCPR, r 42.14.

3. [17]

   A first difficulty with this argument is that the offer did not even purport to be made pursuant to the applicable rule: UCPR, r 51.47. Rules 51.47 and 51.48 apply to offers of compromise made in proceedings in the Court of Appeal. Those rules expressly modify the operation of Part 20, Division 4 (“Compromise”) and Part 42, Division 3 (“Offers of Compromise”), including by making “such other modifications as are necessary”: UCPR, rr 51.47(2)(h) and 51.48(1)(h).

4. [18]

   Instead, the offer, which identified the “Court” as the “District Court of New South Wales”, was expressed as follows.

5. [19]

   The words, “The plaintiff offers to compromise the whole of this claim” (apparently, the plaintiff’s claim in the District Court) were inapposite. Ms Marmara’s cause of action had merged in the District Court’s judgment. The offer did not refer to any appeal. It did not address the way in which any appeal was to be disposed of. That is unsurprising, given that no more than a notice of intention to appeal had been filed or served at this stage. But the form and timing of the offer have consequences for any attempt to invoke the UCPR offer of compromise costs regime.

6. [20]

   Secondly, it is very much to be doubted that the offer involved the necessary element of “compromise”. The judgment given at first instance and upheld on appeal was for the sum of $624,775.60. This was a liability appeal. Success or failure on the appeal was all or nothing. Yet the offer served on 24 May 2024 was for $624,675. That was just $100.60 less than the judgment sum. The offer was made at a time at which Ms Marmara could not have incurred any substantial costs with respect to the appeal (no notice of appeal yet having been filed).

7. [21]

   The purpose of the UCPR offer of compromise rules is not to trigger an automatic award of costs on an indemnity basis in favour of every successful party which does $1 better than its offer. The rules require that the offer involve a “compromise”. As this Court (Basten, Macfarlan and Meagher JJA) explained in Fabre v Lui (No 2) [2015] NSWCA 312 at [6], by reference to what Giles J said in Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 at 368:

8. [22]

   It is submitted for Ms Marmara that the compromise was not merely the $100 discount. She also relies on the fact that “no claim was made” for post-judgment interest (i.e., the terms of her offer did not provide for such interest to be payable). The submission should not be accepted. As Kmart submits, the offer did not disavow any “claim” for post-judgment interest. It was silent on the issue. In circumstances in which judgment had already been entered in favour of Ms Marmara in the District Court proceedings, and the offer of compromise did not address the disposition of any proceedings in the Court of Appeal, the implications of the offer for post-judgment interest were not clear.

9. [23]

   As noted above, the offer was served at a time when Kmart had not yet filed or served a notice of appeal identifying its grounds of appeal and the relief sought. The purported offer of compromise could not be regarded as “giving anything away” based on any assessment made on behalf of Ms Marmara of her prospects of defeating the grounds of appeal that were later formulated. Moreover, at the time the offer was made, it was not known whether Kmart would take up on appeal any number of other issues that it had fought at trial, including the heavily contested medical evidence. This was not a case in which Kmart’s prospects on the issues it ultimately chose to pursue in this Court, in an all-or-nothing case, were manifestly lacking in merit.

10. [24]

    It is thus very much to be doubted that the offer made on 24 May 2024 was an “offer … to compromise any claim in the proceedings” for the purpose of r 20.26 (as modified by r 51.47), so as to engage the costs consequence in r 42.14 (as modified by r 51.48).

11. [25]

    However, as was said in Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [28] (Spigelman CJ, Beazley and McColl JJA):

12. [26]

    Even if the offer met the requirements of the rules, the element of compromise was absent. This is a clear case in which the Court should “order otherwise” pursuant to the power in UCPR, r 42.14(2) as modified by r 51.48.

Conclusion and orders

1. [27]

   Ms Marmara’s notice of motion filed on 27 November 2024 had sought an order for post-judgment interest. That application fell away, the judgment and post-judgment interest having been paid. In those circumstances, and given that the application to vary the costs orders should be refused, the notice of motion should be dismissed.

2. [28]

   Kmart seeks its costs. There is no reason why costs should not follow the event.

3. [29]

   The order of the Court is:

   1. (1)

      The notice of motion filed on 27 November 2024 be dismissed with costs.