Dragon Property Development & Investment Pty Ltd v 183 Eastwood Pty Ltd (No 2)

1. [1]

   On 6 July 2022, I delivered an ex-tempore judgment in this matter (Dragon Property Development & Investment Pty Ltd v 183 Eastwood Pty Ltd [2022] NSWSC 910). The sole issue in the proceedings was whether the defendant had given a rogue, Scott Chan, any authority to enable him to persuade the plaintiff that he was acting as the defendant company in entering into a contract and taking the plaintiff’s money. I found the defendant had done so, and therefore awarded the plaintiff $1,672,000.

2. [2]

   At [82] of my reasons, I ordered that the defendant pay the plaintiff’s costs on the ordinary basis as agreed or assessed, unless a party sought a different costs order.

3. [3]

   The plaintiff has sought a special costs order on the basis of a Calderbank offer.

4. [4]

   The defendant has not contested the plaintiff’s application.

Calderbank offer

1. [5]

   On 13 January 2022, the plaintiff sent the defendant a letter, which made reference to the principles of Calderbank v Calderbank (1975) 3 All ER 333. The plaintiff offered full and final settlement of the dispute if the defendant paid $1,600,000 to the plaintiff. The letter noted that the plaintiff had already incurred costs of approximately $70,000.

2. [6]

   Just recently, Ward P summarised the well-known principles in relation to costs in Abdi v Abdi (No 2) [2022] NSWSC 582 at [19]-[30]:

3. [7]

   Significantly, her Honour continued in relation to principles concerning Calderbank offers:

4. [8]

   I consider that the offer in the present case was in the form of a valid offer. The offer stated: “[t]his formal offer of settlement is made pursuant to the principles of Calderbank v Calderbank [1975] 3 WLR 586”. Although it was not explicitly apparent in the terms of the offer that it would be relied on for the purposes of a special costs order, the letter does state that it is “without prejudice save as to costs”. I consider this sufficient to constitute a valid offer: Assaf v Skalkos [2000] NSWSC 935 at [110] (Carruthers AJ); Geoffrey Andrew Smith v Robert Gould [2014] VSCA 138 at [156] (Warren CJ, Osborn and Beach JJA); Farlow v Farlow [2009] FamCA 46 at [26] (Mushin J); Becker v Queensland Investment Corporation (No 2) [2009] ACTSC 147 at [12] (Refshauge J).

5. [9]

   The offer was all-inclusive in that it made no separate reference to a costs component. It has been said that a settlement offer which is ‘inclusive of costs’ is not suited to being an effective Calderbank offer, because it does not allow the Court to decide whether the offeree obtained a worse outcome in the judgment: Van Zonneveld v Seaton [2005] NSWSC 175 at [6] (Campbell J). The offer in this case, however, specifies the approximate legal costs already incurred by the plaintiff to the date of the offer. Such an offer may constitute a Calderbank offer, because it is possible to know that the combination of $1,600,000 and $70,000 was less than the total sum claimed and in fact awarded: Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322 at [143] (Basten JA, with whom Beazley JA agreed).

6. [10]

   In terms of the unreasonableness of the defendant’s rejection of the offer, the plaintiff pointed to the timing of the offer. It said that, at the time of the offer on 13 January 2022, the defendant had the benefit of the plaintiff’s Reply filed on 13 December 2021, which squarely pleaded the issue of ostensible authority and drew attention to relevant particulars. Further, the offer was made at a time when all the affidavit evidence had been served.

7. [11]

   The plaintiff also submitted that the offer pointed out the likely findings that would be made at hearing, which proved correct.

8. [12]

   There is no question that the terms of the offer were more favourable to the defendant than the terms of my judgment. The plaintiff obtained judgment in the sum of $1,672,000, which is $72,000 more than the sum in the offer. Further, as a result of my judgment, the defendant has an adverse costs order against it, which it could have avoided.

9. [13]

   Finally, the plaintiff submitted that there was ample time for the defendant to consider the offer. The offer was open for 14 days, which, although not a generous time, is not so short as to be unreasonable: Brymount Pty Ltd v Cummins (No 2) [2005] NSWCA 69 at [15] (Beazley JA, with whom Ipp and McColl JA agreed). In circumstances where all the evidence was available, the plaintiff had outlined the merits of its case, and the matter only concerned an application of the general principles of agency law to largely uncontested facts, I consider that 14 days was a reasonable time for the defendant to assess its position.

10. [14]

    On balance, and in the absence of contrary submissions from the defendant, I consider that the defendant unreasonably rejected the plaintiff’s offer and, therefore, the plaintiff is entitled to a special costs order based on the offer.

Orders

1. [15]

   The Court orders that:

   1. (1)

      The order made as to costs in the principal judgment is set aside.

   2. (2)

      The defendant is to pay the plaintiff’s costs on the ordinary basis as agreed or assessed up to 13 January 2022 and on an indemnity basis thereafter.