Oliveri Legal Pty Ltd v Cassegrain Tea Tree Oil Pty Ltd (No 3)

1. [1]

   There are two notices of motion before the court; one filed by the defendant on 22 September 2023 and the other filed by the plaintiff on 20 October 2023.

2. [2]

   I gave judgment in the primary proceedings on 7 September 2023 (Oliveri Legal Pty Ltd v Cassegrain Tea Tree Oil Pty Ltd (No 2) [2023] NSWSC 1082). I found in favour of the defendant and ordered the plaintiff to pay the defendant’s costs of the proceedings. I gave leave to the parties to raise any issues concerning my costs order.

3. [3]

   The plaintiff’s notice of motion seeks a stay of my orders and a deferral of the defendant’s motion. The plaintiff has appealed my decision. I understand the appeal is due to be heard on 29 February 2024.

4. [4]

   The defendant’s notice of motion seeks an amendment to my costs order, primarily to seek a period of indemnity costs arising from offers made by the defendant to the plaintiff, but not accepted by the plaintiff. The motion also seeks a direction that caveats lodged by the plaintiff on two properties owned by the defendant be removed (via the dissolution of orders made by Lindsay J on 18 May 2021).

5. [5]

   The plaintiff also seeks an amendment to my costs order, effectively for the defendant to pay any costs associated with preparation of material in response to affidavits served by the defendant but ultimately not relied upon during the hearing (including not calling evidence from the respective deponents of the affidavits).

The caveats

1. [6]

   The primary reason behind the plaintiff’s notice of motion is that if the appeal is successful, it will have lost the benefit of the caveats which provide a protection, or preservation, of the monies that it is seeking from the defendant.

2. [7]

   The defendant’s response is that it has been deprived of the right to deal with the properties since May 2021 and this has had, and will have, a deleterious effect upon the defendant’s business. For example, the defendant cannot raise funds through a bank loan if property that it might provide as a security is subject to a caveat.

3. [8]

   The verdict sought by the plaintiff is large (almost $2 million) and it is fairly obvious from the affidavit filed by Mr Oliveri that the plaintiff is not an overly successful law firm. In other words, if the appeal is successful, the properties could well represent the best chance of recovering much-needed funds from the defendant. Although the defendant is apparently controlled by Mr Thomas Cassegrain, it may well be that Mr Claude Cassegrain still plays a part. I expressed some doubt about Mr Claude Cassegrain’s credit at [92] of the primary judgment.

4. [9]

   I obviously cannot express any opinion on the chances of success of the appeal. Mr Oliveri thinks the prospects are “reasonable.” Mr Locke, who appears for the plaintiff, in his written submissions has elevated the prospects to “real.” I can only say that there were a number of complex issues in the case all of which were forcefully argued by both sides.

5. [10]

   The appeal is not far away, and although some time may pass before a decision is delivered, I think the caveats should remain in place in case the appeal is successful.

6. [11]

   Finally, in respect of the caveats, and to some extent consistent with my above observation about the plaintiff’s law practice, the defendant submitted that there could be little substance behind any undertaking as to damages flowing from the continuing existence of the caveats. The submission depended upon there effectively being an extension of the caveats because, it was said, they would otherwise have expired upon conclusion of the proceedings. In my view, at least for current purposes, and noting that the caveats are in place “until further order,” I think there is no need for any new undertaking as to damages and that the continuation of the caveats is not dependent upon any further undertaking.

7. [12]

   I also note that it will be open to the defendant to raise the question of the caveats at the appeal hearing, either in response to this decision or as an interim provision pending the decision of the Court of Appeal.

Amending the costs order

1. [13]

   The plaintiff, as expressed many times during the hearing, took a very dim view of the defendant not calling witnesses from whom affidavits had been served. This related to Mr Claude Cassegrain and Mr Thomas Cassegrain. The plaintiff went to considerable expense to respond to the affidavits and obviously prepared for the hearing on the basis that the witnesses would be called.

2. [14]

   When it became obvious that the witnesses would not be called, the plaintiff needed to amend its approach and even to rely upon some parts of the affidavits, as admissions, that had been served by the defendant.

3. [15]

   The plaintiff says that the defendant should pay the costs of preparing for the hearing on the basis that the defendant’s witnesses would be called. There is a fundamental flaw in the plaintiff’s argument.

4. [16]

   A plaintiff must prove its case. It may do so through material emanating from a defendant, for example by way of a notice to admit facts or the tendering of documents produced by a defendant. However, if a defendant, at the conclusion of the plaintiff’s case comes to a forensic decision that the plaintiff has not proved its case and there is no need to call its witnesses then it is perfectly entitled to do so. Of course, the tactical decision might fail, and the plaintiff would receive all of its costs. But in this case, it did not fail.

5. [17]

   I cannot see any basis upon which there should be an amendment to the costs order because the plaintiff anticipated the way the defence would be run, but it was run in a different way.

6. [18]

   The defendant’s amendments to the costs order are in two categories:

   1. (1)

      there should be orders in its favour in respect of two decisions by Lindsay J to reserve costs; and

   2. (2)

      there should be an order for indemnity costs arising from pre-hearing offers made by the defendant, the offers being more favourable to the plaintiff than the ultimate result.

7. [19]

   In relation to the costs reserved by Lindsay J, the plaintiff accepted that they should effectively be treated as an order for costs in the cause so that they fall under the general order I have made that the plaintiff pay the defendant’s costs of the proceedings.

8. [20]

   Turning now to the pre-hearing offers, there were three offers, all styled as Calderbank offers (derived from Calderbank v Calderbank [1975] 3 All ER 333).

9. [21]

   The first offer was made on 19 November 2021. It was in the following terms:

10. [22]

    The plaintiff did not respond to the offer. It submitted that it was not unreasonable to take this course. It submitted that the offer was no more than a ‘walk away’ proposal and not a genuine compromise. In addition, the offer was made at an early stage when the defendant’s evidence had not been served and the plaintiff was not in a position to assess the likely outcome of the proceedings.

11. [23]

    In addition, the offer (and in fact all three offers), required the plaintiff to enter into a mutual release of all claims, whether known or unknown. This might have included claims separate to those arising from the proceedings so that such a requirement was not reasonable.

12. [24]

    The second offer was made on 14 October 2022. This offer included the following:

13. [25]

    Once again there was no response to the offer. This time there was more substance to the offer because it contained the payment to the plaintiff of $100,000, albeit in instalments and inclusive of costs.

14. [26]

    Once again, the primary point made by the plaintiff, in justification of its failure to respond, was that the offer required the release of all claims, both known and unknown.

15. [27]

    The third offer was made on 18 July 2023. It was made shortly after an unsuccessful mediation. It had these terms:

16. [28]

    This offer did prompt a response. The following day, 19 July 2023, the plaintiff made the following offer:

17. [29]

    The offer was expressed to be open until 2 August 2023. It was not accepted. It was also put as a Calderbank offer.

18. [30]

    I think there is some substance in the plaintiff’s point about the mutual release, in particular concerning claims known and unknown. I accept that a settlement of proceedings will often include terms to ensure that the whole of the dispute between the parties is finalised, but I think the extension to any possible future claim renders the rejection of the offers to be not unreasonable.

19. [31]

    However, at the same time, I think that the plaintiff’s failure to respond is important; the plaintiff could have suggested an amendment to the release or some other term with which it was comfortable.

20. [32]

    I also think that by the time the third offer was made, in particular because it included a monetary payment of some size ($250,000 within 28 days and not in instalments) that the rejection of the offer had become unreasonable. There can be little doubt that the offer would have placed the plaintiff in a better position than the ultimate result of the case.

21. [33]

    Unlike an offer of compromise under the court rules, there is a greater room for discretion when considering a Calderbank offer. My ultimate purpose in deciding costs is to reach a conclusion which is fair and just. I think this is achieved by awarding indemnity costs from the date of the third offer, namely 19 July 2023.

22. [34]

    While the plaintiff, perhaps consistent with the way the practice was run, as referred to in my principal judgment, could have responded to the first two offers I do not think it would be fair and just to amend the costs order as a result of those offers.

23. [35]

    By the time of the third offer however, when the defendant was offering a real sum, payable within 28 days, I think the position had changed. In relation to the release, the plaintiff could have responded suggesting a different formula. Also, the plaintiff could have requested that the caveats not be removed from the title until receipt of the $250,000. Instead, the plaintiff simply made a counter-offer for a much larger sum.

24. [36]

    In relation to costs of the two motions before me, I think each party has had a degree of success, such that they should each pay their own costs of the motions.

25. [37]

    I make the following orders:

    1. (1)

       Order ‘2’ made on 7 September 2023 is varied to read as follows:

    2. (2)

       The defendant’s application for withdrawal of the caveats bearing identifications AK400763 and AK275111 is refused.

    3. (3)

       Each party is to pay its own costs of the notices of motion filed on 22 September 2023 (by the defendant) and on 20 October 2023 (by the plaintiff).