Alceon Group Pty Ltd v Rose (No 2)

1. [1]

   HER HONOUR: On 3 July 2015 I gave judgment in proceedings brought by the plaintiff (Alceon Group Pty Ltd) (“Alceon”) against Mr Peter Francis Rose and Mrs Betty Nola Rose: Alceon Group Pty Ltd v Rose [2015] NSWSC 868.

2. [2]

   The proceedings were commenced by a Statement of Claim in which Alceon claimed against Mr and Mrs Rose judgment in the sum of $2 million, and possession of land which was subject to a mortgage in favour of Alceon to secure the debts of Quadwest Developments Pty Ltd.

3. [3]

   Although, it seems, initially Mr and Mrs Rose filed a joint defence to the claim, as the case proceeded to trial, they relied on separate defences. Mr Rose raised a number of defences, all of which failed. Mrs Rose pleaded the same defences; she adduced no evidence and addressed no argument in support of them, and, in her case, they also failed. However, Mrs Rose pleaded, additionally, a defence under the principles stated in Garcia v National Australia Bank Ltd [1998] HCA 48; 194 CLR 395, and a defence under the Contracts Review Act 1980 (NSW). Those defences succeeded. Accordingly, the following orders were made:

4. [4]

   It remains to determine the questions of costs.

5. [5]

   Alceon seeks an order that Mr Rose pay the costs of the proceedings, and that, from 13 September 2013, those costs be assessed on an indemnity basis. As against Mrs Rose, while implicitly recognising that Mrs Rose is prima facie entitled to an order for costs in her favour, Alceon seeks a special order, by reason of her reliance on the failed defences. It seeks an order that not only would exclude any liability on Alceon to pay the costs associated with those defences, but, further, an order that Mrs Rose pay Alceon’s costs of meeting those defences.

6. [6]

   The basis on which Alceon seeks an order that Mr Rose pay part of the costs on an indemnity basis lies in an Offer of Compromise, and a letter, each dated 12 September 2013. The Offer of Compromise was in the following terms:

7. [7]

   The Offer was expressed to be made in accordance with Uniform Civil Procedure Rules 2005 (NSW) 20.26, and to be open for acceptance by “the defendants” for a period of 28 days. The letter asserted that one of the defences pleaded by Mr and Mrs Rose was “bound to fail”, that the Offer contained in the Offer of Compromise represented a better outcome than Mr and Mrs Rose would obtain at trial, and that it would be unreasonable for them not to accept the Offer. Alceon therefore reserved the right to seek an order that costs be assessed on an indemnity basis in the event that the assertions in the letter proved to be prophetic. Reference was made to the principles stated in Calderbank v Calderbank [1975] 3 All ER 333.

Determination

1. [8]

   UCPR 20.26 is relevantly in the following terms:

2. [9]

   The Offer of Compromise was made jointly to Mr and Mrs Rose. It was not, in its terms, capable of acceptance by Mr Rose alone. That is especially so, since one of the orders sought in the Statement of Claim was for possession of jointly owned real estate.

3. [10]

   It may true that Mr Rose could have made a counter-offer, accepting the offer so far as it related to him, but that is not the same as acceptance of an Offer of Compromise.

4. [11]

   Further, it was apparent to Alceon, at least from 4 April 2014, when Mrs Rose’s Amended Defence was filed raising the Garcia and Contracts Review Act defences, that she proposed to defend the claim on a different basis to that advanced by Mr Rose. That, if nothing else, ought to have alerted Alceon to the need to seek to deal with the defendants separately.

5. [12]

   In any event, Alceon has not achieved a result more favourable than its Offer. The two paragraphs of the Offer are not expressed to be disjunctive; they are most readily read as conjunctive or cumulative - that is, seeking both judgment in the sum of $2 million, and possession of the property, including that part of the property of which Mrs Rose is the owner and as to which Alceon is not entitled.

6. [13]

   Alceon has not justified its claim for an order for indemnity costs against Mr Rose.

7. [14]

   The order I propose to make in respect of Mr Rose is that he pay the costs of Alceon assessed on the ordinary basis.

8. [15]

   So far as Mrs Rose was concerned, given that she did not seek to support the failed defences, the only costs involved were of preparation in meeting them. Those costs were coextensive with the costs incurred by Alceon in meeting those same defences, as to which an order in favour of Alceon will be made. I do not propose to make an additional order that would enable Alceon to recover the same costs in duplicate.

9. [16]

   The orders I make are: