Glover & Sheils v Roche [2003] ACTSC 39 (16 May 2003)

Last Updated: 20 May 2003

PETER RICHARD GLOVER, PETER LENNOX SHEILS v CHRISTOPHER ROCHE, BARRY ROCHE [2003] ACTSC 39 (16 May 2003)

INDEMNITY COSTS - maintenance of groundless contentions - imprudent rejection of offer of settlement contained in "Calderbank" letter.

Kelson v David Syme & Co Ltd [1998] SCACT 87

Colgate Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225

No SC 665 of 2002

Judge: Crispin J

Supreme Court of the ACT

Date: 16 May 2003

IN THE SUPREME COURT OF THE )

) No. SC 665 of 2002

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: PETER RICHARD GLOVER

First plaintiff

PETER LENNOX SHEILS

Second plaintiff

AND: CHRISTOPHER ROCHE

First defendant

BARRY JOSEPH ROCHE

Second defendant

ORDER

Judge: Crispin J

Date: 16 May 2003

Place: Canberra

THE COURT ORDERS THAT:

1. the defendants pay the plaintiffs' costs of the action; and

2. those costs incurred on and from 26 February 2003 be assessed on an indemnity basis.

1. On 4 April 2003 I ordered that the plaintiffs have leave to enter judgment in the sum of $448,897.21 and also ordered that the counter claim be dismissed. The orders were made pursuant to an application for summary judgment. The plaintiff has now sought an order for costs including an order that costs be paid on an indemnity basis from 19 February 2003 which was the date upon which a "Calderbank" letter was forwarded to the defendant's solicitors offering to accept the sum of $400,000 plus costs in full satisfaction of the claim.

2. I dealt at some length with the principles governing applications for indemnity costs in Kelson v David Syme & Co Ltd [1998] SCACT 87 and do not think it is necessary to re-canvass the various authorities then cited for the purpose of resolving the present application. The Court has a broad discretion in relation to costs though in the case of an application for indemnity costs it must be exercised with due regard for the normal practice to award costs on a "party and party" basis. Hence, it is incumbent upon the plaintiffs to show that there is some adequate reason to depart from this practice. However, the circumstances which have been held to warrant the exercise of discretion to award indemnity costs include both the prolongation of a case by groundless contentions and imprudent refusal of offers of compromise. See generally Colgate Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233.

3. In the present case, I acceded to the application for a summary judgment because, in my opinion, there was no viable defence to the action and the profusion of contentions on the defendant's behalf were manifestly groundless.

4. I accept that the amount originally claimed by the plaintiffs was substantially higher than that which was ultimately claimed at the hearing and which I duly accepted was owed to the plaintiffs. Nonetheless, the figure awarded was still somewhat higher than that which the plaintiffs had offered to accept in the "Calderbank" letter of 19 February 2003.

5. The decision to maintain the defences notwithstanding the offer contained in the letter of 19 February 2003 not only involved the continued maintenance of groundless contentions but the imprudent refusal of a reasonable offer.

6. The proceedings had been commenced in October 2002 and by the time they received this letter the defendants would have already had more than four months to evaluate the plaintiff's claim. Furthermore, it related to liability for payment of monies due as a consequence of an agreement to acquire the plaintiffs' legal practice in July 1998 and the defendants had been aware of their liability under that agreement since that time.

7. I accept that the plaintiffs may have needed to consider and discuss the offer but can see no reason why that process should have taken more than a few days.

8. In these circumstances I propose ordering that the defendants pay the plaintiffs cost on a party and party basis and that those costs be assessed on an indemnity basis with effect from 26 February 2003.

I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Crispin.

Associate:

Date: 16 May 2003

Counsel for the appellants: Dr O'Hair

Solicitor for the appellants: Canberra Lawyers

Counsel for the defendants: Mr Spinks

Solicitor for the defendants: Elrington Boardman Allport

Date of hearing: 11 April 2003

Date of judgment: 16 May 2003