Category:
Created:
Updated:
DEFENDANTS ASKS FOR INDEMNITY COST AGAINST PLAINTIFFS FOR UNREASONABLY REFUSING THEIR OFFERS
In the matter of Pacific Springs Pty Ltd [2021] NSWSC 66 (10 February 2021)
This case involves the defendants seeking for indemnity costs order against the plaintiffs for refusing to accept their settlement agreement offer three times.
Facts:
Plaintiffs sought to bring a derivative suit to rectify the members’ register of Pacific Springs Pty Limited. Specifically, they sought a declaration that an allotment of 1,800 shares in Pacific Springs by and to their son was made for an improper purpose and was void and of no effect and, further, an order that the register of the company be rectified. Pacific Springs was not, however, named as a defendant.
The defendants’ solicitors sent a detailed letter to the plaintiffs’ solicitor suggesting that the proceedings were flawed as Pacific Springs was not a defendant and Mr Dzelme was wrongly named as a defendant. It was suggested that, given these defects, the proceedings ought be summarily dismissed with costs. Accompanying the open letter was a without prejudice letter offering that, if the plaintiffs agreed for the proceedings to be dismissed, then Mr Dzelme would bear his own costs. The plaintiffs refused.
The defendants’ solicitors conveyed a second offer of settlement. The “without prejudice save as to costs” letter accompanied an open letter dealing with various outstanding procedural matters, and noting that Mr Dzelme did not agree to a further adjournment. Proposed short minutes of order were proffered to progress the proceedings. In the without prejudice letter, the defendants’ solicitors expressed the view that the plaintiffs’ claim for relief in the proceedings was not strong and was likely to be dismissed, with the plaintiffs being required to pay the defendants’ costs of the proceedings.
The defendants made a third offer. The defendants offered to pay $200,000 to the plaintiffs, with the proceedings to be dismissed with no order as to costs and the parties to enter into a deed of settlement and release.
The plaintiffs did not accept this offer. By the time the third offer was made, the defendants had incurred costs of some $308,000. The defendants submit that an indemnity costs order should be made as the plaintiffs unreasonably refused the offers of settlement.
Issue: Should an indemnity cost be ordered against the plaintiffs for unreasonably refusing the offers of the defendant?
Law:
Held:
The third offer enabled the plaintiffs to be reimbursed for their own legal costs, retrieve their security for costs and extinguish their exposure to the defendants’ costs where the relief sought in the proceedings was likely of low value.
Further, the plaintiffs had by then been served with all of the defendants’ evidence which indicated that a significant number of witnesses would be called and documentary evidence tendered which, if accepted, would mean that the plaintiffs’ claims would fail. Such matters were no doubt the subject of discussion at the mediation, canvassed in the position papers, and informed the offers of settlement which were made at that time. The only remaining ‘unknown’ was how the various witnesses would perform at the hearing, and what a judge would ultimately decide. The plaintiffs had all the information that they needed and sufficient time to consider it. In all of the circumstances, and for the reasons advanced by the defendants’ submissions in respect of this offer, I consider that the plaintiffs’ rejection of the third offer was unreasonable and warrants an order for indemnity costs from the date of the offer.
Conclusion: Court orders the plaintiffs to pay the defendants’ costs for the proceedings.
0
0
0
0
0
0
0
