February 22, 2022

Snowy Mountains Grammar School v Adventurer AWD [2022] NSWSC 53

5 minutes

P, a school, bought a bus from D. It was old stock sold at a substantial discount.

The Court found D had engaged in misleading and deceptive conduct by silence (as to the build year of the bus) when selling the bus to P. But - crucially - the Court found P did not rely on that misrepresentation: [13]

That meant P lost its claim, despite D’s conduct: [1]

This left open the question of legal costs.

Often “costs follow the event” in litigation: the winner will benefit from an order that the loser pays their legal fees, or some of them on the “ordinary” basis. The alternate costs order is a more generous “indemnity” costs order.

Here the Court had to consider the position where D had done the wrong thing but P’s claim failed.

D sought to have P pay its legal costs on the basis P did not accept their offer to refund the P’s purchase price of $135K. The offer was made both pursuant to the UCPR and by way of Calderbank offer: [2]

P replied offering to accept $136.5K plus D paying 85% of P’s legal costs: [3]

The outcome of the litigation was clearly more favourable to D than the offer they made: [4]

In relation to the UCPR offer, D said that it was unreasonable for P not to have accepted it and so an indemnity costs order should follow, this not being an exceptional case where a different order was appropriate.

In relation to the Calderbank offer, D alternatively sought an indemnity costs order on the basis it was unreasonable for P not to have accepted D’s offer: [5]

P said they should take the benefit of a costs order as the Court found D had indeed engaged in misconduct, noting the Court can depart from “costs following the event” where the unsuccessful party succeeds on significant issues: [6], [7]

The D certainly did better than their offer, especially noting P had had the bus for 2 years at the time the offer was made: [9]

At the time the offers were exchanged, the matter had been set for hearing and evidence was largely complete: [10]

P’s claim required proof that there was a misrepresentation (which P proved), that they relied on that misrepresentation (which P failed to prove), and that they suffered loss (which they also failed to prove): [13]

Absent any offer, the Court found D would have its costs on the ordinary basis. Having made the UCPR offer, which it was unreasonable for P not to accept, D got a costs order on the more generous indemnity basis from the date of that offer: [14]

D’s misrepresentation was not misconduct sufficient to disturb this position: [12]

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