Alcock v KEM Projects Pty Ltd (No 2)

[2023] ACTMC 35

MAGISTRATES COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Alcock v KEM Projects Pty Ltd (No 2)

Citation: 

[2023] ACTMC 35

Hearing Date: 

26 July 2023

Decision Date: 

21 September 2023

Before:

Magistrate Temby

Decision: 

See [47]

Catchwords: 

CIVIL LAW - COSTS – where costs follow the event – where plaintiffs enjoyed mixed success on multiple causes of action – where Calderbank offer was refused

Legislation Cited: 

Civil Law (Wrongs) Act 2002 (ACT)

Court Procedures Rules 2006 (ACT) rr 1722, 1723

Limitations Act 1985 (ACT) s 40

Cases Cited: 

Alcock v KEM Projects Pty Ltd & Anor [2020] ACTMC 9

Allen v Wilson (No 2) [2023] ACTSC 102

Calderbank v Calderbank [1975] 3 All ER 333

Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435

Hulanicki v Walton (No 2) [2015] ACTCA 45

Parties: 

Robert Alcock t/as Imaginative Concreting & Construction ( Plaintiff)

Kem Projects Pty Ltd t/as React Roofing ( First Defendant)

Paul Chesterfield ( Second Defendant)

Representation: 

Counsel

Self-represented ( Plaintiff)

G Blank (First Defendant)

G Blank (Second Defendant)

Solicitors

Self-represented ( Plaintiff)

Terracon Legal (First Defendant)

Terracon Legal (Second Defendant)

File Number:

CS 25 of 2015

MAGISTRATE TEMBY:

Introduction

1․On 15 January 2015, the Plaintiff commenced proceedings against the First and Second Defendants.

2․In the course of the proceedings, the Plaintiff advanced four distinct claims, namely:

(a)a claim against the First Defendant in relation to building works at a property in Macquarie that were carried out in 2005 (the Macquarie Claim);

(b)a claim against the First Defendant in relation to buildings works at a property in Lyneham that were carried out in 2010 (the Lyneham Claim); and

(c)a claim against the Second Defendant, in relation to:

(i)    rectification works that were required in relation to a property in Giralang in 2011 (the Giralang Claim); and

(ii)   a request that the Second Defendant appear as an expert witness in seperate proceedings that were brought by the Second Defendant in relation to the Giralang property (the Expert Claim).

3․The substantive hearing of these proceedings was conducted over seven days (27-28 February 2017, 26-27 March 2018, 20-21 September 2018 and 7 March 2019). I note that the Plaintiff sought an adjournment of the hearing on 28 February, which was granted over the Defendants’ objection. The costs of the adjournment were reserved by the Court and are sought by the Defendants.

4․On 1 May 2020, Magistrate Morrison delivered judgment in Alcock v KEM Projects Pty Ltd & Anor [2020] ACTMC 9 (Magistrate Morrison’s decision) which:

(a)dismissed the Macquarie Claim;

(b)dismissed the Lyneham Claim;

(c)rejected the Giralang Claim; and

(d)entered judgment in favour of the Plaintiff with respect to the Expert Claim, in the sum of $10,023.50, comprising:

(i)    damages of $6,600;

(i)    interest in the amount of $3,423.50; and

(e)stated that his Honour would hear from the parties in relation to the question of costs.

5․The nature of each of the claims brought by the Plaintiff are set out in detail in Magistrate Morrison’s decision.

History of proceedings subsequent to Magistrate Morrison’s decision

6․On 8 November 2022, the Court made orders which provided a timetable for the determination of the parties’ costs entitlements, including in relation to the service of written submissions. The Defendants were required to serve an affidavit of service, presumably with respect to service of the Court’s orders.

7․It is apparent, from an affidavit sworn by Mr Harry Kay of Terracon Legal (the Defendants’ solicitors) on 2 March 2023, that the Defendants attempted to contact the Plaintiff following the making of the Court’s orders on 8 November 2022, through various methods, in order to advise the Plaintiff of the Court’s orders and the listing of the matter for further directions. However, the Plaintiff did not respond to any of these communications and has not further participated in the proceedings.

8․Ultimately, Magistrate Taylor (as her Honour then was) made orders on 15 March 2023:

(a)deciding that the Court’s orders of 8 November 2022 were served on the Plaintiff on 15 February 2023;

(b)granting the Defendants leave to proceed in accordance with the orders of 8 November 2022;

(c)requiring the Defendants to serve a copy of the Court’s orders of 15 March 2023 by post and email (to the addresses identified in the order); and

(d)requiring that the Plaintiff pay the Defendants’ costs of the application giving rise to the Court’s orders of 15 March 2023.

9․An affidavit sworn by Mr Kay on 21 March 2023 confirms that he complied with the service requirement of the Court’s orders of 15 March 2023 on 16 March 2023.

10․An affidavit sworn by Mr Kay on 3 July 2023 attests to Mr Kay, on 4 April 2023, having served the Plaintiff with a stamped copy of the Defendants’ written submissions on costs, to the postal and email addresses identified in the Court’s orders of 15 March 2023.

11․On 20 April 2023, the Court wrote to the Plaintiff at the same addresses, to advise that the matter had been listed for hearing on 26 July 2023.

12․In the above circumstances, I considered that it was appropriate to proceed to determine the question of costs in the Plaintiff’s absence when the matter came before me on 26 July 2023. The Defendants were represented by Mr Blank of Counsel, instructed by Mr Kay. Mr Blank made oral submissions and I also had regard to the Defendants’ written submissions.

Extent costs orders

13․I note that, in addition to the costs order made on 15 March 2023, a number of other costs orders have been made during the proceedings, namely orders of:

(a)15 December 2015, that the Defendants pay the Plaintiff’s costs of an application for disclosure;

(b)15 December 2015, that the Plaintiff pay the Defendants’ costs of amendments made to the Plaintiff’s statement of claim, including costs thrown away by reason of the amendments;

(c)20 April 2016, that the Defendants pay the Plaintiff’s costs of the Defendants’ application to withdraw admissions, including costs thrown away as a result of the application, on an indemnity basis;

(d)20 April 2016, that the Defendants pay the Plaintiff’s costs of an application dated 22 March 2022 on a party-party basis; and

(e)14 June 2017, that the Plaintiff pay the Second Defendant’s costs of, and incidental to, an application dated 18 April 2017, as agreed or assessed.

14․My decision in relation to the question of the costs of the proceedings is subject to (and does not disturb) these earlier orders.

Relevant legal principles

15․In Allen v Wilson (No 2) [2023] ACTSC 102 (Allen v Wilson (No 2)), McWilliam J set out a number of principles that are relevant to the determination of costs in circumstances such as the present, where multiple claims are advanced. Her Honour noted, at [5] to [13], as follows (emphasis in original):

[5] First, costs are in the discretion of the Court: r 1721(1) of the Court Procedures Rules 2006 (ACT). The discretion is a very wide one, though it must be exercised judicially, in accordance with established principle and the statutory context: Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 (Oshlack) at [35], [65].

[6] Second, the fundamental purpose of the discretion is to compensate the successful party, not to punish the unsuccessful party: EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd [2011] FCAFC 92 at [9]. A party who is substantially successful is entitled to recover its costs from the opposing party because costs are compensatory – that is, it is just and reasonable that the party who has caused the other party to incur costs should reimburse that party for the liability incurred: Oshlack at [35]; Latoudis v Casey (1990) 170 CLR 534 at 543 per Mason CJ, at 562-563 per Toohey J, at 566-567 per McHugh J (Latoudis).

[7] Third, in the absence of special features warranting a different order, costs ordinarily follow the event: Oshlack at [67]; GJ v AS (No 4) [2017] ACTCA 7 at [25]-[27].

[8] In Priestley v Priestley (No 2) [2016] NSWSC 1259 at [10]-[49], White J (as his Honour then was) gave detailed consideration as to what the phrase “costs follow the event” means. His Honour drew attention to the history of the law and practice in relation to costs, including referring at [22]-[23] to Reid, Hewitt & Co v Joseph [1918] AC 717 and extracting a passage from the judgment of Lord Finlay LC at 724-5:

The expression “costs shall follow the event” had a definite meaning and imported that the costs of the several issues went to the party who succeeded upon them respectively, while the general costs went to him who on the whole succeeded in the action. If the proviso ... were read as providing that the costs were to follow the event in the sense of giving the costs of all the issues to the party who had recovered something in the action while he had failed upon most of the issues, it would have introduced a startling novelty while its object was to keep up the old practice as to costs. Such an alteration would, moreover, in its working have been inequitable. ... It is not to the purpose to argue that the injustice which would arise under the order so construed might be corrected by the exercise of the special power to order otherwise for good cause conferred upon the judge of the Court.

[9] White J went on to say at [32]:

I think the background to the expression “costs follow the event” is material to an understanding of when a party should be held to be the successful party in the proceedings, accepting that the event might now be considered, at least primarily, as relating to the determination of the proceedings as a whole.

[10] Fourth, it may be appropriate to depart from the usual order where a successful party has propounded a substantially exaggerated claim, succeeds only to a limited extent, and the exaggeration has resulted in the incurring of additional costs: O’Neil v Williams (costs) [2007] NSWSC 51 at [5] per Brereton J, as his Honour then was, cited in Summers v Repatriation Commission (No 2) [2015] FCAFC 64 at [30] (among others).

[11] Here, there were multiple causes of action and therefore multiple issues in the proceedings. In Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 (Bostik), the Court of Appeal (Beazley, Ipp and Basten JJA) dealt with the principles guiding such circumstances at [38] (emphasis added):

The principles governing the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which the successful party in the proceedings or on the appeal did not succeed were reviewed by this court in Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373. Those principles may be summarised as follows:

·     Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported).

·     In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Ltd (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal.

·     If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick (No 2) [2006] NSWCA 374 at [27].

·     Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed).

·     A separable issue can relate to ‘any disputed question of fact or law’ before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34].

·     Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261 at 272.

[12] Ultimately, the question is not what is the appropriate starting point, but what should be regarded as a fair and just outcome in ordering costs: McLaughlin v Dungowan Manly Pty Ltd [2010] NSWSC 306 per Ward J (as the President then was) at [22] and [24], cited in Priestley at [51]. Statements in this Court are to similar effect. In Clarkson Williams Partners Pty Ltd v Vaughan (No 2) [2016] ACTCA 8, the Court of Appeal stated (at [12]) that ultimately, the Court is required to determine the appropriate order in the interests of justice.

[13] Thus, fairness dictates how the discretion as to costs should be exercised. If an issue- by-issue approach produces a result that is fairer than giving the successful party all of his or her costs notwithstanding his or her failure on particular issues, then the issue-by- issue approach should be adopted: Bowen Investments v Tabcorp Holdings (No 2) [2008] FCAFC 107 at [5].

16․In Allen v Wilson (No 2), her Honour was not required to deal with the considerations relevant to assessing the consequences of a party making an offer of compromise. In Hulanicki v Walton (No 2) [2015] ACTCA 45, the Court of Appeal noted, at [13] to [16]:

[13] The acceptance of reasonable offers of compromise is in the interests of litigants and the public; it minimises the personal and financial costs to litigants and it enables the courts to focus resources on claims that are not amenable to compromise. “The non-acceptance of a Calderbank offer is a factor, in some cases a strong factor, to be taken into account on an application for indemnity costs”: Stewart v Atco Controls Pty Ltd (In Liquidation) (No 2) (2014) 252 CLR 331 at [4]. On the other hand, it is critical that litigants have ready access to justice and do not feel unreasonably constrained to compromise cases.

[14] When a Calderbank offer has been made, the issue is whether it was unreasonable to reject the offer, considering all the circumstances of the case, including the apparent strength of each party’s case at the time that the offer was made: Quirk v Bawden (1992) 112 ACTR 1 at 6; Leichhardt Municipal Council v Green [2004] NSWCA 341 at [56]; South Eastern Sydney Area Health Service v King [2006] NSWCA 2 at [90]. In Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435 at [25] the Victorian Court of Appeal noted that other matters that should be taken into consideration when evaluating the reasonableness of a rejection are:

(a)      The stage of the proceeding at which the offer was received.

(b)      The time allowed to the offeree to consider the offer.

(c)      The extent of the compromise offered.

(d)      The offeree’s prospects of success, assessed as at the date of the offer.

(e)      The clarity with which the terms of the offer were expressed.

(f)Whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it.

[15] Even where it is found that a Calderbank offer should have been accepted and the offeree achieves a result that is no better than the offer, it does not automatically follow that indemnity costs will be awarded against the offeree: Evans v Braddock (No 2) [2015] NSWSC 518 at [49]

[16] The applicant for indemnity costs bears the onus of showing that rejection of the offer was unreasonable: Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [26]; Vizovitis v Ryan (No 2) [2014] ACTSC 301 at [17].

Defendants’ position

17․The First Defendant seeks an order that the Plaintiff pay its costs of the proceedings on an indemnity basis or, alternatively, that the Plaintiff pay its costs on a party-party basis.

18․The Second Defendant seeks orders (expressed in the alternative) that:

(a)the Plaintiff pay his costs on an indemnity basis or, at least, that the Plaintiff pay the Second Defendant’s costs from the date that the Defendants sent a Calderbank letter to the Plaintiff on 24 September 2015 on a party-party basis;

(b)each party bear its own costs; or

(c)the Second Defendant pay 33% of the Plaintiff’s costs (in accordance with the Court Procedures Rules 2006 (ACT) (Court Procedures Rules) arising in relation to the Expert Claim, with some further reduction to recognise the limited success of the Plaintiff.

19․As noted above, the Defendants also seek an order that the Plaintiff pay the Defendants’ costs arising from the adjournment of the hearing on 28 February 2017.

Macquarie Claim

20․In relation to the Macquarie Claim, the First Defendant notes that:

(a)the Plaintiff claimed that roofing works undertaken for him by the First Defendant at the Macquarie premises were defective and required rectification costing $24,366;

(b)the majority of the trial was taken up with the evidence and submissions dealing with this claim;

(c)the issues to be addressed were complex and related to the nature of the agreement, the relevant parties, and also the nature of the works themselves and whether they required rectification. In this respect, I note that some of the complexity arose because consideration needed to be given to the application of the Limitations Act 1985 (ACT), a request from the Plaintiff under section 40 of that Act for an extension of time to bring proceedings and a request made by the Plaintiff after the close of evidence that his tort claim be treated as one for contribution under the Civil Law (Wrongs) Act 2002 (ACT) (Wrongs Act) rather than a claim in negligence; and

(d)the First Defendant was entirely successful in defending the Macquarie Claim.

21․The First Defendant also relies on the Calderbank offer that was made on 24 September 2015.

22․The First Defendant submits that, although the amount claimed by the Plaintiff was small, the costs should not be capped by the percentages set out in rule 1722 of the Court Procedures Rules and, subject to the impact of the Calderbank offer, standard party-party costs should be awarded.

Lyneham Claim

23․As is the case in relation to the Macquarie Claim, the First Defendant:

(a)notes that he was entirely successful in defending the Lyneham Claim; and

(b)relies on the Calderbank offer of 24 September 2015.

Giralang and Expert Claims

24․The Second Defendant’s submissions focus on the Expert Claim. The Second Defendant notes that:

(a)the Plaintiff sought $21,900 and that he was awarded $6,600 plus interest; and

(b)the Giralang and Expert Claims occupied approximately 14% of the seven-day trial and 13% of the volume of the parties’ written submissions.

25․The Second Defendant submits that, for the purposes of rules 1722 and 1723(1)(b) of the Court Procedures Rules, the interest figure does not form part of the judgment sum, and thus the amount awarded was less than $10,000. For that reason, the Second Defendant submits that the Plaintiff is entitled to 33% of his legal costs, insofar as they relate to the Expert Claim. The First Defendant submits that it should not be liable with respect to any award of costs for the Expert Claim.

26․The Second Defendant also relies on the Calderbank offer of 24 September 2015.

27․The Second Defendant submits that, if he is not entitled to his costs as a result of the Calderbank offer, each party should bear their own costs in relation to the Giralang and Expert Claims, given:

(a)the small proportion of the trial taken up with the issues relating to the Giralang and Expert Claims;

(b)the significant difference between the amount claimed and the amount awarded by Magistrate Morrison; and

(c)that unnecessary expert evidence was adduced and the expert was brought to Canberra when it was not indicated that he would be required for cross-examination (and no questions were asked of him in cross-examination).

Calderbank offer

28․On 24 September 2015, the Defendants’ solicitors wrote to the Plaintiff’s then solicitors. The letter stated that the Defendants considered that they were not indebted to the Plaintiff at all, but nevertheless made an offer to settle the proceedings for an amount of $7,000, with each party to bear their own costs in relation to the proceedings.

29․The offer was stated to be made on the basis of the principles derived from Calderbank v Calderbank [1975] 3 All ER 333 (Calderbank) and remained open for acceptance until 9 October 2015. The letter was sent on a ‘without prejudice save as to costs’ basis.

30․The letter also alluded to the desirability of avoiding having the matter proceed to a hearing “before the Referee” and advised that, “In the event the Offer is not accepted, we hold instructions to prepare and file a formal bill of costs for taxation, and, in circumstances where our client is successful in achieving a result in taxation more favourable to it than the amount of this offer, will rely on a copy of this letter in support of an order that your client pays our client’s costs of the proceedings on an indemnity basis”. The references to a costs assessment process seems to be an error and makes the letter somewhat confusing to read, although the point sought to be made by the letter can be discerned.

31․The Defendants’ offer was not accepted. The Defendants submit that the Calderbank offer is sufficiently close to the sum ultimately awarded that it was unreasonable for the Plaintiff not to accept the offer. They submit that the Plaintiff should pay the legal costs for each of the Defendants after the date of the offer on an indemnity basis.

Consideration

Magistrate Morrison’s decision

32․In relation to the Macquarie Claim, his Honour decided that:

(a)it was not just and reasonable to extend the limitation period in relation to the Plaintiff’s claim in contract (at [68]);

(b)the Plaintiff was not permitted to rely on the claim sought to be raised by the Plaintiff in closing submissions, under the Wrongs Act, as it was not pleaded in his statement of claim and his case was not run on the basis of any claim for contribution under the Wrongs Act (at [81]); and

(c)the Plaintiff’s claim in negligence (a claim that the Plaintiff raised in an amendment to his claim in 2016) should be dismissed in circumstances where the Plaintiff’s submissions did not address the negligence claim as pleaded and the Plaintiff had not, in any event, led appropriate evidence to support a negligence claim (at [82]-[84]).

33․His Honour also dismissed the Lyneham Claim (at [145]), having regard to his Honour’s findings that:

(a)the Plaintiff had previously provided services by way of ‘putting his licence’ on jobs for the Second Defendant without charge;

(b)there was no agreement between the Plaintiff and either of the Defendants for payment and no quantum meruit claim was pursued by the Plaintiff; and

(c)in any case, any supervision role assumed by the Plaintiff could not have been over the technical aspects of the asbestos removal because that was the specialists’ job and, insofar as other worker or contractor issues were to be covered by the Plaintiff’s supervision, the Plaintiff would have needed to be present while the asbestos removal was taking place but his evidence was that he was not on site at all relevant times.

34․In relation to the Giralang and Expert Claims, his Honour determined that:

(a)the Plaintiff did perform some building related work at the premises in Giralang (at [150]);

(b)the Plaintiff did act as an expert witness in litigation pursued by the Second Defendant with respect to the presence of termites in the premises he bought in Giralang (at [151]);

(c)the Plaintiff’s explanation as to there being an agreement that he be paid $13,500 for the Giralang Claim was not rational (leading his Honour to reject the Plaintiff’s testimony that he was engaged to do the work which was the subject of an invoice for that amount) (at [188]); and

(d)an agreement was made between the Plaintiff and the Second Defendant that the Plaintiff would be paid $300 per hour for his work as an expert in the Second Defendant’s litigation (at [192]). While his Honour found that the Plaintiff’s evidence as to the time he spent under the agreement was deficient (at [197]), his Honour found that the Plaintiff was entitled to be paid for 22 hours, totalling $6,600 (at [200]).

The adjournment of 28 February 2017

35․The adjournment request was made by the Plaintiff and opposed by the Defendants. The request was made in order to give the Plaintiff an opportunity to seek legal advice, on the basis that the Plaintiff “did not appear to appreciate the significance to his claimed causes of action of the difference in corporate identity between the first defendant and another company which is not a party to these proceedings” (Magistrate Morrison’s decision, at [1]).

36․The hearing was adjourned shortly after 1pm on 28 February 2017. It is possible that the Defendants incurred costs which were wasted as a result of the adjournment, although the costs thrown away by reason of the adjournment would have been limited to the loss of the afternoon hearing time on 28 February 2017. As the hearing continued for several days after that time, any costs incurred in having to prepare for further hearing days were not caused by the adjournment.

37․While the Plaintiff was in a difficult position, having become unrepresented a short time prior to the commencement of the hearing, it was his request for an adjournment and the Defendants were in a position to proceed. The Plaintiff should pay the Defendants’ costs thrown away by reason of the adjournment.

Calderbank offer

38․In the circumstances of this matter, consideration of the effect of the Calderbank offer requires an understanding of how the issue of costs should be resolved aside from the making of the offer. That understanding informs the reasonableness, or otherwise, of the Plaintiff’s failure to accept the Defendants’ settlement offer.

39․In my view, this is a case where it would be appropriate to differentiate between the claim with respect to which the Plaintiff was successful (the Expert Claim) and the claims with respect to which he was not. The claims were clearly separable and the claims upon which the Plaintiff was unsuccessful, in particular the Macquarie Claim, took up a significant part of the trial. Whilst I have the benefit of hindsight, it is my view that the parties would have appreciated the distinct nature of the claims and could have anticipated that the Macquarie and Lyneham Claims would have taken up much more time than the Expert Claim in terms of preparation and hearing time.

40․Absent the Calderbank offer, I consider that the appropriate order to make, in the interests of justice, would be one providing for:

(a)the Plaintiff to pay the First Defendant’s costs of the Macquarie and Lyneham Claims; and

(b)the Second Defendant to pay the Plaintiff’s costs of the Expert Claim (and the Giralang Claim if not clearly separable from the Expert Claim).

41․Absent an order to the contrary, the parties would only be able to recover the relevant percentage of the court scale of costs (rules 1722 and 1723 of the Court Procedures Rules). However, I do not consider that the application of the relevant rules is appropriate in this case. This is because:

(a)of the complexity of the proceedings, at least insofar as they concerned the Macquarie Claim, and the volume of evidence that was led and needed to be addressed; and

(b)the circumstances in which judgment is given for the Plaintiff, but costs orders are made both for and against the Plaintiff, with respect to certain aspects of the proceeding, do not fall neatly within any of the scenarios contemplated by rule 1723.

42․What, then, is the impact of the Calderbank offer? This requires consideration of whether it was unreasonable for the Plaintiff to reject the Defendants’ offer.

43․I note that a Calderbank offer may be made jointly by Defendants for the resolution of proceedings in the way the Defendants’ offer was put in these proceedings. In terms of the considerations identified in Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435 at [25]:

(a)the offer was received by the Plaintiff after the Defendants had filed their respective defences, but prior to the Plaintiff filing an amended statement of claim – in my view, the offer was made at a stage of the proceedings by which the Plaintiff should have been cognisant of the relative strength of the parties’ cases;

(b)the Plaintiff was given two weeks to consider the offer – there is nothing to suggest that this was not an adequate time to consider the offer;

(c)the Plaintiff’s prospects of successes, assessed as at the date of the offer, were:

(i)    not strong in relation to the Macquarie Claim, noting that the Plaintiff needed an extension of time to be granted under the Limitation Act 1985 (ACT) in order to pursue the breach of contract claim he had made, and he had not yet pleaded his negligence claim (which was unsuccessful in any event);

(ii)   not strong in relation to the Lyneham Claim, noting that there was no documentary evidence of an agreement (and the Court found that there was no agreement at all), the Plaintiff had previously ‘lent’ his licence without charge (being evidence to support the view that there was no agreement for the First Defendant to pay in this instance), and the Plaintiff did not have the expertise to supervise the technical aspects of the asbestos removal and was not present at all relevant times in order to give the First Defendant the benefit of his supervision otherwise;

(iii)  not strong in relation to the Giralang Claim (ultimately, the Court found that it was not rational); and

(iv)  good in relation to the Expert Claim;

(d)the terms of the offer were not clearly expressed, given the confusing references to a costs assessment process. Nevertheless, the key point of the correspondence, being that the Defendants were offering $7,000, inclusive of costs, to resolve the proceedings, was clear. In my view, the Plaintiff’s solicitors would have realised the error in the drafting of the letter and would have appreciated that the Defendants sought to put the Plaintiff on notice that they would seek an indemnity costs order if the Plaintiff failed to achieve a better outcome; and

(e)similarly, the letter did foreshadow an application for indemnity costs in the event that the Plaintiff rejected the offer, albeit that the letter refers to the Defendants obtaining a better result on taxation, rather than a better result at hearing.

44․Ultimately, despite the deficiencies in the way the Calderbank letter was expressed, I consider that it was unreasonable for the Plaintiff to reject the offer. This is because:

(a)as noted above, I consider that the Plaintiff’s solicitors would have understood the nature of the Defendants’ offer, despite the deficiencies in the letter;

(b)the only claim that the Plaintiff was likely to succeed on was the Expert Claim;

(c)that claim was the least complex of all the claims and would require the smallest volume of work to pursue;

(d)the likely award of damages for the Expert Claim could be predicted with a reasonably high degree of accuracy, given that there were only two inputs – an hourly rate (which could be worked out by reference to the rate payable to other experts) and the number of hours the Plaintiff spent as an expert (which could be worked out from the time he had spent acting in that capacity) – the Plaintiff’s estimated award of damages should have been close to the figure which the Defendants had offered to the Plaintiff given Magistrate Morrison’s findings as to the number of hours the Plaintiff spent performing his role as an expert;

(e)in the above circumstances, it should have been clear to the Plaintiff that he (and, indeed, all parties) would be worse off by the continuation of the proceedings. In particular, the Plaintiff should have been aware that:

(i)    considerable costs would be expended in the pursuit, and defence, of the proceedings, including in relation to the preparation of the proceedings for hearing, and the costs of the hearing itself (even if the Plaintiff could not predict, at the time of the offer, that the hearing would continue for seven days), given the number of claims advanced and the range of issues that needed to be resolved, including contested issues of fact;

(ii)   it was likely that separate costs orders would be made, by reference to each of the claims advanced by the Plaintiff, and that the Plaintiff would be ordered to pay the First Defendant’s costs with respect to the Macquarie and Lyneham Claims;

(iii) he would not be able to recover all of the costs he incurred in relation to the Expert Claim (at best, he would be able to recover standard party-party costs, but he was at risk of recovering only 33% of the cost scale under r 1722 of the Court Procedures Rules);

(iv)  the costs the Plaintiff could recover in relation to the Expert Claim would be significantly outweighed by the costs he would have to pay the First Defendant in relation to the Macquarie and Lyneham Claims (given the complexity of those claims and the likely time and volume of work required to pursue and defend them); and

(v)   in the context of the above, the Defendants’ offer that each party bear their own costs, was advantageous to the Plaintiff; and

(f)the additional costs would be incurred by the Plaintiff in circumstances where the total award of damages that would likely be made in favour of the Plaintiff was small. Even if a more generous allowance was made for the time the Plaintiff spent performing his role as an expert, the award was not likely to be much more than the $6,600 which was in fact awarded. The award was therefore likely to be a small fraction of the costs that would be incurred by the parties after that time.

45․While it does not automatically follow from the above findings that indemnity costs should be awarded against the Plaintiff, in my view the appropriate outcome in the circumstances of this matter is an order that seeks to put the Defendants in the position that they would have been in had the Plaintiff accepted their offer (as he reasonably should have). On that basis, I consider that it is appropriate that:

(a)the parties bear their own costs prior to 10 October 2015; and

(b)the Plaintiff pay each of the Defendants’ costs from 10 October 2015 on an indemnity basis.

46․I will make orders accordingly. In this respect, I note that:

(a)rule 1722 of the Court Procedures Rules does not apply to my orders;

(b)as stated earlier in this decision, my orders are subject to, the extent orders made during the course of the proceedings; and

(c)because the adjournment of the hearing on 28 February 2017 occurred after 10 October 2015, the Plaintiff is to pay the Defendants’ costs thrown away, by reason of the adjournment, on an indemnity basis.

Orders

47․I make the following orders:

(1)Each party pay their own costs of the proceedings prior to 10 October 2015.

(2)The Plaintiff pay the costs of each of the Defendants from 10 October 2015 on an indemnity basis, as agreed or assessed.

(3)The Plaintiff’s costs liability pursuant to Order 2 is inclusive of the Defendants’ costs thrown away by reason of the adjournment of the hearing of the proceedings on 28 February 2017.

I certify that the preceding forty-seven [47] numbered paragraphs are a true copy of the Reasons for Decision of his Honour Magistrate Temby.

Associate: Mason Britton

Date: 21 September 2023