and Stephen Sandri v Paul Robert O'Driscoll and Elizabeth Ellen O'Driscoll (No 2)

[2014] VSCA 109

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2013 0060
STEPHEN SANDRI	Appellant
v
PAUL ROBERT O’DRISCOLL	First Respondent
and
ELIZABETH ELLEN O’DRISCOLL (No 2)	Second Respondent

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JUDGES:	MAXWELL ACJ, NEAVE JA and McMILLAN AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	Decided on the papers
DATE OF JUDGMENT:	2 June 2014
MEDIUM NEUTRAL CITATION:	[2014] VSCA 109
JUDGMENT APPEALED FROM:	[2013] VCC 139 (Judge Ginnane)

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COSTS – Appeal – Indemnity costs – Calderbank offer – Whether refusal of offer unreasonable – Offer invited appellant to discontinue – No element of compromise – Refusal not unreasonable – Application for indemnity costs refused – Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 applied – Settlement Group Pty Ltd v Purcell Partners (A Firm) (No 2) [2014] VSCA 68 distinguished – Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 26.12.

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Appearances:	Counsel	Solicitors
No appearances by leave of the Court

MAXWELL ACJ
NEAVE JA
McMILLAN AJA:

1. Judgment in this appeal was delivered on 8 May 2014.  The appeal was dismissed.  Counsel for the respondents sought an order for costs, and submitted that costs should be awarded on an indemnity basis because the appellant had unreasonably refused a Calderbank offer.  At the Court’s request, the respondents’ solicitor subsequently filed an affidavit to which he annexed the correspondence containing the offer. 

1. By letter dated 5 August 2013, the respondents had invited the appellant to discontinue the appeal, on the basis that each party would bear its own costs up to the date of the discontinuance.  Quite properly, the letter informed the appellant that, if he should fail in the appeal, the respondents would seek an order that costs be paid on an indemnity basis from the date of the letter.  The offer was not accepted.

1. In Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2),[1] this Court said in relation to Calderbank offers that the critical question was whether the rejection of the offer was unreasonable in the circumstances.  Deciding whether conduct is unreasonable involves matters of judgment and impression.  The Court in  Hazeldene held that, when considering whether the rejection of a Calderbank offer was unreasonable, a court should ordinarily have regard at least to the following matters:

   [1](2005) 13 VR 435, 441–442 [23]–[26] (‘Hazeldene’).

(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;  and

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

1. Recently, in Settlement Group Pty Ltd v Purcell Partners (A Firm) (No 2),[2] this Court confirmed that, ‘[f]or obvious reasons of consistency of approach’, the matters identified by the Court in Hazeldene, as being relevant to a consideration of the unreasonableness of the refusal of a Calderbank offer, should be taken as applicable whenever the Court was required to decide whether the refusal of ‘an offer to compromise the appeal’, made pursuant to r 26.12(1), warranted an order for indemnity costs.

   [2][2014] VSCA 68, [9] (‘Settlement Group’).

1. In the present case, we are not persuaded that the appellant unreasonably rejected the offer.  It is significant, in our view, that what was offered involved almost no compromise at all.  As noted earlier, the appellant was simply invited to discontinue.  It is true that the respondents offered to bear their own costs to that point but, given that none of the substantive work of preparing the appeal had yet been undertaken,[3] costs incurred to that point would have been very modest.

   [3]The Summary was not filed until 3 September 2013, and the appellant’s outline of submission not until 11 September 2013.

1. Moreover, in contradistinction to the position in Settlement Group, there was nothing in the letter of offer which should have convinced the appellant to reconsider his position.  The argument put forward in the letter was in these terms:

To the extent that any basis for arguable error can be discerned from the grounds of appeal, none appears to point to the trial judge having made findings that were not open to his Honour on the evidence at trial.  As you will no doubt have advised the Appellant, establishing that alternative findings might conceivably have been made at first instance would not be sufficient to enable the Appellant to succeed on appeal.[4]

[4]Emphasis added.

1. This contention was simply wrong.  It was based on a misapprehension of the nature of an appeal to this Court from a final judgment in a civil proceeding.  The appeal to this Court is an appeal by way of re-hearing, which means that the Court is obliged to ‘give the judgment which in its opinion ought to have been given in the first instance’.[5]  The Court is obliged to conduct ‘a real review of the trial’,[6] weigh the evidence and draw its own inferences and conclusions, always bearing in mind the advantages of the trial judge.[7]  It follows that the question on an appeal by way of re-hearing[8] is not whether a finding of fact was open, but whether it was correct.

   [5]Dearman v Dearman (1908) 7 CLR 549, 561. See also Fox v Percy (2003) 214 CLR 118, 125-6 [23] (‘Fox’);  CSR Ltd v Della Maddalena (2006) 224 ALR 1, 7 [16] (‘CSR Ltd’).  

   [6]Fox (2003) 214 CLR 118, 126-7 [25].

   [7]Ibid 127 [26]; CSR Ltd (2006) 224 ALR 1, 7 [16]-[17].

   [8]As distinct from an appeal on a question of law:  see Christian Youth Camps Ltd & Ors v Cobaw Health Service Ltd & Ors [2014] VSCA 75, [8].

1. In Settlement Group, by contrast, the letter of offer ‘had very clearly and cogently laid out … the correct legal analysis of the respective positions of [the parties]’.[9]  Proper consideration of that analysis, the Court said, must necessarily have led the offeree to the conclusion that it was at risk in the appeal.[10]

   [9][2014] VSCA 68, [13].

   [10]Ibid.

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