Aspire PG Pty Ltd v Dao & Co Pty Ltd (No 2)
[2024] VCC 575
•8 May 2024
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-22-02888
| ASPIRE P.G PTY LTD (ACN 618 080 738) | Plaintiff |
| V | |
| DAO & CO PTY LTD (ACN 614 199 665) | First Defendant |
| And | |
| JACK CHRAPOT | Second Defendant |
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JUDGE: | HER HONOUR JUDGE A RYAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers, written submissions filed 1 and 6 May 2024 | |
DATE OF JUDGMENT: | 8 May 2024 | |
CASE MAY BE CITED AS: | Aspire PG Pty Ltd v Dao & Co Pty Ltd & Anor (No 2) | |
MEDIUM NEUTRAL CITATION: | [2024] VCC 575 | |
RULING
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Subject:PRACTICE AND PROCEDURE - COSTS
Catchwords: Whether indemnity costs should be made following rejection of defendants’ Calderbank offer to walk away
Cases Cited:Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; Berrigan Shire Council v Ballerini (No 2) [2006] VSCA 65
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Blunt | Cohen Veshut |
| For the First and Second Defendants | Dr K Weston-Scheuber | Jeremy Johnson & Associates |
1On 22 April 2024, I delivered reasons for judgment (“the principal reasons”). I found the plaintiff had failed to establish its claim for estate agent’s commission with the result that its claim will be dismissed. These reasons assume familiarity with the principal reasons and adopt the same terminology.
2The parties were directed to file and serve submissions regarding the orders to be made consequent upon the judgment, including costs, if they were unable to agree on the form of the orders to be made. The parties filed submissions dated 1 May 2024, together with submissions in reply dated 6 May 2024.
3The defendants seek costs on a standard basis up until 17 August 2022 and thereafter on an indemnity basis based on a Calderbank offer made on 9 August 2022 (“the Calderbank offer”).
4The plaintiff concedes costs should follow the event and that it should pay the defendants’ costs on the standard basis. It disputes the defendants’ claim for indemnity costs. Additionally, if the Court finds that the defendants are not entitled to costs on an indemnity basis, the plaintiff seeks an order that the defendants pay its costs of and incidental to the preparation and filing of cost submissions on a standard basis.
Legal principles
5The parties referred to the well-known principles contained in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2).[1]
[1](2005) 13 VR 435 (“Hazeldene”)
6As Nettle JA noted in Berrigan Shire Council v Ballerini (No 2):[2]
“The rejection of a Calderbank offer not later bettered by judgment does not lead automatically to an indemnity costs order in favour of the offeror. The question in each case is whether the offer was a reasonable offer of compromise, and whether the rejection of the offer was unreasonable, and the answer to that question turns in each case on all the circumstances of the case.”[3]
[2][2006] VSCA 65
[3]Ibid [33]
7The question of whether rejection of an offer was unreasonable should be considered without the benefit of hindsight and without adducing additional evidence.[4] The party seeking to rely on a Calderbank offer bears the onus of convincing a court to make the advantageous costs order. The determination of whether the rejection is unreasonable involves matters of judgment and impression.[5] A court should ordinarily have regards to the following matters:[6]
“(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 an indemnity costs in the event of the offeree’s rejecting it.”
[4]Thomson Reuters, Quick on Costs [340.180]
[5]Hazeldene, [24]
[6]Ibid [25]
The defendant’s Calderbank offer
8The Calderbank offer was contained in a letter from the defendants’ solicitors to the plaintiff’s solicitors. The stated purpose of the letter was to provide the plaintiff with an opportunity to discontinue its proceeding within the next seven days to avoid the incurring of unnecessary legal costs. The letter then went on to point out the basis upon which the defendants asserted the plaintiff’s claim would fail, which included but was not limited to:
(i) the Sale Authority provided by the plaintiff on 8 August 2022 was different to that held by the defendants. Annexure A in the copy of the Sale Authority held by the defendants contained no reference to the payment of 50 per cent commission on contract and 50 per cent at settlement; and
(ii) not only were the defendants unaware of the amended Annexure A, but Annexure A provided by the plaintiff conflicted with the handwritten notes on page 2 of both versions of the Sale Authority which expressly provided that commission will only be paid on the settlement of the properties and assuming 10 per cent deposit has been paid.
9As the properties did not settle, the defendants’ solicitors wrote that there was no entitlement on the part of the plaintiff to receive commission. Additionally, it was pointed out that the plaintiff had not provided the first defendant with a copy of the signed Sale Authority which breached s49A of the Estate Agents Act 1980. In light of these matters, the defendants’ solicitors invited the plaintiff to discontinue the proceeding within the next seven days, in which case the defendants would bear their own legal costs.
10The defendant’s solicitors foreshadowed making an application for an order for indemnity costs in the event the Court found against the plaintiff referring to the principles in Calderbank v Calderbank[7] and Cutts v Head[8] as adopted in Hazeldene.
[7] [1976] Fam 93
[8] [1984] Ch 290
11The plaintiff opposes the application for indemnity costs based on the Calderbank offer. The first point made by the plaintiff is that the offer was an invitation for the plaintiff to walk away before the defendants pleaded their joint defence. It was said that the offer was therefore a demand to capitulate, and could reasonably be rejected by the plaintiff at the time it was made.
12The second point made is that the offer did not contain any real element of compromise; merely, the compromise, if any, was contained in the words “bear their own costs”. The plaintiff said that at the time the offer was made, no significant costs would have been incurred by the defendants.
13The third point made is that although the plaintiff ultimately failed, it did succeed on some of the pleaded legal and factual issues. Therefore, this case was not one that could be regarded as hopeless or fanciful.
14The fourth matter referred to and relied upon by the plaintiff is that the time to consider the offer was not reasonable. The offer was open to be accepted within the next seven days. The plaintiff said that by the time the offer was made, it was still in the dark about how the first defendant and second defendant intended to plead in compliance with the Rules and the Civil Procedure Act 2010.
15Given all these matters, the plaintiff submits it was reasonable to reject the Calderbank offer. In the circumstances, the plaintiff should be ordered to pay the defendants’ costs on a standard basis.
16The plaintiff also seeks an order that the first and second defendant, jointly and severally, pay the plaintiff’s costs of and incidental to the preparation and filing of written submissions dealing with the effects of the offer on a standard basis to be taxed in default of agreement.
Consideration
17The Calderbank offer was a “walk away” offer with the parties bearing their own costs. The letter sets out the basis upon which it is said that the plaintiff’s case lacked merit; in particular, the construction point relating to the form of the Sale Authority and the non-compliance with the Estate Agents Act 1980. Both of these matters proved to be successful points following the hearing. The letter was clear in its terms and foreshadowed the making of an application for indemnity costs if the defendants succeeded at trial.
18The first issue to consider is whether the offer is, in effect, a demand to capitulate which does not represent a genuine compromise and therefore fails the reasonableness test. The plaintiff referred to a statement by the Court of Appeal in Commissioner of State Revenue v Challenger Listed Investments Ltd (No.2):[9]
“There is authority to the effect that where the offer does not involve a genuine compromise, but is in fact either an invitation to capitulate or a derisory or nominal offer, it would not be unreasonable for the losing party to have rejected it.”
[9] [2011] VSCA 398, [13]
19The defendants refer to various authorities in their reply submissions where courts have found that an offer to walk away or bear a small portion of costs may constitute a sufficient offer of compromise to make the rejection of it unreasonable. The extent of the offer of compromise needs to be assessed in conjunction with all of the relevant circumstances. The costs incurred at the time of the letter included the costs of considering the claim, filing a notice of appearance and drafting the offer letter.[10] These costs would have been relatively low in the scheme of things such that the plaintiff was not receiving much of a benefit, in terms of having to avoid paying the defendants’ legal costs had it accepted the offer. I am not persuaded, contrary to the defendant’s submission, that the offer constituted a real element of compromise having regard to the defendants’ likely costs at the time the offer was made.
[10] Paragraph 17 of the defendants’ reply submissions
20Even though the offer was open for acceptance within a short timeframe of only seven days, I do not consider this factor alone would preclude the offer from being regarded as reasonable.
21There were several disputed questions of fact at trial and some complexity about the application of legal principles relating to matters such as the ability of an agent for a vendor to accept service of the ESA, and whether non-compliance with the Estate AgentsAct 1980 could be later rectified. A further issue arose at trial about whether the second defendant could bind the first defendant, assuming he acted in the capacity of a de facto director of the first defendant.
22The sequence in which the draft versions of the ESA were exchanged only became clear at trial. The oral evidence disclosed how it came about that the handwritten clause under the general conditions was inserted and similarly, with the amendments made to Annexure A which conflicted with the handwritten condition regarding payment of commission. Given the conflicting clauses in the ESA, it fell to the Court to determine as a matter of construction how those clauses should be read in the contract as a whole. It can be accepted there were legitimate competing arguments upon which minds could differ about the construction issue, such that the case put by the plaintiff was not necessarily doomed to fail.
23After considering the competing submissions, I am not persuaded ultimately that an indemnity costs order should be made in respect of the Calderbank offer, having regard to the plaintiff’s prospects of success assessed at the time the offer was made. I do not consider it would have been so obvious to the plaintiff at the time the offer was made that its prospects of success were hopeless, or it was inevitable that its claim would fail. It should also be noted that the pleadings had not yet closed so the plaintiff did not have the benefit of considering the joint defence that was later filed. It follows then that the plaintiff’s decision to reject the Calderbank offer, being an offer to walk away, was not unreasonable.
Conclusion
24Overall, I am not persuaded that the plaintiff acted unreasonably in rejecting the Calderbank offer. Consequently, there is no reason to depart from the usual order that costs be paid on the standard basis.
25The plaintiff sought its costs associated with the submission on costs if the defendants’ application for indemnity costs was unsuccessful. Despite the application for indemnity costs failing, I consider it was reasonable for the defendants to make such a request, given there was an arguable and cogent basis for seeking indemnity costs. In all the circumstances, I am not persuaded that there should be any order made in favour of the plaintiff in respect of its costs incurred in relation to the submissions on costs. I will, however, order that there should be no order as to costs in relation to the submissions on costs.
26I will make the following orders:
(1)The plaintiff’s claim against the first and second defendants is dismissed.
(2) The plaintiff pays the first and second defendants’ costs of and incidental to the proceeding, (excluding the costs of and incidental to the parties’ submissions on final orders including the issue of costs) on a standard basis to be taxed in default of agreement.
(3) There is otherwise no order as to costs.
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Certificate
I certify that these 7 pages are a true copy of the Reasons for Ruling of Her Honour Judge A Ryan delivered on 8 May 2024.
Dated: 8 May 2024
Associate to Her Honour Judge A Ryan
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