Automotive Holdings Group Ltd v Prime Constructions Australia Pty Ltd (No. 2)

[2019] NSWSC 315

Supreme Court

New South Wales

Medium Neutral Citation:

Automotive Holdings Group Ltd v Prime Constructions Australia Pty Ltd (No. 2) [2019] NSWSC 315

Hearing dates:

19 March 2019

Date of orders:

26 March 2019

Decision date:

26 March 2019

Jurisdiction:

Equity

Before:

Slattery J

Decision:

The plaintiff is ordered to pay the third defendant’s costs of the proceedings on the ordinary basis. Costs on the indemnity basis not ordered. The third defendant is ordered to pay the plaintiff’s costs of this application.

Catchwords:

COSTS – indemnity costs – Uniform Civil Procedure Rules 2005, r 20.26 – offer of compromise and alternative Calderbank offer issued before trial – whether or not it was unreasonable for the plaintiff to have not accepted the offer of compromise and Calderbank offer at the time – whether an offer of compromise and Calderbank offer was a basis for awarding indemnity costs in the third defendant’s favour

Legislation Cited:

Civil Procedure Act 2005, s 98
Uniform Procedure Rules 2005, rr 20.26, 42.1, 42.2, 42.20

Cases Cited:

Australian Financial Services and Leasing v Hills Industries Ltd (2014) 253 CLR 560
Automotive Holdings Group Ltd v Prime Constructions Australia Pty Ltd [2018] NSWSC 1960
Bruinsma v Menczer (1995) 40 NSWLR 716
Calderbank v Calderbank [1975] 3 All ER 333
Castro v Hillery [2003] 1 Qd R 651
Curtis v Harden Shire Council (No 2) [2015] NSWCA 45
Danidale Pty Ltd v Abigroup Contractors Pty Ltd (No 2) [2007] VSC 552
Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170
Fabre v Lui (No 2) [2015] NSWCA 312
Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19
Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No. 2) (2005) 13 VR 435
Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242
Leichhardt Municipal Council v Green [2004] NSWCA 341
Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344
South Western Sydney Local Health District v Gould (No 2) [2018] NSWCA 160
Taheri v Vitek (No 2) [2014] NSWCA 344
The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] 67 NSWLR 706

Category:

Costs

Parties:

Plaintiff: Automotive Holdings Group Limited
First Defendant: Prime Constructions Australia Pty Limited
Second Defendant: National Australia Bank Limited (ACN 004 044 937)
Third Defendant: Therese Ann Tsirekas

Representation:

Counsel:

 

Plaintiff: B. Skinner
Third Defendant: J. A. Darvall

 

Solicitor:

  Plaintiff: Christopher James Swanson, Swanson & Symonds Lawyers
Third Defendant: Geoffrey F. Cohen, Mylora Law

File Number(s):

2016/271144

Publication restriction:

No

Judgment

1. This is the Court’s second judgment in these proceedings. The Court gave its first judgment on 20 December 2018: Automotive Holdings Group Ltd v Prime Constructions Australia Pty Ltd [2018] NSWSC 1960 (“the first judgment”).

2. This second judgment deals with the issue of the costs of the proceedings. It is not necessary to restate the background to these proceedings, which is fully explained in the first judgment. Events, matters and things are referred to in this judgment in the same way as they were in the first judgment.

3. The first judgment dismissed Automotive’s claim for relief against Ms Tsirekas in both restitution and fraud. Automotive’s claim arose from events where a fraudster, after opening a bank account using Ms Tsirekas’ identity, stole the funds of Automotive and directed her to distribute these funds to various third parties.

4. Ms Tsirekas defended Automotive’s claim for fraud by arguing that she was not part of any fraud upon Automotive with Mr Prindle, the fraudster. In response to Automotive’s claim for restitution, Ms Tsirekas pleaded a change of position defence. Ultimately, the Court accepted the change of position defence and Ms Tsirekas was otherwise not found to be liable to Automotive in fraud.

5. The Court ordered Automotive to pay Ms Tsirekas’ costs of the proceedings on the ordinary basis; unless a special costs order was to be sought. As noted in the first judgment, Ms Tsirekas’ counsel proposed, when the Court handed down the judgment, to seek a special costs order that may lead to a variation of the costs order awarded by the Court.

6. Ms Tsirekas’ application for a special costs order was heard in a short supplementary hearing on 19 March 2019. Ms Tsirekas seeks a special costs order that Automotive pays her costs on the ordinary basis up until 28 June 2017 and thereafter on the indemnity basis.

7. On this application, Mr B. Skinner of counsel, instructed by Christopher James Swanson of Swanson & Symonds Lawyers, continued to appear for Automotive. Mr J.A. Darvall of counsel, instructed by Geoffrey F. Cohen of Mylora Law, continued to appear for Ms Tsirekas.

The Offer of Compromise and Calderbank Offer

8. Ms Tsirekas claims an entitlement to an order for indemnity costs on the basis of the service of an offer of compromise on Automotive, on 28 June 2017 (“the Offer”). In the Offer, Ms Tsirekas offered to compromise Automotive’s claim on terms that there be judgment in her favour, with no order as to costs. The Offer also stipulated that the Offer was made pursuant to Uniform Civil Procedure Rules 2005 (“UCPR”), r 20.26 and was open for acceptance until 4:00 pm on 28 July 2017.

9. Additionally, Ms Tsirekas also seeks to rely on the Offer as a Calderbank offer.

10. The covering letter to the Offer provided as follows:

“We enclose herewith by way of service Offer of Compromise.

Further, the offer contained within the said Offer of Compromise will also be relied upon as an offer made in accordance with the principles in Calderbank v Calderbank and is open for acceptance in writing on or before 4.00 pm on 28 July 2017.”

11. Automotive did not accept the Offer.

Whether Costs Should be Awarded on the Indemnity Basis

12. The relevant applicable costs principles may be shortly stated. Costs will follow the event, unless it appears to the Court that some other order should be made: UCPR, r 42.1. This rule applies to dismissal of a claim, where, unless the Court orders otherwise, the plaintiff must pay the defendant’s costs of the proceedings: UCPR, r 42.20. Costs payable are to be assessed on the ordinary basis, unless the Court orders otherwise: UCPR, r 42.2. The Court otherwise has full discretion to award costs, and may order that costs be awarded on the ordinary or indemnity basis: Civil Procedure Act 2005, s 98.

13. Automotive submits that the Court, in having regard to the overall justice of the case, should not exercise its discretion to award indemnity costs either under the UCPR r 20.26, or on the Calderbank basis. It submits that: the Offer contained no element of compromise; Ms Tsirekas’ case contained inconsistencies and deficiencies; and the change of position defence was not clearly articulated in the pleadings extant at the date of service of the Offer.

14. In response, Ms Tsirekas contends that: the Offer is compliant with the UCPR and contains a genuine element of compromise; her amended defence, filed after the service of the Offer, does not raise any further defence but merely provided a more fulsome pleading of the change of position defence; and there is nothing to prevent the Court from exercising its discretion to make the special costs order she seeks.

15. This judgment dismisses Ms Tsirekas’ application for a special costs order and leaves in place the existing Order 2 of the Court’s 20 December 2018 orders, so that Automotive is ordered to pay Ms Tsirekas’ costs for the proceedings, on the ordinary basis. The Court further orders Ms Tsirekas to pay Automotive’s costs of this application.

16. These reasons now consider each of Automotive’s arguments in turn.

Real Element of Compromise

17. For Ms Tsirekas to be successful in her application to be awarded indemnity costs, the Offer, or alternative Calderbank offer, must contain a real element of compromise: Leichhardt Municipal Council v Green [2004] NSWCA 341, (at [23]).

18. The Court of Appeal’s decision in Miwa Pty Ltdv Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344 (“Miwa”), (at [9]), is authority for the proposition that an offer of compromise under the UCPR, and an informal offer, must contain “a real and genuine element of compromise”: see also The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] 67 NSWLR 706; [2006] NSWCA 120, (at [8]). But in Miwa, the Court noted that there is authority that the epithets “real” and “genuine” add little to the requirement of compromise: Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19, (at [23]); Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170, (at [17]-[18]).

19. Automotive contends that the Offer contained no element of compromise. But this submission is not persuasive.

20. The Offer included a term that the parties bear their own costs: the Offer is in effect a “walk away” offer. Ms Tsirekas has not served any evidence of her costs incurred to date. But by the time the Offer was made in June 2017, the proceedings had been on foot for over nine months.

21. In that time, Ms Tsirekas, additionally to defending the proceedings, prepared and served her first defence and evidence, comprising of her principal affidavit and the affidavit of Geoffrey Francis Cohen. Automotive had also served its evidence.

22. The Court is satisfied from the acknowledged course of the matter up to the date of service of the Offer, with the assistance of lawyers on both sides, that by that date Ms Tsirekas had incurred substantial costs. Her offer to forego her costs accordingly contained a significant compromise on her part: Taheri v Vitek (No 2) [2014] NSWCA 344, (at [13]); South Western Sydney Local Health District v Gould (No 2) [2018] NSWCA 160, (at [6]); cf Fabre v Lui (No 2) [2015] NSWCA 312, (at [7] – [8]); cf Curtis v Harden Shire Council (No 2) [2015] NSWCA 45, (at [17]).

Ms Tsirekas’ Case

23. Automotive further contends that Ms Tsirekas is not entitled to an award of indemnity costs, due to her case containing inconsistencies and deficiencies. This submission is made on the bases that the content of Ms Tsirekas’ written and oral evidence, with her written evidence being served eight days prior to the Offer being made, did not: (1) explain why she attended and presented “obviously false” documentation to the bank; (2) elucidate why she presented documentation addressed to her company TAG; (3) suggest that “the educational standard by [her] did not equip her to assess the clumsier features of [Mr Prindle’s] presentation as an international figure”; and, (4) explain the transaction, pursuant to which money was lost.

24. But this argument is not persuasive and, in my view, does not amount to justification for the Court not to exercise its discretion in awarding indemnity costs.

25. Ultimately, to assess the reasonableness of Automotive’s non-acceptance of the Offer, the Court must evaluate what was disclosed in the material in the proceedings at the time of service of the Offer: Castro v Hillery [2003] 1 Qd R 651 (“Castro”), (at [72]); [2002] QCA 359. This assessment of reasonableness must be made without the benefit of hindsight: Miwa, (at [11]).

26. At the time the Offer was made, Ms Tsirekas had served her written evidence and her initial defence in the proceedings. Her defence is discussed below. Her evidence well traces out a picture of Ms Tsirekas as a lonely figure who craved the affection and attention that had been absent from her first marriage. The evidence also shows that she was highly susceptible to manipulation through the attention that was showered on her by Mr Prindle.

27. Ms Tsirekas’ vulnerable persona was examined in detail in the first judgment and does not need to be repeated here. But what is of importance, for the purposes of this judgment, is that Ms Tsirekas’ general character and openness to manipulation well emerges from the voluminous correspondence between herself and Mr Prindle; showing his masterful grooming of her to his own fraudulent ends.

28. The Court made an objective assessment of the documentary evidence served by Ms Tsirekas all material served on Automotive prior to the service of the offer. As the Court noted, in the first judgment, (at [210]):

“The text message traffic between these two is a reliable analytical tool. Ms Tsirekas was not manufacturing text messages to defend herself in some hypothetical later legal action. The texts do not bear such a construction.”

29. Automotive contends that it “justifiably assumed that a person of reasonable aptitude could have discerned from the language used by the fraudster that he was not a native speaker of the English language” and that the Court agreed that Ms Tsirekas’ approach made no sense. The point of this contention seems to be that the evidence pointed both ways and that its service could not really help Automotive make up its mind whether or not to accept the Offer.

30. This is not a correct characterisation of the Court’s conclusions. The Court relevantly held in the first judgment, (at [56]):

“In poor English, he changed the subject and explained that everyone had nevertheless been advised to do this and that has assisted him to decide to sell off much of his old goods. He explained, “i want to come back and start new life and new beginning buy the new house and everything new with my Queen”. He explained he needed more cash for such a purchase and as he was self-employed, he needed to liquidate materials. To anyone of a financial sophistication, what he says does not make much sense. But Ms Tsirekas was not a person of any financial sophistication. His response and his willingness to respond seemed to satisfy her doubts. This led her to proceed.”

31. Ms Tsirekas’ own affidavit evidence details her education level, work experience and discussions with Mr Prindle as to financial matters; depicting her limited financial sophistication. The Court held in the first judgment, (at [238]):

“In my view, Ms Tsirekas asked the kind of questions which would be appropriate for her limited level of commercial knowledge and to demand more enquiry from her is to judge her to a standard of commercial sophistication that she did not have.”

32. In my view, Ms Tsirekas’ evidence served before the Offer is the basis for the Court’s conclusions in the first judgment about her and showed the essential weaknesses that allowed Mr Prindle to manipulate her.

33. Automotive also contends that the complexity of Ms Tsirekas’ conduct is sufficient for the Court to exercise its discretion not to award her indemnity costs. Her conduct did have to be interpreted as a whole, with a realistic assessment of ordinary human reactions and without any initial presumption either way that she had fraudulent intent. Approached with an open mind at the time the Offer was made, the interpretation of her conduct that the Court came to in the first judgment should then have been quite discernible to Automotive.

34. Overall, Automotive’s arguments about the deficiencies in Ms Tsirekas’ case, and her presentation as a witness, are not persuasive to defeat her claim for indemnity costs. The Offer required Automotive to take a realistic view of its case, including assessing the strengths of the pleaded causes of action and defences. The correspondence between Ms Tsirekas and Mr Prindle speaks for itself; it was well open for Automotive then to foresee the same conclusion that the Court ultimately reached.

35. The claimed deficiencies and inconsistencies in Ms Tsirekas’ case did not make it unreasonable for Automotive to not accept the Offer.

Ms Tsirekas’ Pleading of the Change of Position Defence

36. But there is merit in Automotive’s submission that Ms Tsirekas’ pleading of the change of position defence was not clearly articulated in her pleaded defence as at the date of the Offer.

37. The change of position defence was central to the outcome of the proceedings. Ms Tsirekas was ultimately successful in defending Automotive’s claim for restitution by reason of this defence. In my view, that defence was not properly and clearly pleaded in her defence as at the date of the Offer, 28 June 2017. Ms Tsirekas had certainly by then filed evidence to that might support such a defence, but it was not clearly pleaded. In the absence of a clear pleading of this defence, the evidence so filed could properly be regarded by Automotive as irrelevant.

38. Ms Tsirekas filed her first defence on 24 March 2017, served an unverified amended defence on 18 September 2017, and filed a further amended defence on 23 July 2018 (although this version of the defence was served on Automotive following the Court’s 6 October 2017 orders). All of the amended defences were served well after the expiry of the Offer. Ms Tsirekas says that this amended defence did not raise any new change of position defence and that such a defence was already clear from the defence on the record, as at 28 June 2017. Automotive contends that the amended defence did not plead the change of position defence.

39. The issue of whether a change of position defence had been clearly articulated in the pleadings was agitated before me on several occasions, all of which occurred following the service and expiry of the Offer.

40. At a pre-hearing directions hearing on 2 August 2017, counsel for Ms Tsirekas submitted to the Court that the change of position defence had already been pleaded. The transcript for this directions hearing reads as follows:

“HIS HONOUR:   Is your defence to the restitution claim that your client has changed her position, she no longer has the money and it is a change of position defence?

DARVALL:      Yes.

HIS HONOUR:   And the change of position is that she has paid the money overseas at the request of some third party?

DARVALL:      Yes.

HIS HONOUR:   Do you understand that defence to be there on the pleadings?

DARVALL:      Yes”.

41. But this was not the case. The 24 March 2017 defence does not expressly plead a change of position defence. On 13 September 2017, the need for an explicit pleading of the change of position defence was again raised during the hearing of the proceedings, where the Court directed Ms Tsirekas to clearly articulate her case as to why this defence would succeed. The transcript reads as follows:

“HIS HONOUR:   I want you to set out in your submissions how you calculate the loss and what the relevant dates are for moneys not received and what they are for tort, you are pursuing both actions, I need to know. I also need very clearly from Mr Darvall, how he says the change of position, defence operates.

SKINNER:      He has not pleaded one.

HIS HONOUR:   Well, I have been—

DARVALL:   I will seek leave to amend to include. That has been foreshadowed.

HIS HONOUR:   Did you raise the fact that it was not pleaded at the beginning?

SKINNER:      No.

HIS HONOUR:   Well, Mr Skinner, I had a discussion with you at the beginning of this case about the defence of change of position, and you talked about illegality. I thought it was all in issue.

SKINNER:   It is in issue, except that Mr Darvall has never pleaded it, never told us what it is.

HIS HONOUR:   It sounds as though you are not taking the point.

SKINNER:   I am not taking the point because I have no point to take, essentially.

HIS HONOUR:   Well, Mr Skinner, I have assumed from the way this case was conducted in the oral openings that what advanced, you were engaged with such a defence and that you actually put questions to the third defendant. That appeared to me to deal with that defence. You asked her, you were aware of illegality. That seemed to me to dovetail in with the way you had said the defence's change of position was to be answered on your part in reply.

SKINNER:   Indeed, your Honour. I have, what happened at a directions hearing, your Honour raised a question of change of position to Mr Darvall who raised it. I have covered it in my submissions in outline, I have covered it in my cross‑examination. I am not taken by surprise. I am simply making the point that I don't know very much about it, but I am doing my best.

HIS HONOUR:   Mr Darvall, Mr Skinner reminds me this was dealt with in a directions hearing and I, not brought to my attention, since then, that there was any issue between you about the pleadings until now. Are you going to plead this defence?

DARVALL:      Yes.

HIS HONOUR:   Why was it not pleaded before?

DARVALL:   Your Honour, the point had simply not appreciated that it was not there. It has been addressed in the submissions.

HIS HONOUR:   All right.

DARVALL:   The case has been argued on that basis. It seems I will make an application.

HIS HONOUR:   I think it would be best if the pleadings did correspond with how I think the case has been run on both sides…”

42. The deficiency in Ms Tsirekas’ claim to have pleaded a change of position defence was still not resolved by 6 October 2017, following the principal hearing in the proceedings. Prior to the mention of the proceedings on this day, counsel for Ms Tsirekas provided to the Court an unverified copy of the amended defence, and an amended pleading that the Court still considered did not properly articulate the change of position defence.

43. At the mention on 6 October 2017, the Court made further orders for the filing of Ms Tsirekas’ amended defence and indicated as follows:

“HIS HONOUR:   This is a not unimportant issue. I want the pleadings ‑ I said I want the pleadings right and I am not going to reserve judgment until the pleadings are right.

SKINNER:   I understand that, but the problems is twice your Honour has raised the issue of change of position, twice my friend has endorsed it. The amended document we submit does not embrace what your Honour anticipated or what my learned friend said would happen. I understand where your Honour is coming from perfectly. And perhaps that is what is required. But at this stage, the plaintiff does not understand nor appreciate what the change of position is that is being asserted.

HIS HONOUR:   Mr Darvall, the words I said to you on the last day of the hearing were "I will direct that by tomorrow afternoon the 14 September that any necessary amendments to the defence to clarify in pleadings the defence of change of position should be served on the plaintiff".

DARVALL:      It was a day late, but it was served.

HIS HONOUR:   Well, Mr Skinner says that the document doesn't plead change of position.

DARVALL:      I think he is taking a pleading point.

HIS HONOUR:   I don't want pleading points in this case, Mr Darvall, I want issues of substance, on both sides. What is wrong with ‑ you have added paragraphs 45 to 58.

DARVALL:   They are the facts that constitute the change of position.

HIS HONOUR:   All right. Well, I want you to draw it together and draw a conclusion and say there is a change of position and how that provides a defence to their claim.

DARVALL:      I will do that.

HIS HONOUR:   It has to say so expressly.

DARVALL:      I will do so.

HIS HONOUR:   I don't want ‑ I am not going to decide a pleading point in the judgment when you have both got plenty of opportunity to sort it out and present the issues for determination.

DARVALL:      I will have the draft served by 4:00 pm on Monday.

HIS HONOUR:   It has to use the words "change of position".

DARVALL:      Yes.

HIS HONOUR:   And it has to draw together paragraphs 45 to 58 to explain how they fit into tradition principles of change of position.”

44. Ms Tsirekas complied with these directions. And the first judgment noted the early insufficiency of the pleading of the change of position defence, but that the insufficiency was ultimately overcome. The Court explained in the first judgment, (at [247]):

“Automotive first argued that Ms Tsirekas had not pleaded a defence of change of position in answer to Automotive’s claim for monies had and received. But that argument is not persuasive. Whereas at first it might have been said that the claim was not clearly pleaded, the Court directed the parties to attend to this issue and for Ms Tsirekas to make the raising of the issue clearer on the pleadings. As a result of the Court’s directions, the trial was finalised on the basis that this defence was being fielded in answer to the plaintiff’s claim…”

45. Ultimately, to assess the reasonableness of Automotive’s non-acceptance of the Offer, the Court must evaluate what was disclosed in the pleadings at the time of the Offer: Castro, (at [72]). If there was a substantial change to Ms Tsirekas’ case after this time, indemnity costs should not be awarded: Castro, (at [75]).

46. On 24 March 2017, Ms Tsirekas filed her first defence in the proceedings; this was her operative pleading at the time of the Offer. The pleading did assert that Ms Tsirekas, at all times, believed the funds in the NAB Account belonged to Prime Constructions Australia or Mr Prindle, and that she was authorised by Prime Constructions Australia or Mr Prindle to make payment out of the account.

47. But Ms Tsirekas did not otherwise plead in her first defence the core requirement of the change of position defence: that she acted to her detriment on the faith of the receipt; see [248] of the first judgment. Her first defence otherwise did not overall plead the elements of that defence, so as to present it for consideration: the test was propounded by Gageler J in Australian Financial Services and Leasing v Hills Industries Ltd (2014) 253 CLR 560; [2014] HCA 14, discussed in detail in the first judgment (from [261]).

48. Despite the issue being cleared up later by the Court’s directions, I accept Automotive’s submission that Ms Tsirekas’ defence did not properly articulate the change of position defence at the time of the Offer.

49. The onus is not on Automotive to fill in the gaps of the deficient pleadings, and deduce that the assertions pleaded in the first defence amounted to the pleading of a change of position defence. Ms Tsirekas’ pleading of the change of position defence simply was not clear at the time of the Offer. On this basis, the Court concludes that it was reasonable for Automotive not to accept the Offer.

50. Finally, Automotive advances a related contention that Ms Tsirekas’ success on the change of position defence was dependent upon the Court’s acceptance of her oral evidence. But this does not really strengthen Automotive’s otherwise successful argument. Ms Tsirekas’ affidavit evidence that grounds her change of position defence was served by the time of the Offer and was well capable of being assessed then, even though only tested and accepted later.

Calderbank Offer

51. Ms Tsirekas also seeks to rely on the Offer as a Calderbank offer. But in my view that does not lead to a different result on this application.

52. The principles of Calderbank offers are well settled. The considerations relevant to the determination of whether a refusal of a Calderbank offer is unreasonable were stated in Miwa, at [12], based on Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No. 2) (2005) 13 VR 435; [2005] VSCA 298 (“Hazeldene's”),(at [25]). The Victorian Court of Appeal (Warren CJ, Maxwell P and Harper AJA) in Hazeldene’s held that the following elements were relevant to determining whether the rejection of a Calderbank offer was unreasonable:

“(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.”

53. The covering letter containing the Offer was not marked “without prejudice save as to costs”. But this will not of itself render the offer inadmissible as a Calderbank offer: Bruinsma v Menczer (1995) 40 NSWLR 716.

54. The covering letter did not contain any statement regarding Ms Tsirekas’ intention to seek indemnity costs, if the settlement offer was rejected (Hazeldene’s, (at [25]); Danidale Pty Ltd v Abigroup Contractors Pty Ltd (No 2) [2007] VSC 552, (at [17]) per Habersberger J; Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242, p 249 per Kirby P), nor did it detail any reasoning to persuade Automotive as to why the Offer should be accepted.

55. But the Court’s earlier reasoning also leads to the conclusion that the stage of the proceedings that had been reached when the Offer was made (before the successful change of position defence had been clearly pleaded) means that it was reasonable for Automotive to not accept the Calderbank offer made by Ms Tsirekas.

Conclusion and Orders

56. For these reasons the Court orders as follows:

1. The plaintiff shall pay the third defendant’s costs of the proceedings on the ordinary basis, up until 20 December 2018.

2. Note that the plaintiff has been successful on this application, and therefore the third defendant will pay the plaintiff’s costs of this application on the ordinary basis.

3. The Court notes that all Exhibits are to be retained on the Court file for 28 days, or until the expiry of the time to file an appeal, following which the material is to be returned to the parties upon application.

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Decision last updated: 26 March 2019