Beaumaris Football Club v Beau Hart [No 2]
[2017] VSCA 245
•8 September 2017
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2017 0156
| BEAUMARIS FOOTBALL CLUB & ORS | Appellants |
| v | |
| BEAU HART & ORS [No 2] | Respondents |
S APCI 2017 0157
| BAYSIDE CITY COUNCIL | Appellant |
| v | |
| Respondents | |
| BEAU HART & ORS |
---
| JUDGES: | OSBORN, BEACH and KAYE JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | On the papers |
| DATE OF JUDGMENT: | 8 September 2017 |
| MEDIUM NEUTRAL CITATION: | [2017] VSCA 245 |
---
PRACTICE AND PROCEDURE – Costs – Costs of application for leave to appeal and appeal – Whether costs should be on an indemnity basis – Offer of compromise at trial – Calderbank offer on appeal – Unsuccessful appellants obtaining less favourable judgments at first instance and on appeal than terms offered in offer of compromise and Calderbank offer – Relevance of reasonableness of not accepting Calderbank offer – Whether it was unreasonable for unsuccessful appellants to refuse Calderbank offer – Not unreasonable for unsuccessful appellants to refuse Calderbank offer – Costs ordered to be paid on the standard basis.
---
| APPEARANCES: | Counsel | Solicitors | |
| For the First Appellant/Second Respondent, Beaumaris Football Club, and the Second Appellant/ Third Respondent, South Metro Junior Football League | Mr J Ruskin QC with Mr A Anderson | Terrill & Holmes | |
| For the First Respondent, Beau Hart | Mr M F Wheelahan QC with Ms K Foley | Mills Oakley Lawyers | |
| For the Second Respondent/ Appellant, Bayside City Council | Mr S A O’Meara QC with Mr A Middleton | Ligeti Partners | |
OSBORN JA
BEACH JA
KAYE JA:
The first respondent (Beau Hart) was the successful plaintiff in a personal injury proceeding heard and determined in the County Court. On 21 October 2016, following a 10-day trial, the trial judge entered judgment for the first respondent in the sum of $589,525, together with interest fixed at $20,000.[1] On 30 August 2017, this Court granted the appellants (who were the unsuccessful defendants in the County Court proceeding) leave to appeal, but dismissed their appeals.[2]
[1]Hart v Beaumaris Football Club [2016] VCC 232.
[2]Beaumaris Football Club v Hart [2017] VSCA 226 (‘Appeal Reasons’).
The first respondent now seeks his costs of the applications for leave to appeal and the appeals on an indemnity basis. The appellants oppose the ordering of costs on an indemnity basis. They submit that the costs should be on the standard basis.
Background to the application
The first respondent commenced his County Court proceeding against the appellants in July 2014. On 9 December 2015, he served an offer to compromise the proceeding in the sum of $550,000 plus costs. It was on the basis of that offer of compromise that the judge, in accordance with the County Court Civil Procedure Rules 2008 (‘the County Court Rules’), ordered the appellants to pay the first respondent’s costs of the County Court proceeding on an indemnity basis.
In November 2016, the appellants filed applications for leave to appeal and written cases. Thereafter, the first respondent filed his written case and a notice of contention, and the parties filed written cases on the issues raised by the notice of contention.
The applications for leave to appeal and the appeals were fixed for hearing in this Court on 18 August 2017. On 11 August 2017, a week before hearing, the first respondent sent a letter to the appellants offering to settle the applications for leave to appeal, and making reference to the principles in Calderbank v Calderbank (‘the Calderbank offer’).[3]
[3][1976] Fam 93.
The Calderbank offer recorded that on 15 December 2016, the parties agreed that the appellants would pay the first respondent $109,525 together with interest calculated at 9.5 per cent per annum from the date of judgment, and that payment of the balance of $500,000 (together with interest) would be stayed pending the determination of the applications for leave to appeal. At the time of the Calderbank offer, the appellants had paid the sum of $111,106.57 towards the judgment sum and interest that was then owing to the first respondent.
In the Calderbank offer, the first respondent proposed that, in lieu of the first respondent’s entitlement to judgment ($589,525 and interest fixed at $20,000) and post judgment interest, the appellants would pay the respondent the total sum of $526,057.24 inclusive of interest since judgment. The first respondent also proposed that the indemnity cost order made in the County Court be replaced with an order for costs on the standard basis, although the trial judge’s certification of counsel’s fees would not be altered. In addition, the first respondent proposed that the appellants would pay the first respondent’s costs of the applications for leave to appeal.
The Calderbank offer concluded with a statement that if the offer was not accepted and the appellants failed to obtain a judgment more favourable than the Calderbank offer, then the first respondent would rely on the Calderbank offer ‘on the question of costs in the Court of Appeal, including whether an order for indemnity costs should be made’.
First respondent’s contentions
The first respondent seeks his costs of the applications for leave to appeal and the appeals on an indemnity basis in the exercise of this Court’s discretion under rr 26.12, 63.31 and 64.38 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’). The first respondent describes the ‘sole basis’ for his application for indemnity costs as ‘the [appellants’] failure to accept two offers made by the first respondent to settle his claim that was the subject of the proceeding below, and the appeals’. The offers are the offer of compromise made on 9 December 2015 and the Calderbank offer made on 11 August 2017.
The first respondent accepts that the offer of compromise at trial does not, of itself, give him an entitlement to the costs of the appeals on an indemnity basis. The first respondent, however, relies upon what was said by Brooking JA[4] in Sands & McDougall Wholesale Pty Ltd v Commissioner of Taxation (Cth) [No 2][5] as follows:
[I]t will be open to a plaintiff who before judgment made an offer answering the requirements of r 26.11 to contend, in the event of a successful appeal by the plaintiff or an unsuccessful appeal by the defendant, that the making of the offer and its non-acceptance should induce the Court, in disposing of the appeal, to award the costs of the appeal on a solicitor and client basis. In doing this the plaintiff would be founding an argument upon the presence in the rules of r 26.11 but would not be suggesting that it operated of its own force in relation to the appeal.
[4]With whom Charles and Chernov JJA agreed.
[5][1999] 2 VR 114 (‘Sands & McDougall’).
The first respondent submitted that the principal consideration which is enlivened in this case is the policy of the law to encourage settlements. That policy underlies the offer of compromise rules which dictated that the first respondent’s costs of the trial should be on an indemnity basis. It was submitted that the dismissal of the appeals should place the first respondent in the same position he was at the conclusion of the trial below — ‘particularly having regard to the Calderbank offer’.
Moreover, in the present case, the appellants had two opportunities to resolve the litigation. The Calderbank offer, at a lower sum than the offer of compromise made at trial, was against the background of an indemnity costs order which, by the Calderbank offer, the first respondent offered to forego.
Additionally, the first respondent submitted that in order to give effect to the indemnity costs order made below, the costs of the appeals should also be made on an indemnity basis ‘so that the benefits that the first respondent obtained as a result of the trial judge’s orders are not diluted by the additional costs incurred in meeting the applications for leave to appeal’.
Finally, the first respondent submitted:
The applications for leave to appeal are to be regarded as a continuation by the [appellants] of the defence of the proceedings below, having rejected [the offer of compromise], and subsequently rejecting [the Calderbank offer]. It is the combination of the two offers which the first respondent advances as being relevant to the Court of Appeal’s discretion as to the costs of the appeals.
Appellants’ contentions
The appellants oppose the awarding of costs on an indemnity basis. In respect of the passage relied upon by the first respondent in Sands & McDougall, the appellants observe that Sands & McDougall was decided before the introduction of r 26.12 (a rule expressly permitting an offer of compromise to be made in respect of proceedings in the Court of Appeal) and the decision of this Court in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority [No 2].[6] Hazeldene is authority for the proposition that a critical question, in an application for indemnity costs where an offer of settlement under r 26.12 has been rejected and the offeree has achieved a less successful outcome on appeal, is whether the rejection of the offer made under r 26.12 was unreasonable in the circumstances.[7]
[6](2005) 13 VR 435 (‘Hazeldene’).
[7]Hazeldene (2005) 13 VR 435, 441 [23].
The appellants submit that the appropriate test in the present case is whether they acted unreasonably in rejecting the Calderbank offer. They submit that they did not act unreasonably. In support of that submission, the appellants point to a number of matters. First, leave to appeal was granted by this Court before the appeals were dismissed.
Secondly, the appellants succeeded with respect to the error of the trial judge in making his own measurements from an aerial photograph. While the first respondent conceded this error, the first respondent maintained that the error did not vitiate the judgment of the trial judge. This Court, however, upheld the appellants’ submissions that the error did vitiate the judgment.[8]
[8]Appeal Reasons [82]–[83].
Thirdly, the success or otherwise of the appeals fell to be determined by reference to the first respondent’s notice of contention and competing inferences that might properly be drawn from the evidence by the Court of Appeal. The exercise in predicting which inferences might be preferred by the Court of Appeal is a more difficult one than merely evaluating what the Court might say about whether a trial judge made a particular error.
Fourthly, this Court’s reasons for judgment ‘indicates that there were finely balanced inferences that fell for consideration’ in the resolution of the present case.
The appellant’s, not having acted unreasonably in rejecting the Calderbank offer, should not now be ordered to pay costs on an indemnity basis.
Resolution of the application
While there is some force in the first respondent’s submissions, ultimately we have come to the conclusion that the first respondent should only have his costs in this Court on the standard basis.
The decision at trial was a finely balanced one. The first respondent was entitled to his costs on an indemnity basis at trial by the operation of the County Court Rules. The decision in this Court was equally finely balanced, involving as it
did a reconsideration of all of the evidence in order for this Court to decide for itself the proper outcome.[9] It is to be remembered that the sole basis upon which the trial judge found for the first respondent was erroneous, and accepted to be wrong by the first respondent in his written case. Moreover, the first respondent’s submission that the judge’s error was ‘not vitiating’ was successfully resisted by the appellants in this Court.[10] Thus, the appeal was well founded.
[9]Ibid [87]–[91].
[10]Ibid [83].
A critical issue in relation to whether indemnity costs should be ordered in this Court remains the question of whether the rejection of a relevant offer was unreasonable. That is not to say that arguments of the kind advanced by the first respondent in this case can never succeed.[11] While the promotion of settlement is important, and the question of the dilution of a trial judgment is relevant, in the circumstances of the present case it is the issue of whether the rejection of the Calderbank offer was unreasonable that is the principal consideration.
[11]Cf McDonald v Dodds [2017] VSCA 197, and in particular at [19(c)].
The present case was finely balanced. So much is demonstrated by our reasons for judgment.[12] While the compromise offered by the first respondent in the Calderbank offer was of substance, we do not think that it was so reflective of the risks of the litigation in this Court as to make its rejection by the appellants unreasonable. Notwithstanding the significant amount the first respondent agreed to compromise, the Calderbank offer was an offer that still required the appellants to pay a large proportion of the judgment at first instance (approximately 80 to 85 per cent of the first instance judgment and post-judgment interest). In the circumstances, we are not persuaded that the first respondent should have his costs on an indemnity basis.
[12]Appeal Reasons [95]–[125].
Orders
There will be orders that the appellants pay the first respondent’s costs of the applications for leave to appeal and the appeals on the standard basis.
- - -
0
4
0