Butler v Dickson (No 2)
[2018] VCC 718
•23 May 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-16-02443
| VIKTORIA BUTLER | Plaintiff/Defendant by Counterclaim |
| (as executrix of the Will and Estate of the Late Graham Oliver Thompson) | |
| V | |
| PETER THOMAS DICKSON and CAROLYN MAREE DICKSON | First Defendant/ Second Defendant/ |
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JUDGE: | HER HONOUR JUDGE A RYAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers | |
DATE OF RULING: | 23 May 2018 | |
CASE MAY BE CITED AS: | Butler v Dickson (No 2) | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 718 | |
RULING
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Subject: COSTS
Catchwords: Calderbank offer – whether claim pursued in wilful disregard of known facts or clearly established law – costs of particular part of the proceeding
Legislation Cited: Civil Procedure Act 2010 (Vic)
County Civil Procedure Rules 2008
Cases Cited: Berrigan Shire Council v Ballerini (No 2) [2006] VSCA 65
McNab v Graham [2018] VSCA 8
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M C McKenzie | Robinson Gill Lawyers |
| For the Defendant | Mr K E Mihaly | Megan Copas |
HER HONOUR:
1 On 10 May 2018, I gave reasons for judgment in favour of the defendants. The parties were asked to file and serve written submissions regarding the consequential orders to be made, including costs. The defendants filed written submissions dated 15 May 2018, together with an affidavit from Megan Copas, solicitor for the defendants sworn 15 May 2018. The plaintiff filed written submissions on 18 May 2018.
2 The defendants argue costs should follow the event given the plaintiff’s claim failed and they succeeded on their counterclaim for adverse possession.
3 The defendants also seek a special costs order, namely, an order the plaintiff pay the defendants’ costs on an indemnity basis as follows:
(a)from 25 August 2016, being the date of a Calderbank letter; or
(b)from 24 October 2016; alternatively,
(c)from 25 July 2017 after which the plaintiff continued her case in wilful disregard of known facts and clearly established law.
Calderbank offer
4 On 25 August 2016, Ms Copas wrote to the plaintiff’s solicitors and made a Calderbank offer in the following terms:
(a)the defendants pay the plaintiff the sum of $15,000 within 7 days of the parties executing formal Terms of Settlement;
(b)the plaintiff consent to any application by the defendants for a declaration that they had acquired title to the plaintiff’s land by adverse possession;
(c)the parties consent to an order that the proceeding is otherwise discontinued with no orders as to costs.[1]
[1]Exhibit “MC-1” to the affidavit of Megan Copas sworn 15 May 2018
5 The letter noted that the defendants’ position in relation to the issues in dispute had been fully canvassed in previous correspondence. The letter set out in a short summary form why the defendants considered their claim for adverse possession would succeed and the plaintiff’s claim for an easement would fail. The letter noted the value of the land was between $30,000 to $45,000 and attached copies of three market appraisals which confirmed that range. If the offer was accepted, the letter foreshadowed the need for the parties to execute formal terms of settlement. The offer was open to be accepted within 14 days.
6 The principles applicable in respect to the consideration of Calderbank letters are well settled. They were summarised by Nettle JA in Berrigan Shire Council v Ballerini (No 2).[2] His Honour said at [33]:
[2][2006] VSCA 65 at [33]
“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. The making of an offer and its rejection are but two albeit important circumstances to which the court will have regard in the exercise of its costs discretion. As the court explained in Hazeldene’s Chicken Farm:
‘The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations. It is neither possible nor desirable to give an exhaustive list of relevant circumstances. At the same time, a court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:
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 [order] in the event of the offeree’s rejecting it’.”
7 The principle that the rejection of a Calderbank offer does not automatically give rise to a presumption of an order for indemnity costs if the offeree receives a less favourable result, was recently confirmed by the Court of Appeal in McNab v Graham.[3] It still falls to be determined whether the rejection of the offer was unreasonable in all the circumstances.
[3][2018] VSCA 8, [12]
8 The defendants contend the plaintiff’s rejection of the offer made was unreasonable because:
·the offer was made at a time when the plaintiff could properly assess the merits of the parties’ positions in the proceeding;
·fourteen days was sufficient time for the plaintiff to consider the offer;
·the offer involved a significant compromise;
·the plaintiff’s prospects as at the date of the offer were weak;
·the offer was expressed with clarity; and
·the offer foreshadowed an application for indemnity costs.
9 The defendants relied upon various matters in support of their claim for indemnity costs. At the time the offer was made, the plaintiff had received various letters from the defendants and their solicitors outlining the relative weakness of her claim.[4] The defendants note the plaintiff was informed by her own surveyor of the risk of an adverse possession claim.[5] The plaintiff had met the defendants and inspected the property with them. The plaintiff had been served with the defendants’ defence and counterclaim and had evidence of the value of the property so as to enable the plaintiff to ascertain the degree of compromise. Accordingly, the defendants say that the plaintiff was sufficiently aware of the merits of the defendants’ strong case at the time the offer was made.
[4]The defendants’ solicitors sent letters to the plaintiff’s solicitors dated 24 March 2016 and 22 April 2016: Exhibit “MC-2” to the affidavit of Ms Copas sworn 15 May 2018
[5]Court Book page 597, report from Mr John Macey, licensed surveyor, dated 11 June 2015
10 The defendants submitted the land is worth between $35,000 and $45,000, such that the offer to pay $15,000 was a sizeable proportion of its value. Even though the plaintiff’s case in trial was that the property was worth more than the sum valued by the defendants’ witnesses, the payment of $15,000 was still better than no payment at all. Consequently, in light of all these matters, the defendants submit that the plaintiff has unreasonably rejected the defendants’ offer and should pay costs on an indemnity basis from the date of the offer.
11 The plaintiff submits the offer was in effect a demand to capitulate and the sum offered would not have met the plaintiff’s costs at the time the offer was made. The value of the land was in dispute. Mr Scott Allison, real estate agent for the plaintiff said he had been told by the plaintiff that the council had rated the value of the property at $135,140.[6] He said he had received expressions of interest from potential purchasers in the region of $110,000.[7] The inventory for probate purposes listed the value of the disputed land at $125,000. The plaintiff also referred to the complexity of the issues of enclosure, the extent of use, plus the entitlement of the plaintiff to test the Dicksons’ evidence as being reasons to say that the plaintiff was not acting unreasonably in rejecting the offer.
[6]T466
[7]T461, 466
12 The offer was made at a very early stage of the proceeding given the writ was filed on 9 June 2016. It was by no means certain then or indeed later that the defendants would be successful, given the complex factual and legal issues involved in the proceeding. There was conflicting evidence about the value of the land, such that it cannot be said the sum of $15,000 was so obviously a figure which the plaintiff ought to have accepted. The defendants had also made prior offers to buy the disputed land. The Calderbank offer was considerably less than the last offer made by the defendants in the sum of $35,000. The offer made was subject to the parties entering into formal terms of settlement. Therefore, it could be said that the offer was subject to further negotiation which would negate potential costs consequences as there was no immediately binding contract if the offer had been accepted.[8] Given all these matters, I am not satisfied the plaintiff’s rejection of the offer was unreasonable in the circumstances. Accordingly, there should be no departure from the usual order that costs be paid on the standard basis.
[8]Law of Costs, Dal Pont 3rd ed , LexisNexis Butterworths at [13.66]
Claim made in wilful disregard of known facts or established law
13 The alternate ground relied upon for the defendants’ respective costs is that an indemnity costs order may be made in favour of a party where the proceeding is commenced or continued in wilful disregard of known facts or clearly established law. It is sufficient, the defendants argue, that the jurisdiction to awards such costs is enlivened where a party has persisted with what should be seen as a hopeless case. The defendants also referred to the Civil Procedure Act2010 (Vic) and the overarching obligation not to make claims that are vexatious or frivolous, and the making of costs orders can take such conduct into account.
14 In support of this alternative claim for costs, the defendants say the plaintiff should have known her claim for an easement was weak and coupled with the discovery provided by the defendants, the plaintiff should have realised the defendants’ claim for adverse possession was very strong. It was submitted the plaintiff ought to have known her claim was hopeless and should not have continued with it. Costs on an indemnity basis are sought either from 24 October 2016 or 25 July 2017 on the basis the plaintiff should not have continued her proceeding in wilful disregard of the facts and law after receiving the defendants’ initial and subsequent discovery.
15 The fact that arguments are accepted by a successful party does not mean that the losing party should then be exposed to a special costs order. Even a resounding defeat will not necessarily mean a claim is so hopeless as to warrant a special costs order.[9] Litigants should not be discouraged from bringing their disputes forward, particularly, where the questions of law are not straightforward and open to interpretation.[10]
[9]Law of Costs, Dal Pont 3rd ed, [16.52]
[10]McNab v Graham [2018] VSCA 8 at [13]
16 I do not accept the defendants’ submission that the plaintiff should have abandoned her claim upon receipt of the defendants’ discovery. No particular documents are referred to as supporting that submission. It was not so patently obvious that her claim would fail or that the defendants would establish their claim to adverse possession. A considerable part of the claim turned upon oral evidence from both parties as the use of the disputed land. It could not necessarily be predicted with definitive accuracy as to how that evidence would emerge or what findings would be made by the court. I consider the plaintiff was entitled to purse these matters. I do not consider her claim was either frivolous or vexatious. I am not persuaded that a special costs order is warranted on this alternative basis put by the defendants.
Reduction of costs relating to particular parts of the proceeding
17 The plaintiff submitted that the costs should be reduced having regard to various issues. In all, the plaintiff requested a reduction of some 4 days from the 9 days hearing with the result that the plaintiff should be liable to pay only 5 days of hearing costs.
18 The first item of reduction was the time spent on the challenge to the plaintiff’s amended statement of claim relating to the pleading of the easement claim. The court gave a ruling to the effect that the plaintiff’s pleading was adequate and did not require amendment. The plaintiff’s counsel says this took a day and half and accordingly his client should not have to pay those costs and the defendants should pay his client a day and half, being a total reduction of three days. I do not consider the limited debate about the adequacy of the plaintiff’s pleading warrants any departure from the usual rule that costs follow the event. Such rulings commonly occur in trials and this did not in my view raise any reason why a particular costs order should be made.
19 The next matter was the view of the disputed land which was conducted on one morning of the trial. Both parties requested and attended the view. Evidence was not taken and the land was merely inspected by the court. I see no reason why the costs of the view should be treated differently to any other part of the proceeding, despite the plaintiff saying there should be no order for costs of that whole day.
20 The last matter raised was the evidence regarding the easement. Both parties did not see the other and given this, the plaintiff submits the costs of that issue be borne by the parties without recourse to an order against the other. It is suggested that one day be allowed from the total otherwise payable by the plaintiff. The plaintiff also submits that in the exercise of a discretion to award costs, she acted reasonably and appropriately whereas Mr Dickson in effect took advantage of Mr Thompson, an elderly absent land owner. I reject the latter part of this submission as questions of morality are not relevant to the issue of adverse possession. As outlined in the reasons for judgment, the fact that an adverse possessor is aware of the title owner’s interest does not prevent a claim for adverse possession being pursued.
21 Self-evidently, the court has a discretion to make such an order under Rule 63A.04 of the County Civil Procedure Rules 2008. But I am not persuaded that any of the matters relied upon by the plaintiff justify a reduction of the costs otherwise payable by reference to a particular issue or part of the proceeding.
Conclusion
22 The plaintiff should pay the defendants’ costs of the proceeding on the standard basis.
23 I will therefore order as follows:
(1)There be judgment for the defendants on their counterclaim for the following declarations:
(a)the defendants have established title by adverse possession to 12 Jasper Road, Kalorama, in the State of Victoria, more particularly known as Certificate of Title Volume 6291, Folio 104 (“the disputed land”);
(b)the plaintiff’s title to the disputed land is extinguished pursuant to section 18 of the Limitations of Actions Act 1958;
(c)the defendants are the beneficial owners in fee simple of the disputed land.
(2)The court directs the Registrar of Titles to do any act or make any amendments to the Register that are necessary to give effect to these orders.
(3)The plaintiff’s claim is dismissed.
(4)The plaintiff pay the defendants’ costs of the proceeding, including any reserved costs, on the standard basis to be taxed in default of agreement.
(5)The costs ordered to be paid on 18 August 2017 by the defendants to the plaintiff fixed in the sum of $1,100 be offset against the costs payable under order (4) above.
CERTIFICATE
I certify that these 9 pages are a true copy of the Reasons for Ruling of her Honour Judge A Ryan delivered on 23 May 2018.
………………………………
Elisabeth Buchan
Associate to her Honour Judge A Ryan
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