Civil and Allied Technical Construction Pty Ltd (ACN 077 924 120) v A1 Quality Concrete Tanks Pty Ltd (ACN 095 210 683)

[2018] VSCA 167

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2017 0118

CIVIL AND ALLIED TECHNICAL CONSTRUCTION PTY LTD (ACN 077 924 120)	Applicant
v
A1 QUALITY CONCRETE TANKS PTY LTD (ACN 095 210 683)	Respondent

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JUDGES:	WHELAN, SANTAMARIA and McLEISH JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	19 April 2018
DATE OF JUDGMENT:	29 June 2018
MEDIUM NEUTRAL CITATION:	[2018] VSCA 167
JUDGMENT APPEALED FROM:	[2017] VCC 1320 (Judge MacNamara)

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COSTS – Application for leave to appeal allowed in part – Appeal dismissed – Respondent sought indemnity costs – Conduct of appellate proceedings not sufficient to warrant indemnity costs – Applicant to pay costs on standard basis.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr R Fenwick Elliot with Mr G Sykes Bidstrup	McKean Park
For the Respondent	Mr M Clarke QC with Ms C Pierce	MP Lanza Lawyers

WHELAN JA

SANTAMARIA JA

McLEISH JA:

1. On 20 June 2018 we published our judgment in this matter.[1]  For the reasons we set out we refused leave to appeal on proposed ground 1, granted leave to appeal on proposed ground 2, and dismissed the appeal.  Counsel for the respondent sought an order for costs on an indemnity basis.  We made directions for the filing and service of written submissions and advised that we would deal with the issue of costs on the basis of those submissions without a further hearing.

   [1][2018] VSCA 157 (‘the Judgment’). These reasons assume knowledge of the matters dealt with in the Judgment.

1. The respondent seeks an order for indemnity costs on four grounds.  They are:

(1)The appellant rejected an offer of compromise made during the conduct of the County Court proceeding on 8 August 2013.  The amount the respondent offered to accept is less than that which it has recovered.

(2)The appellant made a serious allegation of illegality which it ought to have realised was hopeless.

(3)The appellant conducted the litigation in a high-handed and presumptuous manner.  The respondent relies upon certain findings in the Judgment in that regard.

(4)The respondent relies upon conduct in the course of the application and appeal said to contravene s 24 of the Civil Procedure Act.

1. The appellant resists the claim for indemnity costs and submits that because it was successful in its application for a stay of execution pending appeal, and in obtaining leave to appeal on one of the proposed grounds, the costs should be apportioned, or should be ‘netted off’ so that the respondent should recover half of its costs of the entire appellate proceeding.

1. In our opinion costs should follow the event.  The appellant should pay the respondent’s costs.  The respondent has been successful in the appellate proceeding.  Leave to appeal was refused on one proposed ground, and, while it was granted on the other proposed ground, the appeal was dismissed.  The costs of the stay application were ordered to be costs in the appeal.

1. We are not persuaded that it is appropriate to order costs on an indemnity basis.

1. We do not consider that the appellant’s conduct of the appellate proceeding warrants such an order.

1. As to the offer of compromise, the relevant offer was made during the course of the proceeding in the County Court prior to the liability trial under Order 26 of the County Court Civil Procedure Rules 2008.  The appellant’s failure to accept the offer was the reason why the trial judge awarded indemnity costs against it from 9 August 2013 (see Rule 26.08), although the judge did also say that he was ‘fortified’ in that conclusion by aspects of the manner in which the proceeding had been conducted which had, in the judge’s view, resulted in a damages assessment trial of inordinate length.[2]

   [2][2017] VCC 1455, [25]–[27].

1. As to the significance after an appeal of an offer of compromise made at the trial level, we adopt the observations of Tate JA (with whom Harper JA and Kyrou AJA agreed) in Rosa v Galbally & O’Bryan (No 3).[3] An offer of compromise at the trial level does not have the consequences on appeal for which the rules provide at trial, but it remains a relevant matter. It is also relevant that Rule 26.12 of the Supreme Court (General Civil Procedure) Rules 2015 provides for offers of compromise in relation to appellate proceedings, and that the respondent did not avail itself of that procedure. 

   [3][2013] VSCA 159.

1. In all the circumstances we have determined that this is not an appropriate matter in which to order indemnity costs.  The appellant should pay the respondent’s costs of the application for leave to appeal and the appeal on the standard basis.

1. The order for a stay made by this Court on 1 February 2018 ordered the appellant to pay the judgment sum of $266,863.36 into Court.  The parties are agreed we should order that that sum be paid out to the respondent’s solicitors.

1. The orders accordingly are:

(1)The sum of $266,863.36 paid into Court pursuant to the order made 1 February 2018, together with accrued interest, is to be paid out to the solicitors for the respondent, MP Lanza Lawyers.

(2)The appellant is to pay the respondent’s costs of the application for leave to appeal and the appeal on the standard basis.

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