Conte Mechanical and Electrical Services v Roach

[2005] VSC 353

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 4354 of 2003

CONTE MECHANICAL AND ELECTRICAL SERVICES	Plaintiff
v
ROACH AND ANOTHER	Defendants

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JUDGE:	OSBORN J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	30 AUGUST 2005
DATE OF JUDGMENT:	1 SEPTEMBER 2005
CASE MAY BE CITED AS:	CONTE MECHANICAL AND ELECTRICAL SERVICES v ROACH & ANOR
MEDIUM NEUTRAL CITATION:	[2005] VSC 353

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Costs – Commercial matter – Two defendants – Plaintiff to pay costs of both first and second defendants – Possible conflict of interest as between two defendants – 'Calderbank' letter – Costs awarded on a party-party basis.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P. Cosgrave	Pilley & Associates
For the First Defendant	Mr N. Wallace	McCluskys
For the Second Defendant	Mr N. Pane	Matthew Shaw & Associates

HIS HONOUR:

1. In this matter each defendant seeks orders for costs including costs on a solicitor/client basis from 9 August 2005.

1. The plaintiff contends that only one set of costs should be awarded to the defendants on the grounds that it was unnecessary for each defendant to be separately represented.  The plaintiff also contests the application for costs on a solicitor/client basis. 

1. The relevant principles with respect to the costs of two defendants were stated by Woodward J in Statham v Shephard[1]. 

"The principle which I deduce from these authorities, and which I believe I should follow in spite of the two cases earlier cited, is that the court will not normally allow two sets of costs to defendants where there is no possible conflict of interest between them in the presentation of their cases. I would add to this basic proposition three provisoes. In the first place, if a conflict of interest appears possible but unlikely, the defendants should make any necessary inquiries from the plaintiff as to the way in which his case is to be put if this would resolve the possibility of conflict between defendants. (See In re Lyell [1941] V.L.R. 207.)

Secondly, there could be circumstances in which, although the defendants were united in their opposition to the plaintiff, their relationship to each other might be such that they would be acting reasonably in remaining at arm's length during the general course of litigation.

Thirdly, even if defendants are acting reasonably in maintaining separate representation for some time or for some purposes, they may still be deprived of part of their costs if they act unreasonably by duplicating costs on any particular matter or at any particular time."

[1][1974] 23 FLR 244 at 266-7

1. In the present case it is not true that the defendants had exactly the same interest in the litigation.  Nor is it a case where in my view a conflict of interest was unlikely and any  differences of interest might have been resolved by agreement before trial with the plaintiff.

1. First, the representations complained of included statements allegedly made by the defendant Payton in the absence of the defendant Roach at the first September meeting to which I have referred in my reasons for judgment.  Secondly, Roach maintains that he was absent from the major portion of the second September meeting to which I have referred in my reasons for judgment.  Roach says, “By the time I arrived the meeting had concluded”.  Roach’s defence was conducted on the basis that it deliberately sought to minimise the occasions of contact between him and Conte and implicitly to support the view that if relevant representations were made they were made by Payton alone.  It was always open to the Court to accept Roach but disbelieve Payton as to a series of material matters.

1. Insofar as the plaintiff’s evidence sought to aggregate the position of Payton and Roach, it was also legitimate for Payton to emphasise matters that related to Roach alone.  Perhaps the most significant of these was that Aquavita was not a Courthouse project or one in which Payton had an interest, thus making improbable the terms of the initial representations alleged against him. 

1. No objection was taken to cross-examination of Conte by counsel for each of the defendants respectively, and such cross-examination adopted different forensic emphases reflecting the different interests of the individual defendants.

1. The defendants were confronted with claims inter alia of breaches of the Trade Practices Act 1974 (Commonwealth) and of unconscionable conduct.  Such allegations were serious allegations and in my view reasonably required separate representation in the circumstances I have set out above.  Accordingly in my view each defendant is entitled to his costs.

1. The application for solicitor/client costs is based on a 'Calderbank' letter[2] dated 3 August 2005.  By that letter the defendants offered to settle the proceeding on the basis each party bear its own costs.  The offer was expressed to be open until 4.00 pm on 8 August 2005.  The intervening five days included a weekend.  The offer was put on the basis of “the firm view … that your client does not have a sustainable claim against our clients”.  Mr Pane submitted that this offer was to be understood in the context of elaborations of the defendants’ position that occurred in discussions between counsel but in my view such discussions were without prejudice and I cannot have regard to them.

   [2]cf. Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd [2000] FCA 163

1. By the date of the offer in question witness statements had been exchanged and it must have been apparent to the plaintiff that there was at the very least a real risk it would fail in persuading the Court of its case on the facts.  In these circumstances I doubt that the failure of the letter to articulate problems with the plaintiff’s case should be regarded as fatal.

1. Nevertheless, the offer was not made until shortly before the date then fixed for trial 11 August 2005. 

1. In my view the five day period provided for in the offer was not sufficient to make it fair and reasonable that the plaintiff now suffer the cost consequences which the defendants contend for.  In reaching this view I have had regard to the terms of Rule 26 of the Supreme Court Rules relating to offers of compromise including Rule 26.03.  The time period of 14 days there provided for informs the conclusion I have reached.

1. This matter has a relatively long history but no explanation has been advanced as to why the plaintiff was not given more than five days (including the weekend) to reflect on the offer made. 

1. Accordingly I propose simply to order that the plaintiff pay the costs of the first and second defendants including reserved costs.

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