Dimitrakakis v Dimitrakakis (No 2)
[2021] VCC 1335
•17 September 2021
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-19-05138
| Vassilios Dimitrakakis | Plaintiff |
| v | |
| Elias Dimitrakakis | Defendant |
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JUDGE: | Her Honour Judge Brimer | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers - written submissions received from the plaintiff on 12 August 2021 and from the defendant on 17 August 2021 | |
DATE OF RULING: | 17 September 2021 | |
CASE MAY BE CITED AS: | Dimitrakakis v Dimitrakakis (No 2) | |
MEDIUM NEUTRAL CITATION: | [2021] VCC 1335 | |
RULING
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Subject:COSTS
Catchwords: COSTS – indemnity costs – Calderbank letter - whether rejection of offer made in Calderbank letter was unreasonable – whether offer was unambiguously clear – whether offer was a genuine offer of compromise or an invitation to capitulate –– whether the offeree had reasonable prospects of success as at the time of offer
Cases Cited:Re McKenzie (No 2) [2018] VSC 23; Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; Grbavac v Hart (1997) 1 VR 154; MT Associates Pty Ltd v Aqua-Max Pty Ltd (No 3) [2000] VSC 163; VWA v O’Brien (Costs Ruling) [2017] VSC 68; Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398; Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358; Berrigan Shire Council v Ballerini & Anor (No 2) [2006] VSCA 65; Oversea-Banking Corporation v Richfield Investments Pty Ltd [2004] VSC 351; Ultra Thoroughbred Racing v Those Certain Underwriters (Ruling No 2) [2011] VSC 636; Nilumbik Shire Council v Victorian YMCA Community Program Pty Ltd [2016] VSCA 192
Ruling: For the defendant
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Stavris | MCK Legal |
| For the Defendant | Mr T Messer | KCL Law |
HER HONOUR:
Introduction
1In Dimitrakakis v Dimitrakakis [2021] VCC 960 (the judgment), I upheld the plaintiff’s claim and found that a strip of land forming part of a driveway that runs along the boundary of neighbouring properties in Richmond had not been adversely possessed by the defendant, and that the plaintiff had not abandoned the carriage-way easement appurtenant to his property.
2I invited the parties to prepare draft orders to give effect to my reasons, including a proposed order that the defendant pay the plaintiff’s costs of the proceeding (including reserved costs) on the standard basis, subject to any matters the parties brought to my attention on the question of costs.
3The parties have been unable to agree on the issue of costs. In summary, the defendant submits that costs ought to be ordered on the standard basis. The plaintiff contends that costs ought to be on an indemnity basis. Having had regard to the parties’ written submissions on costs and to the authorities referred to in those submissions, in my view, costs ought to be ordered on the standard basis.
Calderbank letter
4The plaintiff relied on a Calderbank letter his solicitor sent to the defendant’s solicitor on 15 October 2020. In this letter, the plaintiff proposed an offer of settlement consisting of two options:
5Option 1:
(i)Easement remains as on titles
(ii)Both properties erect a fence on adjoining easement which will allow access to each property.
(iii)Each owner pays their share of the fence
(iv)Each party pay their own legal costs to date
Option 2:
(i)Fence to be erected down middle of easement as shown on title
(ii)Both properties lose use and access to the 4-foot easement of adjoining property
(iii)Fence and all other costs dividing properties to be shared amongst the parties
(iv)Your client pays my client’s legal costs to date
6The offer was expressed as being ‘‘open for 14 days after which time it will lapse’’.
7Neither option was accepted by the defendant.
Plaintiff’s submissions
8The plaintiff recognised that the prima facie position in respect of costs in litigation is that the defendant should pay the plaintiff’s costs on a standard basis.[1] However, he contended that this was a proceeding which exhibited ‘‘special or unusual features’’ or ‘‘special circumstances’’ that support the Court making an indemnity costs order.[2] The plaintiff reluctantly commenced proceedings after numerous failed attempts to resolve the matter privately with the defendant and attempted unsuccessful mediation. The defendant unreasonably refused the Calderbank offer, giving rise to special circumstances that support the Court making an indemnity costs order against the defendant.
[1] The plaintiff relied on Re McKenzie (No 2) [2018] VSC 238, [21].
[2] Ibid [22].
9The plaintiff argued that the rejection of the offer was unreasonable because the judgment was ‘‘completely in accordance with the position of the plaintiff’’. The findings made in favour of the plaintiff were not finely balanced borderline determinations, but rather confidently positive. The defendant achieve nothing at trial.
10The plaintiff submitted that the offer to the defendant was generous considering the circumstances. In light of all the material available to the defendant, it was unreasonable for him to refuse that offer.
11The Certificate of Title, together with evidence supporting the continuous and uninterrupted use of the carriage-way easement, meant that the plaintiff’s prospects of success at trial were high. The offer that each party bear their own costs was a compromise on the part of the plaintiff, in favour of the defendant.
12Option 1 of the Calderbank letter was not a demand to capitulate, but rather a serious endeavour to resolve the proceedings. The plaintiff was proactive in attempting to solve the dispute with the defendant, and provided an offer that, given the circumstances of their particular matter, was the most agreeable solution. The plaintiff described Option 1 as an ‘‘attractive offer that would mitigate the legal costs that would ensue’’. The plaintiff said that, given the title of land and the continual use of the carriageway easement by the plaintiff, the defendant should have recognised the reality of the circumstances, namely that Option 1 would have provided an amenable and appealing solution.
13The plaintiff described his offer as ‘‘detailed and solid’’. He said that it provided two ‘‘clear and concise’’ options to the defendant.
Defendant’s submissions
14The defendant contended that his rejection of the plaintiff’s offer was not unreasonable.
15The terms of the offer were ‘‘not a model of clarity’’, but rather vague and imprecise. Both options lacked detail, rendering the offer meaningless. For example, the offer did not mention what would become of the covered outdoor area at the defendant’s property. Had the offer been accepted, it would have been incapable of enforcement.
16The defendant submitted that the offer was a demand to capitulate. Option 1 involved no element of compromise, as there was no concession to the defendant’s claim whatsoever. Accepting Option 1 would have reduced his tenant’s use and enjoyment of the land. The construction of a fence along the western boundary of the easement would block one of the defendant’s windows, as well as preventing access for maintenance along a section of the dwelling. Option 2 was not a ‘‘serious endeavour to resolve the proceeding’’.
17The defendant contended that the offer provided no reasons as to why the defendant should abandon his claim. At the time the offer was made, the defendant’s case was not hopeless. Given that the plaintiff’s Statement of Claim contained an admission that the fence had separated the properties in its present position since 1985, the defendant had reasonable prospects of success as at the time of offer.
18The Court should have no regard to the plaintiff’s assertion that proceedings were instituted after unsuccessful to attempts to resolve the matter. The defendant contended the plaintiff’s assertion is untrue and in any event, unsupported by evidence and hotly contested.
Legal principles
19In Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (Hazeldene),[3] the Victorian Court of Appeal held that the rejection of a Calderbank offer is a matter to which the Court should have regard when considering whether to order indemnity costs.[4] However, the rejection of a Calderbank offer does not automatically warrant the making of a special costs order.[5] The critical question is whether the rejection of the offer was unreasonable in the circumstances.[6]
[3] (2005) 13 VR 435.
[4] Ibid 441.
[5] Ibid 440.
[6] Ibid 441.
20Deciding whether the rejection of an offer was unreasonable will always involve matters of judgment and impression.[7] It is a question about which different judges might properly arrive at different conclusions.[8]
[7] Ibid.
[8] Ibid.
21A court considering whether a 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 offer;
(e) the clarity with which the terms of the offer were expressed;
(f) whether the offer foreshadowed an application for an indemnity costs in the event of the offeree’s rejecting it.[9]
[9] Ibid.
22In MT Associates Pty Ltd v Aqua-Max Pty Ltd (No 3),[10] Gillard J held that:
‘‘The offer has to be certain in its terms and capable of acceptance and enforcement. This means that the offer cannot be ambiguous or uncertain in its terms or involve further negotiation between the parties prior to the compromise being effected. The offer must be capable of being accepted thereby bringing into existence a binding contract.’’[11]
[10] [2000] VSC 163.Cited in Hazeldene 440 [17].
[11] Ibid [56]. See also Grbavac v Hart (1977) 1 VR 154, 160.
23In VWA v O’Brien (Costs Ruling),[12] Forrest J considered whether the rejection of an offer was unreasonable with reference to the extent of the compromise offered. His Honour referred to Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2),[13] in which the Court of Appeal made the following observations as to an offer which does not represent a genuine compromise:
‘‘There is authority to the effect that where the offer does not involve a genuine compromise, but is in fact either an invitation to capitulate or a derisory or nominal offer, it would not be unreasonable for the losing party to have rejected it.’’[14]
[12] [2017] VSC 68.
[13] [2011] VSCA 398.
[14] Ibid [13].
24In Hobartville Stud Pty Ltd v Union Insurance Co Ltd,[15] Giles J said ‘‘[c]ompromise connotes that a party gives something away’’.[16]
[15] (1991) 25 NSWLR 358
[16] Ibid 368.
25In Berrigan Shire Council v Ballerini & Anor (No 2),[17] one of the parties offered to bear its own legal costs of an appeal in exchange for the other party giving up the benefit of its judgment.[18] The Court of Appeal regarded this as an offer to walk away.[19] In the circumstances of that case, it held that it had not been unreasonable for the offeree to reject the offer.
[17] [2006] VSCA 65.
[18] Ibid [38].
[19] Ibid.
26The Court of Appeal in Hazeldene concluded that it was neither necessary nor desirable to lay down any general rule that the makers of a Calderbank offer should not be entitled to costs unless the offer sets out, with some reasonable specificity, the basis for the offeror’s contention that the offeree should accept the compromise.[20] However, it expressed approval for the following passage in Oversea-Banking Corporation v Richfield Investments Pty Ltd,[21] where Redlich J said the following:
‘‘Whether there is a need for the offeror to descend to specificity as to why the offer should be accepted must depend upon a consideration of all of the circumstances existing at the time of the offer. The extent to which the weakness of a party’s position is exposed through the pleadings, affidavits and the various communications between the parties during the course of the litigation may bear upon the significance of the absence of specificity in the informal order.’’[22]
[20] Ibid.
[21] [2004] VSC 351.
[22] Ibid [87].
27In Ultra Thoroughbred Racing v Those Certain Underwriters (Ruling No 2),[23] Forrest J noted that while setting out the basis upon which an offeree should accept the offer is not a prerequisite to an effective Calderbank offer, it goes to the reasonableness of the rejection of the offer.[24]
[23] [2011] VSC 636.
[24] Ibid [12].
28The unreasonableness or otherwise of the rejection of the offer must be assessed at the time, and in the circumstances, in which it was rejected, and not with the benefit of hindsight.[25]
[25] Nilumbik Shire Council v Victorian YMCA Community Program Pty Ltd [2016] VSCA 192, [150].
Analysis
29In my opinion the plaintiff has not demonstrated that the Court should exercise its discretion to make an order outside the usual order for standard costs.[26] The defendant’s rejection of the offer was not unreasonable in the circumstances.
[26] Even if I were to accept the plaintiff’s contention that there were numerous failed attempts to resolve
the matter privately, a contention that is challenged by the defendant, I do not consider that on its own or together with the rejection of the offer, it constitutes ‘special or unusual features’ or ‘special circumstances’ which justify the making of an order for indemnity costs for the reasons set out below.
30I address each consideration in turn.
Stage of proceeding and time allowed to consider the offer
31The defendant did not contend and I do not consider that the stage of the proceeding at which the offer was received or the time allowed to the defendant to consider the offer precludes the making of an order for indemnity costs. The offer was made 6 months before trial, and the offer was open for 14 days.
The extent of the compromise offered
32In my view, Option 1 of the offer does not represent a genuine compromise. Rather, it is an offer to capitulate. In exchange for the defendant abandoning his adverse possession claim and his claim that the plaintiff had abandoned the easement appurtenant to his property, the plaintiff offered to pay his own legal costs up to the date of offer. This was not an offer to give something away. It was an opportunity given to the defendant to walk away.
The defendant’s prospects of success, assessed as at the date of the offer
33The onus was on the defendant to prove that, notwithstanding the disputed land and the easement were registered on the plaintiff’s Certificate of Title, the disputed land had been adversely possessed and the easement abandoned. This was a high bar to meet.
34The plaintiff’s pleaded adverse possession claim hinged on the allegation that the physical boundary between the properties consisted of a fence since at least 1985, and that the fence had been configured in the same way since at least 1985. The plaintiff admitted this allegation in his pleadings (the admission).
35Although the admission was subject to a number of qualifications and the position and composition of the fence was hotly contested at trial, I accept the defendant’s contention that in light of the admission, the defendant’s case could not have been regarded as hopeless at the time the offer was made.[27]
[27] Hazeldene 442.
The clarity with which the terms of the offer were expressed
36There are aspects of the offer that are vague and imprecise. It is not certain in its terms and capable of enforcement. Clarity of terms would have required further negotiation.
37Option 2 is silent as to matters that would need to be addressed before the agreement could be capable of enforcement. Clause (iii) of Option 2, which states that the ‘‘fence and all other costs dividing properties [are] to be shared amongst the parties’’, is unclear as to what other steps would need to be taken and what costs would be shared.
38The defendant submitted both options are silent as to what would become of the outdoor area on the defendant’s property, the supports of which are on the title land of the plaintiff’s property. Presumably the removal of the outdoor covered area is one of the matters the expression ‘‘costs dividing the properties’’ refers to, although that is unclear.
Whether the offer foreshadowed an application for indemnity costs
39The plaintiff’s letter states that if the defendant were to obtain a result at the hearing less favourable than the offer of settlement proposed in the letter, then the plaintiff would apply for costs on a solicitor-client basis from the date of the offer.
Reasons as to why the offer ought be accepted
40The plaintiff did not provide any reasons as to why his offer should be accepted. As noted above, this is not a prerequisite to an effective Calderbank offer, but is something that can be taken into account when deciding the unreasonableness of rejecting an offer. In light of the admission on a critical issue, I consider the plaintiff should have descended to specificity as to why the offer should be accepted. The defendant’s assessment of his prospects of success and whether the offer ought reasonably be accepted would properly have been made in light of the admission.
Conclusion
41For the reasons set out above, the plaintiff has not demonstrated that the Court should exercise its discretion to make an order outside the usual order for standard costs. The defendant’s rejection of the offer was not unreasonable in the circumstances.
42I order that the defendant pay the plaintiff’s costs of and incidental to the proceedings, including any reserved costs, on a standard basis, to be taxed in default of agreement.
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Certificate
I certify that these 42 paragraphs are a true copy of the ruling of Her Honour Judge Brimer delivered on 17 September 2021.
Dated: 17 September 2021
Ilias Tsirogiannis
Associate to Her Honour Judge Brimer
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