Ebraham v AAI Limited t/as GIO Insurance (No 2)
[2018] VCC 142
•27 February 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-15-05271
| EMAD EBRAHAM | Plaintiff |
| V | |
| AAI LIMITED T/AS GIO INSURANCE (ACN 005 207 807) | Defendant |
---
JUDGE: | HER HONOUR JUDGE A RYAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers | |
DATE OF RULING: | 27 February 2018 | |
CASE MAY BE CITED AS: | Ebraham v AAI Limited t/as GIO Insurance (No 2) | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 142 | |
RULING ON COSTS
---
Subject:COSTS
Legislation Cited: County Court Civil Procedure Rules 2008
Cases Cited:Board of Examiners v XY [2006] VSCA 190;
Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S);
Brookfield Multiplex Ltd v International Litigation Funding Partners Pte Ltd (No 4) [2013] VSC 714;
Chen & Ors v Chan & Ors [2009] VSCA 233;
Smith v Jovanoski & Anor(No 2) [2013] VSC 714
---
HER HONOUR:
1 On 1 February 2018, I gave reasons for judgment in favour of the defendant (“GIO”). Subject to hearing from the parties, I proposed an order that the plaintiff pay GIO’s costs of the proceeding, including any reserved costs, on a standard basis to be taxed in default of agreement. The parties were invited to file written submissions on the form of orders to be made regarding the costs of the proceeding.
2 Pursuant to my direction, both parties filed written submissions in respect of the orders to be made relating to costs. The plaintiff filed a submission dated 12 February 2018 which he prepared himself.
3 The plaintiff seeks an order that there be no order as to costs. In support of that submission, he refers to various findings made in the judgment. These include the fact that he was not found to have engaged in fraudulent conduct and GIO had not succeeded in satisfying the Court about various matters under the coincidence rule. The plaintiff referred to the position in Syria, which had affected his ability to verify the items of jewellery that were the subject of his claim. The plaintiff further submits he was unaware as to GIO’s requirement that any valuation be provided by someone who was a qualified jeweller or professional valuer. He claims he was not advised by Mr Al Saffar of Baghdad Jewellery that he did not meet those requirements. He also referred to the finding of the Court that he had not acted dishonestly or failed to give complete information to GIO. The plaintiff then made reference to his parlous financial circumstances and as a consequence, he has no real prospects of meeting a substantial order for costs.
4 Many of the matters which the plaintiff relies upon are essentially commentary about the findings in the reasons for judgment. To the extent it may be said that there should be some outcome other than the plaintiff pay costs because GIO did not establish each of the grounds made out in its defence, this does not provide a satisfactory basis for departing from the general rule that costs are awarded to a successful party. As GIO is the successful party, it should recover its costs in my view, even though it did not succeed on each and every matter argued at trial.[1]
[1]Chen & Ors v Chan & Ors [2009] VSCA 233 at [10]; Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39, [6]–[8]
5 The fact that the plaintiff may be impecunious is not a matter which is relevant to the exercise of discretion of the Court to award costs.[2]
[2]Board of Examiners v XY [2006] VSCA 190
6 GIO provided written submissions dated 16 February 2018. GIO submits there is no reason to depart from the ordinary course that costs follow the event.
7 GIO served an offer of compromise pursuant to Order 26 of the County Court Civil Procedure Rules 2008 whereby the defendant offered to “walk away” and bear its own costs of the proceeding. The offer was not accepted. Accordingly, GIO seeks an order under Rule 26.08(4) that:
(a)the plaintiff pay the defendant’s costs until 11.00am on 26 May 2017; and
(b)the plaintiff pay the defendant’s costs thereafter taxed on an indemnity basis.
8 Pursuant to a direction from the Court, GIO filed and served an affidavit by Geoffrey Alan Horne sworn 20 February 2018, exhibiting the offer of compromise served and confirming it had not been accepted. Mr Horne deposed that the matter was mediated on 16 May 2017 but did not resolve. On 24 May 2017, he forwarded a letter to the plaintiff’s solicitors which attached the offer of compromise. A further letter was sent to the plaintiff’s solicitors on 13 June 2017, being Exhibit GAH-3 to Mr Horne’s affidavit, which noted inter alia that the offer of compromise had expired.
9 The offer of compromise, which is Exhibit GAH-2, relevantly provided as follows:
“TAKE NOTICE that the Defendant offers to walk away and bear its own costs of the action to date in full and final satisfaction of all the causes of action particularised in the Statement of Claim annexed to the Plaintiff’s Writ filed herein.”
10 The costs consequences of a failure to accept are dealt with in Rule 26.08 of the County Court Civil Procedure Rules 2008. The relevant sub-paragraph is Rule 26.08(4) which refers to an offer being made by a defendant and provides as follows:
“Where an offer of compromise is made by a defendant and the plaintiff unreasonably fails to accept the offer and the claim to which the offer relates is dismissed or judgment on the claim is entered in favour of the defendant, then unless the Court otherwise orders –
(a) the defendant shall be entitled to an order against the plaintiff for the defendant’s costs in respect of the claim until 11.00am on the second business day after the offer was made, taxed on the ordinarily applicable basis; and
(b) the defendant shall be entitled to an order against the plaintiff in respect of the defendant’s costs after the time referred to in paragraph (a) taxed on an indemnity basis.”
11 The question for determination is whether it was unreasonable for the plaintiff to have rejected the offer made by GIO to walk away and bear its own costs. In Smith v Jovanoski & Anor(No 2),[3] Zammit AsJ (as Her Honour then was) held that the principles relating to assessing the reasonableness of accepting Calderbank letters were equally applicable to formal offers of compromise.
[3][2013] VSC 714 at [11] to [12]
12 Under Rule 26.02(4) an offer of compromise must state either that the offer is inclusive of costs or that the costs are to be paid or received, as the case may be, in addition to the offer. The offer of compromise made by GIO was an offer to walk away on the basis that GIO would bear its own costs, which falls within the first category, being an inclusive offer.
13 The efficacy of a “walk away” offer has been considered judicially. Whether such an offer will be a genuine offer to compromise will depend upon the circumstances of each case. It has been held that where the costs have been substantial, an offer to give up those costs does constitute an offer which is meaningful. Factors such as the closeness of an offer to walk away immediately prior to trial, coming at a time when the parties are likely to have incurred substantial costs, is also probative because at that time the parties are well positioned to assess the strength and weaknesses of their respective cases.[4]
[4]See Dal Pont, Law of Costs, 3rd Ed; LexisNexis Butterworths at paragraph 13.9
14 The letter accompanying the offer of compromise, Exhibit GAH-1 to Mr Horne’s affidavit, referred to a number of matters which GIO relied upon to say that it would vigorously defend the plaintiff’s proceeding and decline the plaintiff’s claims. GIO’s lawyers noted the offer represented a significant compromise, given it had already incurred substantial costs investigating and defending the claim. The letter said a brief was ready to be forwarded to counsel which comprised four volumes and that once the brief was forwarded, GIO’s costs would escalate very quickly. GIO stated that it would not thereafter agree to any settlement proposal that did not involve the payment of its costs by the plaintiff. It was pointed out that if the matter went to trial and GIO was successful, then its costs would obviously be significant. The lawyers invited the plaintiff to consider the matter very carefully and accept the offer of compromise.
15 In Brookfield Multiplex Limited v International Litigation Funding Partners Pte Ltd (No 4)[5] Finkelstein J considered a similar offer. The plaintiffs were advised by the defendants that they considered their claim to be completely without merit based on the advice of senior counsel. The defendants offered to resolve the matter on the basis that the plaintiffs withdraw the proceeding, with each party bearing its own costs. The plaintiffs ultimately failed in the action. His Honour stated at [12] that:
“A ‘walk away’ offer may or may not constitute an offer for purposes of O 23 and Calderbank. The starting point is that ‘an offer which does not involve a real and genuine element of compromise, will not be taken into account in relation to costs’…….. Compromise connotes that a party gives something away. .”
[5][2009] FCA 803
16 His Honour continued at [13]:
“It is therefore necessary to determine whether the defendants’ ‘walk away’ offer was a genuine offer of compromise. One can easily envisage circumstances where a ‘walk away’ offer must be regarded as a genuine offer of compromise. Take for example a case that has progressed for some time and the parties’ costs are quite high. In that event an offer to walk away may, in a business sense, be a significant offer.”
17 On the other hand, there could be circumstances, and his Honour considered the case before him to be an example, where an offer to walk away does not involve any real give and take. His Honour was influenced by the fact that the defendants had incurred some costs but probably not a lot. The amount was not proved in evidence and on this view, His Honour was not prepared to award indemnity costs.
18 The writ was filed in this proceeding on 2 November 2015. The matter came on for hearing on 27 September 2017 and ran for seven days. The question then is whether it was unreasonable for the plaintiff not to have accepted the offer to walk away made in May 2017.
19 In the circumstances of this case, I am not persuaded it was unreasonable for the plaintiff not to have accepted the offer of compromise. The offer put was that he capitulate and if he did so, the plaintiff would not have to pay GIO’s costs to the date of the offer. No estimate was given of the costs which GIO had incurred up to May 2017, so the quantum of its costs to that date were unknown to the plaintiff. Self-evidently, the trial costs had yet to be incurred and the trial was fixed some months ahead. Although the covering letter dated 24 May 2017 refers to GIO’s decision to rely upon fraud, this was a defence that was not ultimately made out. Consequently, I am not satisfied this is one of those cases where a “walk away” offer dictates that indemnity costs should be awarded.
20 As GIO is not entitled to rely upon the offer of compromise served, it follows that GIO should receive its costs on the standard basis only.
21 Accordingly, I order as follows:
(a)The plaintiff’s proceeding is dismissed.
(b)The plaintiff pay the defendant’s costs of the proceeding, including any reserved costs, on the standard basis to be taxed in default of agreement.
---
Certificate
I certify that these 7 pages are a true copy of the Reasons for Judgment of Her Honour Judge A Ryan delivered on 27 February 2018.
Dated: 27 February 2018
Stephen Cremean
Associate to Her Honour Judge A Ryan
0
4
0