Gang v You (No 4)
[2022] ACTSC 2
•2 February 2022
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Gang v You (No 4) |
Citation: | [2022] ACTSC 2 |
Hearing Date: | On the papers |
DecisionDate: | 2 February 2022 |
Before: | Crowe AJ |
Decision: | The suspension of order (3) made on 15 December 2021 is lifted |
Catchwords: | PRACTICE AND PROCEDURE – COSTS – Application for special costs order – where alleged that plaintiff had been put on notice of the delinquencies in his case – whether plaintiff acted unreasonably in rejecting settlement offers – consideration of whether a special costs order is warranted |
Legislation Cited: | Court Procedures Act 2004 (ACT) Court Procedures Rules 2006 (ACT) |
Cases Cited: | Calderbank v Calderbank [1975] 1 All ER 333 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Marks v GIO Australia Holdings Ltd (No 2) (1996) 66 FCR 128 |
Parties: | Yeong Suk Gang ( Plaintiff) Colquhoun Murphy Pty Ltd Trading as Colquhoun Murphy Lawyers ( Second Defendant) |
Representation: | Counsel Dr D Hassall ( Plaintiff) A Muller ( Second Defendant) |
| Solicitors Maxwell & Co ( Plaintiff) Moray & Agnew ( Second Defendant) | |
File Number: | SC 430 of 2018 |
CROWE AJ
Background
On 15 December 2021 I delivered judgment in the substantive litigation between the parties; see Gang v You (No 3) [2021] ACTSC 318. I made the following orders:
(1)There be judgment in favour of the defendants in relation to the claims of the plaintiff.
(2)There be judgment in favour of the first defendant on the counter-claim in the sum of $13,822.42.
(3)Subject to order (4), the plaintiff pay the defendants’ costs of this proceeding.
(4)In the event that any party notifies my Associate in writing that he or it seeks an order different from that in (3) by 4:00 pm on 22 December 2021, order (3) shall be suspended until further order.
The second defendant triggered the suspension in order (4) by advising my Associate on 22 December 2021 that it sought orders different from that made in order (3). The second defendant provided written submissions and relied on copies of three letters sent in the course of the litigation in relation to the possible settlement of the plaintiff’s claim. I have marked those letters as Exhibit 2D2 “1” (Costs).
The letters were:
(1)Letter from the second defendant’s solicitor to the plaintiff’s solicitor dated 19 March 2019 in which the second defendant offered to settle the claim by the entry of judgment against it in the sum of $3,000 plus costs.
(2)Letter from the first defendant’s solicitor to the plaintiff’s solicitor dated 6 October 2020. In that letter the defendants offered to settle the claim by the first defendant paying the plaintiff $70,000 and the second defendant paying him $30,000. The proceedings were to be discontinued, with no order being made in relation to costs.
(3)Letter from the second defendant to the plaintiff’s solicitor dated 25 March 2021 in which the second defendant offered to settle the claim by paying $100,000 inclusive of costs.
The first two letters were stated to be offers of compromise made pursuant to pt 2.10 of the Court Procedures Rules 2006 (ACT) (CPR), and also to have been made pursuant to the principles in Calderbank v Calderbank [1975] 3 All ER 333 (Calderbank). The third letter was expressed as having been made pursuant to the Calderbank decision only.
The first and third letters warned that if the plaintiff failed in his claim against the second defendant it would seek an order that he pay its costs on an indemnity basis from the date on which each offer expired. The second letter warned that if the plaintiff achieved a less favourable result (to him) after trial the defendants would seek an order that the plaintiff pay their costs on an indemnity basis from the date of the offer.
The plaintiff provided written submissions responding to those of the second defendant.
The submissions of the parties
The second defendant
The second defendant sought orders in substitution for order (3) made on 15 December 2021 in the following terms:
(1)The plaintiff pay the second defendant’s costs of the proceeding up to and inclusive of 18 March 2019 on a party/party basis; and
(2)The plaintiff pay the second defendant’s costs of the proceeding incurred on and after 19 March 2019 on an indemnity basis.
It was submitted that these orders should be made because the plaintiff acted unreasonably in rejecting the settlement offers made by the defendants in the course of the proceedings. The defendant relied upon rule 2012 of the CPR, or alternatively the Calderbank decision.
The second defendant relies on the principles stated by Murrell CJ in Donohue v Volanne Pty Ltd (No 3) [2021] ACTCA 20 (Donohue) as follows:
[22]Usually, there must be some special or unusual feature in the case that justifies the Court in departing from the usual position that costs should be assessed on a party and party basis: Lewis v Australian Capital Territory (No 2) [2015] ACTSC 343.
[23]Special circumstances may exist where a party is guilty of a “relevant delinquency”: Oshlack at [44]. This is not a reference to ethical or moral delinquency, but a delinquency bearing a relevant relation to the conduct of the case: Ingot Capital Investment v Macquarie Equity Capital Markets Ltd (No 7) [2008] NSWSC 199; 65 ACSR 324 at [24].
[24]As stated in Fountain Select Meats (Sales) Pty Ltd v International Produced Merchants Pty Ltd (1988) 81 ALR 397 at 401, this may occur where it appears to the court that:
an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success.
Reliance was also placed on the decision of Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at pg 232–4, and the statement of Einfeld J in Marks v GIO Australia Holdings Ltd (No 2) (1996) 66 FCR 128 that:
If open access to the legal system is to be preserved, it seems to me that costs have to be a sanction which the courts can use to persuade litigants to settle sensibly. It is thus possible to argue that the public interest demands that the court order indemnity costs in a wide variety of cases as a means of dissuading litigants from fighting cases which ought to be settled …
The second defendant also referred to s 5A of the Court Procedures Act 2004 (ACT) (CPA) as placing an obligation on parties to facilitate the just disposition of disputes as quickly, inexpensively and efficiently as possible. This would have been better achieved in the circumstances of this case by the acceptance of one or other of the offers made by the second defendant.
The second defendant submitted that the plaintiff had been put on notice of the deficiencies in his case and had acted “imprudently and delinquently” in rejecting all of the offers made by the second defendant. The deficiencies which he was warned about in the correspondence were reflected in the findings which I made in the substantive case. The plaintiff’s rejection of the settlement offers was, in all of the circumstances, so unreasonable that the orders sought by the second defendant should be made.
The plaintiff
The plaintiff relied on the statement by Loukas-Karlsson J in Faris v Savage (No 3) [2021] ACTSC 60 (at [51]) that indemnity costs orders “… should be reserved for the most unreasonable actions by unsuccessful plaintiffs”. The plaintiff says that her Honour made it clear that the making of an offer under the CPR or pursuant to Calderbank engaged a discretion to make other than the usual costs order. It did not require such an order.
The plaintiff argues that he had not committed any relevant delinquency. This was not a case where he had “no chance of success”. Indeed, the fact that the defendants made the offers which they did was inconsistent with that proposition.
Moreover, the plaintiff says that the notion of a costs sanction being used to dissuade a plaintiff from pursuing a claim is contrary to the principle of open access to justice. That principle is supported by s 5A of the CPA. The submission advises that an appeal has been lodged from the 15 December 2021 judgment and that it “…is not necessarily to the point, at this stage, that the Second Defendant so relies upon the Judgment …”.
In relation to the appeal the plaintiff notes that the notice of appeal asserts that the decision in favour of the defendants was against the evidence, and the weight of the evidence. In those circumstances it is submitted that I should defer making any costs order until the appeal decision has been made. Alternatively, I should stay any such order until the outcome of the appeal is known.
Consideration
I should say at the outset that I am not persuaded that I should defer making a costs order until the appeal is determined. I do not see that as an appropriate course having regard to the requirements of s 5A of the CPA. It is far more desirable that the first instance proceedings are completed in a timely manner. It will then be entirely a matter for the Court of Appeal as to what consequential orders should be made should the appeal be successful.
Nor is it appropriate for me to order a stay at this stage. No application in proceeding has been made seeking such an order, and no evidence has been provided in support of such an application. Ordinarily a successful litigant is entitled to the benefits of that party’s success in the case. Good grounds must be demonstrated before a judgment will be stayed pending an appeal. If the plaintiff wishes to pursue such a remedy he should do so in the conventional manner.
I accept the statements of principle of the Chief Justice in the Donohue decision as set out in [9] above. However, I also accept what her Honour went on to say in the next paragraph of her judgment. She said:
[25]However, there is a distinction between an action that is “hopeless” or “has no chance of success” and one which is marginal or tenuous but still arguable. Commencing or continuing the latter does not ordinarily merit the making of a special costs order.
I take into account that r 1012 suggests a default outcome which supports the orders sought by the second defendant. The rule relevantly provides:
1012Offer not accepted and judgment no less favourable to defendant
(1)This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim no less favourable to the defendant than the terms of the offer.
(2)Unless the court orders otherwise—
(a)the defendant is entitled to an order against the plaintiff for the defendant’s costs in relation to the claim, to be assessed on a party and party basis, up to the time when the defendant is entitled to costs under paragraph (b);
(b)the defendant is entitled to an order against the plaintiff for the defendant’s costs in relation to the claim, assessed on a solicitor and client basis—
(i) if the offer was made before the first day of the trial—on and from the day after the offer was made; ...
However, as the prefatory words to sub-rr (2) indicate, the Court has a residual discretion. It seems to me that it would not be just in all of the circumstances to make the costs order sought by the second defendant. The factors which lead me to that conclusion are:
(1)The very early stage of the litigation when the 19 March 2019 letter was sent. The proceedings commenced in September 2018. I note that the pleadings were not complete by March 2019 (the reply to the second defendant’s defence was filed on 12 April 2019). More importantly, the process of discovery had not been undertaken and the affidavit evidence had not been filed.
(2)I do not accept that the plaintiff’s claim against the second defendant was so obviously hopeless that it was delinquent, in the relevant sense, for him to wish to have his day in court. There were some unusual features of this case which might well have led those advising the plaintiff to consider that he had an arguable case based on the proposition that the second defendant did act as his solicitor in the conveyance of the Giralang property. I referred to those at [364] of my 15 December 2021 judgment. In particular, the charging of fees to the plaintiff and the contents of the internal settlement checklist were matters of concern. It should also be noted that I did find that the second defendant owed the plaintiff a fiduciary duty in relation to the handling of the settlement monies. The circumstances were such that, again, it was not unreasonable for the plaintiff to consider that he might succeed in establishing a breach of that duty. While ultimately I concluded that the second defendant had not breached the duty, it does not seem to me that the prospect of that outcome was such as to render the plaintiff’s rejection of the settlement offers sufficiently unreasonable.
While the orders sought by the second defendant focussed on the 19 March 2019 offer I accept that it would have been open, in the exercise of my discretion, to make a different costs order based upon one of the later offers. However, for the reasons summarised in [21](2) above I consider that the appropriate costs order in the circumstances of this case is order (3) as made on 15 December 2021.
Order of the Court
The order of the court is:
(1)The suspension of order (3) made on 15 December 2021 is lifted.
| I certify that the preceding twenty-three [23] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Justice Crowe Associate: Date: |
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