Glenmont Investments Pty Ltd v O'Loughlin

[1999] SASC 504

GLENMONT INVESTMENTS PTY LTD v O'LOUGHLIN & ORS
[1999] SASC 504

1 MILLHOUSE J.  Having published my reasons I was told that, on 12 April, a few days after the hearing began, the solicitors for the plaintiff had sent to each defendant a letter in which they said, "... our client has now instructed us that it would be prepared to accept in full settlement of this matter the sum of $4.75 million dollars (sic) in addition to costs."  There was no response from anyone.  The offer was not withdrawn.  Subsequently on 24 May the solicitors for Parker and Edwards wrote on behalf of their clients and the Show Society offering to pay $1,750,000 in settlement of the claim, interest and costs.  The offer was to remain open for 24 hours.  The offer was not accepted within that time but I suppose it meant that the offer of 12 April of the plaintiff lapsed.
2 As I had awarded far more than the plaintiff had offered to take, Mr Anderson asked for solicitor and client costs from the time of the offer.  Mr Bell vigorously opposed this saying, "None of the parties in their wildest dreams presumably envisaged the award that was made".  Mr Bell argued that it was not imprudent for the defendants to have rejected the offer.  Mr Harms, from the slightly different perspective of his clients, Parker and Edwards, supported Mr Bell's opposition.  It had not been imprudent to refuse the offer of the plaintiff because of the difficult questions concerning liability and assessment, the relationship between the defendants and their respective degrees of impecuniosity.
3 I have a discretion as to costs.  The Full Court of which I as a member,  considered questions similar to the present in Pirotta v Citibank Limited & Ors, (Judgment S6922, delivered 4 November 1998).  Our brother Debelle wrote the Reasons.  I agreed with them then and I propose to follow them now.
4 Debelle J referred to the decision of Rolfe J in Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425 and said:-
"... Rolfe J concluded (at 451) that whether an offer of compromise be made either by way of a Calderbank letter or by way of an offer of compromise pursuant to the Rules of Court, there should be a prima facie presumption in the event of the offer not being accepted and in the event of the recipient of the offer no (sic) receiving a result more favourable than the offer, that the party rejecting the offer should pay the costs of the other party on an indemnity basis from the date of the making of the offer." (@ p7)
5 Debelle J (@ pp 9-10) went on to consider four matters arising out of Rule 41 (the heading to which is "Offers by plaintiff to settle") for a judge to take into account.
6 First, "regard should, in appropriate circumstances, be had to a Calderbank letter for the purpose of determining whether an order for indemnity costs should be made."   The letter of 12 April was a Calderbank letter.
7 Second, "the terms in which such a letter are couched should, as a general rule and so far as is reasonably practicable, conform to the regime in Rule 41."
8 Third, "the Rule expresses a prima facie presumption that it will operate in favour of a plaintiff who has been awarded a monetary sum higher than he had been prepared to accept."
9 Fourth, "the writing of a Calderbank letter should be one of the factors, albeit a significant factor, to be weighed by a court when considering whether to order indemnity costs.  I do not think that the complexity of litigation standing alone should necessarily preclude the operation of the rule.  The rule is designed to promote settlement of both complex and straightforward litigation and the court will have regard to all relevant circumstances in determining whether the penalty rule as to costs should apply."
10 Having the information I now have regarding the situations of the various parties, the offers made and hearing the arguments of counsel, I cannot see why I should not take the obvious course of giving the plaintiff its costs of action on a party and party basis up to a reasonable time after the letter of 12 April (to give the defendants the opportunity to react to the offer).  Mr Anderson accepted my suggestion that seven days was reasonable.  That would be until 19 April.  Thereafter the plaintiff should have its costs on a solicitor and client basis.
11 I shall also make an order, as Mr Bell requested, similar to that made by Cox J in Andrew Martin v Francis Kenneth Stratman and Rod Manning (Judgment No. S3700, delivered 16 November 1992), giving each defendant, in respect to his or its joint and several liability, a right of recovery against the other defendants proportionate to their respective percentages of liability as I have fixed them.

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