Hurn v KPMG Pty Ltd

[2015] VCC 561

IN THE COUNTY COURT OF VICTORIA Revised
Not Restricted
Suitable for Publication

AT MELBOURNE

COMMERCIAL DIVISION
GENERAL CASES LIST

Case No. CI-14-04573

CHRISTOPHER HURN	Plaintiff
v
KPMG AUSTRALIAN SERVICES PTY LTD	Defendant

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JUDGE:	HIS HONOUR JUDGE COSGRAVE
WHERE HELD:	Melbourne
DATE OF HEARING:	18 March 2015
DATE OF JUDGMENT:	13 May 2015
CASE MAY BE CITED AS:	Hurn v KPMG Pty Ltd
MEDIUM NEUTRAL CITATION:	[2015] VCC 561

REASONS FOR RULING
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Subject:  COSTS
Catchwords:             Costs of defending application for summary judgment   
Judgment:                 Costs of summary judgment application be reserved.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R Millar	Alexander Law
For the Defendant	Ms P Neskovcin	Allens

HIS HONOUR:

1       In reasons for judgment dated 27 March 2015, I dismissed the defendant’s summons seeking summary judgment against the plaintiff.  The plaintiff has sought his costs of defending the application on an indemnity basis.  The plaintiff contended that he was entitled to costs on this basis first, because the application always had little prospect of success and secondly, because of a Calderbank letter dated 13 March 2015 sent by the plaintiff to the defendant.  The defendant contended that the Court should order that the costs of and incidental to the application be reserved and, if this proposition were rejected, that costs be awarded on a standard, and not an indemnity basis. 

2       The plaintiff contended that it should always have been apparent to the defendant that the plaintiff’s claim was sufficiently arguable that an application for summary judgment had remote prospects of success.  The plaintiff referred to several matters which he said gave rise to a serious issue to be tried.

3       He submitted that the letter dated 5 September 2012 sent by KPMG Australian Services Pty Ltd (“KPMG”) to the plaintiff said that:

“At the conclusion of your secondment you will return to your original position and the associated total remuneration package.”

The plaintiff argued that this letter had to create a triable issue as to the meaning of “return to your original position”.

4       Secondly, it was said that the pleadings and affidavit material established a dispute between the parties as to what, if any, representations were made to the plaintiff at the time of entering the secondment agreement.  The plaintiff asserted, and Mr Robinson of KPMG denied, that Robinson said to the plaintiff that the plaintiff would return to his original position at the conclusion of the secondment. 

5       Finally, the plaintiff relied upon the argument as to the period of notice.  Whereas the defendant contended that three months’ notice constituted reasonable notice, the plaintiff argued, and I accepted, that there was a proper basis to contend, on one view, that the notice period was rather longer than three months. 

6       The plaintiff’s assertion that these matters each constituted a triable issue was an over-simplification.  The wider context must be considered and in particular the state of the pleadings at the time of the application.

7       There seems to me to be substance in the defendant’s contention that the plaintiff’s Amended Statement of Claim appeared to contain two causes of action.[1]  One claim was that the secondment letter dated 5 September 2012 discharged the fixed term agreement by abandonment or abrogation.  The alternate case seemed to be that:

[1] I use the word “appeared” because the pleading seemed to me to be rather less clear than is desirable.

(a) the plaintiff entered into the secondment agreement and its extension due to misrepresentations by the defendant and, in the circumstances, it was unconscionable; or

(b) the defendant should otherwise have been estopped from relying upon the termination of the fixed term agreement to end the defendant’s employment. 

So, while the pleading made a claim to the effect that the defendant represented that at the end of the secondment, the plaintiff would be returned to his original position as varied by promotion, the oral and written submissions at the hearing of the defendant’s application seemed to be directed to a more general claim that the representation made to the plaintiff concerned a guarantee of ongoing employment.

8       The position adopted at the hearing by the plaintiff was confusing.  At the hearing, the plaintiff indicated that in the event of the plaintiff returning to his original position, that position was the subject of the written agreement signed on 10 August 2006.  That agreement was applicable subject to one caveat, namely the provision that either party could terminate the employment on one month’s notice.  The plaintiff added a gloss to the original position whereby the notice provision changed from one month to “reasonable notice”.

9       In short, although the defendant’s application was unsuccessful, the plaintiff defended the application at least partly on a basis which was not in strict conformity with the Statement of Claim as it appeared at the time.  This was alluded to in paragraph 21(a) of the judgment.  In the circumstances, I consider it is appropriate that the costs of the application be reserved.

10      Even if I thought the plaintiff should obtain its costs of the application, I would not have awarded the costs on an indemnity basis.  The defendant’s application was certainly not misguided and, in my view, the Calderbank letter was ineffective.

11      Where a plaintiff seeks indemnity costs in reliance upon a Calderbank letter, it bears the burden of demonstrating that the defendant’s rejection of the offer was unreasonable.  For this purpose, the Court must consider the reasonableness of the offer and the defendant’s rejection at the time the offer is made. 

12      The offer was made, according to the defendant’s submissions, at 10.48am on 13 March 2015 and expired at 5.00pm on 16 March 2015.  Although the Court had ordered the plaintiff to file any affidavit material in opposition to the application by 4.00pm on 13 March, the plaintiff did not file its material until the afternoon of 17 March, after the period for acceptance of the offer had expired.  The plaintiff served its written submissions upon the defendant on the morning that the application was heard, namely 18 March 2015.  Hence, at the time the Calderbank letter was received, the prospects for the defendant’s application could be assessed only with respect to the Amended Statement of Claim.  To the extent that the argument was put differently in the plaintiff’s written and oral submissions, these refinements or variations to the plaintiff’s case could not be taken into account as they had not been received.

13      In circumstances where:

(a)the defendant was given only a short period of time to consider the offer;

(b)the defendant at the time did not have all the material which the plaintiff was proposing to rely upon at the hearing of the application;

(c)the plaintiff’s arguments at the hearing went beyond and differed from the ostensible argument in the amended pleading.

it was not unreasonable for the defendant to have rejected the plaintiff’s offer.

14      Accordingly, I order that the costs of and incidental to the application be reserved.