Icon Construction Aust Pty Ltd v Lysaght Building; Solutions Pty Ltd and Anor

[2010] VCC 1430

IN THE COUNTY COURT OF VICTORIA Revised

(Not) Restricted

AT MELBOURNE
COMMERCIAL LIST

BUILDING CASES DIVISION

Case No. CI-09-04126

ICON CONSTRUCTION AUSTRALIA PTY	Plaintiff
LTD
v
LYSAGHT BUILDING SOLUTIONS PTY LTD	Defendants
and BLUESCOPE STEEL LTD

---

JUDGE:	HIS HONOUR JUDGE ANDERSON
WHERE HELD:	Melbourne
DATE OF HEARING:	14 October 2010
DATE OF JUDGMENT:	21 October 2010
CASE MAY BE CITED AS:	Icon Construction Aust Pty Ltd v Lysaght Building Solutions Pty Ltd & Anor
MEDIUM NEUTRAL CITATION:	[2010] VCC 1430

REASONS FOR JUDGMENT

---

Catchwords:  Practice and procedure - Costs – “Without prejudice” discussions – Plaintiff
ultimately less successful at trial – Whether plaintiff “unreasonable” in
refusing to settle – Trial prolonged by defendant relying upon unreliable
witnesses – Costs ordered to be paid on a party/party basis – Section
131(2)(h) Evidence Act 2008 (Vic).

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr F J Tiernan SC	Middletons
For the Defendants	Mr B A Shnookal	Baker & McKenzie
HIS HONOUR:

1           I gave judgment in this matter on 24 September 2010 and later heard further argument on issues relating to costs. The questions now for decision are:

a.	whether the successful defendants should receive their costs on an indemnity basis as a consequence of without prejudice discussions between the parties;
b.	whether the defendant should pay the plaintiff’s costs of an application heard

by Her Honour Judge Kennedy on 19 August 2010.

2           The without prejudice negotiations between the parties were as follows:

a.	an offer by the defendants’ solicitors in a letter dated 24 November 2009 that if the plaintiff withdrew its claim the defendants would not claim legal costs;
b.	an offer at mediation on 14 December 2009 by the defendants to the same effect. At the mediation the plaintiff counter offered to “bear its own costs if Bluescope paid the full amount claimed by Icon”;
c.	an offer by the defendants by letter dated 18 December 2009 similar to the offer in the earlier letter;
d.	an offer by the defendants by letter dated 12 August 2010 to pay the plaintiff $245,000 (inclusive of GST) with each party to bear its own costs of the proceeding;
e.	an offer by the defendants during settlement discussions between counsel on 30 August 2010 that they would pay to the plaintiff $550,000 inclusive of costs. Plaintiff’s counsel had previously indicated that the plaintiff would accept $525,000 plus costs.

3 Evidence of offers made at the mediation were received pursuant to s.47B of the County Court Act 1958 which permits parties to consent to disclose what was said or done at mediation. The content of the discussions between counsel on 30 August 2010 is now admissible in evidence pursuant to s.131(2)(h) of the Evidence Act 2008 as “relevant to determining liability for costs”.

8

4           In relation to the first three offers, essentially that the plaintiff withdraw its claim without costs penalty, I consider that it was not unreasonable for the plaintiff to reject each of those offers as there appeared to be a genuine dispute between the parties which, at that time, did not necessitate the plaintiff effectively capitulating in order to avoid possible liability for the defendants’ costs to be taxed on an indemnity basis if ultimately unsuccessful at trial.

5           The offer made on 12 August 2010 allowed about 24 hours for the plaintiff to respond. In the circumstances, the time was insufficient for the court to determine that the plaintiff’s refusal of that offer was unreasonable.

6           I consider, however, that if the offer made on 12 August 2010 had remained open for a further period of time, it would have been difficult to assert that a failure to accept that offer by the plaintiff was not unreasonable. Similarly, the offer made on 30 August 2010 occurred at a time when the factual and legal issues in the case had been substantially ventilated in court and the plaintiff would ordinarily be required to accept responsibility for continuing with the action in circumstances where the ultimate decision was less successful for it.

7           Although earlier offers made in writing by the defendants had expressly stated that the defendants would seek indemnity costs if the plaintiff were unsuccessful at trial, a similar condition was not stated during the discussion between counsel on 30 August. In my view, this is of little consequence because counsel would have been aware of that possibility, both from the earlier correspondence and the nature of the communications between counsel.

Ordinarily, I would have made an order for the defendants to be paid their costs on matter of significance which I consider makes it inappropriate to make such an order. In the written submissions on behalf of the defendants, defendants’ counsel referred to the fact that the evidence of the defendants’ witnesses was generally not accepted and that the plaintiff “should have recognised from the earliest time that at the very least its case was speculative” as the plaintiff’s case essentially relied upon the evidence of its own witnesses and any supporting documents.

9           This submission does not, however, reflect the reality of the proceeding and particularly the conduct of the defendants at trial. Until May 2009, the defendants had engaged in a course of conduct which was designed to mislead the plaintiff into believing that the defendants were proceeding with the design development of the sunshades, not necessarily because they were contractually bound but on the basis that from at least the time of the project meeting on 29 January 2009 there was an understanding that the defendants would execute contract documents in respect of the sunshades. These facts were not determinative of the proceeding and were consistent with the submissions of the defendants which were ultimately successful.

10 from its witnesses to the evidence of the plaintiff’s witnesses. The evidence

However, the case was run by the defendants on the basis of very different evidence never have agreed a price to separately perform the sunshade work. Generally, I found that evidence unsatisfactory. The effect of the defendants relying on the evidence was that both during the plaintiff’s case when matters were put to the plaintiff’s witnesses in cross-examination and during the defendants’ case when evidence was led from those witnesses, considerable time was spent dealing with factual matters which, although they had little relevance to the ultimate decision reached in the case, nevertheless confused the issue and resulted in the case taking considerably longer than it might otherwise.

11         I consider in the circumstances that these matters provide a partial explanation for the plaintiff’s refusal to compromise the proceeding at trial, even for a figure which, after judgment, appears to be very generous. Further, the defendants should, in my

view, be required to accept the consequences of having conducted the proceeding in
the way they did which both confused the issue and resulted in an unnecessary
waste of time.

12         In the circumstances, I do not consider that there is a proper basis to make an order other than for the defendants’ party/party costs. I intend to certify defendants’ counsel’s fees substantially as sought. It is likely therefore that the defendants’ actual costs of the trial will be borne in large part by the plaintiff although there will be some counsels’ fees and perhaps part of the solicitors’ fees at trial and other costs which the defendant will not recover. I do not intend to certify for the full amount of preparation fees sought for counsel in view of the matters I have previously referred to about the issues relied upon at trial on the defendants’ behalf.

13         In relation to the costs reserved by Judge Kennedy on 19 August 2010, I see no reason why those costs should not be part of the defendants’ costs. There is usually little basis for denying a successful party the costs of an interlocutory dispute, particularly where the question of costs is reserved by the judge hearing the application.

14         The orders I will make are as follows:

1.	Judgment for the defendants that the plaintiff’s claim be dismissed.
2.	The plaintiff must pay the defendants’ costs to be taxed on Scale D on a party/party basis, including all reserved costs.
3.	Certify counsels’ fees as follows:

a.	pre-trial preparation, including special conferences of two days at $3,800 per day;
b.	brief fee at trial for eight days at $3,800 per day;
c.	preparation for final submissions, one day at $3,800;
d.	brief to present final submissions, one day at $3,800.
e.	brief to hear judgment at $380.

4.          Counsels’ fees for all other matters, including appearances, shall be at scale.

5.          The plaintiff must pay or bear the costs of the preparation of a transcript of the proceeding and for the preparation, service and filing of the court books.

15         Final orders will be made in accordance with these minutes unless, by 4:00pm on 28 October 2010, notice is given to the court by a party that it wishes to be heard further in relation to the orders. In that case, a time convenient to the parties and to the

court will be arranged by my Associate.

Certificate

I certify that these 5 pages are a true copy of the reasons for decision of His Honour Judge

Anderson delivered on 21 October 2010.

Dated: 21 October 2010

Caroline Dawes

Associate to His Honour Judge Anderson