Joseph Finance and Investment Pty Ltd v Eastwood Retirement Pty Ltd (No 2)
[2024] VSC 11
•2 February 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2021 02186
| Joseph Finance and Investment Pty Ltd (ACN 153 729 125) (as trustee for the Lifestyle Investment Unit Trust) | Plaintiff |
| v | |
| Eastwood Retirement Pty Ltd (ACN 130 786 195) (as trustee for the Eastwood Retirement Unit Trust) | Defendant |
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JUDGE: | Croft J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 2 February 2024 |
CASE MAY BE CITED AS: | Joseph Finance and Investment Pty Ltd v Eastwood Retirement Pty Ltd (No 2) |
MEDIUM NEUTRAL CITATION: | [2024] VSC 11 |
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COSTS — Offer of compromise — Rejection — Consequences — Effect of prior judicial advice — Calderbank offer — Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority(No 2) (2005) 13 VR 435 — Lahanis v Livesay(Costs) (2021) 63 VR 197 — Supreme Court Act1986, s 24(1).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Evans KC and Mr A Silver | Madgwicks |
| For the Defendant | Mr N De Young KC and Mr S Cromb | HWL Ebsworth Lawyers |
HIS HONOUR:
Introduction
The plaintiff, Joseph Finance and Investment Pty Ltd (ACN 153 729 125) (“Joseph” or “the plaintiff”) succeeded in its claim, resulting in the entry of judgment on 15 December 2023 as to:
(1) $9,872,719.16 in damages, assessed at 19 September 2023; and
(2) $238,027.20 in interest on those damages from 19 September 2023 to 15 December 2023.
Reasons were published in this proceeding on 7 December 2023.[1]
[1]Joseph Finance and Investment Pty Ltd v Eastwood Retirement Pty Ltd [2023] VSC 731 (“Reasons”).
Joseph submits that, as a result of its success, it is entitled to an order that the defendant, Eastwood Retirement Pty Ltd (ACN 130 786 195) (“Eastwood” or “the defendant”) pay its costs of the proceeding on a standard basis, as a minimum. Were such an order made the total amount payable on the claim would then be $10,110,746.36 plus costs.
Eastwood, on the other hand, submits that the appropriate form of order as to costs is that:
(1) Joseph is to pay Eastwood’s costs thrown away by reason of certain pleaded claims or distinct issues which were abandoned by Joseph prior to trial or not ultimately pursued at trial; and
(2) Eastwood otherwise pay the costs of Joseph of the proceeding on a standard basis.
Joseph also submits that it is entitled to costs in addition to those payable on a standard basis as a result of an offer it made on 23 February 2022 pursuant to the principles in Calderbank v Calderbank[2] in which it offered to settle the proceeding for the sum of $9,000,000 on an inclusive costs basis, leaving the offer open for 14 days. Alternatively, Joseph offered to settle the proceeding on the basis that it would purchase the Retirement Village for an amount of $14,200,000.[3]
[2][1975] 3 All ER 333.
[3]Affidavit of Alexandra Lawrence dated 11 December 2023 (“Lawrence Affidavit”), p20.
More specifically, on this basis, Joseph contends that it ought to be awarded its costs up to 9 March 2022 (being 14 days after the offer was made) on a standard basis and its costs thereafter until the date of final orders on an indemnity basis.
Relevant principles
Discretion as to costs
Section 24(1) of the Supreme Court Act1986 relevantly provides that the question of costs “is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid”. It is clear that the power to order costs involves a broad discretion, but one to be exercised judicially and in accordance with well‑established principles.[4]
[4]Gray v Richards (No 2) (2014) 89 ALJR 113 at 113, [2]; Sandoz Pty Ltd v H. Lundbeck AS [2021] FCAFC 47 (“Sandoz”) at [30].
Multiple claims
In the context of multiple claims, the Court of Appeal observed in Marriner v Australian Super Developments Pty Ltd that:[5]
It is a well-established principle that costs follow the event, that is, that the unsuccessful party is usually ordered to pay the successful party’s costs. This is so even if the successful party failed in establishing all its claims. However, where the successful party made multiple claims and failed in respect of some of them or pursued distinct issues upon which it achieved mixed success, in an appropriate case, the court can award that party only part of its costs or make an order that reflects the measure of success achieved by each party on the issues in dispute.
[5][2016] VSCA 141 at [228] (Tate ACJ, Kyrou and Ferguson JJA).
Additionally, the Full Court of the Federal Court of Australia observed in Sandoz Pty Ltd v H. Lundbeck AS that: “a successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered to pay the other party’s costs of them”, noting that “the object is not mathematical precision … but a result that best reflects the interests of justice in the circumstances of the case”.[6]
[6][2021] FCAFC 47 at [31], citing EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd [2011] FCAFC 92 at [9] (Emmett, Jagot and Nicholas JJ); and see Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748 at 48,136 (Toohey J); Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272 (Gummow, French and Hill JJ).
Indemnity costs
The principles applicable with respect to the award of indemnity costs have been stated in many cases and in a variety of contexts. Particularly helpful in the present context is the summary of the principles relating to indemnity costs as set out by Riordan J in Winslow Constructors Pty Ltd v Head, Transport for Victoria (Costs) (“Winslow”):[7]
[7](2021) 64 VR 200 at 204–5, [4]–[10] (citations omitted).
[4]In Ugly Tribe Co Pty Ltd v Sikola, Harper J stated that an order for indemnity costs requires special circumstances. He identified that special circumstances may include:
(i)The making of an allegation, known to be false, that the opposite party is guilty of fraud.
(ii)The making of an irrelevant allegation of fraud.
(iii)Conduct which causes loss of time to the Court and to other parties.
(iv)The commencement or continuation of proceedings for an ulterior motive.
(v)Conduct which amounts to a contempt of court.
(vi)The commencement or continuation of proceedings in wilful disregard of known facts or clearly established law.
(vii)The failure until after the commencement of the trial, and without explanation, to discover documents the timely discovery of which would have considerably shortened, and very possibly avoided, the trial.
[5]Recently, in Banksia Securities Ltd v Insurance House Pty Ltd (Costs), John Dixon J restated the principles applicable to an award of indemnity costs as follows:
(a)Costs are to be assessed on a standard basis unless the circumstances of the case justify a departure from the usual course.
(b)The making of an indemnity costs order is in the unlimited discretion of the court, with such discretion to be exercised judicially and not unreasonably.
(c)The court may order indemnity costs where the circumstances warrant departing from the usual rule that costs be payable on a standard basis, including conduct that bears a ‘sufficient or unusual feature’ or some ‘relevant delinquency’.
[6]His Honour proceeded to say that ‘[t]he court may order indemnity costs in cases where a party, properly advised, knew or should have known that it had no chance of success and has persisted with its claim’. I will hereafter refer to such cases as ‘unmeritorious claims’.
[7]With respect to the category of unmeritorious claims, in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd, Woodward J considered that the jurisdiction to award indemnity costs was enlivened if the litigant had an ulterior motive for the litigation, and that an ulterior motive would be presumed if the litigant should have known there was no chance of success. He explained:
I believe that it is appropriate to consider awarding … ‘indemnity costs’, whenever it appears 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. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law.
[8]In Johnston v Herrod, Muir JA considered the jurisdiction for an indemnity costs order on the basis of an unmeritorious claim, and quoted with approval the following comments of Goldberg J in White Industries (Qld) Pty Ltd v Flower & Hart (a firm):
The authorities do not support the proposition that simply instituting or maintaining a proceeding on behalf of a client which has no or substantially no prospect of success will invoke the jurisdiction. There must be something more namely, carrying on that conduct unreasonably.
Calderbank offers
The principles applicable to assessing the effect of Calderbank offers were summarised by Derham AsJ in Lahanis v Livesay (Costs) (“Lahanis”)[8] as follows:[9]
[8](2021) 63 VR 197.
[9](2021) 63 VR 197 at 200–1, [8]–[9].
[8]In Wong [v McConville & Ors [2014] VSC 282] I also set out the principles applicable to Calderbank offers as follows:
In Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2), the Victorian Court of Appeal said, in relation to Calderbank offers, that the critical question was whether the rejection of the offer was unreasonable in the circumstances. Deciding whether conduct is unreasonable involves matters of judgment and impression. The Court in Hazeldene held that, when considering whether the rejection of a Calderbank offer was unreasonable, a court should ordinarily have regard at least to the following matters:
(a)the stage of the proceeding at which the offer was received;
(b)the time allowed to the offeree to consider the offer;
(c)the extent of the compromise offered;
(d)the offeree’s prospects of success, assessed at the date of the offer;
(e)the clarity with which the terms of the offer were expressed; and
(f)whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it.
In Luxmore Pty Ltd v Hydedale Pty Ltd Maxwell P and Kellam JA noted that what was said by the Court of Appeal in Hazeldene was meant to be of assistance to judges in approaching an application for costs consequent upon the service of a Calderbank letter. The Court of Appeal was not there engaging in a kind of judicial legislative process; they were simply giving a direction that these are the matters which the trial judge should ordinarily have regard to, in addition to such other matters as the judge might consider relevant. They remarked that it would be wrong to regard the decision as having prescribed a list of matters which must be taken into account in every case, such that a party failing to get a special order for costs could complain on appeal if one of the matters mentioned by the Court had not been specifically adverted to. Like every question of costs, it is in the discretion of the trial judge and is to be decided according to the circumstances of the particular case.
There are some aspects of the matters mentioned in Hazeldene relevant to this application that deserve further elucidation, as follows:
(a)there is no presumption that where such an offer is rejected, the offeree should pay indemnity costs where it receives a less favourable result;
(b)the onus always lies upon the offeror to demonstrate unreasonableness in the offeree;
(c)the policy objectives underlying the principle in Calderbank v Calderbank include:
(i)that it is in the interests of the administration of justice that litigation should be compromised as soon as possible and so save both private and public costs;
(ii)to indemnify an offeror whose offer is later found to have been reasonable against the costs thereafter incurred. This is considered reasonable because from the time of rejection of the offer the real cause of the litigation is the offeree’s rejection of the offer;
(iii)to this end, a party in receipt of an offer of compromise should have some incentive to consider the offer seriously. That incentive is the prospect of a special order as to costs;
(iv)it is nevertheless important not to discourage potential litigants from bringing their disputes to the Court;
(d)it is undesirable that Calderbank letters be burdened with technicality;
(e)where the offer is made by a plaintiff, the requirement that the non‑acceptance be unreasonable takes on a particular significance. A plaintiff may be supposed to be aware of the claim which it makes, including, even in a general way, its magnitude and its prospects of success. A defendant, however, faced with an offer of compromise may not have this awareness. If it appears that this lack of awareness is not due to its own default, it is difficult to conclude that its rejection of the offer was unreasonable;
(f)a decision to accept or refuse a Calderbank offer will ordinarily be based upon the offeree’s prediction as to the likely outcome of the trial. An erroneous prediction may not be unreasonable if at the time the offeree was, for good reason, in possession of insufficient information to make a proper assessment or if the circumstances upon which it was based later changed;
(g)it does not follow necessarily from an adverse outcome for the offeree that rejection of the offer was relevantly unreasonable. Reliance on the outcome to show that rejection of the offer was unreasonable is a hindsight analysis;
(h)the offer must be one capable of acceptance, such that an offer that is subject to approval by a third party will not constitute a Calderbank offer, but rather an offer to negotiate; and
(i)the reasonableness of an offer, and the assessment of the reasonableness or unreasonableness of a rejection of an offer, will generally be assisted if the maker gives reasons why the offeror should succeed and/or the offeree should fail to do better than the offer. As Sundberg and Emmett JJ said in Dukemaster Pty Ltd v Bluehive Pty Ltd:
a Calderbank offer ... is unlikely to serve its purpose of attracting an indemnity award of costs if the rejecting applicant fails to recover more than what is offered, unless the offer is a reasonable one and contains a statement of the reasons the offeror maintains that the application will fail.
[9]In addition to these matters, this case brings into sharp focus an aspect of the third factor identified in Hazeldene’s Chicken Farm, the extent of the compromise offered and its relationship to the question whether the rejection of the offer was unreasonable in the circumstances. The defendants’ Counsel has referred to a number of cases that address, in varying circumstances, the circumstance where an offer does not involve a genuine compromise, but is in fact either an invitation to capitulate or a derisory or nominal offer, so that it would not be unreasonable for the losing party to have rejected it. These authorities, and the many others that are referred to in them, all turn on their own facts. However, they demonstrate that where an offer is characterised as a demand to capitulate, or as derisory or nominal then it may be found to be reasonably rejected.
Submissions and analysis
Joseph says that its offer was made:
(1)approximately six months after the close of pleadings (and Joseph did not subsequently amend its statement of claim);[10]
(2)after the parties had conducted mediation on 27 January 2022,[11] and where Joseph had provided to Eastwood, for the purposes of the mediation, and as referred to in the Calderbank letter, with a six-page position paper, which articulated, in some detail, both the basis upon which Joseph ultimately succeeded at trial, and the principal contentions upon which Joseph ultimately succeeded at trial; and
(3)prior to the exchanging of witness statements spanning matters from 2009 to 2020 (such statements necessarily involving a significant number of conferences with witnesses, reviewing of documents and crafting of statements) — the first witness statement was not filed until 24 June 2022.
[10]Joseph’s Reply is dated 20 August 2021.
[11]Affidavit of Alexandra Lawrence dated 11 December 2023 at p 19. The position paper is at pp. 22–27.
Joseph submits that the court ought to conclude that the failure by Eastwood to accept Joseph’s offer was unreasonable so as to justify an award of indemnity costs from the date of the offer lapsing, on the following grounds:[12]
[12]Plaintiff’s submission on costs of the proceeding (20 December 2023), [9].
(1)Each of the alternative offers made would have, if accepted by Eastwood, have resulted in a significantly more favourable outcome for Eastwood than the outcome of the proceeding:
(a)“Offer 1” (sale of the Retirement Village at $14.2 million including GST, equivalent to $12.9 million excluding GST), would have resulted in Eastwood receiving $12.9 million in exchange for the Retirement Village, which it can reasonably be concluded had a then value of somewhere between $16 million[13] and $19.2 million[14] on a GST‑exclusive basis. This can be compared with the damages awarded, which were based on a price under the Option of $8.23 million excluding GST.[15] There is no scope for the application of the Sellars discount in undertaking this comparison.;
[13]Reasons at [191].
[14]Reasons at [11(e)].
[15]Reasons at [221].
(b)“Offer 2” (agreement to pay $9,000,000, on a costs inclusive basis) would have resulted in Eastwood being liable to pay Joseph $9,000,000 on or about 9 March 2022. This may be compared with the principal amount of the judgment as ultimately found, of $9,872,719.16, which was based on the difference between the Price payable under the Option and the value of the Retirement Business — $10,969,687.96, less 10% for a Sellars discount.[16]
[16]Reasons at [221].
(2)The offer was made at a stage of the proceeding when the issues were well defined, immediately following a mediation, and where no amendments to the statement of claim were subsequently made (see paragraph 8 above). Eastwood had all relevant documents within its power to enable it to consider the alternative offers;
(3)The period of not less than 14 days allowed to Eastwood to consider the offers was ample, particularly given the immediately preceding mediation;
(4)“Offer 1” provided a substantial compromise of the claims made by Joseph against Eastwood, of more than $4 million. “Offer 2” offered a lesser compromise, by comparison with “Offer 1”, but acceptance of “Offer 2” not only would have saved Eastwood more than $870,000 over the eventual amount of damages, but would have avoided a significant amount of its own legal costs as well as avoided the likelihood of an adverse costs order against Eastwood in respect of Joseph’s already‑incurred and future costs to the conclusion of the proceeding. (Eastwood could have avoided inter alia the trial and its preparation as well as the witness statements).
(5)The potential quantum of an adverse decision was within Eastwood’s knowledge: Eastwood’s board reported to unitholders that it considered the Village was ‘worth $16m or $18m’ in December 2019,[17] and it had the capacity to calculate the Price from its own financial records;
(6)The reasons why Joseph was entitled to succeed in the proceeding were always within Eastwood’s knowledge — it necessarily knew of the steps it took between November 2019 and June 2020 which deprived Joseph of the benefit of the Option. Further, Joseph provided Eastwood with a detailed position paper for the mediation, which was then subsequently and expressly replied upon in the making of the offer.[18]
(7)The offers were clear in their terms and what was required to accept them;
(8)As is the custom with ‘Calderbank Offers’ the offer expressly put Eastwood on notice that Joseph intended to rely upon the letter in support of an application for indemnity costs if the trial of the proceeding produced a no less favourable outcome than either of the offers; despite this, Eastwood pressed forward with a full trial which caused both parties significant expense and, as noted above, for a result to Eastwood significantly worse than that the subject of either offer.
[17]Reasons at [191].
[18]Lawrence Affidavit at pp19, 22–27.
Eastwood emphasises, in support of its submissions that costs should only be awarded to Joseph on a standard basis, that the default position is that costs are assessed on this basis “unless the circumstances of the case justify a departure from the usual course”.[19] It is submitted that the circumstances of this case do not justify a departure from the usual course and, moreover, none of the circumstances described by Riordan J in Winslow apply to Eastwood’s conduct in the proceeding, nor does Joseph allege otherwise.
[19]See paragraph 2.5 above (at [5](a) per John Dixon J).
As indicated in its submissions, Eastwood says that the singular basis upon which Joseph seeks a departure from the usual course with respect to costs is the fact of its Calderbank letter to Eastwood dated 23 February 2022 (“the 23 February Letter”).
Relying upon the principles referred to in Lahanis and the authorities to which reference was made in that case, Eastwood submits, for a variety of reasons, that Joseph has not discharged its onus in establishing that Eastwood acted unreasonably in not accepting the offers in the 23 February Letter. Judicial advice was provided to Eastwood with respect to these proceedings by Elliott J on 26 September 2022.[20]
[20]Application by Eastwood Retirement Pty Ltd [2022] VSC 568.
The reasons advanced by Eastwood in support of its submission that Joseph has not discharged its onus in establishing unreasonableness on Eastwood’s part are quite detailed and so helpfully set out in full:[21]
[21]Defendant’s submissions on costs (22 January 2024), [3.4]–[3.14]; noting that the Fourth and Fifth points were not pressed (Lawrence Affidavit [5]).
3.4For the reasons outlined below, and consistently with the authorities referred to in paragraph 2.6 above, Eastwood submits that Joseph has not discharged its onus in establishing that Eastwood acted unreasonably in not accepting the offers in the 23 February Letter.
3.5First, as this Court observed in Lahanis, ‘there is no presumption that where [a Calderbank] offer is rejected, the offeree should pay indemnity costs where it received a less favourable result’ and ‘the onus always lies upon the offeror to demonstrate the unreasonableness in the offeree’.
3.6Secondly, the fact that Eastwood was not ultimately successful in defending the proceeding does not mean that it acted unreasonably in not accepting the offers in the 23 February Letter.
3.7Thirdly, in defending Joseph’s claim in the proceeding, Eastwood acted pursuant to judicial advice. By orders in September 2022, Elliot J directed it would be appropriate for Eastwood to defend, and Eastwood would be justified in defending, the claims made against it by Joseph.[22]
[22]Application by Eastwood Retirement Pty Ltd [2022] VSC 568 (Elliott J).
3.8Fourthly …
3.9 Fifthly …
3.10 Sixthly contrary to Joseph’s submissions at [9(6)], the reasons why Joseph was entitled to success in the proceeding were not always with Eastwood’s knowledge. For example, Joseph’s submissions completely overlook causation. This was a critical issue at trial. It was an essential element of Joseph’s entitlement to damages. The issue depended on Joseph’s evidence. In this regard, we note that:
(a)Joseph’s evidence on causation was not to hand as at the 23 February Letter;
(b)neither the 23 February Letter nor the Joseph’s mediation position paper referred to therein grappled with the issue of causation; and
(c)the determinative material in support of Joseph’s causation case was not provided to Eastwood until shortly before trial (emails with the Bank of Queensland at CB 1532 and CB 1568) and at trial (loan agreements with Curry Securities Pty Ltd at CB 1602 – CB 1682] and Mr Camp’s oral evidence).
3.11Seventhly, the first of the offers in the 23 February Letter would have required Eastwood to sell the retirement village to Joseph at a price that is below (on Joseph’s own case)[23] market value. However, Josephabandoned its claim for specific performance claim (ie. for the sale of the Village to it) in the days prior to trial. Joseph’s abandonment of this claim flies in the face of its reliance on first offer.
3.12Eighthly, the second offer in the 23 February Letter would, in Joseph’s submission, ‘have resulted in Eastwood being liable to pay Joseph $9,000,000 on or about 9 March 2022’.[24] The time period for payment was unreasonable. It was not reasonable to expect Eastwood to raise the proposed settlement funds within such a short period of time. The Court already has evidence as to Eastwood’s financial position. It is clear that Eastwood did not have the available liquid assets to pay the proposed settlement amount at that time, as Joseph must have known. The only way Eastwood could come up with such a sum would have been to sell the village, which could only occur after a tender process / marketing campaign and settlement period.[25] This could not reasonably occur within this period but would likely take at least six months.[26]
3.13Ninthly, Joseph submits at [9(1)(a)] that ‘there is no scope for the application of the Sellars discount in undertaking this comparison’ [of the offer price versus the judgment sum]. This assertion is neither explained, supported by authority, nor sound as a matter of doctrine. The prospect of a Sellars discount on Joseph’s damages was always an issue in the proceeding. It was not in contest at the trial that a Sellars discount could be awarded. The amount of the Sellars discount which the Court might award was inherently uncertain. The Court ultimately arrived at a 10% discount. However, Eastwood submits that it was not unreasonable for it to expect a higher discount, particularly at the time of the 23 February Letter. Had the Sellars discount been just 8% higher, the resulting damages award ($8,995,144.13) would have been lower than the $9 million offered in the 23 February Letter.
3.14Tenthly, Joseph Submits at [9(2)] that ‘the offer was made at a stage of the proceeding when the issues were well defined’, noting that ‘no amendments to the statement of claim were subsequently made’ and that ‘Eastwood had all relevant documents within its power to enable it to consider the alternative offers.’ Contrary to these submissions:
(a)the issues were far from ‘well defined’ as at 23 February 2022. Indeed, as late as 24 August 2023, Joseph was propounding a list of issues with 11 issues for trial,[27] before on 20 September 2023, it narrowed its case significantly to focus almost exclusively on its ‘reasonable endeavours’ claim. Further, the statement of claim may not subsequently have been amended, but Eastwood’s Defence was, as recently as 25 August 2023; and
(b)Eastwood did not have ‘all relevant documents’ as at 23 February 2022. Taking just one example, as explained above, Joseph first made discovery on the critical issue of causation on the eve of trial (by a supplementary affidavit of documents dated 26 September 2023) and then during the trial itself (by a supplementary court book dated 10 October 2023).
[23]Plaintiff’s Submissions, [9(1)(a)].
[24]Plaintiff’s Submissions, [9(1)(b)]. It is assumed that this reference in the Plaintiff’s Submissions is a typographical error, which should instead read ‘9 May 2022’. In any event, whether the time period be 14 or 90 days, it was an inadequate a period of time for Eastwood to have marketed, sold and settled the village.
[25]See the Affidavit of Duncan Adair Johnston affirmed 15 December 2023, paragraphs 10–13.
[26]See the Affidavit of Duncan Adair Johnston affirmed 15 December 2023, paragraph 12.
[27]Reasons, [8].
Joseph responded in some detail to these points made by Eastwood. [28] At the outset Joseph accepts that there is no presumption with respect to the effect of a Calderbank offer and that merely because a party pursued proceedings unsuccessfully does not mean that it necessarily behaved unreasonably in so doing.
[28]Plaintiff’s Reply Submissions (30 January 2024) (“Reply Submissions”) [3]–[12].
Joseph submits that Eastwood’s obtaining of judicial advice from the Court in September 2022 cannot be relied upon in support of its position; for a variety of reasons.[29] I accept that the judicial advice proceeding was outside the critical time period for the purpose of the Calderbank offer and it is not clear, in any event, that it was focussed on matters that may have been relevant to that offer. On this basis, it is not necessary to decide whether section 91 of the Evidence Act 2008 would prevent Eastwood placing any reliance on the judicial advice. Accordingly I neither rule out nor accept the possibility of such reliance in other circumstances.
[29]Reply Submissions, [5].
The point is made in Eastwood’s submissions that, contrary to Joseph’s submissions, the reasons why it contended it was entitled to success in the proceeding were not always within Eastwood’s knowledge.[30] It should be remembered, however, that whether or not Eastwood acted unreasonably in not accepting the offers in the 23 February Letter is dependent on knowledge it had at that time. As indicated in its submissions it does appear, and perhaps unsurprisingly, that critical material in support of Joseph’s causation case was available on 23 February or within any critical time thereafter. In any event, this does not, in my view, detract from the reasonableness of Eastwood’s decision to continue to defend the claims made against it. In my view Joseph’s response on this knowledge point takes matters no further. [31] It does, nevertheless, accept that the reasonableness of Eastwood’s rejection of the offers must be considered in light of its position, hence knowledge at the relevant time. I accept that the matters raised by Joseph in respect of this point may well have been relevant and important in the proceeding progressed but not that they are matters which should or could necessarily have been taken into account in its decision making at the relevant time.
[30]In this respect, reference being made to causation issues.
[31]Reply Submissions, [8].
Joseph also criticizes Eastwood’s seventh, eighth and ninth points[32] which, in substance, raise commercial and financing issues said to be critical to Eastwood’s decision not to accept either of the offers. Whilst Joseph’s point may go to alternative commercial or financial options or possibilities they do not, in my view, provide any basis for the proposition that Eastwood unreasonably refused to accept an offer. Moreover, it was not, in my view, reasonable for Eastwood to contemplate that there may have been a greater than 10% Sellars discount given the point the proceeding had reached at the time of the Calderbank offer on 23 February 2022. Joseph’s submissions on this point are mainly speculative.
[32]Reply Submissions, [9]–[11].
Eastwood also makes the point that it is not, as Joseph submits, that the offer was made at the stage of the proceeding when the issues were well defined, particularly having regard to the following claims or discrete issues which Joseph ultimately abandoned or did not press at trial. Eastwood elaborates these matters in its submissions:[33]
[33]Defendant’s submissions on costs (22 January 2024), [3.15]-[3.16].
3.15Consistently with the authorities cited at paragraphs 2.3 and 2.4 above, Eastwood submits that the Court should order that Joseph pay Eastwood’s costs thrown away by having to defend the following claims or discrete issues which Joseph ultimately abandoned or did not press at trial.
(a)at [7]-[9] of the Statement of Claim [CB 26], various implied terms that were not pursued at trial, including that Joseph could ‘waive the requirement that Completion required the issue of occupancy permits for all of the Villas’ (despite such terms being contrary to the express terms of the Option Deed);
(b)at [17] and [19] of the Statement of Claim [CB 28] and [1] and [3] of the Reply [CB 33-34], that wavier had occurred, on the basis of a letter dated 20 July 2020 (which did not itself assert any waiver);[34]
[34]The 20 July 2020 letter appears at CB 928.
(c)at [20]-[22] of the Statement of Claim [CB 28-29], allegations of contractual breach by Eastwood, reliant on the establishment of the implied term and waiver allegations; and
(d)at [1(3)] of the Reply [CB 33], an estoppel precluding Eastwood from relying on clause 10 of the Option Deed.
3.16Those claims or issues were additional and distinct from Joseph’s claim which was ultimately successful at trial.
In my view there is force in these submissions and they are matters which are not detracted from in Joseph’s responsive reasons.
Subject to my views expressed in the preceding reasons, and on the basis of matters relied upon and the reasons advanced by Eastwood, I am of the view that Joseph has not established that Eastwood acted unreasonably in not accepting any of the offers in the 23 February Letter.
Having regard to the relevant principles with respect to multiple claims and the authorities to which reference has been made it is appropriate that the Court should order that Joseph pay Eastwood’s costs thrown away by having to defend these claims or discrete issues which Joseph ultimately abandoned or did not press at trial. In effect, Joseph’s response to Eastwood’s claim in this respect is that its abandoned claims did not generate significant extra work, suggesting that the costs of such abandoned claims would be less than 5% of the parties’ total costs in the proceeding.[35] Mindful of the desirability of cost-effective expedition in resolving the costs issues in this proceeding and the broad discretion of the Court in this context, and having regard to the matters put by the parties, I find that it is reasonable that the sum of costs thrown away be fixed at 5% of the total costs of the proceeding (all calculated on a standard basis).
[35]Reply Submissions, [1].
Conclusions and orders
For the preceding reasons, the parties are to bring in orders for the payment of costs in favour of Joseph on a standard basis subject to the deduction of Eastwood’s costs thrown away by having to defend the claims or discrete issues which Joseph ultimately abandoned or did not press at trial as indicated in the preceding reasons.[36]
[36]See paragraph [20]–[22] above.
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