Lawson v Shire of Yarriambiack (No.2)

[2010] VCC 1169

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE
CIVIL DIVISION

COMMERCIAL – GENERAL DIVISION

Case No. CI-09-01303

MARK LEON LAWSON	Plaintiff
v
SHIRE OF YARRIAMBIACK	Defendant

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JUDGE:	HIS HONOUR JUDGE GINNANE
WHERE HELD:	Melbourne
DATE OF HEARING:	18 August 2010
DATE OF JUDGMENT:	24 August 2010 (Revised 3 September 2010)
CASE MAY BE CITED AS:	Lawson v Shire of Yarriambiack (No.2)
MEDIUM NEUTRAL CITATION:	[2010] VCC 1169

REASONS FOR JUDGMENT

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Catchwords: COSTS – whether proceeding should have been commenced in the Magistrates Court – Calderbank offer – whether unreasonably refused – County Court Civil Procedure Rules 2008, Rule 63A .24 and 34A (3)(d).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P Finkelstein	FLA Partners
For the Defendant	Ms C Kirton	Minter Ellison
HIS HONOUR:

1          I delivered judgment on 18 August 2010 and it remains to deal with costs.

2 Under Rule 63A.34A (3)(d) where there is a counterclaim, if both parties are successful, the applicable scale of costs is determined by the amounts which they recover on their respective claims. So, in the absence of any other order, Mr Lawson would recover costs on Scale A and the Shire, on Scale B.

3          Two reasons were advanced on behalf of the Shire as to why I should depart from that position. The first was that Mr Lawson could have brought his claim in the Magistrates’ Court and therefore Rule 63A.24 applies so as to reduce the costs to which Mr Lawson is entitled. I do not accept that argument and propose to otherwise order for the following reasons.

4          First is the relief that Mr Lawson claimed, which included a declaration, injunctions, damages and punitive damages. It is true that he has only recovered a relatively modest amount of damages, which related to the damage to his 1966 Toyota Crown Deluxe, but I have declared that he is entitled to the return of the cars on paying the expenses incurred by the Shire. The arguments on which Mr Lawson’s case was based were appropriate arguments to bring in the County Court. They included arguments about whether the local laws had retrospective operation and claims for promissory estoppel. In any event, the authorities discussed at page 5624.12 of Civil Procedure Victoria suggest that the Rule does not apply where a substantial part of the proceeding is the obtaining of relief other than debt or damages.

5          The second matter raised by the Shire was the effect of a Calderbank offer made by the Shire on 9 April 2010. The solicitors for the Shire proposed a four-step resolution of the matter which included, first, that the Shire pay Mr Lawson $5000 plus costs and secondly, that the Shire was prepared to make available land at the transfer depot where Mr Lawson’s motor vehicles are currently stored, at a stipulated rental. The terms of the settlement would be confidential and Mr Lawson would be required to sign a release as a term of settlement. The Shire’s offer was open for acceptance until 5.00 pm on 16 April 2010. In effect it remained open for a week and that week was approximately two weeks before the commencement of the trial.

6          Courts encourage parties to attempt to resolve issues. The opportunity that parties have to make Calderbank offers and the more formal offer of compromises reflect that policy.

7          The critical question is whether the rejection of the offer by Mr Lawson was unreasonable in the circumstances and that is to be judged against the matters set out by the Court of Appeal in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No.2).[1] There is also the authority of Byrne J in Fletcher Insulation (Vic) Pty Ltd v Renold Australia Pty Ltd (No.2)[2] that there is no presumption that indemnity costs will be awarded if a Calderbank offer is refused. The party relying on a Calderbank offer has to satisfy the Court that the refusal was unreasonable.

[1] (2005) 13 VR 435

[2] [2006] VSC 292, at paragraphs 13-17

8          I have decided for a combination of reasons that it was not unreasonable for Mr Lawson to refuse the offer and therefore that I should not make a Calderbank order. Those reasons are: first the stage at which the offer was made, which was less than two weeks before the trial and gave only one week for a response in circumstances when the issues of the litigation had been identified since late 2008.

9          I have taken into account that Mr Lawson quickly refused the Shire’s offer. The letter rejecting the offer was headed “Without Prejudice” and I have only taken it into account to ascertain that the offer was refused.

10        The second reason is Mr Lawson’s prospects of success in the litigation to be judged at the time when the offer was made. In addition to the matters on which Mr Lawson did succeed, there is evidence before the Court, particularly from him and Mr Cuthbert, that provided grounds for an argument that a number of vehicles were damaged while they were being transferred from his property to the transfer station. A Notice of Special Damage dated 1 April 2010 was filed.

11        This wider claim for damages could not be pursued, because ultimately there was no evidence presented to the Court to substantiate the loss that Mr Lawson may have suffered. However, it is necessary to assess, so far as a Court can, without applying hindsight, what view of the proceeding was reasonable for Mr Lawson to adopt on 9 April 2010.

12        It is true that no expert evidence had been filed on 9 April 2010 to establish the quantum of the claim for the additional damaged vehicles and the time for filing expert statements had expired. However, it is not unknown for parties to supplement expert statements, by further evidence filed out of time. Whilst Mr Lawson ultimately did not attempt this, it was reasonable as at 9 April 2010 for Mr Lawson to take into account the possibility of this wider claim to damages being pursued.

13        The other reason for my decision is that the terms of the Calderbank letter were not entirely clear. It is fair that I assume, as counsel for the Shire submitted, that the offer of $5000 plus costs was intended to waive the Shire’s costs of removal of the vehicles. However, the letter does not make clear whether the vehicles were to be released to Mr Lawson. The letter suggests that as part of a packaged offer, land would be made available at the transfer station for their storage, but it is not made clear whether Mr Lawson’s key demand, the return of the vehicles to him, was to be granted if he did not agree to all the terms of the Shire’s offer.

14        I should add, in case there is any misunderstanding about this, that once the vehicles are released to Mr Lawson, he will have to store them in accordance with the law and my judgment does not authorise him to return them to his Woomelang property.

15        A substantial part of Mr Lawson’s case, was to seek a return of the cars. The Shire’s letter of offer leaves uncertain, what its position was about Mr Lawson’s right to return of the cars. It may be said that that conclusion is to read the letter too technically and that its intent was clear – that the vehicles were going to be returned to him even if he did not agree to lease the land at the transfer station from the Shire. However the letter does not make that clear.

16        It is not a point against the reasonableness of Mr Lawson’s refusal of the Shire’s offer that he did not attempt further negotiations with the Shire following its offer. The question I have to decide is whether the refusal of the offer was unreasonable. For the reasons that I have given, I do not consider it was.

17        I therefore will make an order as to costs which entitles Mr Lawson to costs on Scale A and the Shire on Scale B.

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