Leared v Lordan (No 2)

[2019] VCC 455

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

Case No. CI-17-03687

John Robert Leared on his own behalf and as Trustee of the Leared McNamara SMSF	Plaintiff
v
John Lordan	Defendant

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JUDGE:	Lewitan
WHERE HELD:	Melbourne
DATE OF HEARING:	4, 5, 6, 8, 11, 12 and 25 February 2019, 8 April 2019
DATE OF JUDGMENT:	10 April 2019
CASE MAY BE CITED AS:	Leared v Lordan (No 2)
MEDIUM NEUTRAL CITATION:	[2019] VCC 455

REASONS FOR JUDGMENT
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Subject:  Costs

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P Lithgow	Dwyer Robinson Pty Ltd
For the Defendant	Mr D Carlile	Altaee Law Firm

HER HONOUR:

1       On 8 April 2019 the Court made the following orders:

(1)      Judgment for the plaintiff against the defendant for $90,000 in respect of the first, second, fourth and fifth agreements together with interest pursuant to the agreements at 12% per annum to the date of judgment being $114,828 interest.

(2)      Judgment for the plaintiff against the defendant for $77,870 in respect of the third agreement together with interest at 12% per annum from 5 June 2014 to the date of judgment being $45,158 interest.

The defendant’s counterclaim

(3)      An order for rectification of the first and second agreements so that the date of repayment of the loans is at the date of completion of the property.

(4)      Judgment for the defendant for $48,283.95 for the GST claim together with interest pursuant to statute being $17,093.

(5)      The defendant’s claims for loss and damages are otherwise dismissed.

(6)      Reserve costs.

The defendant’s offer to “commercially agree to $250k”

2       The defendant referred to an email dated 9 June 2017[1] and submitted that on that day the defendant offered to pay to the plaintiff the sum of $250,000.  The email states:

…anyway Bob the maths are what they are, so ether[sic] accept that I will commercially agree to $250k to be done with this out of control situation, at a great loss to me, and avoid legally passing onto you years of cost etc., then you absorb all southern surveys bills outstanding – I will pay the scaffold and not bring out any/all the bills still owed/to be deducted, as you well know they will well exceed your estimate’s, so be it, back to you, your thought’s, this needs be commercial to me not personal…

[1] Exhibit 29.

3       

By email dated 10 June 2017 John Lordan (Lordan) forwarded an email to

Juli Skeparoski stating that “you can give him an undertaking (irrevocable) that he will be paid $250 from the settlements there, he can caveat the rear unit for that amount in full”.[2] A copy of this email was forwarded to Robert Leared (Leared).

[2] Court Book p 1001.

4       Counsel for the defendant, Mr Carlile, submitted that the plaintiff was not entitled to an order for costs based on the principles in Calderbank v Calderbank.[3] In that case the Court held that a successful litigant was not entitled to an order for costs where he ought to have accepted an offer which had previously been made and which was greater than the award in the proceedings.  Mr Carlile referred to Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2).[4]

[3] [1976] Fam 93.

[4] (2005) 13 VR 435.

5       Mr Carlile submitted that the defendant’s offer of $250,000 was greater than the award in these proceedings.  The offer was made on 9 June 2017 before the commencement of the proceedings on 10 August 2017.  As at 9 June 2017 the plaintiff was owed $234,383.

6       

Although informal offers of compromise should not be burdened with technicality, a party receiving the offer should be left in no reasonable doubt what offer the offeror intended to make.[5]  In this case the meaning of the words “I will commercially agree to $250,000” is unclear and vague.  The email of

9 June 2017 does not say when the amount is going to be paid and there is no indication as to what is being commercially compromised.  The email of 10 June 2017 is also unclear.  It is not clear when the $250,000 will be paid “from the settlements” and the possibility of placing a caveat over the rear unit also indicates that the date of payment from the settlements is uncertain.

[5] BMD Major Projects Pty Ltd v Victorian Urban Development Authority [2007] VSC 441, [5].

7       The emails also do not state what the consequences are if the offer is not accepted.  In Whitney v Dream Developments Pty Ltd [6] Bathurst CJ of the New South Wales Court of Appeal held that there was nothing in the correspondence with which the offers were enclosed in that case “to indicate they would be relied on in relation to the question of costs should a verdict more favourable than the offer be achieved.  Such an indication, in my opinion, is the essence of a Calderbank offer.”[7]  In this case the emails do not provide any such indication.

[6] [2013] NSWCA 188, [42].

[7] Beazley P, McColl JA and Barrett JA agreed.

8       Having considered the submissions made by counsel, it is my view that the offer cannot take effect as a Calderbank offer.

The issues in this case

9       Mr Carlile submitted that the costs should be apportioned by reference to the issues in the case.  The defendant referred to the document headed “Key Issues In Dispute” filed in these proceedings.  Mr Carlile referred to paragraph 8.3 of G E Dal Pont, Law of Costs (third edition) which states that the term “issue” is to be construed as any disputed question of fact or law.  Mr Carlile submitted that one of the key issues in this case was whether or not there was a joint venture.  The Court held that there was a joint venture.

10      Mr Carlile submitted that much of the case revolved around that question, more than any other issue in this case.  Mr Carlile submitted that all of the defendant’s cross-examination related to whether or not there was a joint venture. 

11      I do not accept Mr Carlile’s submission.  The defendant denied that the plaintiff was entitled to payment under the loan agreements because it entered into a joint venture with the plaintiff.  The plaintiff succeeded in its claim for payment of monies pursuant to the loan agreements.  The defendant did not succeed in its claim for damages for breach of the terms of the joint venture.  It was not until 6 February 2019, the third day of the trial, that the defendant abandoned its claims for consequential loss of $1,720,000.[8]  Ultimately the defendant did not establish that it was entitled to damages as a result of the joint venture because it did not satisfy the Court on a balance of probabilities that it was entitled to damages.  As a result most of the issues referred to in the “Key Issues in Dispute” were resolved in favour of the plaintiff.

[8] Transcript p 253.

12      I accept Mr Carlile’s submission that the defendant succeeded in its claim for payment of GST and that the defendant lead evidence to establish its claim.  The plaintiff’s concession that the defendant was entitled to payment of GST was not made until final submissions.

13      Mr Carlile then submitted that costs should lie where they fall.  I do not accept the defendant’s submission.  A large part of the case involved the determination of the question of damages.  The plaintiff was successful in its claim that it was entitled to payment pursuant to loan agreements entered into with the defendant. As stated in the above paragraph 11, the defendant did not succeed in its claim for damages for breach of the joint venture.

14      The Court has a discretion as to costs.  In Chell Engineering v Unit Tool and Engineering Co. Ltd. (Chell)[9] Lord Denning stated:

I would only add that in most of these cases it is desirable that a judge should consider whether a special order should be made as to costs because the issues are often very much interlocked, and the usual order of “judgment for plaintiff on claim with costs and for defendant on counterclaim with costs” does not always give a just result.

[9] [1950] 1 All ER 378.

15      In cases where claim and counterclaim are closely connected it is appropriate that a judge consider whether a special order for costs should be made to secure a just result.[10]

[10]Chell [1950] a All ER 378, 383 per Denning LJ; Childs v Blacker [1954] 2 All ER 243, 245.

16      Whether a claim and cross-claim are sufficiently closely connected is determined according to the particulars of each matter and as required to achieve a just result.[11]  Having considered the whole of the evidence in this case, the issues raised in this case and the submissions made by counsel, I consider that in the circumstances of this case it would be undesirable for there to be separate taxation of the plaintiff’s costs and the defendant’s costs which may well give rise to unnecessary disputes about whether a particular letter, telephone call or attendance was a cost in the plaintiff’s claim or the counterclaim.

[11]Polwood Pty Ltd v Foxworth (No 2) [2008] FCAFC 168 at [12] –[13].

17      The plaintiff submitted that an order should be made that the defendant pay 80% of its costs on the basis that the plaintiff has been wholly successful (together with interest) and that the defendant has only been partially successful.  Judgment for $327,856 has been entered in favour of the plaintiff.  Judgment for $65,376 has been entered in favour of the defendant.  The plaintiff submitted that the plaintiff received $262,480 which is an 80/20 split.  However having considered the evidence, the issues and the submissions made by counsel, I propose to order that the defendant pay 70% of the plaintiff’s costs of the proceeding (including reserved costs).

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