Lo v Russell (No 2) - [2017] VSCA 14

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2016 0089

CHENG LO	First Appellant
and
ENG KIAT TAN	Second Appellant
v
THOMAS JOHN RUSSELL [NO 2]	Respondent

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JUDGES:	WARREN CJ, TATE and McLEISH JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	On the papers
DATE OF JUDGMENT:	14 February 2017
MEDIUM NEUTRAL CITATION:	[2017] VSCA 14
JUDGMENT APPEALED FROM:	[2016] VSC 93 (Cameron J)

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COSTS – Trial – Appellants made Calderbank offer to respondent prior to trial – Respondent successful at trial but unsuccessful on appeal – Whether respondent’s refusal of offer unreasonable – Offer represented only modest discount – Relevance of respondent’s success at trial – Stewart v Atco Controls Pty Ltd (in liq) [No 2] (2014) 252 CLR 331; Miwa Pty Ltd v Siantan Properties Pte Ltd [No 2] [2011] NSWCA 344; Crossman v Sheahan [No 2] [2016] NSWCA 351, referred to – Refusal of offer not unreasonable in circumstances – Respondent to pay appellants’ costs of trial on standard basis.

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APPEARANCES:	Counsel	Solicitors
For the Appellants	Mr P Best with Mr P R Miller	Kalus Kenny Intelex
For the Respondent	Mr R Hay QC with Mr R T Wodak	Dellios West & Co

WARREN CJ

TATE JA
McLEISH JA:

On 16 December 2016, the Court granted leave to appeal and allowed the appeal in this matter.[1] It made orders that the appellants have judgment for the sum of $341,040,[2] together with interest pursuant to s 58 of the Supreme Court Act 1986, and that the respondent’s counterclaim be dismissed. The respondent was ordered to pay the appellants’ costs of the appeal. At the parties’ request, the Court ordered that written submissions be filed and served in relation to the costs of the trial.
[1]Lo v Russell [2016] VSCA 323.
[2]‘Being the deposit of $350,000 less 0.2 per cent of the sale price of $4.48 million (as provided in [Sale of Land Act 1962] s 31(4) and the “important notice to purchasers” in the contract)’: ibid [13] n 2.

The appellants seek an order that the respondent pays the appellants’ costs of the trial on a standard basis up to and including 17 February 2015 and on an indemnity basis thereafter. They rely on a Calderbank offer contained in a letter dated 23 January 2015, which was left open for acceptance until 4:00 pm on 17 February 2015.[3] The offer was as follows:

Our clients offer to settle this proceeding on the following basis:
1.Your client refunds the sum of $300,000 to my clients from the sum of $350,000 your client is holding in trust as part payment of the deposit.
2.Your client retains the balance of the deposit of $50,000 plus interest (estimated at around $10,000) which has accrued on the deposit.
3.Your client agrees to pay our clients’ cost of the proceeding on a standard basis to be taxed … in the absence of agreement.
4.Your client discontinues his counterclaim or agrees to an Order…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Lo v Russell (No 2)

Details

AGLC: Lo v Russell (No 2) [2017] VSCA 14
Case: [2017] VSCA 14
Decision Date: 14 February 2017

CaseChat Overview and Summary

In the case of Lo v Russell (No 2), the appellants sought to challenge the refusal of the respondent to accept a Calderbank offer made before the trial. The offer, which was for a modest discount, was rejected by the respondent, who went on to be successful in the trial but ultimately unsuccessful on appeal. The primary focus of the appeal was to determine if the refusal of this offer was unreasonable under the circumstances. The legal issues that needed resolution revolved around the principles established in previous cases such as Stewart v Atco Controls Pty Ltd (in liq) [No 2], Miwa Pty Ltd v Siantan Properties Pte Ltd [No 2], and Crossman v Sheahan [No 2]. These cases highlighted the relevance of the trial outcome in assessing the reasonableness of refusing a Calderbank offer.

The court examined whether the refusal of the offer was reasonable given the modest nature of the discount and the subsequent trial outcome. It noted that while the respondent's success at trial might typically influence the assessment, the key consideration was the proportionality of the offer in relation to the risk of losing at trial. The court found that in this instance, the respondent's refusal was not unreasonable, taking into account the context and the principles established in previous cases. The court emphasised that the refusal was not disproportionately harsh, considering the modest nature of the offer and the potential risk involved for the respondent.

Consequently, the court ruled that the respondent's refusal of the Calderbank offer was not unreasonable. As a result, the appellants were awarded costs of the trial on a standard basis. This decision underscores the importance of evaluating the reasonableness of a Calderbank offer refusal in light of the specific circumstances of the case, including the nature of the offer and the outcomes at both trial and appeal levels. The court's ruling reinforces the need for careful consideration of such offers to avoid unjust cost implications.

Orders