Milenkovic v Milenkovic (Costs Ruling)
[2024] VSC 804
•20 December 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2021 01802
| MILAN MILENKOVIC (by his litigation guardian NENAD NIKOLIC) | Plaintiff/First Defendant by Counterclaim |
| v | |
| MILIC MILENKOVIC | First Defendant/Plaintiff by Counterclaim |
| COOPERS LAWYERS (AUST) PTY LTD (ACN 084 948 907) | Second Defendant/Second Defendant by Counterclaim |
---
JUDGE: | McDonald J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 20 December 2024 |
CASE MAY BE CITED AS: | Milenkovic v Milenkovic (Costs Ruling) |
MEDIUM NEUTRAL CITATION: | [2024] VSC 804 |
---
COSTS – Calderbank offer – Whether plaintiff’s rejection of first defendant’s Calderbank offer unreasonable – First defendant offered to settle proceedings for less than half of the amount claimed and to bear own costs – Prior to receipt of Calderbank offer plaintiff had received outlines of evidence of witnesses who corroborated key elements of first defendant’s evidence – Evidence of witnesses not meaningfully challenged in cross-examination – Plaintiff’s prospects of successfully defending counterclaim not good when Calderbank offer received – Rejection of Calderbank offer unreasonable.
---
HIS HONOUR:
On 11 December 2024 the Court published reasons for judgment in Milenkovic v Milenkovic [2024] VSC 763 (‘principal judgment’). The Court upheld the claim by the plaintiff by counterclaim (‘Milic’) for an order that the second defendant pay him the net proceeds of sale of 285 Glenlyon Road, Fitzroy North (‘Glenlyon Road’) together with any accrued interest held in the trust account of the second defendant.
Milic seeks the following orders as to costs:
(i) the plaintiff and first defendant to counterclaim (‘Milan’) pay Milic’s costs of the proceeding on a standard basis, to be taxed in default of agreement, with respect to costs incurred up to 19 May 2024.
(ii) Milan also pay Milic’s costs of the proceeding on an indemnity basis, to be taxed in default of agreement, with respect to costs incurred on and from 20 May 2024.
(iii) Milan pay the costs of the second defendant and second defendant to counterclaim on a standard basis, to be taxed in default of the agreement.
Milan seeks the following orders as to costs:
(iv) Milan pay Milic’s costs on the standard basis to be taxed in default of agreement;
(v) There be no order as to the second defendant’s costs.
On 13 May 2024 Milic made an offer to compromise the proceeding, expressed as an offer on Calderbank principles. The Calderbank offer was as follows:
(a) Milic shall receive $850,000 from the proceeds of sale of Glenlyon Road with the balance of funds held on trust by the second defendant to be paid to Milan;
(b) Milic agreed never to contest Milan’s Will; and
(c) the parties were to mutually release and discharge each other in respect of all matters and disputes, including costs (whether the subject of existing orders or otherwise), arising out of or incidental to the proceedings.
Milic’s Calderbank offer was rejected by Milan and the trial of the proceeding commenced on 21 May 2024.
The rejection of a Calderbank offer is a matter which the Court should have regard to when considering whether to order indemnity costs.[1] The critical question is whether the rejection of the offer was unreasonable in the circumstances.[2] A court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:
[1]Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435 at 441 [20].
[2]Ibid at 441 [23].
(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 as 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.[3]
[3]Ibid at 442 [25].
The Calderbank offer remained open to be accepted until 5:00pm on 20 May 2024. Milan submits that, although the offer was made shortly before the trial, he was not in a position at that time to have assessed the parties’ respective merits such that it was unreasonable for him to reject the offer. Milan submits that in May 2024 he did not have “sufficiently certain information to make a sure assessment of his prospects of success”.[4] I reject this submission.
[4]Milan’s Costs Submissions dated 17 December 2024 at [7].
In order to succeed in his claim based on a proprietary estoppel constructive trust Milic had to establish that Milan and Milunka promised to bequeath Glenlyon Road to him if he undertook significant renovations of the property. He also had to establish that he relied upon this promise to his substantial detriment. By 13 May 2024 Milan had been provided with witness outlines of Mr Tom Savic, Mr Drago Susanj, Mr Petar Stojanovic and Mr Milutin Bogicevic. These witness outlines, particularly those of Messrs Savic and Susanj, placed Milan on notice of evidence which was directly inconsistent with Milan’s defence to Milic’s claim. Further, as set out in the principal judgment, key aspects of the evidence of Messrs Savic and Susanj was not challenged during cross-examination. When Milan received the Calderbank offer he was in a position to make an assessment of the extent to which he would be able to call into question the evidence of Messrs Savic and Susanj. He was therefore in a position to make an assessment of his prospects of success. The period of time which Milan had to consider the Calderbank offer was sufficient to allow Milan to consider the offer.
Milan submits that the extent of the compromise contained in the Calderbank offer was not so generous as to make the refusal unreasonable.[5] I reject this submission. The Calderbank offer constituted a real element of compromise. Under the proposed offer Milic agreed to bear his own costs of the proceeding up until 20 May 2024. Further, the sum of $850,000 which he sought represented significantly less than the $1,808,909.98 plus accrued interest on that sum held in the second defendant’s trust account.
[5]Ibid at [9].
Milan submits that “it cannot be said that Milan’s prospect of success, as at the date of the offer, were so poor as to make his rejection of the offer unreasonable”.[6] Milan’s prospects of successfully defending Milic’s claim for the proceeds from the sale of Glenlyon Road, assessed as at 13 May 2024, is a matter properly to be taken into account when considering whether Milan’s rejection of the Calderbank offer was reasonable. Milan submits that as at 13 May 2024 there was considerable uncertainty as to the outcome of the litigation. In support of this submission Milan points to observations which the Court made about the risks to both parties in the litigation flowing from the absence of financial records supporting the parties’ respective claims.[7]
[6]Ibid at [10].
[7]T 695 L 27 – 696 L 4.
On 29 May 2024, the seventh day of the trial, the Court did make observations about the absence of objective financial records supporting the parties’ respective claims. These observations were made in the context of an exchange with counsel during which the Court urged the parties to resolve their dispute by agreement.[8] Subsequently, the parties attended a mediation before Efthim AsJ without a resolution being achieved. The trial resumed on 19 June 2024. On 19 June 2024 Messrs Savic, Susanj, Stojanovic and Bogicevic gave evidence. When the offer of compromise was received by Milan on 13 May 2024 Milan’s legal representatives had received the outlines of evidence of these four witnesses and were able to take instructions from Milan in respect of the matters contained in the outlines. When Mr Savic and Mr Susanj were cross-examined on 19 June 2024 there was no meaningful challenge to their evidence. The unchallenged evidence of Mr Savic and Mr Susanj corroborated key elements of Milic’s claim. As Milan’s counsel was not able to meaningfully challenge the evidence of Mr Savic and Mr Susanj, his prospects of successfully defending Milic’s claim were not good when he received the offer of compromise. This conclusion is reinforced by the fact that the Calderbank offer placed particular weight upon the witnesses who would corroborate Milic’s evidence:
It should be evident from our client’s (Milic’s) witness outlines that our client has several witnesses to corroborate his evidence of the very substantial detriment he suffered in reliance on the Promises, by his long periods of work performing and facilitating construction works on the family’s properties.[9]
[8]T 696 L 14 – T 701 L 25.
[9]Milic’s Costs Submissions dated 13 December 2024 at [5] (emphasis in the original).
Milan does not take issue with the clarity with which the terms of the Calderbank offer were expressed. Further, it is common ground that the offer foreshadowed an application for indemnity costs if the offer was rejected.
Milan’s rejection of the Calderbank offer was unreasonable. Milic is entitled to an order that Milan pay the costs of the proceeding on an indemnity basis, to be taxed in default of agreement with respect to costs incurred on and from 21 May 2024 (the offer having lapsed at 5:00 pm on 20 May 2024). Milan will be ordered to pay Milic’s costs of the proceeding on a standard basis, to be taxed in default of agreement, with respect to costs incurred up to 20 May 2024.
Milan submits that no order should be made in respect of the second defendant’s costs. I reject this submission. The proceeding was commenced by writ filed 27 May 2021. The statement of claim named Coopers Lawyers (Aust) Pty Ltd as second defendant. Paragraph 11 of the statement of claim pleaded that following the sale of Glenlyon Road the second defendant held $1,807,960.88 in its trust account. Paragraph 16 pleaded that the second defendant was joined solely for the purpose of obtaining a direction that it distribute the funds in question to the plaintiff, and that no other relief or order was sought against it.
On 15 July 2021 the second defendant filed a defence. The only mater of substance raised in the defence was correcting the amount held in trust: $1,808,909.98.
On 13 August 2021 Keith JR made an order by consent on the papers:
Upon giving an undertaking to abide by any order of the Court arising from the determination of the dispute between the plaintiff and the first defendant, the second defendant is excused from further participation in this proceeding unless and until the Court otherwise orders.
Having been served with the writ, upon filing an appearance the second defendant was required to serve a defence within 30 days after service of the statement of claim: Rule 14.04(b) Supreme Court (General Civil Procedure) Rules 2015. The costs incurred by the second defendant should not be significant. Nevertheless, the second defendant is entitled to have its costs paid. Costs should follow the event. Milan should pay the second defendant’s costs on a standard basis to be taxed in default of agreement.
---
0
2
0