Morris v McEwen

In the matter of Morris v McEwen, the parties were involved in a commercial dispute which was adjudicated in the District Court of Victoria. The plaintiff, Morris, sought recovery of a net balance of moneys owed by the defendants, McEwen, following the breakdown of a commercial relationship. The trial resulted in a judgment for the plaintiff, but the focus of the appeal was on the costs awarded. The defendants had made a settlement offer via a Calderbank letter dated 1 May 2003, which was open for acceptance for only seven days. The trial Judge ordered that the defendants pay the plaintiff's costs up to 15 May 2003, and the plaintiff pay the defendants' costs after that date, effectively apportioning the costs based on the timing of the settlement offer.

The legal issues before the court were whether the Calderbank offer could be considered in determining the costs, and if the trial Judge's discretion in ordering costs was exercised correctly. Specifically, the court needed to determine if the Calderbank offer should be treated similarly to an offer made under Rule 40 of the Supreme Court of Victoria's Civil Procedure, and if the plaintiff's failure to adequately discover relevant information could affect the defendants' entitlement to benefit from the Calderbank offer. Additionally, the court had to assess if the trial Judge's order for costs was appropriate given the parties' conduct during the proceedings.

The court found that while a Calderbank offer could be considered in determining costs, it must be framed in terms consistent with Rule 40 to have the same effect. The defendants' Calderbank offer was not framed in accordance with Rule 40, and thus, could not be given the same weight. Furthermore, the court held that the plaintiff's failure to adequately discover information did not preclude the defendants from benefiting from the Calderbank offer. However, the court held that the trial Judge's discretion with respect to costs was misapplied. Consequently, the orders for costs made by the trial Judge were set aside, and the plaintiff's costs of action were to be taxed on the District Court scale. The appeal was allowed on the basis that the trial Judge's orders for costs were incorrect.