Murray v MyDomaine Pty Ltd
[2016] WADC 109 (S)
•28 JULY 2016
MURRAY -v- MYDOMAINE PTY LTD [2016] WADC 109 (S)
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WADC 109 (S) | |
| Case No: | CIV:2874/2012 | 1 - 4, 7 - 10 DECEMBER 2015 & 21 NOVEMBER 2016 | |
| Coram: | LEVY DCJ | 28/07/16 | |
| PERTH | 16/02/17 | ||
| 31 | Judgment Part: | 1 of 1 | |
| Result: | Damages assessed at $37,620 in favour of the plaintiffs | ||
| PDF Version |
| Parties: | DANIEL MURRAY LYNDA MURRAY MYDOMAINE PTY LTD SHELLEY MAE CLACK GREGORY RAYMOND CLACK BRADLEY RICHARD DENTON RAELENE JOY DENTON |
Catchwords: | Civil Damages Apportionment of damages pursuant to Civil Liability Act 2002 (WA) Apportionable and non-apportionable damages Partly successful plaintiffs' costs Whether a departure from the general rule should be applied Whether Magistrates Court scale should be applied where damages awarded do not exceed that jurisdictional limit Whether Special Costs Order appropriate |
Legislation: | Civil Liability Act 2002 (WA) s 5AK Corporations Act 2001 (Cth) s 471B District Court of Western Australia Act 1969 s 50, s 64(3) Legal Profession Act 2008 (WA) s 280(2) Magistrates Court (Civil Proceedings) Act 2004 (WA) s 4 Rules of the Supreme Court 1971 O 66 r 17(1) |
Case References: | Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158 (S) Berrigan Shire Council v Ballerini (No 2) [2006] VSCA 65 Calderbank v Calderbank [1976] Fam 93 Civic Video Pty Ltd v Paterson (No 3) [2014] WASC 321 Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115 Ghunaim v Bart (No 2) [2006] NSWCA 82 Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 Jones v Bradley (No 2) [2003] NSWCA 258 Leichhardt Municipal Council v Green [2004] NSWCA 341 Leighton Contractors Pty Ltd v Public Transport Authority of Western Australia [No 7] [2009] WASC 218 Michael Kellaway International Pty Ltd v Shark Bay Airport Pty Ltd (Unreported, WASC, Library No 980302, 25 March 1998) Pennington v Norris (1956) 96 CLR 10 Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492; (1985) 59 ALR 529 Potts v Miller (1940) 64 CLR 282 Selig v Wealthsure Pty Ltd (2015) 255 CLR 661 SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 Vella v Ivanovski [1984] WAR 8 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 16 FEBRUARY 2017 FILE NO/S : CIV 2874 of 2012 BETWEEN : DANIEL MURRAY
- LYNDA MURRAY
Plaintiffs
AND
MYDOMAINE PTY LTD
First Defendant
SHELLEY MAE CLACK
Second Defendant
GREGORY RAYMOND CLACK
Third Defendant
BRADLEY RICHARD DENTON
Fourth Defendant
RAELENE JOY DENTON
Fifth Defendant
Catchwords:
Civil - Damages - Apportionment of damages pursuant to Civil Liability Act 2002 (WA) - Apportionable and non-apportionable damages - Partly successful plaintiffs' costs - Whether a departure from the general rule should be applied - Whether Magistrates Court scale should be applied where damages awarded do not exceed that jurisdictional limit - Whether Special Costs Order appropriate
Legislation:
Civil Liability Act 2002 (WA) s 5AK
Corporations Act 2001 (Cth) s 471B
District Court of Western Australia Act 1969 s 50, s 64(3)
Legal Profession Act 2008 (WA) s 280(2)
Magistrates Court (Civil Proceedings) Act 2004 (WA) s 4
Rules of the Supreme Court 1971 O 66 r 17(1)
Result:
Damages assessed at $37,620 in favour of the plaintiffs
Representation:
Counsel:
Plaintiffs : Mr T Offer
First Defendant : No appearance
Second Defendant : Dr E Heenen
Third Defendant : Dr E Heenen
Fourth Defendant : Mr N Landis
Fifth Defendant : Mr N Landis
Solicitors:
Plaintiffs : McAuliffe Legal
First Defendant : Not applicable
Second Defendant : Austasia Legal Pty Ltd
Third Defendant : Austasia Legal Pty Ltd
Fourth Defendant : Classic Legal
Fifth Defendant : Classic Legal
Case(s) referred to in judgment(s):
Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158 (S)
Berrigan Shire Council v Ballerini (No 2) [2006] VSCA 65
Calderbank v Calderbank [1976] Fam 93
Civic Video Pty Ltd v Paterson (No 3) [2014] WASC 321
Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373
Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115
Ghunaim v Bart (No 2) [2006] NSWCA 82
Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435
Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)
HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640
Jones v Bradley (No 2) [2003] NSWCA 258
Leichhardt Municipal Council v Green [2004] NSWCA 341
Leighton Contractors Pty Ltd v Public Transport Authority of Western Australia [No 7] [2009] WASC 218
Michael Kellaway International Pty Ltd v Shark Bay Airport Pty Ltd (Unreported, WASC, Library No 980302, 25 March 1998)
Pennington v Norris (1956) 96 CLR 10
Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492; (1985) 59 ALR 529
Potts v Miller (1940) 64 CLR 282
Selig v Wealthsure Pty Ltd (2015) 255 CLR 661
SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323
Vella v Ivanovski [1984] WAR 8
- LEVY DCJ:
Introduction:
1 On 28 July 2016 I handed down my judgment (primary judgment) in relation to the primary issues dealt with at the trial. I found that the 'true market value' of the property at the time of contract was $308,200 and that subject to the further issue of the 'taxation benefits' that the plaintiffs received, they were entitled to damages in the sum of $37,620. Whilst I found all of the defendants were liable, I did not make findings as to how the loss suffered by the plaintiffs should be apportioned between the defendants pursuant to the Civil Liability Act 2002 (WA) ('CLA') and the form of the final orders. Consequently, I was not in a position to make final orders including the question of costs.
2 I note that during the course of the trial all parties requested that the issue relating to the 'taxation benefits' that the plaintiffs received from the property not be resolved until after I had considered issues of liability and damages, excluding the 'taxation benefits' that the plaintiffs received.
3 On 12 August 2016 the matter was again listed before me. Leaving aside the question of the apportionment of the damages between the defendants and the issue of costs, despite the fact that during the trial the only issue that was identified as requiring resolution after the primary issues had been decided was the question of the 'taxation benefits', all counsel for the parties flagged a number of issues that needed to be further ventilated. I consequently made further orders on that day adjourning the further hearing to deal with various matters including the extent to which (if any) consequential issues and tax implications should be taken into account in assessing the quantum of the loss and the damages suffered by the plaintiffs. I required the parties to file and serve any affidavits dealing with the question of costs and further written submissions dealing with the consequential issues being:
(a) the appropriate apportionment between the defendants pursuant to pt 1F of the CLA;
(b) the form of orders necessary to give effect to any apportionment between the defendants pursuant to Part 1F of the CLA; and
(c) costs.
4 I subsequently received from the parties the following material:
From the first and second plaintiffs:
• Affidavit of Mark Adrian McAuliffe solicitor for the plaintiffs, sworn on 29 August 2016 (18 pages) attaching 256 pages of annexures (McAuliffe Affidavit).
• Submissions dated 29 August 2016 addressing consequential issues, tax implications and costs (10 pages).
• Responsive submissions dated 1 November 2016 (20 pages).
From the second and third defendants (nothing was filed on behalf of the first defendant for reasons that will be elaborated upon below):
5 Affidavit of Katherine Susan Pole, solicitor for the second and third defendants, sworn 30 September 2016 (13 pages) attaching 215 pages of annexures (Pole Affidavit).
• Submissions dated 30 September 2016 in relation to final orders and costs (16 pages).
• Chronology of offers and events relevant to costs (4 pages).
From the fourth and fifth defendants:
• Affidavit of Charles Robert Cook, solicitor for the fourth and fifth defendants, sworn 14 September 2016 (12 pages) attaching 48 pages of annexures (Cook Affidavit).
• Submissions on final orders dated 14 September 2016 (9 pages).
• Submissions on costs dated 14 September 2016 (6 pages).
First defendant insolvent
6 On 17 August 2016 the Federal Court of Australia, on the application of the Deputy Commissioner of Taxation, ordered that the first defendant (MyDomaine Pty Ltd, ACN 120 016 499) be wound up in insolvency under the provisions of the Corporations Act 2001 (Cth). Consequently, the plaintiffs cannot proceed with this action against the first defendant except with the leave of the Supreme Court of Western Australia or the Federal Court of Australia (Corporations Act, s 471B). At the time of the publication of this decision no order granting leave has been made.
7 On 17 November 2016, the solicitor acting for the first to third defendants sought and obtained leave to withdraw as solicitors for the first defendant. No submissions have been filed on behalf of the first defendant in relation to the issues that are dealt with in these reasons.
Outstanding issues
8 I note that on 11 December 2015, at the conclusion of the evidence to be relied upon by the parties, I was so concerned about the costs involved in the litigation of this matter that I invited the parties to dispense with oral final addresses and to instead file written submissions. The parties adopted this course.
9 Despite my concerns about the legal costs associated with this case, it is obvious from the voluminous affidavits, annexures and submissions that the legal costs associated with this matter have continued to grow post the trial. I note that at par 50 of the Cook Affidavit, as at the time of the swearing of the affidavit on 14 September 2016, the fourth and fifth defendants alone had incurred approximately $160,000 in costs associated with these proceedings.
10 On 21 November 2016, having received the affidavits and submissions referred to above, I heard further legal argument. The issue relating to the 'taxation benefits' that the plaintiffs received from the property, despite being the only issue previously flagged as being outstanding, was abandoned with the consent of all parties. Instead, the second and third defendants now argues that the consequential issues, following my primary judgment, includes the need for a further assessment of the quantum of loss suffered by the plaintiffs based upon an analysis of what the 'true value' of the property was at the time of the contract, rather than the 'market value'. The fourth and fifth defendants have not only joined issue with the second and third defendants on this submission, but have also raised a further matter that they submit should be taken into account on the assessment of the quantum of damages, namely that as a result of my determination of what the 'true market value' of the property was at the time the plaintiffs acquired it, the plaintiffs have received a 'windfall' in rent received. Consequently, the following issues arise to be dealt with relating to the final orders that should be made following the delivery of the primary judgment:
• the quantum of loss suffered by the plaintiffs;
• the appropriate apportionment between the defendants pursuant to pt 1F of the CLA and the form of orders necessary to give effect to any apportionment between the defendants; and
• costs.
The quantum of loss suffered by the plaintiffs
11 The trial was conducted by all parties on the basis that that the quantum of loss suffered by the plaintiffs, if any, would be calculated after the court had determined whether any of the defendants were liable for the plaintiffs' claims and made findings in respect of Mr Myers' evidence.
12 As already noted at [1] above, in my primary judgment I found that 'the true market value of Cowrie Apartment 216 was $308,200.00' (see [326] of the primary judgment). This finding was based upon Mr Myers' evidence (see [326] of the primary judgment) and was the value at the time of the contract (see [373] of the primary judgment) (my emphasis added).
13 The figure of $308,200 was arrived at by adding together the following:
• 'total market value' of the property - $280,000 (see exhibit 46, attachment 'CM1' Mr Myers' evidence at ts 293; 308, 310);
• value of furnishings - $10,000 (see Mr Myers' evidence at ts 310); and
• 'profit rent' for the 5 years of the lease - $18,200 (see Mr Myers' evidence at ts 315).
The second and third defendants' submission that the 'true value' of the property should be reduced by a further sum of $18,200 to take account of the actual profit rent earned by the plaintiffs (adopted by the fourth and fifth defendants)
14 Counsel for the second and third defendants now, correctly, submits that there is a difference between 'market value' and 'true value' and, in reality, although the primary judgment was expressed to be a finding of 'true market value' (which he submitted was an 'oxymoron' – see pars 5 and 6 of the 'Second and Third Defendants' Submissions on Final Orders and Costs' dated 30 September 2016), the expert opinion of Mr Myers was that the market value of the property at the date of the contract was $308,200.
15 The second and third defendants contend that the correct measure of the plaintiffs' loss is the difference between what the plaintiffs' paid for the property and the 'true value' of the property on the date the plaintiffs' became contractually bound to purchase it. Furthermore, the true value, on the first to third defendants' submission, must be assessed bearing in mind post-acquisition events. This submission is said to be based upon the judgment of the High Court in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 [34] - [40].
16 The court in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd[38] noted what Dixon J said in Potts v Miller (1940) 64 CLR 282, 299, namely:
[T]he real value of what the plaintiff got must be ascertained in light of the events which afterwards happened, because those events may show, for instance, that what the shares might have sold for was not their true value or that it was a worthless company.
17 However, the High Court in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd[35] went on to say that this approach, sometimes referred to as the rule in Potts v Miller, 'is not universal or inflexible or rigid'.
18 The post-acquisition events, on the second and third defendants' submission, includes a need to factor in the rent that was guaranteed and actually received by the plaintiffs over all five years of its term. The guaranteed rent was calculated at 6.25% of the purchase price of $350,000 and was indexed for CPI every year. The second and third defendants point to Mr Myers' evidence that anything over a 5% return on the property was a 'profit rent' (ts 309 - 311). Given the second plaintiff's evidence that the plaintiffs received the rent that they were entitled to pursuant to the contract for the purchase of the property (exhibit 14), the second and third defendants submit that the profit rent they earned was actually $36,400, not the sum of $18,200 given by Mr Myers in evidence.
19 On the available evidence, I do not accept the second and third defendants' submission that the sum of $36,400, not $18,200, should be used in determining the 'true value' of the property. Mr Myers was extensively cross-examined by counsel for the second and third defendants. The sum of $18,200 was arrived at after a complicated and hypothetical exercise was put to him as a witness (see ts 309 - 315). At no time was he ever asked to consider the value of the property based upon what was actually known at the time of the hearing. Although I have expressed my findings as being 'true market value', it is clear that the sum of $308,200 took account of not only the 'total market value' of the property together with furnishings, but also the 'profit rent'. There is now no proper basis to reconsider the value of the property beyond that which was the subject of evidence at trial.
The fourth and fifth defendants' submission (adopted by the second and third defendants)
20 The second to fifth defendants submit that, by virtue of the finding that the 'true market value' of the property was $308,200, the plaintiffs received a 'windfall of $13,062.50 being the amount in excess of the rental guarantee that they were entitled to receive under the Contract of Sale' (see pars 12 and 13 of the Fourth and Fifth Defendants' Submissions on Final Orders dated 14 September 2016).
21 This argument is based upon the fact that the Contract of Sale for the purchase of the property included a special condition that the plaintiffs were entitled to a guaranteed rental return for a period of five years calculated at 6.25% of the purchase price. Since the purchase price was $350,000, the guaranteed rental return was calculated at 6.25% of that amount. Consequently, if the 'true market value' was used rather than the purchase price, the defendants submit that the plaintiffs would have received at least $13,062.50 less than they actually did.
22 The defendants' argument proceeds on the basis that the plaintiffs would not have received the rent that they did, if they had in fact only paid $308,200 for the property, instead of the $350,000 they actually paid for it. Whilst there is some logic to this argument, these issues were neither directly raised nor canvassed during the evidence at trial. Instead, the defendants ask me to draw inferences from the available evidence to arrive at a conclusion that the plaintiffs received a 'windfall rent' of $13,062.50.
23 The difficulty with drawing the inferences suggested by the defendants is that there are gaps in the evidence. In that regard, I note that, for example, if you applied the figure of 6.25% to $350,000 (the guaranteed rental return calculated at 6.25%) you arrive at the figure of $21,875. Yet the plaintiffs' tax returns, which were tendered at the trial, disclose that the rent they received for the year ending 30 June 2010 was $18,229. There is no explanation on the evidence for that fact. If the court were to adopt the approach suggested by the defendants, the plaintiffs actually received less than they were entitled to for that year (if you applied 6.25% to the sum of $308,200 = $19,262.50). The second to third defendants point to plaintiffs' tax returns (exhibits 31 - 37 and exhibits 66 - 71), together with the first plaintiff's evidence at trial, to support the inference that they received a 'windfall' in rent. The defendants submit that the actual rent received from the property during the term of the lease (the period of the rental guarantee only applied to the years ending 30 June 2010 through to the year ending 30 June 2014) was as follows:
• for the year ending 30 June 2010 - $18,229
• for the year ending 30 June 2011 - $22,509
• for the year ending 30 June 2012 - $25,288
• for the year ending 30 June 2013 - $22,764
• for the year ending 30 June 2014 - $25,083.
25 On the available evidence, in circumstances where this issue was not directly raised at trial and there are gaps in the evidence which would call for a degree of speculation, I cannot conclude that the plaintiffs did receive a 'windfall'.
26 In addition, I accept the plaintiffs' submission that the figure of 6.25% of the purchase price of the property was a guaranteed minimum return. It did not mean that the rent was capped at that amount.
Conclusion of matters raised by the second to fifth defendants in relation to the quantum of damages
27 In my view, the issues now raised by the second to fifth defendants go beyond the consequential issues that were proposed to be dealt with after my primary judgment was delivered. Furthermore, these issues were not directly raised during the trial and call for a degree of speculation. Consequently, the quantum of damages will now be fixed in the sum of $37,620.
The appropriate apportionment between the defendants pursuant to pt 1F of the Civil Liability Act 2002 (WA)
28 In the primary judgment [330]; [332]; [359]; [381] - [383]; I found that:
(a) Each of the first to fifth defendants were liable in relation to the plaintiffs' claim for negligent misrepresentation in relation to the two Gold Representations identified as being the First and Fourth Gold Representations in the Gold Document.
• First Gold Representation - statement of claim 18(v): Slide 4 - Portfolio 'represent[s] You not the seller'; and
• Fourth Gold Representation - statement of claim 18(ix): Slide 5 - 'We [My Portfolio] provide you an unbiased consultative service'.
(b) Each of the first to fifth defendants were liable in relation to the plaintiffs' claim in negligence in that the defendants' failed to advise the plaintiffs of the risks associated with property investment (statement of claim 46(a));
(c) The first, second and third defendants were liable in relation to the plaintiffs' claim in fraudulent misrepresentation as they knew the First Gold Representation was false, were recklessly indifferent as to whether it would be presented to the plaintiffs and had no reasonable grounds for believing that the representation on Slide 4, namely MyPortfolio 'represent[s] You not the seller', was true.
29 Pursuant to s 5AI of pt 1F of the CLA, an 'apportionable claim' means -
(a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care (but not including any claim arising out of personal injury); or
(b) a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 2010 based on misleading or deceptive conduct;
30 The same section defines the term 'concurrent wrongdoer,' in relation to a claim, as:
a person who is one of 2 or more persons whose act or omission caused, independently of each other or jointly, the damage or loss that is the subject of the claim.
31 Section 5AK (1) of the CLA provides:
(1) In any proceedings involving an apportionable claim -
(a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss; and
(b) the court may give judgment against the defendant for not more than that amount.
33 Relevant to this case, s 5AK of the CLA needs to be read in combination with s 5AJA (1) of the CLA which provides that:
(1) Nothing in this Part operates to limit the liability of a concurrent wrongdoer (an excluded concurrent wrongdoer) in proceedings involving an apportionable claim if -
(a) the concurrent wrongdoer intended to cause the economic loss or damage to property that is the subject of the claim; or
(b) the concurrent wrongdoer fraudulently caused the economic loss or damage to property that is the subject of the claim.
(a) liability for the claims based upon negligence and negligent misrepresentation must be apportioned in accordance with s 5AK of the CLA; and
(b) liability for the claim founded in fraudulent misrepresentation is not limited by the operation of pt 1F.
35 All parties (save for the first defendant who has not made any submissions) agree that the claim founded in fraudulent misrepresentation is not limited by the operation of pt 1F of the CLA and consequently are not apportionable: Selig v Wealthsure Pty Ltd (2015) 255 CLR 661.
36 The first to third defendants submit that, in all the circumstances, the fourth and fifth defendants were 'significantly more responsible for the loss suffered by the plaintiffs than either the second and third defendants' and that their proportionate responsibility should not be higher than the plaintiffs' contributory negligence assessed to be 10% (see pars 25 and 26 of 'Second and Third Defendants' Submissions on Final Orders and Costs' dated 30 September 2016).
37 On the other hand, the fourth and fifth defendants submit that the first to third defendants should be held liable for the whole of the damages awarded to the plaintiffs on the basis of the finding of fraudulent misrepresentation (see pars 14 and 30 of the Fourth and Fifth Defendants' Submissions on Final Orders dated 14 September 2016).
38 The structure of any final orders in this case is complicated by the fact that the court's findings include both apportionable and non-apportionable claims.
39 In the joint judgment of Gibbs CJ, Mason, Wilson, Brennan and Deane JJ in Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492; (1985) 59 ALR 529 [8], the court said:
A finding on a question of apportionment is a finding upon a 'question, not of principle or of positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighing different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinion by different minds': British Fame (Owners) v Macgregor (Owners) (1943) AC 197, at p 201. Such a finding, if made by a judge, is not lightly reviewed. The task of an appellant is even more difficult when the apportionment has been made by a jury: Zoukra v Lowenstern [1958] VicRp 94; (1958) VR 594. In the circumstances to which reference has been made, it is not possible to say that it was unreasonable for the jury to place almost the entire responsibility for the damage on the appellant himself, and to make the apportionment that they did.
40 In Pennington v Norris (1956) 96 CLR 10, it was determined that the court should attempt to arrive at a 'just and equitable' apportionment having regard to who is 'responsible' for the damage. This consideration involves a comparison of culpability, which is the degree of departure from the standard of care of the reasonable man.
41 In determining questions of 'proportion', 'balance and relative emphasis', and 'weighing different considerations' referred to by the High Court in Podrebersek v Australian Iron & Steel Pty Ltd, theactual role played by the relevant parties needs to be considered.
The role played by the first, second and third defendants
42 The second and third defendants ran the business called MyPortfolio which was operated through the first defendant. The second and third defendants were the controlling minds of MyDomaine and the business MyPortfolio.
43 The first defendant was vicariously liable for the actions of the fourth and fifth defendants.
44 The second and third defendants were involved in discussions, negotiations and meetings with Mr Peter Marshall on behalf of the Indigo Group which resulted in the agreement between the first defendant and Indigo Real Estate (exhibit 74);
45 The second and third defendants gave presentations and seminars to property investment clients and met with clients (ts 622); and
46 The second and third defendants trained the fourth and fifth defendants in the business (ts 622).
47 The third defendant created the Gold Document for the purpose of marketing properties including the property the subject of this matter (exhibit 2);
48 The second defendant was aware of what was contained in the Gold Document.
49 The second defendant made the appointment for the plaintiffs to meet with the fourth and fifth defendants. At the relevant time the second and third defendants must have been aware that there was a real likelihood that the Gold Document would be used and relied upon by the fourth and fifth defendants in the course of their presentation to the plaintiffs.
50 I have already set out my findings including the plaintiffs' successful claims against the various defendants. Significantly, whilst the fourth and fifth defendants were not found to be liable in relation to the plaintiffs' claim for fraudulent misrepresentation, the first, second and third defendants were. Each of the first, second and third defendants were found to be liable in relation to the plaintiffs' claim in fraudulent misrepresentation as they knew the First Gold Representation was false, were recklessly indifferent as to whether it would be presented to the plaintiffs and had no reasonable grounds for believing that the representation on Slide 4, namely MyPortfolio 'represent[s] You not the seller', was true.
The role of the fourth and fifth defendants
51 It was the fourth and fifth defendants who presented the Gold Document to the plaintiffs and then took them through relevant parts of the Gold Document, knowing at the time that MyPortfolio did in fact represent the seller. They were, at the time of the presentation to the plaintiffs, in a good position to assess the needs of the plaintiff. In so doing however, they were acting as servants or agents of the first defendant. They provided services to the first defendant as consultants.
The appropriate apportionment between the defendants pursuant to pt 1F of the Civil Liability Act 2002 (WA): Conclusion
52 In my view, whilst the fourth and fifth defendants played a significant role by:
• ultimately meeting with the plaintiffs and actually presenting the Gold Document to them; and
• failing to advise the plaintiffs of the risks associated with property investment,
it is clear that, when considering relative responsibility for the loss suffered by the plaintiffs, the first, second and third defendants' conduct was of greater significance. I note the first defendant accepted at trial that it was vicariously liable for the actions of the fourth and fifth defendants.
53 I am of the view that the claims for negligence and negligent misrepresentation should be assessed at being 60% of the overall damages, in other words the amount of $22,572.
54 Noting all of the factors above, and leaving aside the successful claim against the first, second and third defendants for fraudulent misrepresentation which cannot be apportioned, I am of the view that the appropriate apportionment of responsibility as between the various defendants expressed as a percentage with respect to the claims for negligence and negligent misrepresentation, is as follows:
First defendant – 20%
Second defendant – 25%
Third defendant – 25%
Fourth defendant – 15%
Fifth defendant – 15%.
55 There is obviously some overlap in relation to the successful claims in negligent misrepresentation and fraudulent misrepresentation since they both involved the First Gold Representation - statement of claim 18(v): Slide 4 - MyPortfolio 'represent[s] You not the seller'.
56 The remaining 40% of the loss suffered by the plaintiffs is referrable to the successful claim in fraudulent misrepresentation. Damages awarded for this claim cannot be apportioned. Each of the first, second and third defendants is jointly and severally liable for the balance of the claim being $15,048 such sum being 40% of the amount of $37,620.
Costs: the second and third defendants' submissions generally
57 The second to fifth defendants submit that any costs payable to the plaintiffs, if any, should be reduced by virtue of a number of factors including:
1. The plaintiffs' prima facie loss was $41,800 which is well within the limits of the Magistrates Court Scale. Furthermore, given the content of the McAuliffe Affidavit, the plaintiffs had no reasonable basis to expect that their loss would exceed $75,000. Consequently, the second and third defendants submit that this matter should have been litigated in the Magistrates Court and that the plaintiffs are not entitled to their costs taxed at the applicable Magistrates Court Scale (see Rules of the Supreme Court (RSC), O 66 r 17(1) and District Court of Western Australia Act 1969 (WA), s 64(3)).
2. The plaintiffs were only partly successful, having had the following claims dismissed:
• breach of contract
• breach of fiduciary duty
• misleading and deceptive conduct (abandoned at the start of the trial)
• unconscionable conduct (abandoned at the end of the trial).
59 The claim for negligent failure to provide any or adequate advice was only introduced on the first day of the trial and, in the second and third defendants' submission, occupied little actual time during the trial being premised on an omission rather than an act.
60 Furthermore, the second and third defendants submit that they should have their costs for the claims of:
• breach of fiduciary duty;
• unconscionable conduct;
• wider allegations of fraud.
61 The second and third defendants point to the court's finding that the claim for breach of fiduciary duty was outside of the District Court's jurisdiction; the plaintiffs' abandonment of the claim of unconscionable conduct and the dismissal of the wider allegations of fraud.
62 The plaintiffs' claims in fraud were only successful on the basis that the second and third defendants were liable in relation to the plaintiffs claim in fraudulent misrepresentation as they were recklessly indifferent as to whether the representation would be presented to the plaintiffs (Slide 4, namely MyPortfolio 'represent[s] You not the seller) (see [359] of primary judgment). Furthermore, other wider allegations of fraud were not substantiated and lacked any proper basis given the content of the McAuliffe Affidavit.
63 The second and third defendants also rely upon a Calderbank offer made to the plaintiffs by letter dated 21 August 2015. That offer, which was made on a 'without prejudice save as to costs' basis, was for the second and third defendants to settle the matter by paying to the plaintiffs the sum of $60,000 inclusive of costs. The offer was rejected by the plaintiffs. The second and third defendants submit that the plaintiffs' rejection of the offer was not only unreasonable, but in light of the amount of the assessment of damages, the plaintiffs should be considered to be the unsuccessful party from the date of the offer.
64 In opposing the plaintiffs' application for a special costs order, the second and third defendants adopt the fourth and fifth submissions made in relation to the issue. The second and third defendants also submit that any complexity or unusual difficulty that arose in the action was a product of the plaintiffs' making. In that regard, they point to a combination of factors, all said to be attributable to the plaintiffs, namely:
• poor preparation for trial;
• deficient pleadings; and
• pursuing claims that were without merit or fell outside the jurisdiction of the District Court.
Costs: the fourth and fifth defendants' submissions generally
65 Like the second and third defendants, the fourth and fifth defendants not only submit that where applicable the plaintiffs costs should be reduced, but that the plaintiffs should pay their costs in relation to some of the unsuccessful claims brought against the fourth and fifth defendants. Those unsuccessful claims include claims for:
• breach of fiduciary duty; and
• unconscionable conduct.
66 The fourth and fifth defendants also submit that the ultimate amount of the claim was within the Magistrates Court's jurisdiction and that the majority of the claims brought against them were unsuccessful. In that regard, the fourth and fifth defendants point to the RSC, O 66 r 17(1).
67 In relation to the plaintiffs' successful claim in negligence made out against the fourth and fifth defendants, they submit that the claim was only made after the trial commenced and the plaintiffs should be deprived of those costs despite the fact that the plaintiffs were successful.
68 The plaintiffs' application for a 'special costs order' is opposed.
Costs: the plaintiffs' submissions generally
69 The plaintiffs not only seek their costs, but submit that a 'special costs order' should be made in their favour pursuant to s 280(2) of the Legal Profession Act 2008 (WA).
70 The plaintiffs reject the second to fifth defendants' submissions that any costs awarded to them should be assessed on the Magistrates Court scale, noting that although the ultimate award of damages falls within the Magistrates Court's jurisdiction, the question is not whether the ultimate amount of damages falls within the Magistrates Court jurisdiction but rather whether it was proper at the time the proceedings were instituted to bring it in the District Court.
Costs: Should the general rule that the successful party to an action or matter be awarded costs be displaced? Or, in the alternative, should the plaintiffs have their costs reduced? Are the defendants entitled to some or all of their costs?
71 Relevantly, the general rules as to costs are set out under O 66 r 1 of the RSC and includes:
General rules as to costs
(1) Subject to the express provisions of any statute and of these rules the costs of and incidental to all proceedings including the administration of estates and trusts shall be in the discretion of the Court but, without limiting the general discretion conferred on the Court by the Act, and subject to this Order, the Court will generally order that the successful party to any action or matter recover his costs.
(2) If the Court is of opinion that the conduct of a party either before or after the commencement of the litigation or that a claim by a party for an unreasonably excessive amount has resulted in costs being unnecessarily or unreasonably incurred it may deprive that party of costs wholly or in part, and may further order him to pay the costs of an unsuccessful party either wholly or in part.
(3) Where a party though generally successful in an action has, by the introduction of some issue or issues on which he has failed, increased the costs the Court may order such party to pay the costs of such issue or issues.
72 Ordinarily, solicitor/client and party/party costs are regulated by determinations made by the Legal Costs Committee.
73 The general rule that the successful party to any action or matter recover his or her costs usually applies notwithstanding that the successful party may have failed in relation to some issues or parts of their case. In Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 Beazley, McColl and Basten JJA said:
Where there are multiple issues in a case the court generally does not attempt to differentiate between the issues on which the appellant was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed [6].
74 In Leighton Contractors Pty Ltd v Public Transport Authority of Western Australia [No 7] [2009] WASC 218 [19] Le Miere noted that:
In determining the appropriate costs order where a litigant is not successful on each issue in the action, the court must seek to give effect to two policies that are likely to collide. On the one hand, it should not adopt an approach so rigid as to dissuade a party, by the risk of an adverse costs award, from canvassing all issues, however doubtful, which might be material to the decision in the case. On the other hand, in view of extensive court delays and high legal costs, the court should encourage parties to consider carefully the matters they do put in issue in their litigation. Litigants who realise that they will not necessarily recover the whole of their costs where they have unsuccessfully raised a discrete issue are more likely to consider whether the raising of that issue is a justifiable course to take. Which policy should prevail in any given case depends on what, according to the court, the justice of the case requires: see Dal Pont G E, Law of Costs (2003) [8.9].
75 The defendants correctly note that the plaintiffs only succeeded in relation to a small number of claims. The vast majority were dismissed.
76 The mere fact that a large number of claims did not succeed is not, of itself, a reason to depart from the general rule that a successful party is entitled to their costs. In Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158 (S) the Court of Appeal observed:
[T]he power to adjust an order for costs by reference to particular issues upon which the generally successful party has failed, is properly exercised only where there are discrete and severable issues upon which the generally successful party has failed, and which have added to the cost of the proceedings in a significant and readily discernible way [7].
77 A proper analysis of all of the claims pursued by the plaintiffs at trial reveals that although many claims failed, the evidence relied upon in relation to the failed claims was generally relevant and admissible in relation to all claims. Looking at the separate claims that did not succeed, including the ones referred to below, I note that:
(a) The claim for breach of contract by the first defendant, which was advanced solely against the first defendant, needed to be assessed by an objective assessment of what was said by Mrs Clack and Mrs Murray during the relevant conversation. This was essential background evidence and was relevant to the events that followed.
(b) In relation to the claim for breach of fiduciary duty against first to fifth defendants, whilst the District Court does not have jurisdiction to hear or determine such a claim standing separately, many of the issues raised under this claim were generally relevant to the circumstances surrounding the claims against the defendants in negligence where a relevant duty of care was pleaded.
(c) The Radio Promotion was relevant when considering the nature of the relationship between the plaintiffs and the defendants, how it developed and whether in fact a duty of care existed between them.
(d) What occurred during the attendance on 16 March 2009 (the attendance representations (Statement of claim par 16)) was relevant when considering the totality of the circumstances involved, including the nature of the relationship between the plaintiffs and the defendants. The pleaded representations did not stand alone. They were relevant when considering, together with the Gold Representations (statement of claim 18) and the Purple Representations (statement of claim 19), all of the circumstances leading up to the purchase of the property.
(e) Although the plaintiffs originally relied upon 12 separate representations set out in the Gold Document (exhibit 2), only seven were ultimately pursued (statement of claim 18(v) - 18(vii); 18(ix) - 18(xii), the whole Gold Document needed to be considered in context. Two representations ultimately succeeded, namely:
• First Gold Representation - Slide 4 - MyPortfolio 'represent[s] You not the seller' (statement of claim 18(v));
• Fourth Gold Representation - Slide 5 – 'We [My Portfolio] provide you an unbiased consultative service' (statement of claim 18(ix)).
(f) The plaintiffs claim based upon the Purple Representations (Statement of Claim [19]) failed completely. Nonetheless, all parties submitted at trial that the Gold and Purple Representations needed to be considered together and in context. Consequently all of the representations were relevant irrespective of whether the plaintiffs succeeded in relations to specific claims based upon individual representations contained within each document.
(g) So far as the claim based upon the Financial Projections (Statement of claim [17(b)]) is concerned, the plaintiffs ultimately conceded that there was no evidence to support this claim.
(h) In relation to the Verbal Representations (Statement of claim [20]), the plaintiffs ultimately only pursued two of the four verbal representations originally pleaded at statement of claim 20, both of which failed. They were:
• 'the Cowrie Apartments proposal referred to in the Purple Representations and the Gold Representations was the best property for the Plaintiff' (statement of claim 20(i)); and
• 'that the Cowrie Apartment proposal was perfect due to the lease guarantee over the property' (statement of claim 20(iii)).
- The evidence relating to all the verbal representations was part of the background and was generally relevant to all issues at trial.
(i) The claims in negligence that the defendants failed to provide any advice (statement of claim 46(a) and 49(xxii)) and the claim that they failed to make adequate market enquiries as to the true market value of the property (statement of claim 46(b)) were inextricably intertwined. The fact that the plaintiffs failed in relation to the latter says nothing about the relevance of the evidence generally.
78 At [337] - [338] of the primary judgment I found that:
The combination of factors that causally contributed to the plaintiffs' purchase of Cowrie Apartment 216 included their reliance upon the representations made to them by the defendants. This is to be inferred from all of the available evidence including the fact that the plaintiffs, on the evidence of Mrs Murray, were induced to do so. No one fact should be looked at in isolation. This decision to ultimately purchase Cowrie Apartment 216 was one that the plaintiffs made at the end of a series of events that included:
• the Radio Promotion;
• Mrs Murray's conversation with Mrs Clack; and
• the meeting with and presentation conducted by the fourth and fifth defendants on 16 March 2009.
Mrs Murray ultimately relied upon those representations as part of a matrix of facts presented to her by the defendants. This lead the plaintiffs to form the view that MyPortfolio, represented by the Dentons, were 'knowledgeable in property investing' and that they were acting in the plaintiffs' best interests. Consequently, they accepted the fourth and fifth defendants' recommendation with respect to the purchase of Cowrie Apartment 216.
79 So far as the plaintiffs claim against the fourth and fifth defendants for fraudulent misrepresentation failed, it is of importance that I concluded that I was 'left in some doubt in relation to the question of whether each of the defendants had no honest belief in the truth of the representations (both the First and Fourth Gold Representations) in the sense in which each of the defendants intended it to be understood' (see [356] of primary judgment). That was not a finding that there was no proper basis for the claim or that the plaintiffs were unjustified in bringing the claim. They simply failed to satisfy me to the requisite standard.
80 It is not appropriate to now separate the various issues for the purposes of determining costs. Even if, such as the question of whether the District Court had jurisdiction to hear a claim for breach of fiduciary duty, was capable of being dealt with as a discrete and severable issue, all issues and claims were clearly intertwined. The pursuit of the failed claims did not, in a 'significant and readily discernible way', add to the cost of the proceedings (see Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [7]).
81 Consequently, I see no reason to depart from the usual practice of allowing the plaintiffs in this case to have their costs paid by the second to fifth defendants. The issue of whether the plaintiffs' conduct unnecessarily added the costs in this case is further dealt with below.
Costs: Is the Magistrates Court scale the relevant scale to be applied?
82 It is not in dispute that the ultimate award of damages is well within the $75,000 jurisdictional limit of the Magistrates Court(Magistrates Court (Civil Proceedings) Act 2004 (WA), s 4). The defendants submit that if the plaintiffs had properly considered the issues to be litigated and the likely outcome, the appropriate jurisdiction to determine the matter would have been the Magistrates Court. The defendants also rely upon O 66 r 17(1) and r 17(2) of the RSC set out below:
17. Cases that Magistrates Court could have decided, costs in
(1) If an action is brought in the Supreme Court which could have been brought in the Magistrates Court without the special consent of the defendant, the plaintiff shall recover no greater sum by way of costs than he could have recovered had the action been brought in the Magistrates Court, unless the Court certifies that by reason of some important principle of law being involved, or of the complexity of the issues or of the facts, the action was properly brought in the Supreme Court.
(2) Where this rule applies a solicitor acting for a plaintiff shall not be entitled to charge his client any sum by way of costs in excess of that properly payable on a party and party basis in the Magistrates Court, unless the client has agreed in writing, before the proceedings are commenced, to pay on a higher scale, or the Court has certified that the action was properly brought in the Supreme Court.
84 Firstly, the question is not whether the ultimate amount of damages falls within the Magistrates Court jurisdiction, but rather whether it was proper at the time the proceedings were instituted to bring it in the District Court (see Civic Video Pty Ltd v Paterson (No 3) [2014] WASC 321 [35] - [38]; Vella v Ivanovski [1984] WAR 8; Michael Kellaway International Pty Ltd v Shark Bay Airport Pty Ltd (Unreported, WASC, Library No 980302, 25 March 1998) (per Kennedy J).
85 In Civic Video Pty Ltd v Paterson (No 3) Chaney J said [37]:
In Michael Kellaway International Pty Ltd v Shark Bay Airport Pty Ltd Kennedy J considered the provisions of s 74(2)(b) of the District Court of Western Australia Act1969. That section was (prior to its amendment) drawn in terms which, relevantly, reflected the terms of O 66 r 17(1). Citing Vella v Ivanovski, Kennedy J identified the central test as whether the plaintiff in the case, when instituting proceedings, might reasonably have been expected to recover an amount in excess of the maximum of the jurisdiction of the Local Court.
86 In determining whether it was reasonable for the plaintiffs to bring the action in the District Court rather than the Magistrates Court, it is necessary to examine some of the history of the case.
87 The plaintiffs' original writ of summons, dated 18 September 2012, was filed in the District Court on 21 September 2012. It sought, amongst other damages, exemplary damages against the defendants. The original statement of claim was dated 6 November 2012. It claimed that the 'true market value' of the property was $220,000. This was a claim that was maintained right up to the time that the plaintiffs filed the 'Further Re-Amended Statement of Claim' dated 11 December 2015.On the bare face of the statement of claim the amount originally sought was well over the Magistrates Court's jurisdictional limit. The plaintiffs in this case pursued claims for damages well in excess of the jurisdiction of the Magistrates Court. They could not have instituted their claim for that amount in the Magistrates Court.
88 Furthermore, by letter dated 19 February 2015, the plaintiffs advised the defendants that they were seeking damages totalling $461,200, together with interest, equitable compensation, exemplary damages and legal costs (see 'CRC 6' annexed to the Cook Affidavit).
89 As late as 1 September 2015, the solicitors for the plaintiffs offered to settle the matter on the basis that the plaintiffs pay them the sum of $145,000 plus costs. This was put on the basis that a reassessment of damages had been undertaken. The reassessment included a new estimate, said to be between $85,000 - $100,000, based upon the difference between the purchase price and value of the property. This was the value said to have been assessed by Herron Todd White Valuers (see 'MAM 35' annexed to the McAuliffe Affidavit).
90 I note that at the time that proceedings were instituted and for some considerable time thereafter, the defendants maintained a position of bare denials with respect to the claims made against them. Whilst the plaintiffs clearly bore the onus of proving their allegations, I am satisfied on the basis of all the material filed, including: the McAuliffe Affidavit; the Pole Affidavit and the Cook Affidavit - that for a significant period of time the defendants' conduct did nothing to cast doubt on the plaintiffs claim that the value of the property purchased by the defendants was $220,000. In fact, at least one registrar of this court criticised the defendants' failure to provide substantive details of their defence.
91 The plaintiffs themselves also contributed to the delay in the finalisation of this case. I note that both the Pole Affidavit and the Cook Affidavit set out both the defendants' requests for further and better particulars of the plaintiffs' statement of claim, as well as the defendant's correspondence to the plaintiffs setting out why they believed that the plaintiffs' statement of claim was defective.
92 It is also clear that for a considerable period of time the plaintiffs laboured under an erroneous understanding of the importance of the properties purchased by RJR Investments for $220,000 each. This caused the plaintiffs to initially pursue a case based on a belief that the defendants were creating a false market by engaging in a profit-making scheme involving RJR Investments buying and on-selling properties at Cowrie for inflated values.
93 The defendants were required to file an amended defence by 21 February 2014. They failed to do so. The plaintiffs filed an application for a springing order due to the defendants' failure to file amended defences. The defendants were ultimately allowed to file further amended defences in July 2014.
94 By letter dated 24 November 2014, solicitors for the plaintiffs set out their understanding of the relevant facts (see 'MAM 6' annexed to the McAuliffe Affidavit). It was not until after the defendants filed an amended defence that the plaintiffs understood the relationships between the parties. Whilst the plaintiffs cannot blame the defendants for their misunderstanding of the facts relevant to the case, nonetheless the defendants did nothing to assist in the process.
95 Although all the defendants filed an amended defence in July 2014, it was not until September 2015, when the defendants filed minutes of proposed further amended defences, that any substantive defence was in fact provided by any of the defendants.
96 Given the claims they wished to pursue, although the damages ultimately awarded to the plaintiffs is below the amount of the civil jurisdiction of the Magistrates Court, in all the circumstances it was not unreasonable for the plaintiffs to have commenced and pursued their action in the District Court rather than the Magistrates Court. Order 66 r 17(1) does not apply in the present circumstances.
Costs: Should there be a 'special costs' order made?
97 The plaintiffs make application pursuant to s 280(2) of the Legal Profession Act 2008 (WA) (the LPA) to remove the limits on costs fixed in the relevant determination (although the McAuliffe Affidavit is sworn in support of an application for 'indemnity costs and in the alternative special costs' - see par 2 of McAuliffe Affidavit).
98 In Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S), Martin CJ dealt with the issues to be addressed by a court where an application is made by a successful party to remove the limit on the costs which they would otherwise be able to recover from the losing party or parties. In dealing with the application (brought pursuant to s 215(2) of the Legal Practice Act 2003 (WA) (LPA) which then applied and is in identical terms to s 280(2) of the LPA), Martin CJ said [11]:
Before the court can make an order under the subsection, the court must form an opinion which has two components. The first is that 'the amount of costs allowable in respect of a matter under a legal costs determination is inadequate', and the second is that the inadequacy arises because of the 'unusual difficulty, complexity or importance of the matter'.
99 The plaintiffs rely upon the issues raised in the McAuliffe Affidavit to justify a claim that the case was one that was particularly complicated and document intensive. The plaintiffs' solicitors concede that until October 2015 they erroneously focused on issues that ultimately either came to naught, or played a limited role in the case that ultimately proceeded to trial. Whilst the confusion appears to be understandable, it would not now be appropriate to make an order requiring the defendants to pay additional costs which seem to be largely due to the plaintiffs' lawyers' errors. Furthermore, although the case was, to a degree, a complicated one, it was not so complicated or document intensive that it would justify the making of a special costs order.
The Calderbank Offer
100 On or about 19 February 2015, the plaintiffs provided to the defendants a document setting out their particulars of loss. This particularised a claim for damages, excluding equitable compensation and exemplary damages and legal costs, totaling $461,200. This did not include legal costs.
101 According to the Cook Affidavit, the parties participated in a mediation at the court on 24 February 2015 during which the plaintiffs offered to settle if the defendants paid them $750,000 in full and final settlement of the matter (see par 40 of the Cook Affidavit).
102 It is clear from the McAuliffe, Cook and Pole Affidavits that there were negotiations and further offers made 'without prejudice save as to costs' by the parties prior to trial. Some of the offers included:
• by letter dated 21 August 2015, the first to third defendants offered to pay the plaintiffs the sum of $60,000 'in full and final settlement of the proceedings' against them. The offer was made on the basis that it was 'without prejudice save as to costs'. It was also purported to be made in 'in accordance with the principles in Calderbank v Calderbank' (see Annexure KSP-44 to the Pole Affidavit being the letter dated 21 August 2015 addressed to the plaintiffs' solicitors);
• the plaintiffs responded by letter dated 1 September 2015 whereby they countered by offering to settle the matter by the defendants paying them the sum of '$145,000 plus costs to be taxed;'
• the fourth and fifth defendants, by letter dated 6 October 2015 made an offer to settle on the basis that they would pay the plaintiffs the sum of $60,000 in full and final settlement of the matter. The letter was made 'pursuant to the principles set out in Calderbank v Calderbank [1975] 3 All ER 333' and remained open for 3 days only;
• by email dated 8 December 2015, the plaintiffs offered to accept the amount of $200,000 in full and final settlement of the matter.
103 The Cook Affidavit also makes it clear that, as at 31 October 2014, the fourth and fifth defendants were prepared to contribute the sum of $30,000 towards a global offer from the defendants to settle the matter (see pars 48 and 49 of the Cook Affidavit and annexures 'CRC 15' and 'CRC 16'). This was ultimately reflected in the offer the fourth and fifth defendants made by letter dated 6 October 2015 (above).
The Law relating to Calderbank offers
104 The making of an offer of compromise in the form of a Calderbank letter (see Calderbank v Calderbank [1976] Fam 93), in circumstances where the offeree does not accept the offer and ultimately ends up worse off than if the offer had been accepted, is a matter to which the court may have regard when deciding whether to otherwise make the usual order for costs in favour of a successful party. All the circumstances must be considered. The question ultimately is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs. The fact that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure. The question is whether a party's rejection of a Calderbank offer was unreasonable in all the circumstances: see SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 [37]; Jones v Bradley (No 2) [2003] NSWCA 258 [7] - [9]; Leichhardt Municipal Council v Green [2004] NSWCA 341 [46]; Hazeldene's Chicken FarmPty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435; Berrigan Shire Council v Ballerini (No 2)
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