Orwin v Rickards (Ruling No 3)
[2019] VSC 388
•12 June 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROFESSIONAL LIABILITY LIST
S CI 2017 02935
| MIRIAM MARLIN ORWIN | Plaintiff |
| v | |
| MICHAEL AIDAN RICKARDS SUSAN ILIAS PAUL CONNOR | First Defendant Second Defendant Third Defendant |
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JUDGE: | OSBORN JA |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 30 April 2019, 1–3, 6, 9–10 May 2019, 7, 11 June 2019 |
DATE OF RULING: | 12 June 2019 |
CASE MAY BE CITED AS: | Orwin v Rickards (Ruling No 3) |
MEDIUM NEUTRAL CITATION: | [2019] VSC 388 |
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COSTS – Application for indemnity costs – Calderbank letter – Whether plaintiff acted unreasonably in refusing without prejudice offer.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J D S Barber | Vasilaras + Co Lawyers |
| For the First Defendant | Mr P Cawthorn QC | Lander and Rogers |
HIS HONOUR:
Following the delivery of my substantive judgment in this matter,[1] the first defendant has made application for costs on an indemnity basis.
[1]Orwin v Rickards [2019] VSC 375.
The application is put two ways:
(a) the claim was brought in wilful disregard of known facts;[2]
(b) by letter dated 21 November 2017 the first defendant made a Calderbank offer which was refused.
[2]SunlandWaterfront (BVI) Ltd v Prudentia Investments Pty Ltd [2013] VSCA 237.
I reject the first basis of the application. Insofar as the plaintiff failed on the limitation of actions issue, the question was one of some real legal difficulty.
Insofar as the plaintiff failed to persuade the Court positively of the continuing nature of the de facto relationship at the date of the financial agreement, this issue turned on contested evidence of a detailed kind and my decision does not justify the conclusion that the plaintiff proceeded in wilful disregard of known facts necessarily fatal to her claim.
Insofar as the Calderbank letter is concerned, the first defendant offered to walk away from the proceeding on the basis each party bear his or her own costs. With hindsight this was a reasonable offer.
The more difficult question is whether it was unreasonable of the plaintiff to refuse the offer when she did. As Weinberg JA observed in Alpine Hardwoods v Hardys:[3]
The offeror needs to show that the conduct of offeree was unreasonable. Moreover, the reasonableness of that conduct must be viewed in light of the circumstances which existed at the time the offer was rejected. The fact that the applicants ultimately failed to make good their case does not mean that they acted unreasonably in rejecting the initial offer. Nor does the fact that that initial offer was itself reasonable mean that it was unreasonable to reject it.
[3](2002) 190 ALR 121, 127 [28].
As the Court of Appeal made clear in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2)[4] and Berrigan Shire Council v Ballerini (No 2)[5] there is no presumption that the party rejecting a Calderbank offer should pay the offeror’s costs on a special basis if the offeree receives a less favourable result.
The critical question is whether the rejection of the offer was unreasonable in the circumstances. We see no justification for a more stringent test such as ‘manifestly’ or ‘plainly’ unreasonable.[6]
[4](2005) 13 VR 435.
[5][2006] VSCA 65.
[6]Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435, 441 [23].
The plaintiff raises a preliminary question, namely whether the offer was capable of acceptance in that it was in part expressed as follows:
The offer is subject to execution of terms of release to our clients’ mutual satisfaction.
I am not persuaded that this element of the offer, made in the context of a proceeding of this type, rendered refusal reasonable. There is no reason to suppose mutual releases could not readily have been resolved. Further, the point was not taken at the time.
In Hazeldene the Court of Appeal identified a series of matters that may bear of the question whether the rejection of a Calderbank offer was unreasonable. I shall deal with each of them in turn before returning to the terms in which the offer was made in this case.
(a) The stage of the proceeding at which the offer was received
The offer was received five months after the proceeding had been instituted. Some documentation going to the underlying facts had been exchanged between the parties but full discovery had not been provided. Insofar as the plaintiff’s position was concerned, it might be said that she must have been aware of the case presented by her to the Federal Circuit Court but may not have been aware of the full contents of the first defendant’s file. She was thus aware of matters which presented significant risks to her claim but not to the full extent those matter were established in the evidence at trial.
(b) The time allowed to the offeree to consider the offer
The time allowed to consider the offer was 14 days. This was relatively short considering the range of matters raised in the letter of offer. But no request was made for an extension of time and it appears that it was not strictness of time which caused the plaintiff to fail to accept the offer.
(c) The extent of the compromise offered
The plaintiff’s claim raised difficult issues of fact and law. It should have been apparent at the date of the offer that settlement at that point in time would avoid substantial risks as to future costs. In my view, having regard to the way the parties had joined issue on the pleadings, there was a real element of compromise in the offer.
(d) The offeree’s prospects of success assessed at the date of the offer
The plaintiff’s prospects of success were attended by significant risks that she would fail by virtue of the limitations defence and/or the underlying necessity to make out her version of events surrounding the making of the financial agreement. The latter category of risk was aggravated by the fact that she had presented a case to the Federal Circuit Court which differed materially from that proposed to be put to this Court and the first defendant joined issue with wide-ranging aspects of the case.
Further, the plaintiff’s case was on proper analysis in large part a loss of opportunity case attended by a further series of sequential risks.
(e) The clarity with which the terms of the offer were expressed
The terms of the offer were clear.
(f) Whether the offer foreshadowed an application for indemnity costs
The offer did so foreshadow.
The plaintiff submits that whilst regard may be had to the above factors the reasonableness of the refusal of the offer must in significant part turn on the terms in which it was made.
Whilst it is true, as the first defendant submits, that a Calderbank offer need not necessarily spell out reasons why the offer should be accepted, in the present case it did so in some substantial detail.
First, the letter relied on Ms Einsiedel’s advice as exculpating the first defendant. I have ultimately held that such advice did not exculpate Mr Rickards.
Secondly, the letter postulated that a binding pt VIIIAB financial agreement required the sanction of the court. It is now accepted by both parties that it did not.
Thirdly, the letter pointed to an absence of independent advice from Mr Connor. I have held that there was no satisfactory evidentiary basis for this proposition.
Fourthly, the letter postulated that the financial agreement would have been set aside under s 90UM(1) of the Family Law Act 1975. I have held that there were risks this would occur but no more than risks.
Fifthly, the letter asserted that there were reasonable prospects of establishing that the claim was statute barred. The terms in which this was put forward did not present the point as necessarily determinative.
Sixthly, it was put that insofar as the plaintiff had a claim, it was one for lost opportunity and of doubtful value. This correctly characterised the plaintiff’s substantive claim but did not compel the view that the claim was hopeless.
Seventhly, it was put that the claim for the costs of the Family Law Act 1975 proceeding was flawed because a pt VIIIAB agreement would not have prevented Mr Sarah instituting proceedings. This proposition was sound insofar as it went.
Taken together, these matters did not demonstrate the plaintiff’s claim must fail or had no reasonable prospects.
Nor did the letter raise the threshold factual issue upon which I have held the plaintiff ultimately failed. This was the question whether the de facto relationship was continuing in 2010. This last mentioned aspect of the matter is unsurprising because at that date the first defendant had not obtained full discovery of relevant material from the Federal Circuit Court, but nonetheless the letter does not foreshadow the substantial case put on behalf of the first defendant at trial.
In all the circumstances, I am not persuaded it was unreasonable to refuse the offer made in November 2017. The plaintiff was presented with an offer under cover of a barrage of points. These points did not justify the conclusion that the proceeding was so problematic that it would be unreasonable to proceed.
In the time given to the plaintiff to respond, she cannot reasonably be expected to have done more than consider and respond to the issues raised with her.
The reality is that the true difficulties in the case did not emerge until subsequently.
In the circumstances, I am not satisfied that the refusal of the offer contained in the letter of November 2017 justifies an award of indemnity costs.
The first defendant should have its costs on the ordinary basis.
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