Osman v Lockyer (No 2) - [2016] SADC 82

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
OSMAN v LOCKYER AND ANOR (No 2)
[2016] SADC 82
Judgment of His Honour Judge Slattery
20 July 2016
PROCEDURE - COSTS
Action between the plaintiff and the defendants concerning a contract for sale of land owned by the plaintiff at Glen Osmond. The trial commenced on 11 June 2015. The Court rejected the claim of the plaintiff and found in favour of the defendants.
Defendants seek an elevated order for costs based upon two informal letters of offer dated 19 December 2013 and 30 March 2015.
Whether the plaintiff imprudently refused one or other of those offers; whether on the facts of the matter the Court should exercise its costs discretion in favour of the defendants to make an order for solicitor/client costs or indemnity costs.
Held:
1. The time allowed to the plaintiff to respond to the letter of 19 December 2013 was unreasonably short and it would not be taken into consideration in the course of costs from that date. It may be considered in the background of the offer of 30 March 2015.
2. In the whole of the circumstances of the case the plaintiff’s refusal to accept the offer of 30 March 2015 was not imprudent and in the exercise of the Court’s discretion there was no sufficient basis to make an order for elevated costs to be payable by the plaintiff.
3. The plaintiff is required to pay the costs of action of the defendant on a party/party basis.
District Court (Civil) Rules R187(1), R187(2)(a), R187(3)(a), R187(6)(c), R187(7), R188; District Court Act s 42, referred to.
Davies v Nyland & Anor (1974) 10 SASR 76; Re Fountain Selected Meats [1998] 81 ALR 397, discussed.
Morris v McEwen (2005) 92 SASR 281; BHP Billiton Limited v Parker (2012) 113 SASR 206; Enartis Pacific Pty Ltd v Tscharke Pty Ltd [2015] SASC 42; Wiedemann v Walpole [1891] 2 QB 534; Argy v Blunts and Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112; Pirrotta v City Bank Limited (1998) 72 SASR 259; SMEC Testing Services Pty v Campbelltown Council [2000] NSWCA 323; Nolan v Lady Mary Nolan & Ors [2003] VSC 136; Ng v Chon [2005] NSWSC 385; Danidale Pty Ltd t/a Bernie Cornfoot and Sons Earthmoving v Abigroup Contractors Pty Ltd [2007] VSC 552; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248, considered.

OSMAN v LOCKYER AND ANOR (No 2)
[2016] SADC 82
JUDGE SLATTERY

Defendants’ application for costs on a solicitor/client basis or alternatively on an indemnity basis.
By judgment dated 9 June 2016, I decided that the plaintiff’s claim should be dismissed. I said I would hear the parties as to costs and other ancillary orders.
The defendants make an application for an elevated order for costs; for indemnity costs or alternatively for solicitor and client costs based upon letters of offer of 19 December 2013 or 30 March 2015 respectively. Time limits for acceptance of the offers were set out in those letters. For reasons that I discuss below the time allowed in one letter was too short. The question of the time that should be allowed for consideration of an informal offer of settlement is sufficiently well settled. A reasonable time must be allowed and in the “crucible” of pre-trial activity, an offeror may not (usually) reasonably demand an immediate response from an offeree. I accept that what is reasonable may vary from case to case but between 14 and 28 days is a useful “rule of thumb”.
In order to properly explain my decision, it is necessary to restate some of the background facts of the matter. The plaintiff was a vendor of land at Glen Osmond. The defendants were potential purchasers of that land. At a site visit on 23 October 2013, the plaintiff’s agent disclosed to the defendants copies of architect’s concept plans for development of the land. These plans were misleading because they purported to show the prospect of a purchaser building upon part of an area of the land covered by an easement in favour of SA Water registered on the land. That type of work was prohibited by the terms of the easement except with the permission of SA Water. I found that the architect’s concept plans falsely conveyed the impression that the easements (there were two registered easements on the land) affected only a narrow strip on the land of about 3 metres in width and that the defendants were misled by the content of those plans as well as what was said to them by the plaintiff’s agent. I found that the plaintiff’s agent at that time drew the defendants’ specific attention to the way that the architect had dealt with the easements by proposing the construction of decking (of about 3 metres in width) across the easements. I also found that the conversations between the defendants and the plaintiff’s agent occurred in the presence of the plaintiff.
An issue in the proceedings was whether the misleading effect of the concept plan was continuing in circumstances where within 48 hours, the defendants received Forms 1 and copies of the Certificate of Title both of which described and disclosed the easements upon the property. Any ordinary reading of these documents would have disclosed the content and extent of those easements and if read properly would reveal the inaccuracy of what was said by the agent.
Based upon the evidence led at trial, I found that the defendants relied upon what they saw in the concept plans and what they were told on 23 October 2013 when they executed the contract for the purchase of the land. I found that the impression falsely conveyed to them had a continuing effect upon them. I held that the defendants were, in equity, entitled to rescind the contract of purchase.
The defendants submit that the particular circumstances of this case warrant a departure from the usual order for costs and in favour of an order for indemnity costs or alternatively solicitor and client costs. They submit that in exercising the discretion on costs, I am able to take into account offers of settlement made by them specifically on 19 December 2013 and 30 March 2014. This was so even though the formal content of the offers did not strictly comply with what otherwise might by described as a “Calderbank offer”.[1] The defendants contend that the offers should be treated as being informal offers of settlement that may be taken into account on the issue of costs and that the plaintiff should be found to have imprudently refused to accept those offers.[2]
[1] Morris v McEwen (2005) 92 SASR 281 at [34], [62] and [73]; BHP Billiton Limited v Parker [2012] SASCFC 73 at [261].
[2] Enartis Pacific Pty Ltd v Tscharke Pty Ltd [2015] SASC 42.
There is no contest between the parties that if a Court is in a position to find that the plaintiff imprudently refused settlement offers, then the Court may be in a position where it may exercise its discretion to award costs other than on a party/party basis. The question is whether or not, on the facts of the matter, the plaintiff imprudently refused any offers of settlement.
On 4 December 2013, the defendants’ solicitors sent to the plaintiff’s solicitor a letter requesting a delay in the settlement on the contract executed by the defendants for the purchase of the land. The request was based upon the need for the defendants’ solicitors to consider questions of misrepresentation about easements. Almost inexplicably there was no response and this lack of response of the plaintiff is consistent in this matter; I will discuss that issue later in these reasons. By letter of 8 December 2013, the defendants’ solicitors wrote a letter to the plaintiff rescinding the contract on the basis of a material misrepresentation. There was no response by the plaintiff or her advisors/solicitors to this letter. Implicitly at least the plaintiff expected the defendants to settle upon the contract concerning the purchase of the land. The defendants had quite explicitly informed the plaintiff that they would not settle upon the contract which they now treated as no longer binding on them.
There was an obvious dispute between the parties to the contract for the sale of the land that if not resolved informally would surely lead to litigation; that is in no sense a revelation. A party in the plaintiff’s position inferentially at least will maintain the enforceability of the contract: that is not an unreasonable position to take where the plaintiff is convinced of the rightness of her position. The question of whether that is so rests with the Court.
The defendants’ position
By letter dated 19 December 2013 the defendants’ solicitors wrote to the plaintiff’s solicitors putting forward an offer of settlement to resolve the dispute between the parties on a commercial basis. The terms of the offer in the letter were as follows:-
1.   Ms Osman will acknowledge and consent to the Lockyers’ rescission of the contract for the sale and purchase of (the land).
2.   Ms Osman will consent to and arrange for the immediate repayment to the Lockyers of $31,000 of the deposit paid under the contract; the full amount of the deposit was $36,000).
3.   The Lockyers will consent to Ms Osman retaining the balance of the deposit paid under the contract (that is $5,000) in respect of costs and minor expenses incurred).
4.   The Lockyers and Ms Osman release and discharge each other from any and all claims in connection with the contract and the deposit paid under the contract.
The defendants then said that the offer was made without any admission (of liability) and made on a purely commercial basis. The offer was said to remain open for acceptance in writing until 10.00am on 24 December 2013. The letter was written on a without prejudice basis save as to costs. It was not said to be a Calderbank letter but was in a form characteristic of such an offer in some respects.
For reasons which are unexplained, the plaintiff did not respond personally or through her solicitors to that letter. I will assume because I think the inference is plainly open, that the plaintiff’s solicitors received the letter and forwarded it to their client for instructions. It appears from the events that have surrounded this matter, that those solicitors may not have followed up with the plaintiff to obtain her instructions on that letter. It is not necessary that I decide that issue. Even so, I am unable to understand why that became the position and can think of no reason why an ordinarily competent solicitor would not at least have responded to rebut the assertion of the defendants and put the plaintiff’s position. I think it would have been helpful to have done so but the Court is left with an inference that by her silence the plaintiff rejected the contentions of the defendants.
It is not in contest between the parties that this offer of 19 December was made after the letter of 8 December 2013 was sent to the plaintiff directly by the defendants’ solicitors rescinding the contract. That same letter also sought immediate repayment of the deposit within 7 days.
The defendants contend that they have now obtained a more favourable result in these proceedings than was set out in the 19 December offer. They point to the orders made by the Court that the full amount of the deposit plus interest should be delivered to them and they also point to the fact that the offer was made before proceedings were commenced and therefore a Rules Offer was not possible. They contend that the failure to accept the offer was imprudent.
In relation to that letter, the plaintiff submits that at the time it was made, the letter did not constitute a Calderbank letter because its form did not meet the minimum requirements of such a letter. Also, the plaintiff contends that this offer must be considered in the background that at the time there was an issue whether the plaintiff knew whether she would sustain a loss and how much that loss would be. The facts before me disclose that the plaintiff put the property back on the market and did not inform the defendants of that fact; it is not suggested that it was necessary for the plaintiff to tell the defendants of that fact before putting the property back on the market. Inferentially, this action of the plaintiff confirms her rejection of the defendants’ contentions and their version of the events.
The plaintiff also contends that not all issues were on the table nor had the plaintiff had a fair opportunity to assess the strength and weaknesses of the positions. However, one matter in that background is the fact that no response was made to that letter by the plaintiff to the defendants. I am at a loss to understand why those solicitors would not have actively informed the defendants’ solicitors of at least the plaintiff’s version of what she said happened on site on 23 October 2013.
For reasons which follow I am not able to give any weight to the fact that the form of the letter of 19 December 2013 does not arguably meet the criteria of an informal settlement offer. The content of the letter usually must be weighed against and compared to the structure of the Rules of Court. This is because the Rules of Court provide for a formal offer to be made and the consequences of its acceptance or rejection. But the Rules have no part to play here because the proceedings had not yet commenced and so any offer between the parties was always to be informal in nature. The only offer made in relation to costs under this offer was for the plaintiff to retain $5,000 of the deposit in amount of costs and minor expenses incurred.
I consider that another weakness of this letter is the brevity of time allowed to the plaintiff to consider and respond to the letter of offer. Only a few business days were allowed at a time that is perhaps the busiest in the work year. I consider that in all of these circumstances the time allowed for consideration of the plaintiff was unreasonably short. And even so, the plaintiff’s solicitors did not respond. They appear to have overlooked the imperative arising from the judgment of Zelling J in Davies v Nyland & Anor.[3] as follows:-
One of the problems one has in dealing with procedural defaults of this kinds is also one which was in my mind when I was considering the non-answering of the letters, the non-traversing of a clause in an affidavit, and the purported application by the learned Judge of the rule in Wiedemann v Walpole.[4] I think that at present and for some years to come we have to bear in mind two things:- first, that half the profession or thereabouts, so I am told, is of not more than five years’ call and certainly under ten years’ call, and secondly, that whereas our generation in the profession were painstakingly taught by our respective master solicitors to dot every “I” and cross every “t”, to answer every letter and to allow no allegation in an affidavit, a letter, or any other document to go untraversed or un-answered, we now have a profession which is taught by lecturers who in the main have no professional experience and under a system of articles which again because of the demands of the University is so short as to be nearly worthless for this purpose. I do not wish to enter into argument on either of these two points. I simply state the difficulty which has arisen, because I am anxious that litigants should not be prejudiced in the conduct of their litigation by the fact that members of this profession no longer receive the training which they once received, both from members of the profession lecturing them at the University and from conscientious master solicitors.
[3] (1974) 10 SASR 76 at 109.
[4] [1891] 2 QB 534.
In the end, although I have made specific findings about the effect of the letter and I have rejected the defendants’ contentions, that letter of 19 December 2013 sits in the background of the other issues for my decision here.
The defendants also point to a second letter of offer. On 30 March 2015, the defendants’ solicitors sent a letter to the plaintiff’s solicitors setting out an offer to resolve the matter. By now the parties were deep into this litigation. The plaintiff had sued the defendants and also the agent. This meant that the plaintiff would not have had an opportunity to speak to the agent and ascertain if her version was similar to the plaintiff, whether her version of events was credible and whether she would make a reliable witness.
The terms of that offer relevantly read as follows:-
Mr and Mrs Lockyer are not prepared to pay any amount of money to Ms Osman in relation to her claim. Further, Mr and Mrs Lockyer have incurred significant legal costs in defending Ms Osman’s claim which is bound to fail.
Having said that, Mr and Mrs Lockyer are prepared to make some concession in the interests of avoiding the further costs and time that would be involved if this matter proceeds. On that basis, we are instructed to put forward an offer to resolve the claim by Ms Osman against Mr and Mrs Lockyer, and any other dispute between them, on the following terms:
1.   Ms Osman will consent and direct that the whole of the deposit without setoff or deduction be released to Mr and Mrs Lockyer within 7 days of agreement.
2.   Ms Osman will pay Mr and Mrs Lockyers’ costs of action. If this offer is accepted by 20 April 2015 costs will be fixed at $10,000 which is a substantial discount on party and party costs. If this offer is accepted after that date, costs will be on a party/party basis to be assessed if not agreed.
3.   The claim against Mr and Mrs Lockyer will be dismissed.
4.   The offer set out in paragraphs 1-3 is capable of acceptance only by a notice in writing to this firm. The offer will remain open until it is withdrawn or until 14 days before the start of trial, whichever is sooner.
It was then said in the letter that if the plaintiff did not accept the offer, the defendants would rely on the letter on the issue of costs. It was marked without prejudice save as to costs. It was not indicated to be a Calderbank offer but similar to the earlier letter, it contained some familiar hallmarks of what is described as a Calderbank letter. The evidence before me on this application does not disclose any particular reason why the defendants did not use a Rules based offer at that time. That offer was made 74 days before the scheduled trial date on 11 June 2015. The defendants contend that the offer was clear in its terms and was capable of acceptance and that no response was received to that offer; there was no contest that the solicitors for the plaintiff did not respond to that offer and no reason was proffered about the failure to respond. The defendants also contend that they have received a result at trial which is more favourable than that set out in the offer because they are now entitled not only for the return of the entire amount of the deposit they are also entitled to at least a portion of their costs which will exceed the amount of $10,000.
In an affidavit of 24 June 2016 (FDN 37) Adam Rosser, solicitor, at paragraph 12 informs the Court that between the commencement of the action on 27 June 2014 and up to the date of the letter on 30 March 2015, the defendants had been invoiced costs of $26,030.27 including GST for both fees and disbursements. It is to be expected that in the period between March and June 2016 and in particular in the 60 days between 30 March 2015 and 14 days before the date of trial, significant costs would have been incurred by the defendants in getting the matter up for trial.
The letter of 30 March 2015, is exhibit 2 to the affidavit of Mr Rosser which was read in evidence. There was no application to cross examine Mr Rosser on the affidavit. There are some pertinent parts of the letter which create some difficulties with the defendants’ claim for costs. Apparently the same issues had been raised in an earlier letter between solicitors of 2 June 2014 but that letter is not before the Court. The other pertinent paragraphs of the letter of 30 March 2015 read as follows:-
…it is clear from the matters set out in that letter (2 June 2014) that the defendants were misled in relation to the easements on the property… no plausible alternative explanation has been put forward.
The documents that were provided to the defendants by the agent were a clear misrepresentation of the nature of the easements. The rescission of the contract was entirely lawful.

The letter then goes on to assert acquiescence in the rescission, a matter with which I dealt in the judgment; I dismissed the defendants’ arguments on that issue.
The reason for reciting part of the content of the letter of 30 March 2015 is to place in clear context the fact that the defendants’ solicitors were reemphasising to the plaintiff’s solicitors that the documents given to them and what was said to them on the meeting on 23 October 2013 was the basis of the alleged misrepresentation about the easements and was therefore the basis of their rescission of the contract.
This brings into sharp relief the vital question in this matter. That is, whether the denial by the plaintiff of those factual assertions put forward by the defendants which, in part, revolved around the involvement of Ms Alexandrou the agent meant that the rejection of the defendants’ contentions and therefore the refusal of the offers was imprudent. These are questions of fact. Ms Clark for the plaintiff submitted that with the possible exception of the Argy case,[5] there was very little law that made it possible for counsel or anybody else to accurately predict what the outcome of the case would be. Ms Clark relied upon the fact that the real estate agent had been joined as a defendant in the proceedings. It was not possible to have access to Ms Alexandrou because of that fact and so for the reasons discussed above in relation to the letter of 19 December 2013, no assessment could be made by the plaintiff of the version that might be put forward by Ms Alexandrou or her credibility or reliability.
[5] Argy v Blunts and Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112.
I am satisfied that Ms Alexandrou was a pivotal witness in this case but she was not available to the plaintiff to question or proof for the giving of evidence until after the settlement of the dispute between the plaintiff and Toop which did not take place until about 4 June 2015. This raises another important issue here: the joinder of Toop as a defendant at least inferentially means that the plaintiff rejected the version put by the defendants and that if on 23 October 2013 the agent spoke and acted as alleged by the defendants, then from the plaintiff’s viewpoint, she did so without any actual or implied authority. This is the position that the plaintiff had consistently taken in the litigation. It is however to be recalled that the plaintiff arranged for the retainer of the architect and authorised Toop to instruct that architect to produce the concept plans. He did so based in part upon a garden plan given to him by the agent. The plaintiff had earlier supplied the garden plan to the agent.
There was no settlement between the plaintiff and the agent as a result of the letter of 30 March 2015 and, recognising that Ms Alexandrou was a central player in the proceedings the question of prudence or imprudence rests largely with two witnesses, the plaintiff and Ms Alexandrou. As matters have turned out, the evidence of Ms Alexandrou was crucial. Ms Clark readily conceded that having proofed Ms Alexandrou and the decision having been made to call her, she did not come up to proof. Neither Ms Clark nor the plaintiff could predict the “flipping and flopping” that was Ms Alexandrou’s evidence.[6] I accept that submission.
[6] T20.36.
Ms Clark also submitted that consequently it would be unfair to visit upon the plaintiff the uncertainties of litigation when persons such as Ms Alexandrou do not come up to proof. Litigants do not know how witnesses would perform and the uncertainty of evidence is part of the system in which we all work.
Ms Clark also criticised the wording of the letter of 30 March 2015. Paragraph numbered 4 of that letter says that the offer would remain open until it is withdrawn or until 14 days before the start of trial, whichever is the sooner. On any ordinary reading, that means that the offer could be withdrawn at any time. The latest that it would be open (before it is withdrawn) was 14 days before the start of trial. Therefore, it was not said to be open for a period of, say, 30 days. It could be withdrawn at any time. In my view that is an unsatisfactory situation because it leaves the plaintiff in a position where she cannot know when the offer may be withdrawn, how long she has to consider the offer and what time she has to weigh up all the usual competing considerations as occurs during mature reflection upon the issues.
Ms Clark also identified that the letter of 30 March in a number of material respects fails to comply with what would ordinarily be expected of a Calderbank letter. It fails to make reference to the offer being in accordance with the Calderbank principles. It does not state the cost advantages i.e. any application for indemnity or solicitor/client costs as from the date of the acceptance that the offeror may make and therefore fails to comply with relevant authority. The plaintiff concedes that a failure to meet one or more of these requirements does not necessarily render the offer ineffective but it will impact upon whether it was imprudent for the offeree to reject the offer. As a third matter, Ms Clark submitted that the compromise set out in the letter is a very small compromise. She said it was a compromise that was so insufficient for it to be unreasonable for the plaintiff to reject and was insufficient for it to be a trigger for indemnity cost orders in the matter.
The defendants’ response to that submission was that the offer was not withdrawn and remained open up until 14 days before the commencement of trial which was some 74 days from the date upon which the offer was made. It therefore remained open for 60 days and was open from after the time that the settlement had been reached with Toop, the agents and after sufficient time had been available to proof Alexandrou. I am unable to completely accept that submission. The offer to limit costs of the defendants lasted only to 20 April 2015, some 20 days hence from the letter. Thereafter the defendants would seek their costs on the usual party/party basis. That would (in the absence of imprudence or similar ground) be the usual order for costs for successful defendants and it does not fall into the category of a compromise offer. This was the reason why Ms Clark challenged the level of compromise allegedly made by the defendants and thus whether the offer actually informs the question of imprudence at all. Ms Clark submitted that it is necessary for the Court to weigh in the balance the mix of interests between the plaintiff and the defendants about to what degree the defendants were prepared to compromise. This was to be assessed and weighed in the background of how difficult were the issues and how obvious was the outcome in the case in the event the offer was not a Rules Offer.
In any event, for the reasons set out above this may not be as crucial as may first appear. If Ms Alexandrou provided a proof that independently corroborated the version put by the plaintiff, then it was open to the plaintiff to maintain the correctness of her position and attack the credibility of the defendants’ position. These are just some considerations in the mix of many others in the lead up to a trial. Decisions are made based upon the best information that is available. Considered advice of competent counsel works within the same milieu.
Finally Ms Clark submitted that it is inappropriate for a Court to make an order for indemnity costs in circumstances where a party can merely make offers which do not meet the spirit and intention of the Rules about compromise but that such an offer would then trigger an indemnity costs order. By this submission I understood Ms Clark to be saying that in making an offer on costs (as in the 30 March offer of limiting costs of $10,000), the defendants were doing no more than agreeing to settle for their costs if there had been a taxation and they had won the case. Ms Clark submitted that this falls well short of what is contemplated in the Rules and what they require. As a matter of public policy, it was suggested by Ms Clark that this would have a deleterious effect on the willingness of parties to bring issues to the Court for determination. In those circumstances it would be inappropriate for the Court to exercise its discretion in favour of the defendants.
In response Mr Floreani relied upon Rule 187 which he said states that a formal offer (a formal Rules offer) may be expressed to lapse after the expiration of the stipulated time. It will be taken to remain open until it lapses or is withdrawn. I am unable to accept that submission as it relies upon the Rules of Court applicable to offers on and after 1 December 2015. The weakness of that submission also is that the offer contained within the 30 March 2015 letter is not expressed to lapse after a particular time except the date 14 days before trial. The balance of paragraph 4 indicates that the offer will lapse at any time it is withdrawn; it could have been withdrawn at any time after it was made. For example, it could have been withdrawn at any time before 20 April 2015 and if that be the case, Ms Clark’s submission on the question of compromise becomes all the stronger. I consider that to be a weakness of the defendants’ position because even though the Rules recognise that an offer may be withdrawn under the then applicable R187(7) an offer must be made before the relevant date which is 21 days before trial (R187(1) and 187(2)(a)). In that context the notion of withdrawal of offer under R187(7) is a matter for the offeror, is implicit in the requirements of the operation of the Rules and is not part of the offer. And here the offer was not withdrawn and lapsed 14 days before trial.
In the background of all of those facts, it is necessary to give consideration to the application of principle. Before doing so, I emphasise that the ultimate decision for me rests upon the exercise of my discretion. The question that I have to address is whether I should exercise my discretion in a way that departs from the usual basis for an order for costs on a party/party basis. In the exercise of my discretion it is open to me to find that whilst there has been an imprudent refusal of an offer for settlement, no costs consequences should follow. Conversely, if there has been an imprudent refusal in the particular circumstances of a matter, then I may find that costs consequences follow.
I think it is useful to attempt to summarise the relevant principles. These are taken from the decision of the Full Court of the Supreme Court of South Australia in BHP Billiton v Parker.[7] The relevant discussion commences at page 263. What follows is a summary of the discussion there set out as well as the inclusion of references to other decisions interstate to the same or similar effect. Those principles are:-
[7] (2012) 113 SASR 206.
1. Under s 42 of the District Court Act, I have an unfettered discretion as to costs subject only to the operation of the Court Rules;
2.   In exercising my discretion on costs I may have regard to an offer to consent to judgment or any other attempt to settle the action;[8]
[8]    Rule 263(3) District Court Rules.
3.   Within the exercise of my discretion, I may order costs against a party on any basis that I consider appropriate[9] notwithstanding that the usual basis for an order for costs is on a party/party basis, costs following the event;
[9]    Rule 264(1) District Court Rules. The costs payable to a defendant who makes the offer are to be assessed on a party/party basis.
4.   A party may file an offer at the Court using the prescription of Rules 187 and 188 of the District Court (Civil) Rules and these Rules require that an offer must be in a particular form, that it can be accepted by the party to whom it is made at any time before the date falling 5 business days before the first or any subsequent date fixed for the trial;[10]
[10] Rule 187(3)(a); Rule 188(1) and (2) District Court Rules.
5.   The consequence of a party having been served with an offer and not accepting that offer and the Court determining in the action that the party is not entitled to relief which is more favourable to the party than the terms of the offer is that the party is not entitled to costs after the relevant date of offer and, if a defendant makes the offer, that party is entitled to costs referable to the period falling after the relevant date;[11]
[11] Rule 188(6)(a)(b)(i) District Court Rules.
6.   A Court may have regard to an offer often called a Calderbank letter despite the fact that the party sending the letter could have filed a Rules of Court offer;[12]
[12] Morris v McEwan (2005) 92 SASR 281 at [1], [34], [62] and [73]; see also Pirrotta v City Bank Limited (1998) 72 SASR 259 discussed in Morris v McEwan at [74]-[75].
7.   What has been described as a Calderbank letter should properly be considered as an informal offer of settlement made by a letter for the purposes of Rule 263(3) of the District Court Rules;
8.   Merely because an offer has been made in an informal offer of settlement letter (Calderbank letter) and a party does not better the content of that offer at trial does not automatically mean that costs will be payable on a basis other than as between party/party costs by the unsuccessful party to the successful party;[13]
[13] SMEC Testing Services Pty v Campbelltown Council [2000] NSWCA 323 per Giles JA at [37]; Nolan v Lady Mary Nolan & Ors [2003] VSC 136 at [51] et seq. and particularly at [54]; Ng v Chon [2005] NSWSC 385; Danidale Pty Ltd t/a Bernie Cornfoot and Sons Earthmoving v Abigroup Contractors Pty Ltd [2007] VSC 552 at [12] et seq.
9.   A Calderbank letter is to be viewed consistently with the decision of Debelle J in Pirotta as referred to by White J, Debelle J and Besanko J in Morris v McEwan as follows:-[14]
[14] Morris v McEwan (2005) 92 SASR 281.
[74] The first matter lends support to the view that a court may have regard to a Calderbank letter even though an offer in accordance with the Rules of Court could have been lodged. The second matter suggests that there are some limitations on the circumstances in which it will be appropriate to attach any weight to a Calderbank letter. It suggests that in order for effect to be given to a Calderbank letter, it should be framed in terms which are consistent with the spirit and intent of Rule 40. In particular, for effect to be given to a Calderbank letter where an offer in accordance with the Rules of Court could have been lodged, the Calderbank letter should not impose more onerous obligations on the recipient than would an offer filed in accordance with the Rules. The procedure specified in the Rules for the lodgement of an offer is to be understood as an expression of what the Court regards as a reasonable approach. To the extent that a defendant departs from that régime, it runs the risk that the Court will regard the manner or content of its offer as being unreasonable and, therefore, as not warranting any alteration of the usual position as to costs.
[75] In considering whether to give a Calderbank letter the same effect as an offer lodged pursuant to Rule 40, a number of matters will be relevant. These will include: whether or not an offer could have been lodged pursuant to Rule 40; any difficulties associated with the framing of an appropriate offer; any difficulties occurring because of the involvement of other parties in the litigation; the proximity of the trial at the time when the offer was made and the time available to the plaintiff in which to consider the offer; the commitments to which the plaintiff may be subject at that time; and the extent to which, if at all, the circumstances of the offer, or its terms and conditions, differ from the circumstances or terms and conditions, of an offer lodged in accordance with Rule 40. This is not intended to be an exhaustive list of the matters which may be relevant. [footnotes omitted].[15]
10. The brevity of time within which a party may consider an offer is relevant. In BHP Billiton at 270, Doyle CJ and White J held as follows:-
As the Court observed in Pirrotta and in Morris, a settlement offer by letter does not conform to the scheme in the Rules for a formal offer of settlement will not necessarily be given the weight, in the exercise of the discretion as to costs, that a formal offer according with that scheme will be given. A party receiving an offer that is open for a short time only might not have sufficient time properly to consider the offer. An offer that has a short deadline for acceptance has done its work once that time has expired and that suggests that the Court when considering such an offer in relation to costs should focus its attention fairly carefully on the period of time during which the offer was open.
11. When all of those matters have been taken into account it is then a question of the exercise of the Court’s discretion. The relevant process of reasoning required here was summarised by Doyle CJ and White J in BHP Billiton at [265] as follows:-
[265] It is also important to bear in mind that the question is not simply whether, having regard to a Calderbank letter, a court should order the defendant to pay costs on a basis other than as between party and party. The court will be exercising a broad discretion, and the making of an informal offer of settlement is merely one of a number of matters relevant to the exercise of that discretion: Colgate-Palmolive Co v Cussons Pty Ltd.[16] And a Calderbank letter is but one instance of how a party might make an offer which has been “imprudently refused”: Pirrotta at 263 Debelle J. Imprudent refusal of an offer of settlement is often raised as the basis for an application for an order for costs on a basis other than as between party and party, but once again it has to be borne in mind that while “imprudent refusal” conveniently encapsulates an approach to the exercise of the discretion, in the end the issue is whether the discretion should be exercised to depart from the usual basis of an order for costs.
[15] See Morris at [74]-[75].
[16] (1993) 118 ALR 248, Sheppard J at 257.
In that context it is then necessary to consider the defendants’ application: it is for an order for solicitor/client costs or alternatively indemnity costs. These are not the same thing.
It appears to have readily been accepted that there is a difference between solicitor and client costs and indemnity costs.[17] In Re Fountain Selected Meats[18] Woodward J held as follows:-
I believe that it is appropriate to consider awarding… indemnity costs whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law. Such cases are, fortunately, rare. But when they occur, the Court will need to consider how it should exercise its unfettered discretion.
[17] 6R 264—Basis for awarding costs
(5)In exercising its general discretion as to costs, the Court may—
(a) award costs as between solicitor and client (that is, on the basis that the party will be fully reimbursed for costs incurred by the party in the conduct of the litigation to the extent that the party entitled to the costs shows them to have been reasonably incurred); or
(b) award costs on the basis of an indemnity (that is, on the basis that the party will be fully reimbursed for costs incurred by the party in the conduct of the litigation except to the extent that the party liable for the costs shows them to have been unreasonably incurred); or
…
[18] [1998] 81 ALR 397 at 401.
Earlier in these reasons I have set out the competing submissions of the parties. The defendants rely upon their letters of offer. I have also set out the factual circumstances facing the plaintiff at the time of the receipt of those various offers. I accept the plaintiff’s submission that in relation to the offer of 19 December it could not reasonably be said with any sufficient confidence that the action of the plaintiff in refusing that offer was so unreasonable as to attract an order for an elevated level of costs. No proceedings had been commenced; it may well be that no proper legal advice had been given to the plaintiff; it is almost certain that the plaintiff could not have known of all of the relevant factual circumstances surrounding the case and the plaintiff could not have known whether or not she might bring a claim against the defendants. The offer was open for a very short period of time and ending at the Christmas season. In my view the offer would not be taken into account under R263.[19]
[19] Morris v McEwan (2005) 92 SASR 281.

The position pertaining to the 30 March 2015 letter was quite different. That is because the proceeding had been on foot for some time, the plaintiff had been receiving legal advice for at least 18 months, the plaintiff’s damages were known, the issues were well defined and the plaintiff knew that she was apparently fighting the case on “two fronts” namely as against the defendants and, if the defendants were correct, as against the agent as third defendant. In those circumstances, the plaintiff only had the benefit of giving consideration to the content of the offer in the background of the pleadings as they existed. She would have been aware of the contest raised by the third defendant agent (in its defence) to the assertions made in the Statement of Claim and so she would have been aware of the denials of the third defendant agent of the assertions of the first two defendants.
On 4 June 2015, the plaintiff settled with the third defendant agent. This was about 30 days after the expiration of the reasonable period in which the plaintiff may have given mature consideration to the offer of the defendants. At the same time the plaintiff would have been heavily involved in preparation of the matter for trial on 11 June 2015. It was then that an opportunity was taken for her solicitors to proof Ms Alexandrou, obtain a statement from her and assess her credibility and her reliability. A judgment was made at the time that the plaintiff should continue to press her claim for damages based upon all of the information then before her. She did so on the advice of counsel and I infer solicitors after proofing Ms Alexandrou. As the submissions before me have made clear, the version of events given by Ms Alexandrou in evidence departed significantly from her proof. All that the plaintiff had available to her as an objective measure was that information obtained from Ms Alexandrou (as well as her own evidence). The plaintiff’s position was that on 23 October 2013 she knew nothing of the concept plans, did not hear Ms Alexandrou say anything about them, did not see them on 23 October 2013 and she told the defendants about the existence and extent of those easements. Inferentially at least, Ms Alexandrou was corroborating that version of events. If accepted by the Court, that would strike at the heart of the defendants’ defence. This is the version that Ms Alexandrou attempted to give in her examination in chief. Her initial evidence was that on 23 October 2013 she had not yet collected the concept plans from the architect and so she could not have referred to them. She deferred always to the plaintiff on the question of the easements.
This was the position in which the plaintiff found herself and it is a situation that I must weigh in the balance when making my decision about whether my discretion should be exercised to depart from the usual order for costs. Ms Clark informs me and I accept that there was no way in which the plaintiff could have predicted the “flipping and flopping” of Ms Alexandrou in her evidence. A perusal of my judgment in this matter indicates that the weakness of the evidence given by Ms Alexandrou and her lack of credibility in relation to the events of 23 October 2013 was pivotal to my decision in this matter.
This weakness of the evidence given by Ms Alexandrou only become manifest after the first day of trial. By that time, the offer of settlement had expired. Nothing could be done by the plaintiff to retrieve the position in those circumstances.
Based upon those considerations, it is my decision that the defendants are entitled to an award of costs of the action in their favour on a party/party basis. This is because I have reached the conclusion that when the whole of the factual circumstances of this matter are properly ventilated and analysed, I consider that there is not a sufficient basis to depart from the usual order for costs. I exercise my discretion accordingly.
For the sake of completeness, no basis has been made out by the defendants for an indemnity costs order as such an order is explained in Fountain Selected Meats.
The plaintiff is to have an order for costs in her favour on the argument on costs and I give a certificate for counsel.