Pert v Ballarat Wildlife Park Pty Ltd (Ruling)
[2013] VCC 831
•25 June 2013
| IN THE COUNTY COURT OF VICTORIA AT WARNAMBOOL CIVIL DIVISION | Revised Not Restricted Suitable for Publication |
DAMAGES AND COMPENSATION
GENERAL DIVISION
Case No. CI-11-03812
| CLIFFORD IAN PERT | Plaintiff |
| v | |
| BALLARAT WILDLIFE PARK PTY LTD | Defendant |
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JUDGE: | HER HONOUR JUDGE KINGS | |
WHERE HELD: | Warrnambool | |
DATE OF HEARING: | 12 and 18 June 2013 | |
DATE OF RULING: | 25 June 2013 | |
CASE MAY BE CITED AS: | Pert v Ballarat Wildlife Park Pty Ltd (Ruling) | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 831 | |
RULING AS TO COSTS
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Subject: COSTS
Catchwords: Rejection of Calderbank offer
Legislation Cited: Supreme Court Act 1986, s60; Penalty Interest Rates Act 1983, s2; Evidence Act 2008
Cases Cited: Leichhardt Municipal Council v Green [2004] NSWCA 341; Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; Grbavac v Hart [1997] 1 VR 154; Foster v Galea (No 2) [2008] VSC 331; Eshuys v St Barbara Ltd (No 2) [2011] VSC 150; Aljade and Malaysian Kuwaiti Investment Co SDN BHD (MKIC) v Oversea-Chinese Banking Corp Ltd [2004] VSCA 351; Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 272; Berrigan Shire Council v Ballerini [2006] VSCA 65; Grbavac v Hart [1997] 1 VR 154; Sahin v National Australia Bank Ltd [2013] VSCA 93
Ruling: Costs on party-party basis – discretion to make special costs order not exercised – rejection of offer not unreasonable – offer amounted to demand to capitulate – rejection must be assessed at time of offer and not with hindsight – plaintiff’s claim not hopeless or conducted in bad faith – offer not a serious endeavour to resolve proceeding.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr I Fehring with Mr N Bird | Taits Legal |
| For the Defendant | Mr J Batten | Moray & Agnew |
HER HONOUR:
1 On 12 June 2013, the jury returned a verdict for the defendant. I entered judgment for the defendant. I said that I would hear the parties on costs. I was informed that on 14 January 2013, the defendant’s solicitors had written to the plaintiff’s solicitors informing them of a Calderbank offer.
Calderbank Offer
2 On 14 January 2013, the defendant’s solicitor wrote to the plaintiff’s solicitor and set out the following:
“We enclose by way of service the report of Philip Chun, building code consultants dated 18 December 2012.
The report confirms that our client was entitled to rely on the expertise of the designers of the facility and the approval of the designs by the Relevant Building Surveyor, which was the City of Ballarat, in being satisfied that the toilets were compliant and safe.
It further concludes that your client’s injuries were not caused as a result of any failure with the design of the toilet facility and that that no reasonable alternative design could have reduced the risk of such an incident occurring.
Based on the report, our client is confident that it will successfully defend this claim and no allegation of negligence will be sustained.
In the circumstances, our client is prepared to ‘walk away’ and ‘bear its own costs’ on the basis that your client discontinues his proceeding against it arid bears his own costs to date (‘the offer’).
The offer will expire in 14 days from the date of this letter.
If your client does not accept the offer, but at a future date seeks to discontinue proceedings against our client, our client reserves the right (relying on this letter) to pursue costs on an indemnity basis. Furthermore, if the proceeding continues to trial and your client fails to obtain judgment more favourable than the offer made in this letter, then this letter shall be used on the issue of costs with an application being made for an indemnity costs order or alternatively a costs order on a solicitor and client basis from the date of this letter in accordance with the principles applied in Calderbank v Calderbank (1975) 3 ALL ER 333 and Cutts v Head (1984) 1 ALL ER 597 and adopted in an unreported decision of Justice Byrne in the Supreme Court of Victoria on 28 April 1993, in the case of Mutual Community Limited v Lordan Holdings Pty Ltd & Ors and the Court of Appeal decision in Hazeldene’s Chicken Farm Pty Limited v VVVA (No. 2) [2005] VSCA 298 (‘Hazeldene’s’).”
3 The defendant’s offer of 14 January 2013 was open for a period of 14 days from the date of the letter. I was not informed of any response to the letter by the plaintiff’s solicitors.
Submissions
4 Counsel for the defendant submitted that the plaintiff obtained a result no more favourable than the offer made to the plaintiff in the Calderbank letter. It was unreasonable for the plaintiff to reject, at the time, the Calderbank offer. The defendant set out the basis for the offer. Accordingly, the defendant makes application for costs on a special basis in accordance with the letter of 14 January 2013.
5 Counsel for the plaintiff submitted it was not unreasonable for the plaintiff to reject the Calderbank offer. First, potential litigants should not be discouraged from bringing their disputes to the Court. This underlies the general rule that an order for special costs should only be made in exceptional circumstances.
6 Second, the extent of the compromise offered must be taken into account. In this case, the offer was not a compromise, but an issue of the plaintiff giving up: the plaintiff loses.
7 Third, the offeree’s prospects of success must be assessed as at the time of the offer. At that time, the plaintiff had two expert reports which supported his claim. The defendant relied upon one expert report.
Principles
8 The authorities make it clear that the practice of making Calderbank offers is to facilitate the public policy objective for the litigants to end litigation as soon as possible. Such an offer causes the offeree to consider the offer seriously.[1]
[1]Leichhardt Municipal Council v Green [2004] NSWCA 341
9 The Court of Appeal, in Hazeldene Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2),[2] enunciated the principle that the rejection of the Calderbank offer does not create a presumption in favour of a special costs order if the offeree received a less favourable result. The correct approach is to treat the rejection of a Calderbank offer as a factor to which the Court should have regard to when considering whether to order indemnity costs.[3]
[2][2005] VSCA 298
[3]Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (supra) at paragraph [20]
10 Further, in Hazeldene, the Court of Appeal cited with approval the policy objectives set out by Hayne JA in Grbavac v Hart[4] in respect of the rejection of an offer of compromise. In summary, the policy rationale is to encourage the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise by defendants; to save the public costs which are necessarily incurred in litigation which events demonstrate have been unnecessarily incurred; and to indemnify the defendant who has made the offer later found to have been reasonable against the costs later incurred.[5]
[4][1997] 1 VR 154, 164
[5]Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (supra) at 441
11 The Court of Appeal noted that there were competing objectives of equal importance, citing Redlich J in Aljade and Malaysian Kuwaiti Investment Co SDN BHD (MKIC) v Oversea-Chinese Banking Corp Ltd,[6] who said:
“… Potential litigants should not be discouraged from bringing their dispute to the Courts. It is such considerations which underlie the general rule that an order for special costs should only be made in special circumstances.”
[6][2004] VSC 351, at [60]
12 Having regard to the underlying competing policy objectives, the critical question is whether the rejection of the offer was unreasonable in the circumstances. At the same time, the unreasonable refusal of a Calderbank offer is, by itself, a proper ground for an award of indemnity costs.
13 In Hazeldene, the Court of Appeal set out the principles governing the awarding of costs in respect of a Calderbank offer. It said it was neither possible nor desirable to give an exhaustive list of circumstances relevant to the exercise of the discretion. A court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:
“(a)the stage of the proceeding at which the offer was received;
(b)the time allowed to the offeree to consider the offer;
(c)the extent of the compromise offered;
(d)the offeree’s prospects of success, assessed as at the date of the offer;
(e)the clarity with which the terms of the offer were expressed;
(f)whether the offer foreshadowed an application for an indemnity costs in the event of the offeree’s rejecting it.”
14 In referring to the matters to be taken into account, the Court of Appeal was providing a guide as to the matters the trial judge should ordinarily have regard to, in addition to such other matters as the judge might consider relevant. It is for the judge to give such weight, if any, as seems appropriate.[7] In determining whether the plaintiff acted unreasonably in not accepting the offer, it is important that the assessment is made at the time at which the offer was made and not with the benefit of hindsight, in particular, after a contested trial in which the facts have been the subject of detailed evidence.[8]
[7]Foster v Galea (No 2) [2008] VSC 331 at paragraph [9]
[8]Eshuys v St Barbara Ltd (No 2) [2011] VSC 150 per Kaye J
15 As stated by Redlich J in Aljade and Malaysian Kuwaiti Investment Co SDN BHD (MKIC) v Oversea-Chinese Banking Corp Ltd:[9]
“It is not necessary to establish misconduct by the offeree before the rejection of the offer can be viewed as unreasonable. Lack of merit in the way a party has conducted its case is not a prerequisite for the making of an indemnity costs order [on this ground].”[10]
[9](supra) at paragraph [60]
[10][2004] VSC 351 at paragraph [93]
16 In relation to an offer that can be described as an invitation to capitulate, the Court of Appeal in Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2),[11] said:
“There is authority to the effect that where the offer does not involve a genuine compromise, but is in fact either an invitation to capitulate or a derisory or nominal offer, it would not be unreasonable for the losing party to have rejected it.”
[11][2011] VSCA 272 at paragraph [13]
17 In that case, the Court of Appeal reviewed the recent decisions to the effect that where the offer does not involve a genuine compromise but is in fact either an invitation to capitulate or a derisory or nominal offer, it would not be unreasonable for the losing party to have rejected it. In particular, the Court of Appeal referred to Berrigan Shire Council v Ballerini (No 2.)[12] Callaway JA observed that the treatment of Calderbank offers depends on whether the rejection was unreasonable in the circumstances. In that case, the offer was an offer to walk away. Callaway JA characterised it as a demand to capitulate that could reasonably be rejected.[13]
[12][2006] VSCA 65
[13]Chernov JA and Nettle JA in effect agreed with the observations made by Callaway JA. That case involved a claim for damages by a plaintiff for personal injury. However, the trial was before a judge alone.
Analysis
18 It was agreed that the only matters that required consideration in the present case were the extent of the compromise offered and the offeree’s prospects of success, assessed as at the date of the offer.
19 However, in my opinion, the defendant made the offer at a reasonable time, after the parties had obtained expert reports, and well prior to trial. The offer was in clear terms. The offer was open for fourteen days. I am satisfied, in the circumstances, the defendant gave the plaintiff sufficient time to consider the offer.
20 In my opinion, and for the following reasons, the defendant has not demonstrated that the Court should exercise its discretion to make an order outside the usual order for party-party costs.
21 First, the offer was an offer to walk away and amounts to a demand to capitulate. The offer does not represent a serious endeavour to resolve the proceeding. The nature of the offer goes to the reasonableness of the rejection. At the time the offer was made, both parties were relying upon expert reports. In making the offer, the defendant referred to the opinion contained in its expert report. The plaintiff had in its possession two expert opinions in support of his claim. Ultimately at trial I ruled that the plaintiff’s expert reports could not be relied upon as the opinions expressed by the experts were not opinions of an expert with specialised knowledge as required in s79 of the Evidence Act 2008 and Order 44 of the Supreme Court Rules. I took the view that views expressed by the experts were views that could be expressed by any person. The opinions offered were commonsense or facts and were not matters of science or were not based on expertise of which the experts were qualified to express. However, the rejection of the offer must be considered at the time the offer was made and not with the benefit of hindsight.
22 Second, on any view, the claim could not be regarded as either hopeless or conducted in bad faith.
23 Thirdly, the offer by the defendant could not be said to be “a serious endeavour to resolve the proceeding”; rather it was an attempt to protect its position in relation to any differential between solicitor-client costs and party-party costs.
24 I am not persuaded that I should exercise my discretion and make any order, other than costs following the event on the usual party-party basis.
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