Plymin v Bruce (Costs)
[2023] VCC 1444
•21 August 2023
| IN THE COUNTY COURT OF VICTORIA AT Melbourne COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-21-01520
| Raymond John Plymin | Plaintiff |
| and | |
| Kevin Bruce | Defendant |
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JUDGE: | Her Honour Judge Burchell | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers, written submissions dated 10, 14 and 15 August 2023 | |
DATE OF RULING: | 21 August 2023 | |
CASE MAY BE CITED AS: | Plymin v Bruce (Costs) | |
MEDIUM NEUTRAL CITATION: | [2023] VCC 1444 | |
RULING
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Subject:COSTS
Catchwords: Whether costs should be paid on a standard or indemnity basis – Whether rejection of Calderbank Offer reasonable.
Legislation Cited: County Court Civil Procedure Rules 2018 O63A, rr63A.30 and 63A.31.
Cases Cited:Colgate-Palmolive Co & Anor v Cussons Pty Ltd (1993) 46 FCR 225; BHP Billiton Olympic Dam Corporation Pty Ltd v Steuler Industriewerke GmbH (No 3) [2012] VSC 414; Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; Protec Pacific Pty Ltd v Steuler Services GmbH & Co KG [No 2] [2015] VSCA 123; Hannover Life Re of Australasia v Colella [2014] VSCA 205; Calderbank v Calderbank [1975] 3 All ER 333; Aljade and MKIC v OCBC [2004] VSC 351; Oshlack v Richmond River Council (1998) 193 CLR 72; Australian Competition and Consumer Commission v Australian Safeway Stores Pty Limited (No 3) [2002] FCA 1294; Hobartville Stud Pty Ltd v Union Insurance Co Ltd [2004] FCA 1600; Szencorp Pty Ltd v Clean Energy Council Limited (No 2) [2009] FCA 196; Leichardt Municipal Council v Green [2004] NSWCA 34; VWA V O’Brien [2017] VSC 68.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr L Virgona | Taylor & Whitty Pty Ltd |
| For the Defendant | Mr J Ribbands | Hibbert & Hodges Lawyers |
HER HONOUR:
Introduction
1On 21 July 2023, I gave judgment in favour of the defendant in this matter, Kevin Bruce (“Kevin”). I dismissed the proceeding brought against him by the plaintiff (“Ray”) for possession of the property known as 66 Betka Road, Mallacoota, Victoria (“the Property”). I found in favour of Kevin against Ray that he had a life interest in the Property as life tenant.
2I further proposed to order that Ray pay Kevin’s costs of and incidental to the proceeding on a standard basis to be taxed in default of agreement, unless either party had a basis for seeking a different order as to costs and invited the parties to prepare draft orders to give effect to my reasons. The parties were unable to reach agreement on the issue of costs and prepared written submissions on the question of whether the costs of the proceeding should be paid on a standard (that is, partially in accordance with the County Court Scale) or indemnity basis (that is, in their entirety).
3Kevin seeks orders that Ray pay his costs of and incidental to the proceeding (including reserved costs) to be taxed in default of agreement on the standard basis in respect of costs incurred up to and including 17 May 2023 and thereafter on an indemnity basis. Kevin also initially sought an order that Ray’s interest in the Property be charged in favour of Kevin’s legal practitioners to the extent necessary so as to better secure the payment of Kevin’s costs that are payable. Following the exchange of written submissions, Kevin no longer pressed the proposed orders for a charge.
4Ray opposes the orders that he pay Kevin’s costs on an indemnity basis from the date of the offer in the form of a Calderbank[1] letter dated 17 May 2023. Ray does not oppose orders that he pay Kevin’s costs of and incidental to the proceeding on a standard basis.
[1] Calderbank v Calderbank [1975] 3 All ER 333.
5For the reasons set out below, Ray ought to pay Kevin’s costs of and incidental to the proceeding (including reserved costs) to be taxed in default of agreement on the standard basis.
Relevant Background
6In my judgment, I found that Kevin had an in personam claim against his deceased sister, Cheryl, that survived against her estate in which Cheryl made representations to Kevin that he could live at the Property for the rest of his life. Kevin was successful in his proprietary estoppel claim. In addition, I held that equity ought to intervene in a manner that overrode Ray’s indefeasible title.
7The present costs application involves a Calderbank offer, being a letter marked “without prejudice except as to costs”, setting out the terms of a proposed settlement.
8On 17 May 2023, Ray made a Calderbank offer to settle the proceeding on the basis that Kevin is provided with a life interest in the Property and the proceeding is otherwise dismissed with each party bearing their own costs. The offer was open until 5.00pm on 22 May 2023. The trial was fixed for hearing commencing on 30 May 2023. If more time was required for Ray to consider the offer, he was invited to ask for more time. No request was made for an extension of time and the offer lapsed without a response.
Legal framework
9It is common ground that, as a general rule, the Court will order costs to be taxed on the standard basis.[2] The discretion to make a special costs order is an unlimited one, though it must be exercised judicially and not unreasonably, and the circumstances should be “special”.[3] The usual order as to costs is that costs follow the event, and the successful party is entitled to an award of costs in its favour.[4]
[2] County Court Civil Procedure Rules 2018 (“Rules”) r63A.31 (see r63A.30 regarding the meaning of “standard basis”).
[3] Aljade and MKIC v OCBC [2004] VSC 351 at [10]
[4] Oshlack v Richmond River Council (1998) 193 CLR 72 at [97]
10In BHP Billiton Olympic Dam Corporation Pty Ltd v Steuler Industriewerke gmbH (No 3),[5] Justice Habersberger set out the matters to be considered in circumstances involving the rejection of letters of offer as follows:
[5] BHP Billiton Olympic Dam Corporation Pty Ltd v Steuler Industriewerke gmbH (No 3) [2012] VSC 414 at [59]-[67] (with reference to Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCoverAuthority (No 2) (2005) 13 VR 435)
(a) the fact that a less favourable result is achieved does not give rise to a presumption of a special costs order. The making of an offer and its rejection are only two factors which the Court will have regard in the exercise of its costs discretion.
(b) the competing policy objectives of promoting settlement and reducing litigation costs as against discouraging potential litigants from bringing their dispute to the courts.
(c) the critical question is whether the rejection of the offer was unreasonable in the circumstances.
(d) in considering whether the rejection of the letter of offer was unreasonable, the Court should have regard to the following matters:
(i)the stage of the proceeding at which the offer was received;
(ii)the time allowed for the offeree to consider the offer;
(iii)the extent of the compromise offered;
(iv)the offeree’s prospects of success, assessed as at the date of the offer;
(v)the clarity with which the terms of the offer were expressed; and
(vi)whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it.
(e) whether it was unreasonable for the offeree to have rejected the offer is made “as at the time, or within a reasonably short time after, the offer” was made.[6]
(f) the Court should not too readily embrace submissions that it was inevitable that the proceedings would fail.
(g) the onus lies on the offeror to demonstrate the unreasonableness of the offeree’s rejection of the offer. This means that it is necessary to analyse what was proposed.
(h) there is no general rule that the Calderbank offer must set out with specificity the basis for the offeror’s contention that the offeree should accept the compromise.
(i) it is not necessary for the applicant for an indemnity costs order to establish matters which might be relevant to other, well-recognised, grounds for indemnity costs. Such conduct is not a pre-requisite for a finding that the rejection of the Calderbank offer was unreasonable.
(j) an “all in” offer is permitted in a Calderbank offer.
[6] Australian Competition and Consumer Commission v Australian Safeway Stores Pty Limited (No 3) [2002]. FCA 1294 per Goldberg J at [21].
11Justice Habersberger’s decision was upheld on appeal to the Court of Appeal: Protec Pacific Pty Ltd v Steuler Services GmbH & Co KG [No 2].[7]
[7] Protec Pacific Pty Ltd v Steuler Services GmbH & Co KG [No 2] [2015] VSCA 123 at [55].
12The above “principles established by Habersberger J” were referred to by the Court of Appeal in Hannover Life Re of Australasia v Colella[8] without any criticism.
[8] Hannover Life Re of Australasia v Colella [2014] VSCA 205 at [91].
Issues
13Given Ray’s position that he does not oppose the standard costs order, the issues for determination are as follows:
(a) was Ray’s rejection of the Offer unreasonable;
(b) if yes, should Ray pay Kevin’s costs of the proceeding on a standard basis up to 17 May 2023 and thereafter on an indemnity basis.
Submissions
The Offer
14Kevin submitted that Ray’s rejection of the Offer was unreasonable having regard to the following factors:
(a) the proceeding was listed for trial on 30 May 2023. The proceeding was well advanced;
(b) the period of five days after service for consideration of the offer was reasonable. Given the state of the parties’ preparedness for the trial, it was ample time for Ray to consider the offer;
(c) the allegations made in the proceeding were not conceptually complex, were (or ought to have been) well understood by Ray and Ray was able to assess his position in an informed and considered manner as opening submissions were filed shortly afterwards;
(d) the facts underpinning Kevin’s claim was known from a very early stage given his affidavit in opposition to the Order 53 special procedure for recovery of land sworn on 26 August 2021;
(e) Ray’s prospects of success, assessed as at the date of the offer, were limited. Kevin set out in the Offer that he intended to call other witnesses who would give evidence as to discussions they had with Cheryl where it was said she acknowledged that Kevin would be entitled to remain at the Property for the remainder of his life;
(f) the terms of the offer were clear; and
(g) the offer foreshadowed an application for indemnity costs.
15Ray contends that his rejection of the Offer was not unreasonable for the following reasons. Referring to the principles set out in the decision of Habersberger J in BHP Billiton Olympic Dam Corporation Pty Ltd v Steuler Industriewerke GmbH (No 3)[9] and further responding to Kevin’s submissions, Ray argues:
(a) the offer was provided late on the afternoon of Wednesday, 17 May 2023, and was expressed to expire the following Monday, 22 May 2023 — a period of three business days. As is discussed in more detail below, the Offer was one of capitulation. In those circumstances, providing only three business days to consider effectively abandoning his entire claim should not be considered as providing Ray sufficient time to consider accepting such;
(b) it cannot be said that Ray’s case was hopeless, and certainly not on the matters and the evidence within the knowledge of Ray at the time the Offer was made;
(c) prior to the Offer, Kevin had never alluded to any corroborating evidence for any of the allegations which he made during the proceeding;
(d) it was entirely reasonable for Ray to reject an offer to capitulate within three days of being made and instead require Kevin to prove the matters the subject of his counterclaim;
(e) the Offer should be seen as one of capitulation, as all that Kevin has offered in substance was that Ray agree to grant Kevin the entire interest sought in the counterclaim.
[9] [2012] VSC 414 at [59]–[67].
Analysis
Was Ray’s rejection of the Offer unreasonable?
16The mere refusal of an offer does not automatically mean that the Court should make an order for costs on an indemnity basis where the ultimate result is less favourable than that contained in the offer.[10]
[10] Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCoverAuthority (No 2) (2005) 13 VR 435 at [18]–[20].
17I accept Kevin’s submissions that the Offer was more favourable than the judgment to be entered, given the concession by Ray that costs must follow the event and the Offer made was that each party bear their own costs. Adopting Kevin’s submissions in reply, the Offer should not be seen to be one of capitulation as the Offer in the particular circumstances of this case was the only one that Kevin could make. That is, that Kevin be provided with a life interest in the Property given he had no resources with which to make a monetary offer, the sale of the Property was not an option given Kevin had lived at the Property for 20 years and still required a place to live and an interest for a number of years would only postpone the problem.
18In Szencorp Pty Ltd v Clean Energy Council Limited (No 2),[11] Justice Goldberg considered the situation where a plaintiff is invited to discontinue proceedings with no order as to costs. The plaintiff in that case argued that such an offer is not a genuine attempt to resolve the proceeding by way of compromise, but rather, sought capitulation. His Honour relied on the reasoning of the New South Wales Court of Appeal inLeichardt Municipal Council v Green[12] and found that:
“In an appropriate case, the giving up by a defendant of the opportunity to recover from the plaintiff the costs it has incurred in defending a proceeding can constitute consideration for a compromise which is real, particularly where the costs incurred have been substantial”.
[11] Szencorp Pty Ltd v Clean Energy Council Limited(No 2) [2009] FCA 196 at [15].
[12] Leichardt Municipal Council v Green [2004] NSWCA 341.
19The authorities relied on by Ray in his submissions involved “walk away offers” and do not take into account the fact that such an offer involves the defendant giving up the opportunity to recover their costs from the plaintiff.[13] If the proceeding was pursued to judgment in favour of the defendant, then the defendant would be able to obtain an order to recover its costs from the plaintiff.
[13] VWA V O’Brien [2017] VSC 68 at [8]–[10] and the authorities cited therein.
20Justice Goldberg observed at ([15]) that:
“The renunciation of that opportunity, in my opinion, clothes the offer with the cloak of a genuine compromise of substance”.
21Relying on the above reasoning, I do not agree with Ray’s proposition that an invitation to grant Kevin the entire interest sought in his counterclaim with each party bearing their own costs is not a genuine attempt to resolve the proceeding by way of compromise for the purposes of considering the consequences of an offer made in a Calderbank letter in the particular circumstances of the present case.
22The principles are that there must be some unreasonableness in the refusal to accept.[14]
[14] Hobartville Stud Pty Ltd v Union Insurance Co Ltd [2004] FCA 1600 per Crennan J at [6].
23In my view, the Offer was a genuine offer to compromise, however, it was not unreasonable for Ray to reject the offer in circumstances where the claims were still being amended during the trial.
24The Offer refers to a failure to serve a notice to vacate under the Residential Tenancies Act 1997 (Vic) (“RTA”) and deals with the concepts of proprietary estoppel. On the first day of trial, it was common ground that a notice to vacate was sent to Kevin in January 2020 that complied with the requirements under the RTA. In those circumstances, no RTA issue was pressed.
25Although Kevin explained in the Offer Ray’s prospects of success on the issues in dispute then existing between the parties, he did not deal with the controversy arising from the subsequent filing of a reply and further amended defence to amended counterclaim dated 30 May 2023, arising for the first time by reason of ss42 and 43 of the Transfer of Land Act 1958 (Vic), that Ray’s interest in the Property is unaffected by any unregistered interest claimed by Kevin.
26The issue of indefeasibility of title became a major issue for determination during the trial and the subject of much focus in written and oral closing submissions. Therefore, I do not accept Ray’s submissions that, the fact that the Offer introduced corroborative witnesses for the first time meant that Ray’s rejection of the Offer was not unreasonable. These witnesses went to the known issue of the alleged representation and estoppel claim. The claims had been on foot for over 2 and a half years and the letter clearly sets out Kevin’s prospects of success as at the date of the Offer.
27However, I do not accept that Ray’s case was hopeless as contended by Kevin, particularly, where the issues and claims were still being amended by the parties and there was a real issue to be tried in relation to whether the alleged representations could be proved and whether the elements of equitable fraud could be made out to overcome Ray’s indefeasibility of title.
28Although the Offer was open for 5 days (or 3 business days), Kevin gave Ray the option to request more time to consider the Offer. Ray did not respond to the Offer at all. In my view, he cannot now complain that he did not have adequate time to consider the Offer when it was open to him to request an extension of time.
29For the reasons set out above, it was not unreasonable for Ray to reject the offer in the circumstances.
Should Ray pay Kevin’s costs of the proceeding on a standard basis up to 17 May 2023 and, thereafter, on an indemnity basis?
30Given my finding that the rejection of the Offer by Kevin was not unreasonable, the answer to this issue is no.
Should Ray pay Kevin’s costs of the proceeding on a standard basis?
31For the foregoing reasons, the answer is yes.
Conclusion
32Ray ought to pay Kevin’s costs of and incidental to the proceeding (including reserved costs) on a standard basis to be taxed in default of agreement.
Orders
33For the reasons set out above, the orders are as follows:
OTHER MATTERS:
A. The Court notes that the defendant’s legal practitioners acted for the defendant on a pro bono basis in this proceeding.
B. The defendant’s costs are to be recovered in accordance with r63A.35.2 of the County Court Civil Procedure Rules 2018.
THE COURT ORDERS THAT:
1.The plaintiff’s claim is dismissed.
2.On the defendant’s counterclaim, the Court declares that the plaintiff’s proprietorship of the property known as 66 Betka Road Mallacoota (“Property”), being the Property described in certificate of title Volume 12155 Folio 022, is subject to a life interest in favour of the defendant.
3.The plaintiff pay the defendant’s costs of and incidental to the proceeding (including reserved costs) on a standard basis to be taxed in default of agreement.
4.The costs payable by the plaintiff be paid directly to the defendant’s legal practitioners.
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Certificate
I certify that these 11 pages are a true copy of the ruling of Her Honour Judge Burchell delivered on 21 August 2023.
Dated: 21 August 2023
Gideon Lipinski
Associate to Her Honour Judge Burchell
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