Reiersen v Homestead Shearing Contractors Pty Ltd and Ors (Ruling as to costs)
[2020] VCC 1553
•2 October 2020
| IN THE COUNTY COURT OF VICTORIA AT WARRNAMBOOL COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
| GENERAL LIST |
Case No. CI-19-04598
| ADRIAN REIERSEN | Plaintiff |
| v | |
| HOMESTEAD SHEARING CONTRACTORS PTY LTD | First Defendant |
| and | |
| JUDITH ANNE PRASSER | Second Defendant |
| and | |
| PETER WILLIAM PRASSER | Third Defendant |
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JUDGE: | HIS HONOUR JUDGE O’NEILL | |
WHERE HELD: | Warrnambool (via Zoom technology) | |
DATE OF HEARING: | 9 September 2020 | |
DATE OF RULING: | 2 October 2020 | |
CASE MAY BE CITED AS: | Reiersen v Homestead Shearing Contractors Pty Ltd & Ors (Ruling as to costs) | |
MEDIUM NEUTRAL CITATION: | [2020] VCC 1553 | |
RULING AS TO COSTS
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Subject: COSTS
Catchwords: Application for indemnity costs, alternatively costs on a standard basis as between defendants in contribution proceeding – Calderbank offer in the course of trial – two day time limit within which the offer could be accepted – allegations by plaintiff against defendants changed – whether offer of the plaintiff still open to be accepted – whether terms of the offer sufficiently specific – whether judgment provided a less favourable result – whether refusal to accept contribution offer unreasonable
Legislation Cited: Occupational Health and Safety Regulations 2007; Workplace Injury Rehabilitation and Compensation Act 2013; Civil Procedure Act 2010
Cases Cited:Reiersen v Homestead Contractors Pty Ltd & Ors [2020] VCC 1255; Calderbank v Calberbank [1975] 3 All ER 333; Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; Aljade and MKIC v OCBC [2004] VSC 351; Zealley v Liquorland (Australia) Pty Ltd & Anor (Costs Ruling) [2015] VSC 133; Settlement Group Pty Ltd v Purcell Partners (a Firm) (No 2) [2014] VSCA 68; MacLean v Rottnest Island Authority [2001] WASCA 323 [2001] WASCA 323; Latoudis v Casey (1990) 179 CLR 534
Ruling:Second/third defendants pay the first defendant’s costs of the proceeding and the contribution proceeding on an indemnity basis from and including 6 July 2020.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J P Brett QC with Mr G Pierorazio | Stringer Clark |
| For the First Defendant | Mr A D Clements QC with Ms F Ryan | Thomson Geer |
| For the Second and Third Defendants | Mr D Myers | Meridian Lawyers |
HIS HONOUR:
Preliminary
1 On 27 August 2020, I handed down my Reasons for Judgment[1] in this proceeding. It concerned the plaintiff, a shearer, suffering injury to his lower spine while employed by the first defendant, a shearing contractor, at a shearing shed owned by second/third defendants. I found both the first and second/third defendants in breach of the duty of care they owed the plaintiff which was a cause of his injury. I found further, each defendant was in breach of the Occupational Health and Safety Regulations 2007 (“the Regulations”). I assessed damages both as to pain and suffering and economic loss.
[1]Reiersen v Homestead Contractors Pty Ltd & Ors [2020] VCC 1255
2 As there was a contribution proceeding between the defendants, I assessed that each defendant should contribute 50 per cent towards the plaintiff’s judgment.
3 On 9 September 2020, I made Orders in accordance with my Judgment.
4 On that day, I received written submissions and heard argument as to the costs orders, as between the defendants, which ought follow.
The offers
5 The principal proceeding was heard over fourteen sitting days. Various offers were made by the parties to resolve the principal proceeding, and the contribution proceeding. Aside from statutory offers made pursuant to the provision of the Workplace Injury Rehabilitation and Compensation Act 2013 (“the Act”), the offers included:
· On 23 June 2020, the plaintiff served a Calderbank[2] offer upon the first and second/third defendants to resolve the proceeding on the basis the plaintiff would receive $650,000 plus retention of benefits already received under the Act, plus costs. (The plaintiff’s offer of 23 June).
[2]In accordance with the principles established in Calderbank v Calderbank (1975) 3 All ER 333
· On 23 June 2020, the first defendant served upon the second/third defendants, two separate Calderbank offers: the first offering to contribute 33.4 per cent towards any settlement or damages awarded to the plaintiff, and a second offer indicating the first defendant was prepared to accept the plaintiff’s offer of 23 June on the basis the first defendant would contribute 33.4 per cent towards the plaintiff’s offer, and the second/third defendants would contribute the remainder. (The first defendant’s offers of 23 June).
· On 24 June 2020, the second/third defendants served upon the first defendant a Notice of Offer of Willingness to Contribute stating the defendants accept the plaintiff’s offer of 23 June, and that the second/third defendants contribute 10 per cent towards that offer and the first defendant the balance. Further, each defendant would bear their own costs of the contribution proceeding. That offer was said to expire at the close of business on 26 June 2020. (The second/third defendants’ offer of 24 June).
· On 1 July 2020, the first defendant served upon the second/third defendants a further two Calderbank offers: the first offering to contribute 50.1 per cent towards any settlement or damages awarded to the plaintiff, and a second offer indicating the defendants accept the plaintiff’s offer of 23 June, on the basis the first defendant would contribute 50.1 per cent towards the plaintiff’s offer and the second/third defendants would contribute the remainder. Those offers were said to expire at 5.00pm on Friday, 3 July 2020. (The first defendant’s offers of 1 July).
6 Each of the offers are set out in detail in the affidavit of Mr Nicholas Blayney, affirmed 8 September 2020. The first defendant’s offers of 1 July included the following:
“In summary the First Defendant maintains that it is not liable in negligence or breach of duty for the Plaintiff’s injury. Further, the First Defendant will submit that the Plaintiff’s claim ought fail against defendants.
However, if the Plaintiff is to succeed it is clear he will do so by establishing various deficiencies in the design of your clients’ shed. These alleged deficiencies were highlighted in detail during the opening from the Plaintiff’s Senior Counsel and they occupied a significant amount of the Plaintiff’s evidence-in-chief. These matters are also set out in the expert report of Mr Michael Lawrance, and include alleged deficiencies relating to the catching pen, the shearing board, the shearing stand and the let-go exit. These alleged deficiencies almost entirely relate to an occupier’s liability and are beyond the control of the First Defendant.
Further, the Plaintiff has frequently reported that the injury occurred whilst dragging a sheep at your clients’ shed. This is an inherent requirement of his job and not a task that will implicate the First Defendant in a finding of negligence or breach of duty. If the Plaintiff is to succeed in relation to this task (which is denied) then it should only implicate the Second and Third Defendants on the basis that it allegedly relates to deficiencies in the premises including the size of the shared catching pen and the positioning of the shearing down tube affecting the ‘drag’.
We otherwise suggest that the Plaintiff’s claim that there were inadequate wool handlers on site during the relevant period has little merit and will not be accepted after evidence is called from the two relevant wool handlers.
In these circumstances we view this is a reasonable offer.
… .”
This application
7 The first defendant now seeks, as against the second/third defendants, its costs on an indemnity basis; alternatively, on a standard basis, of the proceeding, including the contribution proceeding, from 2 July 2020. It further seeks the second/third defendants indemnify it in respect of any liability to pay the plaintiff’s costs of the proceeding from 2 July 2020.
8 The basis for seeking such orders is that it was unreasonable for the second/third defendants to reject the first defendant’s offers of 1 July.
9 The onus lies upon the first defendant to prove the refusal by the second/third defendants, to accept its offers of 1 July, was unreasonable.
Relevant factual issues arising from the trial
10 There are a number of factual issues arising from the trial which are relevant in considering this application.
11 The trial commenced on 29 June 2020. According to the Amended Statement of Claim, the particulars relevantly alleged against the first defendant were:
· Failing to inspect the shearing shed where the plaintiff suffered injury, and advise the second/third defendants of problems with the set up and layout of the shed, including:
§ the failure to provide a catching pen for each shearer
§ the failure to provide a fixing point for the plaintiff’s shearing harness
§ the insufficient width of the shearing board
§ the excessive distance needed to be travelled by a shorn sheep to the let-go gates
· Failing to ensure there were sufficient wool handlers to keep the shearing board clear of fleeces and wool
· Failing to comply with the Regulations.
12 As against the second/third defendants, the particulars relevantly allege:
· Failing to provide a shearing shed which was laid out and maintained in accordance with modern shearing practices
· Failing to provide a dedicated catching pen for each shearer to minimise difficulties associated with dragging the sheep to the shearing stand
· Requiring the plaintiff to drag sheep crosswise over floor batons
· Failing to provide a shearing board of sufficient width to enable a sheep to be dragged to the shearing stand with minimal rotation
· Failing to provide a secure harness point to which the plaintiff could affix his harness
· Failing to have an excessive distance by which the shorn sheep exited through the let-go gates
· Failing to ensure there were sufficient staff in the shearing gang to keep the shearing board free of fleeces and wool
· Failing to ensure each shearing stand was offset from the catching pen to minimise rotation
· Failing to comply with the Regulations.
13 The allegations of failing to provide a secure harness point for the plaintiff’s sling, the drag across floor batons and there being too wide a distance between the let-go gate and shearing stand (save as it related to the width of the shearing board), were not pursued.
14 In the course of his opening, counsel for the plaintiff, Mr Brett, summarised the allegations made against the defendants. As against the first defendant, in addition to a breach of the Regulations, the principal allegations were failing to properly inspect the shearing shed and bring to the attention of the second/third defendants deficiencies in the drag path and shearing stand width, and a failure to employ sufficient wool handlers to ensure fleece or wool was not left on the shearing shed floor.
15 As against the second/third defendants, the principal allegations were, aside from a breach of the Regulations, failing to take steps to ensure the drag path between the catching pens and the shearing stand was not too acute, and taking steps to broaden the shearing board.
16 At the time of the first defendant’s offers of 1 July, the trial had been running several days. Mr Brett had opened the case for the plaintiff, Mr Clements, counsel for the first defendant, and Mr Myers, counsel for the second/third defendants, had made brief responses, the plaintiff had given evidence-in-chief, and cross-examination by Mr Clements was underway. The first defendant’s offers of 1 July were made at 7.28pm that evening. By 5.00pm, Friday, 3 July 2020, when the offers of 1 July were said to expire, cross-examination by the first defendant had been completed, and the plaintiff was under cross-examination by Mr Myers.
17 At that point, the allegation as against the first defendant that it had failed to provide enough wool handlers was being actively pursued. The significance of the allegation was that if there had been more wool handlers, there would not have been wool or fleece left on the shearing board, as a consequence of which the plaintiff would not have had to lift a sheep over it. The lifting of the sheep while twisting was said to be a cause of the plaintiff’s lower back injury. As I remarked in the Reasons for Judgment,[3] it was not until final addresses that Mr Brett gave real precision to the way in which the case was put. By that time, and following evidence from a number of wool handlers who were called to give evidence, the allegation against the first defendant of failing to have sufficient wool handlers, was abandoned.
[3]Judgment (supra) at paragraph [11]
The contentions on behalf of the Second/Third Defendants
18 The second/third defendants submit that given the complexity of the case and the shift in allegations made by the plaintiff against the respective defendants, the failure to accept the first defendant’s offers of 1 July, was not unreasonable in the circumstances. Specifically, the second/third defendants contend:
(a)the first defendant’s offers of 1 July, while referring to the allegation as to the number of wool handlers, made no reference to the strength or otherwise of the plaintiff’s allegation that the first defendant had failed to inspect the shearing shed, in particular, as to the width of the shearing board, and the drag path;
(b)the offers of 1 July, while stating the letter would be produced on the question of costs, foreshadowed an application for costs from the date of the letter, but did not specify that application would include an application the second/third defendants indemnify the first defendant in respect of its share of the plaintiff’s costs;
(c)the window within which the offers could be accepted – less than two days – was too short in the circumstances;
(d)the offer was made at a time when the allegations as to negligence made by the plaintiff against the defendants were not clear nor concise. Specifically, at the time the plaintiff maintained against the first defendant and was actively pursuing an allegation of failure to provide sufficient wool handlers;
(e)at the time the first defendant’s offers of 1 July were made, the plaintiff’s offer to accept $650,000 plus costs had expired, and there was no evidence the plaintiff would have accepted that or any other offer;
(f)in any event, the judgment rendered was not less favourable to the first defendant than its offers of 1 July.
The authorities
19 The principles to be considered in determining an award of costs orders in these circumstances were established by the Court of Appeal in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2).[4]The Court said:
“In our view, these competing considerations can be sufficiently accommodated by applying a test of (un)reasonableness. 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.”[5]
[4](2005) VR 435 at 442
[5]At paragraph [23]
20 While acknowledging in the exercise of discretion it was impossible to give an exhaustive list of all relevant circumstances, the Court said that in considering whether the rejection of a Calderbank offer was unreasonable, regard should be had to:
(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.[6]
[6]At paragraph [25]
21 The Court considered whether it was necessary for a Calderbank offer to set out the basis for the offeror’s contention that the offer should be accepted, and approved what Redlich J had said in Aljade Development and Construction SDN BHD and Malaysian Kuwaiti Investment Co SDN BHD v Oversea-Chinese Banking Corporation Limited & Ors.[7] His Honour there said it was neither necessary nor desirable to lay down a rule that an offeror should set out specific details as to why an offer should be accepted. Consideration should be given to all the circumstances existing at the time of the offer.
[7][2004] VSC 351
22 The awarding of costs where a failure to accept an offer was unreasonable, has application to contribution proceedings.[8]
[8]Zealley v Liquorland (Australia) Pty Ltd & Anor (Costs Ruling) [2015] VSC 133
23 In Zealley,[9] J Forrest J did not take issue with an offer said to be open for two days. However, in Settlement Group Pty Ltd v Purcell Partners (a Firm) (No 2),[10] a Calderbank offer said to be open for two days was considered by the Court of Appeal to be a “quite inadequate” time for such an offer to remain open, although there were additional factors which led the Court to the view that the refusal to accept the offer was not unreasonable.
[9]ibid
[10][2014] VSCA 68
24 In MacLean v Rottnest Island Authority,[11] the Court of Appeal of Western Australia said:
“… the Court should not encourage the use of a Calderbank letter delivered shortly before trial when the other party might reasonably be expected to have their minds on a number of matters. The use of a Calderbank letter is an aid to the administration of justice and should be encouraged. Its use as an indiscriminately wielded tactical weapon should be discouraged.”
[11][2001] WASCA 323 at paragraph [36]
Analysis
The need to set out further detail as to why the offers should be accepted
25 As was said by Redlich J in Aljade,[12] it is impossible to set out specific detail as to the strength or weaknesses of a party’s case as a basis upon which an offer should be accepted. To do so would effectively require an offeror to detail all of the allegations, made in a proceeding, and the response to those allegations.
[12]Supra
26 Notwithstanding this, the first defendant’s offers of 1 July suggested the allegation as to inadequate sheep handlers was unlikely to succeed. It went further and noted the expert report of Mr Michael Lawrance was critical of the layout and design of the sheering shed. It noted there were deficiencies relating to the catching pen, the shearing board, the shearing stand and the let-go gates and these were physical issues only the second/third defendants could remedy. While there was no reference to the strength or otherwise of the allegations made by the plaintiff against the first defendant as to inspection of the premises, both the second/third defendants’ counsel and instructing solicitors were experienced litigators in this jurisdiction. They must have been aware of the allegations made against all defendants, had available the expert report of Mr Lawrance and were capable of making an assessment of the relative strengths and weaknesses of the plaintiff’s case. No more detail was required in the first defendant’s offers of 1 July.
The offers did not foreshadow an indemnity for the Plaintiff’s costs
27 The first defendant’s offers of 1 July were in two parts: One was an offer to contribute 50.1 per cent to any damages awarded to the plaintiff; and the second, an offer to contribute 50.1 per cent towards the plaintiff’s offer of 23 June. The warning of an application for costs upon non acceptance was identical in each offer. It was:
“We put you on notice that if your client rejects this offer and your client obtains an outcome at trial that is less favourable than the offer contained herein, then we will produce this letter on the question of costs. An application will be made for costs from your client on a party and party or alternatively an indemnity basis from the date of this letter, in accordance with the principles set out in Calderbank … and Hazeldene’s … .”
28 While the warning did not discriminate between an application for costs incurred by the first defendant and an application for indemnity in respect of costs to be paid by the first defendant to the plaintiff, nonetheless, as experienced litigators, those advising the second/third defendants ought to have known that that was the nature of the application which would be made. It must have been obvious to those practitioners that if the offer was not accepted and a result obtained less favourable than the offer, then the first defendant would be at risk of paying the plaintiff’s costs, and incurring costs itself. Both those possibilities ought to have been in the contemplation of the second/third defendants.
The two-day window
29 The first defendant’s offers of 1 July were made several days into the trial, after the plaintiff had completed evidence-in-chief and in the course of cross-examination by counsel for the first defendant.
30 At that time, undoubtedly counsel for the second/third defendants and his instructor’s attention would have been taken by attempting to understand the case being put against their clients. In any trial of this magnitude, the hours are long, the information to be consumed is extensive and the pressure upon counsel and instructing solicitors substantial. To take the time necessary to understand and assess an offer of compromise in those circumstances is never easy.
31 Nonetheless, the proceeding had been on foot for some days. The pleadings had been filed, interrogatories answered and expert reports exchanged. Any common lawyer practising in the jurisdiction prepares a case with an eye to assessing how much would be required to resolve the proceeding, although that assessment is never done with absolute precision. Experienced practitioners would have some real idea of the likely award of compensation and the risk inherent for a plaintiff. Such assessments are regularly made on short notice. While it would have been a distraction to consider the first defendant’s offers of 1 July, it was nothing that could not be accommodated in the circumstances. Of note is that the second/third defendants’ offer of 24 June likewise gave a window of response of two days.
32 Further, no response was made to seek further time. The issue was not the short period within which to consider the offer. Nor was it the quantum of the plaintiff’s offer, as the second/third defendants’ offer of 24 June contemplated accepting that offer. Rather the view taken was that the offer of 50 per cent contribution was too high. In the circumstances, I am of the view the window for acceptance of the offer was not too brief.
The lack of clarity as to the allegations made against the Defendants at the time of the offers
33 As earlier observed, it was not until final submissions that the plaintiff’s case against the defendants achieved a stage where the defendants knew precisely the allegations against them. As at 1 July 2020, the plaintiff maintained against the first defendant as a significant part of his case, that the first defendant had failed to supply sufficient wool handlers. Further, other aspects of the case against the second/third defendants were subsequently abandoned, including a proper attachment for the plaintiff’s harness, the positioning of the let-go gates and some allegations relating to the catching pen.
34 Every common law trial of this nature has an organic element. It changes, expands and parts of it fall away. A witness who initially was expected to provide strong and persuasive evidence falls in cross-examination. An expert whose theories are attractive on paper does not measure up in the witness box. Allegations of negligence and contributory negligence are regularly abandoned. So much was the case in this proceeding.
35 What must have been obvious to those advising the second/third defendants was that a significant aspect of the allegations against their clients related to the design and set up of the shearing shed. The report of the only expert called to give evidence, Mr Michael Lawrance, was critical of that design, in particular, as to the drag path, and the width of the shearing board. While the shearers and Mr Cook, the shearing contractor, gave evidence as to the suitability of the shed, it must have been obvious that there was a significant risk, particularly given Mr Lawrance’s impressive curriculum vitae, that his evidence would be accepted. Were that to occur, the plaintiff was likely to succeed. Further, resolution of the design issues lay with the second/third defendants, and not the first defendant. That position did not change throughout the course of the trial, albeit other allegations were made and fell away.
36 Counsel for the second/third defendants contended that the real expertise in assessing the risk of injury in a shearing shed lay with the shearing contractor, the first defendant. However, again, it must have been obvious from Mr Lawrance’s report that shearing practice required not only shearing contractors, but also farm owners and managers to have a working knowledge of factors which posed a risk of injury in a shearing shed. Publications were tendered in evidence, which were available within the industry at the time, and said as much.
37 Faced with these issues, the offer by the second/third defendants to contribute 10 per cent to resolution of the plaintiff’s case was wholly inadequate. Experienced minds might differ on a fair apportionment between the defendants. It could be argued the first defendant, as the expert shearing contractor, ought to have contributed more than 50 per cent. It could equally be argued that the second/third defendants, as the owner of the shearing shed, ought to have contributed more than 50 per cent. Whatever the view taken, a contribution of 10 per cent showed a stubborn indifference to the reality of the situation.
38 The overarching purpose of the Civil Procedure Act 2010 is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute in litigation. The Act further requires parties, including counsel and instructing solicitors, to use reasonable endeavours to resolve a dispute. The offer of 10 per cent was, in my view, not a reasonable endeavour.
Would the Plaintiff have accepted the expired offer?
39 By the time the first defendant’s offers of 1 July were made, the plaintiff’s offer of 23 June had expired, the deadline being Friday, 26 June 2020. There is no evidence that were the plaintiff approached after the deadline, the offer would still have been open, and would have been accepted. Mr Myers submits that even had the second/third defendants accepted the first defendant’s offer of 1 July, there was nothing to suggest it would have been accepted and the proceeding resolved.
40 Mr Clements submitted the matter would have resolved had the plaintiff’s practitioners been approached.
41 In order to accept Mr Clements’ position, it is necessary for me to draw an inference that, had the plaintiff’s practitioners been approached, the matter would have resolved for $650,000 plus costs, or even less. I bear in mind the following:
· The plaintiff’s offer of 23 June was a “plus costs” offer that meant that any additional costs incurred between the date of the expiry of the plaintiff’s offer and the date of any resolution, would be accommodated.
· Nothing significant in the evidence had transpired between 26 June 2020, when the plaintiff’s offer expired, and 3 July 2020, when the first defendant’s offers expired, to cause the plaintiff or his practitioners to dramatically re-assess the situation. The plaintiff was being cross-examined and at a point in the trial when his case was not at its strongest.
· In my experience, sensible plaintiff’s counsel and instructing solicitors will always attempt to try to resolve a matter before and during trial. Many cases such as this are run on a ‘no-win-no-fee’ basis, making substantial the risk of not accepting a sensible offer.
· The plaintiff’s offer of 23 June was not dissimilar to the Court’s final judgment, although somewhat more. There was nothing to suggest those advising any of the defendants considered the quantum of that offer overly generous. The issue was not with the amount of the offer, rather the second/third defendants’ contribution to it.
42 It is possible the plaintiff’s practitioners may have seen their client’s case as going well, gaining in strength and asked for more. Something else may have occurred to upset the settlement negotiations.
43 However, on balance, I am of the view had there been a united attempt by counsel for the defendants to approach the plaintiff’s practitioners to resolve the proceeding at the relevant time, with each agreeing to contribute one half towards that resolution, the offer or something very close to it would have been reinvigorated, and the proceeding would have settled. There was too much at stake for the plaintiff and his practitioners to reject a sensible offer.
Was the judgment obtained less favourable than the First Defendant’s offers of 1 July 2020?
44 This is a somewhat complex issue and one upon which I sought further submissions from the defendants. I have taken those submissions into account.
45 My Judgment rendered to the plaintiff total damages of $520,299. That sum included my assessment of pain and suffering and economic loss damages, deductions for an impairment benefit and weekly payments earlier paid to the plaintiff under the Act, plus a small amount of interest. Each of the respective defendants are obliged to pay 50 per cent, or $260,150 plus one half of the plaintiff’s costs and disbursements.
46 The first defendant’s offers of 1 July, if accepted by the second/third defendants, would have required the first defendant to contribute 50.1 per cent of $650,000, or $325,650, plus 50.1 per cent of the plaintiff’s costs. In terms of the judgment sum then, the first defendant was better off by $65,500 than it would have been had the first defendant’s offers of 1 July been accepted. Likewise, the second/third defendants.
47 If costs are to be awarded against the second/third defendants for unreasonably failing to accept the first defendant’s offers of 1 July, then notwithstanding what the offers said about the date from which such costs would be claimed, I am of the view costs could only be awarded from and including Monday, 6 July 2020, the first sitting day after the offers expired. That thus left nine sitting days of counsels’ fees and other costs. Counsel for the plaintiff certified fees alone total $94,500 for those nine days. To this should be added instructing solicitor’s costs, witness fees, attendance upon judgment and the like.
48 The question then is whether 50 per cent of the total of the plaintiff’s costs and disbursements from and including 6 July 2020 would exceed the $65,500 the first defendant saved on the judgment?
49 I consider I am not in a position to answer that question. To do so would be to speculate about costs, an area about which I have limited knowledge. I thus cannot conclude the first defendant’s offers of 1 July, if accepted, would have resulted in a more favourable outcome for the first defendant.
Conclusion
50 Because I am not satisfied the Judgment did not produce a less favourable result, then insofar as the application seeks the second/third defendants indemnify the first defendant for its obligation to pay part of the plaintiff’s costs, that application should fail.
51 However, a further part of the first defendant’s application is that the second/third defendants pay its costs from the date its offer expired.
52 The making of an award of costs is unfettered and always in the discretion of the Court.[13] The conduct of the parties in the course of a proceeding is a matter to be considered. Matters of “judgment and impression” will be taken into account in determining whether a party’s conduct has been reasonable or unreasonable.[14]
[13]Latoudis v Casey (1990) 179 CLR 534 at 557 (per Dawson J)
[14]Hazeldene’s (supra) at paragraph [24]
53 The overarching obligations of the Civil Procedure Act 2010 place important and onerous obligations on insurers and legal practitioners to avoid delay and expense, attempt to resolve matters in dispute and ensure costs are reasonable and proportionate.[15]
[15]Sections 22, 24, 28, 29 of the Civil Procedure Act 2010
54 Further, s65C(1) of the Civil Procedure Act also now permits a court to make “any order as to costs it considers appropriate to further the overarching purpose” of the Act. A court may “make different awards of costs in relation to different parts of a proceeding or up to or from a specified stage of the proceeding”. In making such an order, s65C(2A) sets out a number of matters a court may take into account.
55 I am of the view the second/third defendants’ assessment as to their contribution towards resolution, in the region of 10 per cent, was unrealistic in the light of the pleadings, evidence and material of which they were aware. Their refusal to attempt to join with the first defendant to resolve the proceeding in terms of the plaintiff’s offer of 23 June was unreasonable.
56 The consequence was that the first defendant expended costs from and including 6 July 2020 which ought not to have been incurred. I am of the view, in the exercise of my discretion as to costs, the second/third defendants should pay the first defendant’s costs from that date.
57 No submissions addressed whether those costs should be paid on an indemnity as opposed to a standard basis. In Hazeldene’s,[16] the Court of Appeal made clear there was no presumption that a party rejecting a Calderbank offer should pay the offeror’s costs on an indemnity basis. However, the Court considered the rejection by a party of a Calderbank offer as a matter “which the court should have regard when considering whether to order indemnity costs”.[17] Their Honours also expressly recognised that “the unreasonable refusal of an offer of compromise is, by itself, a proper ground for the award of indemnity costs”.[18]
[16]Supra
[17]Hazeldene’s (supra) at paragraph [20]
[18]Hazeldene’s (supra) at paragraph [28]
58 Given my assessment of the conduct of the second/third defendants, in my view, it is appropriate that costs be awarded on an indemnity basis. Thus, I will order the second/third defendants pay the first defendant’s costs of the proceeding and the contribution proceeding on an indemnity basis from and including 6 July 2020.
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