Russell v GWM Adviser Services Ltd

[2010] VCC 1766

IN THE COUNTY COURT OF VICTORIA Revised

(Not) Restricted

AT MELBOURNE
COMMERCIAL LIST

GENERAL DIVISION

Case No. CI-07-01029

CHRISTOPHER RUSSELL	Plaintiff
v.
GWM ADVISER SERVICES LTD	Defendant

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	7 December 2010
DATE OF JUDGMENT:	7 December 2010 (revised 8 December 2010)
CASE MAY BE CITED AS:	Russell v. GWM Adviser Services Ltd
MEDIUM NEUTRAL CITATION:	[2010] VCC 1766

REASONS FOR JUDGMENT

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Catchwords:  Practice and Procedure – Costs – Offer of compromise by plaintiff –
Mirrored offer made by the defendant some days earlier and rejected –
Whether plaintiff’s offer unreasonably rejected justifying an order for
indemnity costs – Plaintiff’s offer only open for acceptance for two hours
– Relevance of defendant’s previously rejected offer in same terms –
Limited effect of the costs order because counsel’s fees would be
certified in any event – Order made for indemnity costrs after time
plaintiff’s offer expired.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr C.R. Hanson	Wisewould Mahony
For the Defendant	Mr D. A. Klempfner	Monahan & Rowell
HIS HONOUR:

1           I have delivered judgment in this matter this morning. There are a number of issues relating to the quantification of the claim which require attention from the parties before final orders can be made. I have, however, heard argument as to costs and it is appropriate that I give my decision on that issue.

2           It is clear from the findings I have made that the plaintiff will benefit in the case by receiving an annuity which will cost between $850,000 and $1m. From this sum will need to be deducted certain amounts. There is no argument, however, that the net sum that the plaintiff will receive will exceed the sum of $500,000.

3           On 29 October 2010, the defendant made an offer in writing to the plaintiff, that it would settle the proceeding on the basis of a payment of $500,000 plus costs. The offer was put on different bases because it also included an offer to settle the second proceeding. However, for present purposes, that fact is of no consequence. The offer was made at 12.57pm on Friday 29 October 2010, and remained open for acceptance until 9.30am on Monday 1 November 2010. The offer in relation to the first proceeding was not accepted by the plaintiff. The trial commenced on Monday 1 November 2010 and was interrupted by the Cup Day holiday on the Tuesday. At the end of Monday, the plaintiff, Mr Russell, was in the witness box and his evidence in chief had not concluded.

4           On Wednesday 3 November 2010, at about 8.30am, the plaintiff’s solicitors made an offer in writing to the defendant’s solicitors that their client would accept the sum of $500,000 plus party party costs in settlement of the proceeding. The offer stated that it remained open for acceptance until 10.30am that day. The letter anticipated that if the offer were not accepted and the plaintiff obtained a judgment better than the offer, that the letter would be used on the issue of costs with application being made for costs to be paid on a solicitor client and/or an indemnity basis from the date of the letter.

5           In my view, there are three significant factors which are relevant to the determination of the plaintiff’s application to receive costs on an indemnity basis from the morning of Wednesday 3 November 2010. They are:

a.	the time the defendant had on Wednesday to accept the plaintiff’s offer;
b.	the position of the case at that time and the assessment the defendant may have made as to its prospects of success;
c.	the difference that there might be between an order for costs on a party party basis or a solicitor client or an indemnity basis from the morning of Wednesday 3 November 2010.

6           The critical issue that must be determined is whether the refusal of the plaintiff’s offer by the defendant on 3 November 2010 was unreasonable. The time available to the defendant to consider the offer was quite short, but the time must be considered in light of the surrounding circumstances, and particularly in this case, that the parties were to resume the hearing at about 10.30am on that day, and the fact that an offer in similar terms had been formulated by the defendant and made by letter the previous Friday and had remained open until 9.30am on Monday 1 November 2010.

7           The offer the defendant had made on the Friday was a substantial offer. It does, in my view, reflect an appreciation by the defendant that its chances of succeeding on the question of liability was not particularly strong. As to the question of quantum,

there was, as I have indicated in my reasons for judgment, a number of factors which
might have affected the question of quantum, including the cost of purchasing an
annuity, the appropriateness of making allowance for withdrawals made from the
allocated pension in respect of costs incurred by the plaintiff in respect of the
proceeding and issues of mitigation of damages relating to the fact that there had
been a switch of investments in 2007, after which, it might be said, the defendant had
little control over the future course of those investments.

8           The defendant apart from relying on certain documents did not lead oral evidence at the trial. There were some matters relating to issues of quantum which were not addressed by the defendant in the evidence it adduced. It is difficult for me, at this time, to understand the state of mind of the defendant as at the morning of Wednesday 3 November and the appropriate assessment that it was making at that time of the possibility of achieving some success in the action, either in relation to the question of liability, or perhaps more importantly, the question of quantum.

9           I have indicated during the course of argument that my practice in the Commercial List is to certify counsel’s fees at a reasonable rate, in excess of scale. The County Court scale for counsel’s fees is very much out of date, particularly in matters where

the amount in issue would have exceeded the jurisdiction of the Court prior to 1
January 2007. The County Court Scale of Costs has four scales. Scale D
commences when the amount at issue is in excess of $50,000. The present case is
one which, before 2007, would have been required to have issued in the Supreme
Court. It was, in fact, issued in 2007, and it is therefore appropriate that counsel’s
fees should be certified at a reasonable rate. Apart from counsel’s fees which would
therefore be compensated for entirely, the only other costs which might not be
covered by party party costs would include the additional cost of plaintiff’s solicitors in
attending court on Wednesday, Thursday and Friday. Although at times, two solicitor
s have been present in court, I am not sure what was the position on the relevant
days, and the costs of one solicitor attending would be substantially compensated for
by party party costs.

10         I think, ultimately, the issue is to be decided on the reasonableness of the time allowed for the defendant to accept the plaintiff’s offer made on the morning of 3 November 2010. If the time allowed for acceptance of the offer had been even two hours longer, I would have had little hesitation in allowing the plaintiff’s application. Two hours (from 8.30 to 10.30am) to accept an offer seems a very short time. However, in the context of this case, where a similar offer had been put by the defendant a very short time before, I consider that the two hours during which the defendant and its legal advisers would have been preparing to come to court was sufficient for it to give proper consideration to the plaintiff’s offer, and in the absence of any other compelling matters, I conclude that it was unreasonable of the defendant, in the circumstances, to have rejected the plaintiff’s offer.

11         The consequences of an order that the plaintiff receive indemnity costs after 10.30am on Wednesday 3 November 2010 will be comparatively minor and this is another reason why I am reinforced as to the correctness of the approach I have taken.

12         I will order that the defendant pay the plaintiff’s costs of the proceeding, including any reserved costs, to be taxed on Scale D on a party party basis until 10.30am on Wednesday 3 November 2010 and thereafter, on an indemnity basis.

13         I certify four days of counsel’s brief fees at $3,300 (including GST) per day and one day of preparation at $3,300 and $3,300 for counsel’s attendance to hear judgment and present submissions on the issue of costs and attend to the further matters

relating to the finalisation of the orders.

14         It is probably appropriate that the costs of today and perhaps the need for the parties to attend on another occasion should be stood over until those matters are determined.

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Certificate

I certify that these 3 pages are a true copy of the reasons for decision of His Honour Judge

Anderson delivered on 7 December 2010 (and revised on 8 December 2010).

Dated: 8 December 2010

Caroline Dawes

Associate to His Honour Judge Anderson