S.J. Higgins Pty Ltd v Mike & Shan Pty Ltd (No 2)

[2020] VCC 1503

IN THE COUNTY COURT OF VICTORIA

AT Melbourne

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

Building Cases List

Case No. CI-20-02544

SJ Higgins Pty Ltd	Plaintiff
v
Mike & Shan Pty Ltd	Defendant

---

JUDGE:	His Honour Judge Woodward
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers, submissions dated 23 September 2020
DATE OF JUDGMENT:	24 September 2020
CASE MAY BE CITED AS:	S.J. Higgins Pty Ltd v Mike & Shan Pty Ltd (No 2)
MEDIUM NEUTRAL CITATION:	[2020] VCC 1503

REASONS FOR RULING
---

Subject:  PRACTICE AND PROCEDURE

Catchwords:             Costs – Calderbank letter – whether refusal to accept unreasonable – whether offer was giving something away

Cases Cited:Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr B Mason	Holding Redlich
For the Defendant	-	Mills Oakley

HIS HONOUR:

1 I gave judgment in this matter on 14 September 2020 in favour of the plaintiff (“SJ Higgins”) against the defendant (“Mike & Shan”) for $372,247.08 plus GST (S.J. Higgins Pty Ltd v Mike & Shan Pty Ltd [2020] VCC 1443). In my reasons, I indicated that I would further order that Mike & Shan pay SJ Higgins’ costs of and incidental to the proceeding on the standard basis, in default of agreement, “unless either party had a basis for a different order as to costs”. I said that I would determine any issue concerning costs on the papers. The plaintiff did have such a basis – a Calderbank offer sent on 16 July 2020. The parties each filed written submissions on the costs issue dated 23 September 2020.

2       The principles to be applied in determining whether to depart from the usual order for costs are well established and not in dispute. In substance (as Mike & Shan has submitted), SJ Higgins must show that it was unreasonable for Mike & Shan to reject the offer in all the circumstances: “In particular, the Court ought to have regard to the factors articulated in Hazeldene’s Chicken Farm v Victorian Workcover Authority [(2005) 13 VR 435, 442]”.

3       SJ Higgins’ Calderbank offer was to accept $320,000, plus GST, plus its costs on a standard basis. The offer was open for acceptance for eight days and was otherwise in the usual form. Mike & Shan does not take issue with the clarity of the offer, or that it adequately foreshadowed an application for indemnity costs. However, it opposes any departure from the usual order for costs on three grounds, namely:

·     there was insufficient time allowed for Mike & Shan to consider the offer;

·     when assessed as at 16 July 2020, Mike & Shan’s case was not unarguable and largely depended on questions of statutory interpretation; and

·     the extent of the compromise from SJ Higgins does not justify the making of a special costs order.

4       For its part, SJ Higgins argues (among other things) that:

·     the eight days allowed for acceptance was reasonable given that the trial was imminent;

·     the offer contained a reasonable compromise ($320,000 plus GST plus costs on the standard basis, but without an allowance for interest, compared with the judgment amount of $372,247.08 plus GST plus accrued interest); and

·     there had been sufficient material before and during the notice period to ensure that Mike & Shan could assess its prospects of success.

5       In my view, the issues on this application are finely balanced. On Mike & Shan’s first two grounds, I am inclined to the view that these do not justify Mike & Shan’s failure to accept the offer. As to the first ground, the period for acceptance was shorter than is customarily offered. However, in the context of a summary proceeding of this kind and given the imminence of the trial, in my view it was sufficient. Turning to the second ground, I am satisfied that Mike & Shan’s prospects were poor, particularly on the two issues given the most prominence in its submissions on costs (statutory construction and contractual interpretation). Indeed, in my view, the statutory construction argument could fairly be described as unarguable.

6       However, on balance (and having considered the decision of Giles J in Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358) I accept Mike & Shan’s submissions on the third ground. I agree that Hobartville Stud stands for the proposition that a party seeking to rely on a Calderbank offer must “give something away” and that this is an important factor in assessing the reasonableness of a rejection of the offer. While a plaintiff with a strong claim may be in a position to make only a nominal offer, in doing so, it cannot properly be said to have given anything away. For the reasons set out in Mike & Shan’s submissions at [19] to [22], I consider that the offer was not a sufficient compromise of SJ Higgins’ claim as then advanced, with the result that Mike & Shan’s decision not to accept the offer was not unreasonable.

7       I will therefore order that Mike & Shan pay SJ Higgins’ costs of and incidental to the proceeding to be taxed on the standard basis, in default of agreement. Further, given the fine balance in relation to the costs issues, I consider that the order for costs in SJ Higgins’ favour should extend to the costs of and incidental to this ruling. I will also make the order for interest sought by SJ Higgins, being for the sum of $15,154.79 as at the date of these reasons.

- - -

Certificate

I certify that these 3 pages are a true copy of the judgment of His Honour Judge Woodward delivered on 24 September 2020.

Dated: 24 September 2020  Claire Findlay
Associate to His Honour Judge Woodward