Sheridan v Australian Pacific Airports (Melbourne) Pty Ltd [No 2]
[2021] VSC 593
•17 September 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S ECI 2018 02370
| ANTHONY JAMES SHERIDAN | First plaintiff and first defendant by counterclaim |
| ACCIDENT BY DESIGN PTY LTD (ACN 136 691 839) | Second plaintiff and second defendant by counterclaim |
| v | |
| AUSTRALIAN PACIFIC AIRPORTS (MELBOURNE) PTY LTD | First defendant and plaintiff by counterclaim |
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JUDGE: | Gorton J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 31 August 2021 |
DATE OF RULING: | 17 September 2021 |
CASE MAY BE CITED AS: | Sheridan v Australian Pacific Airports (Melbourne) Pty Ltd [No 2] |
MEDIUM NEUTRAL CITATION: | [2021] VSC 593 |
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PRACTICE AND PROCEDURE – Declaratory relief – Defendant sought declaration by counterclaim – Defendant successful on issue at trial – Plaintiffs nevertheless opposed declaratory relief – Declaratory relief granted.
PRACTICE AND PROCEDURE – Costs – First plaintiff obtained only nominal damages at trial – Plaintiffs had served notice to admit – Defendant had served offers of compromise – Offers of compromise not effective – Plaintiffs ordered to pay costs, but with some exclusions – Supreme Court (General Civil Procedure) Rules 2015 (Vic) rr 26.08, 35.06, 63.18.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr Upjohn QC and Mr A Richardson | Mann Lawyers Pty Ltd |
| For the First Defendant | Mr Collins QC | Sparke Helmore |
TABLE OF CONTENTS
A. APAM’s counterclaim................................................................................................................. 1
B. Costs................................................................................................................................................ 3
B.1.Costs generally...................................................................................................................... 4
B.2.Notice to admit...................................................................................................................... 7
C. Offers of compromise................................................................................................................ 11
C.1.The offer that extended to the claims under the Competition and Consumer Act 2010 (Cth).............................................................................................................................................. 12
C.2.The offer that related to the validity of the LDA scheme............................................. 14
C.3.The offer that related to the entire proceeding.............................................................. 15
C.4.Conclusions on the offers of compromise...................................................................... 16
D. Reserved costs — Efthim AsJ.................................................................................................. 16
E. Conclusions and orders............................................................................................................. 17
HIS HONOUR:
On 28 July 2021, I delivered judgment in this matter and published my reasons.[1] Terms used in this ruling have the same meaning that they do in those reasons. The matter was adjourned in the hope that the parties would agree on a form of orders that reflected my decision. Other than accepting that, in accordance with my findings, there should be an order that APAM pay Mr Sheridan damages in the sum of $1,000 and that the second plaintiff’s claim against APAM should be dismissed, the parties have not reached agreement on the orders that should be made. Each has provided written submissions and a proposed form of order. APAM did not pursue an injunction but sought a declaration. Mr Sheridan contended that no declaration should be made. The parties sought very different orders as to costs.
[1]Sheridan v Australian Pacific Airports (Melbourne) Pty Ltd [2021] VSC 440.
After hearing further argument on these issues on 31 August 2021, I indicated that I proposed to order that APAM pay Mr Sheridan damages in the sum of $1,000, to dismiss the second plaintiff’s claim against APAM, and to make a declaration on APAM’s counterclaim.
I indicated that I would provide reasons. APAM then provided me with three offers of compromise that it had served. The parties argued the effect of these offers, and I reserved my decision. This is my ruling on the decision to make a declaration, and on costs.
Although there were two plaintiffs, the parties did not make any arguments that there should be different orders made in respect of the two plaintiffs. I consider this to have been a sensible approach, in circumstances where the second plaintiff was a company owned by Mr Sheridan. There was, in substance, one moving party, and it is appropriate that the one costs order be made in respect of the plaintiffs, rather than a separate and possibly different costs order being made in respect of each plaintiff.
A. APAM’s counterclaim
In its counterclaim, APAM sought declarations that it was entitled to exclude hire car drivers including Mr Sheridan from the premises if they did not comply with the requirements of the LDA scheme, and that Mr Sheridan and his company had trespassed by entering the premises without having complied with the LDA scheme. It also sought an injunction restraining Mr Sheridan and his company from entering onto and engaging in commercial hire car operations at the premises unless and until they hold valid licences. As noted above, in light of the observations made in my reasons that I had no basis for considering that Mr Sheridan was likely to trespass in the same way in the future unless he were restrained from doing so by court order, and in light of the fact that he has since applied for an LDA, APAM did not pursue its claim for injunctive relief.
Mr Sheridan submitted that I ought not to give APAM any declaratory relief. He argued that there was no utility in doing so because the reasons establish that APAM had the right to exclude and because events have moved on. In particular, the licensing scheme has been changed, and the Qantas lease has now expired. On the other hand, APAM contended that, although the detail of the licensing schemes may have changed, the central underlying fact remains — ie, that it as tenant has the right to exclude persons from the leased premises and as a corollary the right to impose a condition on their entry onto the leased premises. APAM contended that this warrants a declaration being made to put that point beyond further dispute.
If Mr Sheridan had not sued APAM and instead APAM had commenced a proceeding in which it as plaintiff made the allegations set out in its counterclaim, and it proved those allegations, the Court would have had little hesitation in making a declaration to record its conclusion that as a matter of law APAM had the right to exclude persons from its leased premises who did not comply with its entry requirements. I see no reason why the fact that the allegations are made in a counterclaim should lead to a different result.
I do not see that the fact that there have or may have been changes in the detail of the licensing scheme operated by APAM means that the dispute between the parties is of historic interest only. The dispute did not turn on the detail of the licensing scheme but instead arose out of a fundamental dispute as to APAM’s rights as a tenant of land at common law and in the context of a complex statutory and regulatory regime. Further, as APAM pointed out, I have to make some order on the counterclaim. I have found the allegations contained within it proved, and if I do not grant the relief sought, I would have to dismiss it, which has the potential to lead to uncertainty. Accordingly, I consider it appropriate to declare that:
The first defendant, in its capacity as tenant, is entitled to exclude the plaintiffs from entering onto the land which it occupies under a lease from the Commonwealth of Australia entered into on or about 1 July 1997 known as Melbourne Airport (save for any part thereof in respect of which the first defendant has given a legal right of exclusive possession to another person) for the purpose of providing commercial hire care services, unless they comply with the conditions upon which the first defendant is prepared to permit them to do so.
For the record, I note that Mr Sheridan expressly declined to allege or to argue in the hearing before me that the licensing scheme was unreasonable in its terms. This meant that there was no issue in the case that I heard as to whether or not APAM’s power to exclude was controlled by a requirement that any licensing scheme be reasonable in the restrictions it imposed having regard to the purpose and terms of the lease. This was, as I observed in my reasons, a sensible approach for Mr Sheridan to take because, on the evidence before me, it could not sensibly have been argued that the scheme was unreasonable in its terms. I have no reason to think that any changes that have been made to the detail of the scheme would alter that position. Also, my reasons would be consistent with a conclusion that, if there were any such restriction, it would be for the Commonwealth or any other party to any lease to enforce, rather than persons in Mr Sheridan’s position who enter APAM’s land as licensee and only with APAM’s permission. Finally, Mr Sheridan may well be estopped from running any such arguments in any future proceedings. But I express no concluded view on these matters.
B. Costs
APAM’s principal submission was that I ought to order costs in its favour and fix them at $650,000. I do not feel it appropriate that I fix costs in this way, as I do not feel in a position to quantify them, or indeed to consider whether that figure is reasonable. Mr Sheridan’s principal submission was that, seen overall, things tended to ‘balance each other out’, and so I ought to make no order as to costs. I do not see it that way. In my view, that submission fails to acknowledge that Mr Sheridan commenced a proceeding in which he was, for the most part, unsuccessful.
Costs are not punitive, and the making of a costs order against a party reflects the reality that costs are incurred and have to be borne by one party or the other. An order that an unsuccessful party pay the costs of the successful party, which is the usual position, does not mean that the unsuccessful party has acted ‘improperly’ in bringing the action. Rather, it reflects the fact that, as a general rule, it will be fairer that the costs be borne by the losing party than by the successful party. I am obliged to make a costs order that attempts to do substantial justice to the parties, but in the context of cost principles, and not by reference to a party’s size, financial position, or ability to pay. As there were a multiplicity of issues, I am entitled to (and I think I ought to) take a ‘pragmatic approach’, taking into account difficulties which would arise in any taxation of costs. Where there has been mixed success and failure, I am entitled to apportion costs based on my impression and evaluation of the importance of, and time taken up by, different issues, rather than by attempting an unachievable ‘arithmetical precision’.[2]
[2]See the summary of principles in Chen v Chan [2009] VSCA 233, [10] (Maxwell P, Redlich JA and J Forrest AJA).
I will first consider the costs orders that would be appropriate having regard to the factual conclusions that I drew, then consider the effect of a notice to admit that Mr Sheridan served, and then the effect of offers of compromise that APAM served. The observations made in Part B.1 below are to be read as being subject to the consequences that flow from these other documents.
B.1. Costs generally
The trial ran for ten days, many hundreds of documents were tendered, and lengthy written submissions were prepared by both parties. The issues in dispute concerned:
(a) whether or not the LDA scheme was lawful;
(b) whether or not there was tortious conduct for which APAM was liable in any of the 18 incidents on which Mr Sheridan relied, which included consideration of a variety of torts or possible torts; and
(c) the financial consequences to Mr Sheridan and his company of any wrongful conduct on the part of APAM.
I do not accept Mr Sheridan’s submission that he enjoyed substantial success in the proceeding. I rejected his argument that the LDA scheme was unlawful. Further, of the 18 separate incidents for which he sought damages against APAM, Mr Sheridan:
(a) failed to establish tortious conduct in 16 incidents;
(b) established tortious conduct but not conduct for which APAM was liable in one incident; and
(c) succeeded in establishing tortious conduct for which APAM was liable in one incident, being a short-lived false imprisonment by an officer standing in a position that prevented Mr Sheridan from closing his car door and driving away. I awarded only nominal damages for that incident.
As such, I consider that APAM was, overwhelmingly, the successful party, and that it ought to have its costs of the proceeding in accordance with the usual rule that costs follow the event. This would include the costs of its counterclaim. I do not agree with Mr Sheridan’s submission that APAM ought not to have its costs of the counterclaim because the counterclaim did not add appreciably to the costs beyond the cost of defending Mr Sheridan’s claims. APAM brought and prosecuted the counterclaim, it was not unreasonable that it did so, the outcome of the counterclaim turned substantially on the question of whether or not the LDA scheme was lawful, and I found for APAM on the issue.
However, consideration has to be given to whether the costs order in APAM’s favour ought to be modified to accommodate the fact that Mr Sheridan did enjoy some success in the proceeding. APAM contended that I ought not to make any apportionment to reflect the fact that Mr Sheridan succeeded in establishing a tort for which he received only nominal damages, or that if any allowance is to be made, it should be reflected in a fixed sum. It suggested a figure of no more than $7,500, which it contended was about half a day of court costs.
Mr Sheridan was seeking substantial damages. However, the tort that he established was not one that had any particular turpitude associated with it such that the finding that it was committed was of real significance in the context of the case. In such circumstances, the costs of that one incident should, conceptually, fall where they lie.[3] Rather than make an order that would require a taxing officer to investigate this issue, it is preferable that I modify the costs order to take account of it.
[3]See, eg, Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394, 401–2 (Stephenson LJ), 404 (Griffiths LJ); MLW Technology Pty Ltd v May (No 4) [2003] VSC 293, [6] (Byrne J); ACN 074 971 109 Pty Ltd v The National Mutual Life Association of Australasia Ltd (No 2) (2013) 41 VR 476, 524–5 [203] (Nettle and Neave JJA, Robson AJA).
The costs associated with establishing liability for that particular incident, considered separately, were, in the scheme of the trial, modest. Approximately half the court time was spent determining whether or not the LDA scheme was unlawful. As noted above, there were 18 incidents that were explored in the trial, and Mr Sheridan succeeded in establishing liability in APAM for only one of them.
In my view, substantial justice between the parties is achieved if, notionally, they each bear their own costs of half of one day of the hearing. This is a more appropriate and pragmatic way of taking account of Mr Sheridan’s partial success than ordering that he pay a percentage of APAM’s costs of the proceeding. This result is achieved if the proposed order that Mr Sheridan pay APAM’s costs is modified by indicating that any assessment of the costs that Mr Sheridan is to pay is to exclude half of the recurrent expenses associated with one day of hearing — by this, I mean counsel’s fees, instructing solicitors’ fees, and any court or transcript or like fees that were regularly incurred for a day’s hearing. The reduction is not intended to depend on which particular day is chosen.
Given that I am not being asked to determine, and am not determining, what those recurrent daily expenses are, I do not propose to quantify this amount.
B.2. Notice to admit
Mr Sheridan filed a notice to admit on 16 April 2021. APAM filed a notice of dispute on 29 April 2021.
Pursuant to r 35.06 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’), if a notice to admit is served, liability for costs is determined in accordance with r 63.18. That rule provides that the party disputing a fact that is proved must pay the costs of proof, unless the Court otherwise orders.
If I do not otherwise order, but allow the notice to admit to take effect in accordance with the Rules, it will fall to the taxing officer to attempt to assess each fact and whether it was proved and the cost of proving it in a taxation. The notice to admit was 36 pages long and, when sub-paragraphs are considered, set out several hundred facts. Some of these facts were proved, some were almost proved, in the sense that there was some variation in detail between the fact and the proof, and some were not proved. It would be inappropriately burdensome for a taxing officer, who did not hear the trial, to have to consider each fact and ascertain discrete costs, or an appropriate award, for the proof or otherwise of that fact. I consider that the discretion to otherwise order is not constrained by any requirement other than that I be persuaded that it is in the interests of justice, notwithstanding the prima facie position, to otherwise order. For this reason, I propose to otherwise order. I propose to have regard to the notice to admit and the extent to which legal expenses were likely incurred in relation to the facts set out in it that were proved, and to make any adjustment I think appropriate to the order that I would otherwise have made to reflect the costs consequences that ought to flow from service of the notice to admit.
The purpose of a notice to admit and its associated costs consequences is to promote efficient and cost-effective litigation by encouraging parties to admit facts that would otherwise take time and expense to prove. Here, the notice to admit was mostly concerned with the 18 incidents that formed the basis of Mr Sheridan’s factual case. To the extent that it dealt with facts relating to quantum, I do not consider that those matters were ‘proved’, because I did not make findings on quantum.[4] Mr Sheridan did not identify any witnesses that he had to call by reason of APAM’s failure to admit the facts in the notice to admit that he would not otherwise have had to call. Most of the facts were within Mr Sheridan’s knowledge, and so the trial was extended, in my view, by the additional time that Mr Sheridan spent in evidence-in-chief explaining those details of the incidents that were contained in the notice to admit. For example, in order to prove the times at which he entered and left the airport, and where each incident took place, Mr Sheridan was required to identify for each incident his parking receipts, or refer to particular times in his diary, and explain where he was at the relevant times. Court time would have been saved if his counsel were able simply to inform me that it was agreed that he arrived and left at particular times and that he interacted with this or that person at this or that location, and then have Mr Sheridan explain that interaction. To the extent that the notice related to documents, those documents were tendered without any additional time being taken beyond that which would otherwise have been taken up in producing them to the Court. Mr Sheridan would, in my view, have had to give some evidence in relation to each incident, even if APAM had admitted each detail contained in the notice to admit, because he had to establish the sense of each interaction to justify why he felt unable to leave when engaging with the various police officers. Similarly, Mr Murphy gave evidence and was cross-examined. He would have had to be called even if APAM had admitted every fact in the notice to admit, but, probably, his evidence would have been slightly shorter.
[4]See Tipperary Developments Pty Ltd v Western Australia (2009) 38 WAR 488, 550 [298] (McLure JA).
APAM contended that it was proper and reasonable for it to have disputed those facts which Mr Sheridan proved, and so it ought not to be bitten by any costs consequences for not admitting them.[5] I agree that APAM was, in large part, within its rights as a responsible litigant to put Mr Sheridan to his proof as to what happened in these incidents. The strength of Mr Sheridan’s memory of the detail of the events was something that APAM could legitimately explore. The diary notes were not verbatim contemporaneous accounts, but were (as might be expected) Mr Sheridan’s notes for his own purposes. They were also in handwriting that was not always legible. The proof of these matters would, it might be anticipated, be relatively inexpensively achieved simply by having Mr Sheridan give the relevant details from the witness box. In this way, APAM’s conduct in disputing many of the facts was reasonable.
[5]See, eg, Nolan v Nolan [2003] VSC 136, [22] (Dodds-Streeton J); Tipperary Developments Pty Ltd v Western Australia (2009) 38 WAR 488, 551 [301] (McLure JA). Cf Meadow Gem Pty Ltd v ANZ Executors and Trustees (Supreme Court of Victoria, Byrne J, 11 June 1996) 5–6.
However, this does not mean that the notice to admit should be disregarded. I do not accept the submission that Tipperary Developments Pty Ltd v Western Australia establishes the broad position that a party that disputes facts, in circumstances where it is ‘reasonable and responsible’ for it to do so, ought not to suffer costs consequences for so doing.[6] In that case, the Court excused a party from the costs consequences of failing to admit facts that were later proved, but did so not only because it was ‘proper and reasonable’ for it to have done so, but also because of the nature of the facts under consideration. In that case, the facts asserted in the notice to admit were not simple facts as to what happened and when and where, but were instead conclusionary facts, such as that a party was insolvent, and as to the level of its ‘bad debts’. The Court concluded that a ‘yes or no answer to those questions would be of little practical benefit’, and that the asserted facts were ‘not such as to further the purpose’ of the applicable costs rule.[7] Also, the existence of such a broad position would conflict with the approach of Byrne J in Meadow Gem Pty Ltd v ANZ Executors & Trustees.[8] His Honour explicitly rejected an argument that the costs consequences of a failure to admit a fact later proved to be true ought only to apply if the failure to admit a fact was ‘unreasonable’. His Honour ultimately concluded:
Coopers & Lyrand has, no doubt for good reason, put the defendants to their proof and it must pay the price.[9]
[6](2009) 38 WAR 488.
[7](2009) 38 WAR 488, 551 [301] (McLure JA).
[8](Supreme Court of Victoria, Byrne J, 11 June 1996) 5.
[9]Ibid 6.
I consider that the discretion in r 63.18 to otherwise order is unfettered by any rule. The starting position under the Rules is that there are costs consequences of the failure to admit unless the Court is persuaded to order otherwise. Whether or not the Court ought to otherwise order will, no doubt, be influenced by matters such as the nature of the facts asserted and the role that they play in the litigation, the expense and inconvenience of having to prove the facts if they are not admitted, the ability of the other party to satisfy themselves of the correctness of the facts asserted, and the time and expense of dealing with an unnecessarily long and detailed series of asserted facts. The reasonableness of a party failing to admit an asserted fact will no doubt be a significant factor in any consideration. But costs orders are not, as a general rule, punishment for unreasonable behaviour; rather, they reflect the reality that costs have been incurred and must be borne by one party or the other. For this reason, the costs consequences of a failure to admit a fact later proved ought not to be controlled by the question of whether or not the party who did not admit the fact is found to have acted unreasonably or improperly. This is particularly so where, under the Rules, that party is, prima facie, to bear the costs of proving that fact.
I consider that, in all the circumstances of this case, APAM ought to bear the costs of Mr Sheridan proving those facts in the notice to admit that APAM disputed and that Mr Sheridan proved. As noted above, this is not because I am critical of APAM disputing those facts, but because I consider that, as between the two of them, it is fairer that APAM bears those costs than Mr Sheridan, or at least there is no reason to conclude to the contrary.
As noted above, looking at the matter pragmatically so as to avoid a disproportionately complex and expensive taxation, in my view, an allowance ought to be made for the notice to admit by modifying my costs award, having regard to my assessment of the extent to which the trial was prolonged by APAM’s failure to admit the facts that were later proved. This essentially comes down to my assessment of the extent to which Mr Sheridan’s evidence-in-chief and, to a lesser extent, Mr Murphy’s cross-examination were prolonged. Mr Sheridan gave evidence-in-chief for just under two days of court time. Mr Murphy was cross-examined for about two hours. I consider that the failure by APAM to admit those facts that Mr Sheridan ultimately proved added something to the duration of the hearing but no more than half a day in total. I do not accept Mr Sheridan’s contention that, if APAM had admitted the facts in his notice to admit which he ultimately proved, the hearing time would have been no more than five to six days.
Accordingly, notionally, there ought to be an order that APAM pay half a day’s costs to Mr Sheridan, and that Mr Sheridan not pay APAM’s costs for that half-day. This result is achieved in a practical way by modifying the order that Mr Sheridan pay APAM’s costs to indicate that any assessment of the costs that he is to pay is to exclude the recurrent expenses associated with one full day of trial. Again, by this, I mean counsel’s fees, instructing solicitors’ fees, and any court or transcript or like fees that were regularly incurred for a day’s hearing. The reduction is not intended to depend on which particular day is chosen.
C. Offers of compromise
APAM served three offers of compromise, which need to be considered separately.
Rules 26.08(3)–(4) provide:
(3)Where an offer of compromise is made by a defendant and not accepted by the plaintiff, and the plaintiff obtains a judgment on the claim to which the offer relates not more favourable to the plaintiff than the terms of the offer, then, unless the Court otherwise orders—
(a)the plaintiff shall be entitled to an order against the defendant for the plaintiff's costs in respect of the claim before 11.00 a.m. on the second business day after the offer was served, taxed on the ordinarily applicable basis; and
(b)the defendant shall be entitled to an order against the plaintiff for the defendant's costs in respect of the claim thereafter taxed on the ordinarily applicable basis.
(4)Where an offer of compromise is made by a defendant and the plaintiff unreasonably fails to accept the offer and the claim to which the offer relates is dismissed or judgment on the claim is entered in favour of the defendant, then unless the Court otherwise orders—
(a)the defendant shall be entitled to an order against the plaintiff for the defendant's costs in respect of the claim until 11.00 a.m. on the second business day after the offer was made, taxed on the ordinarily applicable basis; and
(b)the defendant shall be entitled to an order against the plaintiff in respect of the defendant's costs after the time referred to in paragraph (a) taxed on an indemnity basis.
C.1. The offer that extended to the claims under the Competition and Consumer Act 2010 (Cth)
On 24 January 2020, APAM served an offer of compromise in which it offered to compromise Mr Sheridan’s ‘claims for damages sought in paragraphs A and H and for the declaratory relief sought in paragraphs F and G’ of his prayer for relief. The compromise offered was that the parties consent to orders that ‘the claims for damages and for the declaratory relief sought in paragraphs F and G … be dismissed … with no order as to costs’. Paragraph A of Mr Sheridan’s prayer for relief simply sought damages, and so included the claim for damages for the various torts alleged. Paragraphs F and G sought declarations that APAM had engaged in conduct in contravention of the Competition and Consumer Act 2010 (Cth). Paragraph H sought damages under the Competition and Consumer Act 2010 (Cth).
I do not consider that this offer, which was put forward as a single offer, can be broken down into an offer to resolve the claim for breach of the Competition and Consumer Act 2010 (Cth), and a separate offer to resolve the claim for damages generally. It must be treated as a single offer which, if accepted, would have disposed of Mr Sheridan’s entire claim for damages.
Mr Sheridan failed in his claims that APAM had breached the Competition and Consumer Act 2010 (Cth). However, in my view, he did not obtain a judgment ‘not more favourable’ than this offer, because the offer included a dismissal of his claim for damages, and Mr Sheridan received an award of damages, albeit only nominal damages.
APAM submitted that regard should be had to this offer of compromise when considering whether or not there should be some allowance in Mr Sheridan’s favour because of his partial success. APAM submitted that a result where Mr Sheridan had his claims dismissed but did not have to pay any costs would be a ‘better result’ than the result where he has obtained nominal damages but will have to pay much more than the damages awarded in costs to APAM. It contended that in such circumstances r 26.08(3) was engaged. APAM then said that, because of this, there should not be any allowance in Mr Sheridan’s favour by reason of his partial success
I do not accept this argument. It may be that, if the results are compared in dollar terms only, a result where Mr Sheridan did not have to pay any costs to APAM would be a ‘better result’ than a result where he obtained nominal damages but had to pay more than the damages award in costs to APAM. However, it is not clear to me why the results would have to be compared in dollar terms only. Mr Sheridan succeeded in establishing some liability against APAM, and obtained an order of nominal damages in his favour. Although not in any substantial way, he did establish that he was ‘wronged’.
More fundamentally, to the extent that this submission seeks to engage the offer of compromise procedure, it presumes that an order of costs against Mr Sheridan is a relevant factor in determining whether he has obtained a ‘judgment on the claim … not more favourable … than the terms of the offer’. In my view, where r 26.08(3) refers to the ‘judgment on the claim’, it is referring to the substantive decision on the issues in the case, rather than consequential costs orders, at least in circumstances where the offer is to consent to an order that the claim be dismissed with no order as to costs, and the claim has ultimately succeeded in part. On this basis, the time for comparing the ’judgment on the claim’ obtained by a party and the contents of an offer of compromise is the time at which judgment is delivered and, if the offer of compromise is to affect the costs to be ordered, before costs have been determined. The alternative would result in a circular situation where the Court is invited to presume the outcome of a costs dispute and then to consider that presumed outcome as a factor in the determination of the very same issue.
If APAM wished to secure its position as to costs, it could have included in its offer of compromise a sum of damages that exceeded the amount of nominal damages awarded. Also, even if r 26.08(3) were engaged by this offer of compromise, the consequences provided for in rr 26.08(3)(a)–(b) would not be that Mr Sheridan would be denied any costs allowance in his favour; rather, he would be entitled to costs in his favour in respect of the claim before 11:00am on the second business day after the offer was served.
In my view, r 26.08(3) is not engaged. Similarly, because the offer included the claim for damages, the claim ‘to which the offer relates’ was not dismissed, and judgment on that claim was not entered in favour of the defendant. Accordingly, r 26.08(4) is also not engaged. Rule 26.08 therefore does not impose some altered costs regime that should apply unless I order otherwise.
I accept that, because costs are discretionary, I am entitled, speaking generally, to have regard to any offers made, including one structured as an offer of compromise, even if it does not formally engage the relevant rule. But I do not see why the fact that an offer effectively to ‘walk away’ was made should result in a costs order other than the one I have determined to be just — that is, that Mr Sheridan pay APAM’s costs of the proceeding, with an appropriate allowance for the fact that he succeeded in establishing one aspect of his claim and an appropriate allowance for the effect of the notice to admit.
C.2. The offer that related to the validity of the LDA scheme
On 24 January 2020, APAM also served an offer of compromise in which it offered to compromise Mr Sheridan’s claims in relation to APAM’s right to impose the LDA scheme, ‘including the claims for damages claimed in paragraphs A and H and the declaratory relief claimed in paragraphs C, D and E’ of Mr Sheridan’s prayer for relief. The compromise offered was that the parties ‘agree’ that APAM was ‘entitled to impose as conditions of its permission to enter on the land leased by it’ the requirements of the LDA scheme, and that the parties consent to orders dismissing the claims for the identified declaratory relief, and that there be no order as to costs.
As noted above, paras A and H are the claims for damages. Paragraphs C, D and E sought declarations that would be made only if the LDA scheme were unlawful. The offer to ‘agree’ was, I consider, essentially in the terms of the declaration that I have determined to make.
This offer is ambiguous. It is said to be an offer to compromise, among other things, Mr Sheridan’s claim for damages. But what is offered does not, on its face, deal with that claim. I consider that, on a proper construction, if Mr Sheridan were to have accepted this offer, then he probably would have also been settling his claim for damages. For this reason, I do not consider that rr 26.08(3)–(4) are engaged for the same reasons as those set out in Part C.1 above. Further, in my view, the ambiguity in the offer means that it cannot be said that it was unreasonable for Mr Sheridan not to have accepted it, as required by r 26.08(4).
Even if I am wrong in this conclusion, and the offer on a proper construction would not have resulted in Mr Sheridan settling his claim for damages, I would not have imposed costs consequences on him for not accepting it because of its ambiguity.
C.3. The offer that related to the entire proceeding.
On 15 December 2020, APAM served an offer of compromise in which it offered to compromise the entire proceeding on the basis that there be judgment for APAM and the parties bear their own costs.
APAM accepted that r 26.08(4) is not engaged by this offer. However, it argued that r 26.08(3) was engaged because the costs likely to be awarded against Mr Sheridan far outweigh the benefit of obtaining nominal damages and so the judgment he had received is ‘not more favourable to him’ than the offer. Although r 26.08(3), where it applies, does not give rise to costs on an indemnity basis, APAM contended that I should have regard to this rule generally when exercising my discretion as to costs, including as to whether or not to reduce the costs it would otherwise receive by reason of Mr Sheridan’s minor success in the proceeding. I reject these arguments in so far as they rely on this offer of compromise for the same reasons as those set out in Part C.1 above.
The situation would have been different, of course, if APAM had made an offer of compromise for an amount equal to or more than the $1,000 that I have awarded Mr Sheridan.
C.4. Conclusions on the offers of compromise
For the reasons set out above, I do not propose to alter the costs orders that I would otherwise have made by reason of the fact that APAM made the offers of compromise that it did.
D. Reserved costs — Efthim AsJ
On 19 May 2020, APAM made discovery by swearing an affidavit of documents. Mr Sheridan wrote seeking further discovery. APAM responded denying any obligation to provide further discovery, but indicating an intention to provide further discovery prior to 9 September 2020. On 3 September 2020, which was before this date arrived, Mr Sheridan filed a summons seeking further discovery. APAM did not provide further discovery before 9 September 2020, but did provide further discovery by affidavits filed on 2 October 2020, 22 October 2020 and 20 November 2020. This discovery amounted to several hundred additional documents.
Mr Sheridan’s summons was then heard by Efthim AsJ on 4 March 2021. His Honour dismissed the summons and ordered Mr Sheridan to pay the costs of the hearing on that day. This was because he was able to determine that, as at that day, APAM ought not to be obliged to make any further discovery. But his Honour reserved for later determination the costs otherwise incurred. In his reasons for decision, his Honour recorded that:
(a) APAM sought the costs of the summons on an indemnity basis on the grounds that the summons was filed precipitously and that the discovery sought (and provided) was disproportionate and, at least to some extent, irrelevant; and
(b) Mr Sheridan sought the costs of the summons on the grounds that it was the ‘only operative reason’ for which APAM ‘corrected blatant, systematic deficiencies in discovery’.[10]
[10]Sheridan v Australian Pacific Airports (Melbourne) Pty Ltd (Supreme Court of Victoria, Efthim AsJ, 7 May 2021) [17].
The reserved costs at stake are, in the scheme of this litigation, not large. The costs of the summons will not include the costs of making discovery or of reviewing the discovered documents. The costs of the date upon which the summons was heard has already been dealt with. I am not in a position to determine, without requiring evidence, whether or not APAM would have made the discovery it did, despite its letter, without Mr Sheridan having filed the summons. The starting position would be in APAM’s favour, as the summons was filed at a time when it was still completing discovery. Similarly, undertaking an analysis to ascertain the extent to which the documents or categories of documents sought and then provided (and there were hundreds discovered) were obliged to have been discovered would require further detailed submissions and involve disproportionate time and expense. On this issue, the starting position would be in Mr Sheridan’s favour, as the documents were ultimately discovered by APAM, which suggests an acknowledgement that they were relevant.
In these circumstances, as was sensibly acknowledged by APAM, it is appropriate that I order that each party bear their own costs of the summons filed 3 September 2020 not dealt with by the order of Efthim AsJ made 7 May 2021.
E. Conclusions and orders
I have already made orders disposing of the claims involving the second defendant.
For the above reasons, I now propose to order and declare that:
(a) The first defendant pay the first plaintiff damages of $1,000.
(b) The second plaintiff’s claim be dismissed.
(c) The first defendant, in its capacity as tenant, is entitled to exclude the plaintiffs from entering onto the land, which it occupies under a lease from the Commonwealth of Australia entered into on or about 1 July 1997, known as Melbourne Airport (save for any part thereof in respect of which the first defendant has given a legal right of exclusive possession to another person) for the purpose of providing commercial hire care services, unless they comply with the conditions upon which the first defendant is prepared to permit them to do so.
(d) The costs reserved by Efthim AsJ on 7 May 2021 fall where they lie.
(e) The plaintiffs pay the first defendant’s costs of the proceeding, to be taxed in default of agreement on the standard basis, such costs to exclude one and a half days of the recurrent trial costs.
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