The Friendly Backpacker Pty Ltd and Will Ang Drive Pty Ltd (No 2)
[2023] VCC 114
•10 February 2023
A
| IN THE COUNTY COURT OF VICTORIA AT Melbourne COMMERCIAL DIVISION | Revised (Not) Restricted Suitable for Publication |
Expedited List
Case No. CI-21-02772
| The Friendly Backpacker Pty Ltd | Plaintiff |
| v | |
| Will Ang Drive Pty Ltd | Defendant |
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JUDGE: | Her Honour Judge Burchell | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers, written submissions dated 20 and 27 January 2023 | |
DATE OF RULING: | 10 February 2023 | |
CASE MAY BE CITED AS: | The Friendly Backpacker Pty Ltd and Will Ang Drive Pty Ltd (No 2) | |
MEDIUM NEUTRAL CITATION: | [2023] VCC 114 | |
RULING
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Subject:SPECIFIC PERFORMANCE - COSTS
Catchwords: Whether costs should be paid on a standard or indemnity basis – Application of r26.08 - Specific performance of binding agreement - Form of order for specific performance
Legislation Cited: Civil Procedure Act 2010 (Vic) ss41, 42 and 46; County Court Civil Procedure Rules 2018 rr 26.08, 63A.07, 63A.17, 63A.20.1, 63A.30 and 63A.31; Sale of Land Act1962 (Vic) s32.
Cases Cited:Molonglo Group (Australia) Pty Ltd v Cahill [2018] VSCA 147; J & G Knowles and Associates Pty Ltd v Crowncross Pty Ltd [2010] VSC 227; Masters v Cameron (1954) 91 CLR 353; Niesmann v Collingridge (1921) 29 CLR 177; Cahill v Kiversun Pty Ltd; Molonglo Group (Australia) Pty Ltd v Cahill [2017] VSC 641; White v Director of Housing [2003] VSC 124; Boateng v Dharamdas; [2019] NSWCA 233; Aljade and MKIC v OCBC [2004] VSC 351; Kheirs Financial Services Pty Ltd v Aussie Home Loans Pty Ltd (2010) 31 VR 46; Oshlack v Richmond River Council (1998) 193 CLR 72; Colgate-Palmolive Co & Anor v Cussons Pty Ltd (1993) 46 FCR 225; Australian Pharmaceutical Industries Ltd v O’Neale (Costs Ruling) [2021] VSC 688; Stevens v Spotless Management Services Pty Ltd (No 2) [2016] VSCA 311; Gamboni v Bendigo and Adelaide Bank Ltd [2013] VSCA 282; Enerka Apex Belting Pty Ltd v Vickers Systems Pty Ltd (No 2) [2002] VSC 409; Simonovski v Bendigo Bank Ltd (No 4) [2003] VSC 139; PCCEF Pty Ltd v Geelong Football Club (No 3) [2019] VSCA 191; Re Saric; Saric v Vukasovic (No 2) [2018] VSC 254.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J McKay | Tisher Liner FC Law |
| For the Defendant | Mr P Ehrlick KC with Mr R Kornhauser | P&B Law |
HER HONOUR:
1On 13 December 2022, I gave judgment in favour of the plaintiff in this matter. I invited the parties to make written submissions on the question of costs and final orders to be determined on the papers.
2The plaintiff sought orders of the Court, inter alia, that:
(a) Subject to any variation that the parties may agree, the plaintiff and the defendant are to specifically perform their respective obligations under the agreement between the plaintiff and the defendant (headed “Offer to Purchase”) dated 1 April 2021 (“Agreement”).
(b) The defendant pay the plaintiff’s costs of and incidental to the proceeding on the standard basis until 11.00am on 21 January 2022, and thereafter on an indemnity basis, to be taxed if they cannot be agreed.
3The defendant sought orders of the Court including that:
(a) Subject to any variation that the parties may agree, the plaintiff and the defendant are to perform their respective obligations under the contract for the sale and purchase of the Land (“contract of sale”) brought into existence pursuant to the exercise by the plaintiff, on or about 1 July 2021, of the option to purchase contained in the agreement between the plaintiff and the defendant (headed “Offer to Purchase”) dated 1 April 2021 (“Offer to Purchase”).
(b) The defendant pay the plaintiff’s costs of the proceeding, including the costs of the counterclaim, on a standard basis to be taxed in default of agreement.
4For the reasons set out below, the orders for specific performance and costs will be ordered substantively in the form proposed by the plaintiff in this proceeding.
Procedural History
5By its statement of claim dated 7 July 2021, the plaintiff (“The Friendly Backpacker”) sought to specifically enforce a document headed “Offer to Purchase” dated 1 April 2021 against the defendant (“Will Ang Drive”). The plaintiff claimed that the Offer to Purchase is an agreement for the grant of an option to purchase in respect of the land at 41-43 William Angliss Drive, Laverton North, in Victoria (“the Land”), for the sum of $5,500,000.00. The defendant denied that the Offer to Purchase is an enforceable agreement by which the defendant immediately bound itself to the actual grant of an option to purchase its land. The defendant claims that the Offer to Purchase does not constitute a binding, enforceable contract at law, and is not specifically enforceable in equity.
6By reasons dated 13 December 2022, the Court found in favour of the plaintiff whereby the document headed “Offer to Purchase” dated 1 April 2021 was a binding and enforceable agreement. Therefore, the plaintiff was entitled to judgment for specific performance.
7The parties are not in agreement as to the form of orders which are appropriate to give effect to the Court’s decision. In particular, the plaintiff proposes a general form of order giving effect to specific performance of the Offer to Purchase whilst the defendant proposes that it should be confined to the specific terms contained within the Offer to Purchase.
Specific performance of the Offer to Purchase
Submissions
Plaintiff’s submissions
8The plaintiff submits, that the defendant’s submissions demonstrate a misapprehension of its case advanced at trial. It contends that the plaintiff has always sought performance of the Offer to Purchase dated 1 April 2021 (“the Agreement”) rather than the unexecuted option deed or the attached contract of sale dated 1 July 2021. However it says that the Agreement was a contract to enter a formal option and was not simply a contract of sale, which is stated at paragraphs 1(f) and (g) of the plaintiff’s reply.
9The plaintiff contends that the defendant’s proposed order is not accurate. The Agreement did not bring into existence a contract for the sale and purchase of land in any usual sense. Instead, it says that the Agreement required the defendant to produce and execute a formal option deed on the terms that had been agreed. The defendant produced a deed, however, they refused to execute it.
10The plaintiff submits that the Court has held that the Agreement was binding and there would be no utility in ordering the defendant to execute a formal option deed and sale contract and then perform those agreements. It argues that the date of exercise of the option has passed and the plaintiff did its best to exercise such option on 1 July 2021 by signing and returning the documents prepared by the defendant’s lawyers. Accordingly, that the Court should order the defendant to perform the Agreement by conveying the subject land which would give effect to what would have occurred had the defendant done what it agreed to.
11The plaintiff rejects the defendant’s proposed form of orders which are confined to the performance of the Agreement. Both parties are in agreeance that the Court must order the performance of Agreement and no other instrument or agreement. In turn, that the appropriate course of action is for the Court to express an order in generic terms by confining the operative order to the Agreement which the parties accept should be enforced.
Defendant’s submissions
12The defendant submits that the plaintiff is entitled to, and only entitled to, the purchase of the Land on the essential terms and conditions which are recorded in the Offer to Purchase dated 1 April 2021. It argues that the plaintiff’s case was that the Agreement was itself a binding option agreement which contained all essential terms for sale and purchase. The plaintiff, by exercising its option thereunder, became entitled to specific performance of those essential terms, being the essential terms and conditions of sale and purchase as recorded in the Agreement.
13The defendant refers the paragraph 14(g) of the plaintiff’s reply which it argues makes clear that it was seeking to enforce the Agreement and not the Contract of Sale or Option Deed which it later purported to execute on 1 July 2021. The defendant submits that it must follow that the plaintiff is only entitled to specific performance of the essential terms and conditions contained in the Agreement. The plaintiff is not entitled to require the execution of the Option Deed, Contract of Sale and vendors statement under s32 of the Sale of Land Act1962 (Vic) previously delivered to the defendant’s solicitors, described at paragraph 9 of the plaintiff’s Statement of Claim or the performance of obligations these documents.
14The defendant submits that there is difficulty with the wording proposed by the plaintiff which is ambiguous, and leaves open the question of what is to be specifically performed.
Analysis
15In Cahill v Kiversun Pty Ltd; Molonglo Group (Australia) Pty Ltd v Cahill,[1] the parties executed a document described as an “Agreement to Purchase” (“Cahill Agreement”) for the purchase of a commercial property in Collingwood. At trial,[2] the plaintiff proposed a form of order requiring delivery of a signed form of final contract. The defendant’s opposed this form of order suggesting that it included terms that were not subject of the alleged Cahill Agreement in that case. The defendant proposed that an order should be framed like those in J & G Knowles and Associates Pty Ltd v Crowncross Pty Ltd,[3] with further directions in respect of conveyancing and settlement. Importantly, that further terms may be agreed by negotiation, however, if nothing further occurred within such time, that parties would be left with the basics. The form of order given by Justice Pagone in J & G Knowles and Associates Pty Ltd v Crowncross Pty Ltd was as follows:
1. The plaintiff has an equitable interest in the property at 1197–2005 Malvern Road, Malvern East — being Lot 2 on Plan of Subdivision 507399P as purchaser.
2.The plaintiff, as purchaser, and the defendant, as vendor, are bound by the agreement made by them as constituted and contained in a letter dated 9 December 2009 signed on behalf of each of them (“the agreement”).
3.The defendant convey to the plaintiff title to the property at 1197–2005 Malvern Road, Malvern East — being Lot 2 on Plan of Subdivision 507399P upon the plaintiff paying all moneys due upon the sale as contained in the agreement.
4.The cross claim and all other claims are dismissed. [4]
[1] [2017] VSC 641.
[2] Ibid at [280]-[284].
[3] [2010] VSC 227.
[4] Ibid at [13].
16Justice Kennedy, at first instance, reasoned that it was not appropriate for the defendant to be bound by obligations not subject of the Cahill Agreement and that the defendant’s obligations should be treated as having been satisfied for all purposes. The general type of order proposed by the defendant was appropriate, on the basis that the contract was still on foot, save that consistent with the Cahill Agreement and subject to any agreement to the contrary, the timing of settlement.[5]
[5] [2017] VSC 641 at [280]-[284].
17The form of order proposed by Justice Kennedy, considering her reasoning above, was as follows:
1. Declare that the plaintiff as purchaser and the defendant as vendor are bound by the agreement made by them as constituted and contained in the Agreement to Purchase dated 15 July 2016.
2. The defendant’s solicitors are to provide a form of final contract within 10 business days of the date of this order for approval by the plaintiff’s solicitors. That final contract may only contain additional terms if the parties have agreed to the same.
3. The plaintiff’s solicitors are to return the signed final contract documentation, together with any amount outstanding in respect of the first 5% deposit payment, no more than five business days after the receipt thereof.
4. Subject to the payment of all monies due upon the sale, the defendant convey to the plaintiff title to the Rokeby Street Property being the land described in Volume 10341 Folio 081. [6]
[6] Ibid at [296].
18On appeal, Maxwell ACJ, Whelan and Kyrou JJA[7] reasoned that, as the Cahill Agreement was an immediately binding contract for sale of the property, it was specifically enforceable. The Court of Appeal viewed that the orders set out by the trial judge was consistent with the conclusion that the Cahill Agreement fell within the fourth Masters v Cameron[8] category. Referring to the case of Niesmann v Collingridge,[9] which concerned the second category of Master v Cameron, an order for specific performance of an agreement of the sale of land can provide that, as a first step, the parties execute a formal contract incorporating mutually agreed terms.[10]
[7] Molonglo Group (Aust) Pty Ltd v Cahill [2018] VSCA 147 at [183]-[185].
[8] (1954) 91 CLR 353.
[9] (1921) 29 CLR 177.
[10] [2018] VSCA 147 at [185] citing Niesmann v Collingridge (1921) 29 CLR 177 at 1845.
19In my reasons dated 13 December 2022, I found that the Agreement, being the document headed “Offer to Purchase” dated 1 April 2021, is a binding and enforceable agreement and, therefore, the plaintiff is entitled to judgement for specific performance. I viewed that the Agreement fell squarely within either the first or fourth category of Masters v Cameron, however, more likely the fourth category. I agree with the plaintiff, that the Agreement was a contract to enter a formal option and not simply a contract of sale. Indeed, it contained terms to the following effect:
(a) The defendant agreed to give the plaintiff a right to enter into a contract of sale to purchase the Land.
(b) The option could be exercised between 1 July 2021 and 15 July 2021.
(c) The defendant would provide the plaintiff with a contract of sale and statement under s32 of the Sale of Land Act 1962 (Vic) (“SLA”), and have an option drawn up that included the contract of sale.
(d) The sale price was $5,500,000.00.
(e) GST was not applicable on the basis that the sale of the Land was deemed to be the sale of a “going concern”.
(f) A 10% deposit was to be paid upon the signing of the contract of sale and statement under s32 of the SLA, of which $5,000.00 was payable by the purchaser at the execution of the Agreement.
(g) The initial $5,000.00 deposit was to be non-refundable (and to come off the purchase price) on the basis that the option was agreed.
(h) Settlement was to occur 60 days from the signing of the contract of sale.
(i) The balance of the purchase price was payable upon settlement.
(j) The purchaser was to be the plaintiff and/or its nominee.
(k) The sale was to be subject to a lease back to the tenant, Board Pro Pty Ltd (“Board Pro”), commencing on the settlement date.
(l) The rental under the lease was to be fixed at $80.00 per square metre for 4,067 square metres, equalling $325,360.00 per annum plus GST and outgoings.
(m) The lease was to expire two years from settlement.
20Further, at paragraphs 152 to 154 of my Reasons, I concluded that the Put and Call Option Deed alongside other documents provided by the defendant and signed and executed by the plaintiff on 1 July 2021 did not put into question the binding and enforceable nature of the Agreement. The parties clearly wished to be bound by the terms of the Agreement itself and necessarily expected to make a further subsequent contract in substitution with additional terms. The plaintiff sent formal notices to the defendant exercising the option in the Agreement on 1 July 2021 along with other documents prepared by the defendant’s solicitors. I concluded that the plaintiff did duly exercise the option in accordance with the terms of the Agreement within the requisite period.
21To give effect to my reasons and specific performance of the Agreement, the appropriate order would be an order that conveys the subject Land being 41-43 William Angliss Drive, Laverton North, in Victoria. The orders should be expressed in such way that is operative to the Agreement which the parties accept should be enforced. Whilst it is not appropriate, as emphasised by Justice Kennedy in Cahill v Kiversun Pty Ltd; Molonglo Group (Australia) Pty Ltd v Cahill,[11] for the defendant to be bound by obligations not subject of the Agreement, a general form of order is appropriate on the basis that the Agreement is still on foot. The Court of Appeal also endorsed such general orders as being consistent with the conclusion of an agreement falling within the fourth Masters v Cameron[12] category. Accordingly, I view that the plaintiff’s proposed orders in general terms are appropriate and operative to the Agreement itself which I have concluded is binding and specifically enforceable. There is no need to compel the defendant to execute a formal option deed and contract of sale and then perform the obligations under these agreements. Indeed, this would be redundant particularly as the period for exercising the option has well passed.
Costs
Submissions
[11] [2017] VSC 641 at [280]-[284].
[12] (1954) 91 CLR 353.
Plaintiff’s submissions
22The plaintiff submits that, if the Court is to accept its earlier submissions, that the defendant entered a binding agreement and reneged on that agreement, it should also accept the plaintiff’s position on costs. It argues that whilst, in granting relief, the Court is not required to give effect to each interim step that ought to have eventuated if the contractual agreements had been fully performed, this does not undermine the plaintiff’s offer of 19 January 2022 (“Offer of Compromise”).
23The plaintiff argues that its offer called for the defendant to execute the documentation that its own lawyers had prepared in accordance with the Agreement and had this occurred the formal option and contract would have been performed and conveyance effected. It says this is what the Agreement itself contemplated and required.
24The plaintiff submits, considering the above, that it should not be criticised or prejudiced for framing the 19 January 2022 offer in the terms it did. It argues that when the offer was made, that matter was not heard and determined, and when crafting it, the plaintiff did not have the remedial flexibility of the Court. Had it made an offer of compromise that the Land be conveyed on the agreed terms, without execution of the option deed and contract, it would have also been vulnerable to attack from the defendant. In turn, it elected to express the offer in the most cautious manner strictly confined to the Agreement by requiring the execution of the formal option document.
25The plaintiff submits that, in accordance with r26.08(2) of the County Court Civil Procedure Rules2018 (Vic) (“the Rules”), the plaintiff’s entitlement to indemnity costs is based on “the plaintiff obtain[ing] a judgment on the claim to which the offer relates no less favourable to the plaintiff” which does not require the Court to descend into analysis of the offer. The question to be asked is simply whether the plaintiff attained a better result than what was offered. It argues that the defendant’s argument has no substance and it is of no relevance or difference whether the offer required the execution of the formal option document or offered an outright conveyance. The execution of the formal documents was only sought to ensure strict accordance with what the parties had agreed to in the Agreement.
26The plaintiff further argues that what is relevant is that the plaintiff offered to pay the defendant $150,000.00 in addition to the agreed price to execute and perform the formal option document that the defendant prepared but then refused to sign. Accordingly, that this was a significant effort at compromise which the defendant does not deny. It submits that parties who ignore such offers should be subject to the ordinary consequences dictated under the Rules unless there is a good reason to the contrary of which none is evident.
Defendant’s submissions
27The defendant submits that the plaintiff is not entitled to indemnity costs premised on the Offer of Compromise dated 19 January 2022. It says that, per that offer, the plaintiff offered to settle on terms and conditions other than what was contained in the Agreement. Instead, that it offered to settle “in accordance with the terms of the Option Deed and Contract of Sale” and on the basis the defendant would execute the Option Deed, Contract of Sale, lease and s32 vendors statement for the Land provided in May 2021.
28The defendant argues that, in light of its earlier submissions, the plaintiff was never entitled to enforce or require the execution of those agreements or documents even where the Agreement was binding and specifically enforceable. It says there is a distinction between what the plaintiff was granted by the proceeding and that which was contained in the Offer of Compromise, namely, the requirement for the execution of formal transaction documents which contained terms advantageous to the plaintiff when compared to the essential terms and conditions contained in the Agreement.
29The defendant submits that it must follow that the plaintiff’s submissions that the sale of the Land, by reason that the formal transaction documents was the basis upon which parties contracted in the Agreement, should be rejected.
30Referring to the decisions of White v Director of Housing[13] and Boateng v Dharamdas,[14] the defendant acknowledges that whilst it may not be fatal that an Offer of Compromise is expressed in terms that differ from those which might be the subject of a court order, the offer must nevertheless be such that it is possible to determine whether or not an order is less favourable to the recipient of the offer.
[13] [2003] VSC 124 at [17].
[14] [2019] NSWCA 233 at [83]–84].
31The defendant submits the Court is not able to determine whether the order or judgment was less favourable. Further, that by offering to settle on unquantifiable terms, which the plaintiff neither sought nor which it could ever be entitled to, the costs consequences under r26.08 of the Rules are not engaged.
Analysis
32It is common ground that, as a general rule, the Court will order costs to be taxed on the standard basis: O63A and r63A.31 of the Rules (see r63A.30 regarding the meaning of “standard basis”). 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”.[15] 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.[16]
[15] Aljade and MKIC v OCBC [2004] VSC 351 at [10]. See also Kheirs Financial Services Pty Ltd v Aussie Home Loans Pty Ltd (2010) 31 VR 46 at [15].
[16] Oshlack v Richmond River Council (1998) 193 CLR 72 at [97].
33In Colgate-Palmolive Co & Anor v Cussons Pty Ltd,[17] Justice Shepherd set out many categories of circumstances which will warrant the making of a special costs order:
(a) the making of allegations of fraud knowing them to be false;
(b) the making of irrelevant allegations of fraud;
(c) evidence of particular misconduct that causes loss of time to the court and to other parties;
(d) the fact that the proceedings were commenced or continued for some ulterior motive or with wilful disregard of known facts or clearly established law; and
(e) the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions.
[17] (1993) 46 FCR 225 at [23]– [24].
34The Rules provides for the cost consequences of a party’s failure to accept an offer of compromise, relevantly as follows:
26.08 Costs consequences of failure to accept
(1) This Rule applies to an offer of compromise which has not been accepted at the time of verdict or judgment.
(2) Where an offer of compromise is made by a plaintiff and not accepted by the defendant, and the plaintiff obtains a judgment on the claim to which the offer relates no less favourable to the plaintiff than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall be entitled—
(a)if the claim of the plaintiff is for damages for or arising out of death or bodily injury, to an order against the defendant for the plaintiff’s costs in respect of the claim taxed on an indemnity basis;
(b)in the case of any other claim of the plaintiff, to an order against the defendant for the plaintiff’s costs in respect of the claim before 11.00 am on the second business day after the offer was served, taxed on the ordinarily applicable basis and for the plaintiff’s costs thereafter taxed on an indemnity basis.
…
(5) Where a plaintiff obtains judgment for the recovery of a debt or damages and-
(a)the amount for which the Court pronounces judgment includes an amount for interest or damages in the nature of interest; or
(b)by or under any Act the Court awards the plaintiff interest or damages in the nature of interest in respect of the judgment amount—
for the purpose of determining the consequences as to costs referred to in paragraphs (2) and (3) the Court shall disregard so much of the amount recovered by or awarded to the plaintiff for interest or damages in the nature of interest as relates to the period after the day the offer of compromise was served.
(6) For the purpose only of paragraph (5), the Court may be informed of the fact that the offer of compromise was served, and of the date of service, but shall not be informed of its terms.
(7) Paragraphs (2), (3) and (4) shall not apply unless the Court is satisfied by the party serving the offer of compromise that that party was at all material times willing and able to carry out the party’s part of what was proposed in the offer.
(8) Where the plaintiff obtains judgment for the recovery of a debt or damages, and the amount of the debt or the damages was not in dispute, but only the question of liability, paragraph (2) shall not apply unless the Court is satisfied that the plaintiff’s offer was of a genuine compromise.
35Recently, Justice Sloss in Australian Pharmaceutical Industries Ltd v O’Neale (Costs Ruling)[18] emphasised the proper approach, as outlined by the Court of Appeal in Stevens v Spotless Management Services Pty Ltd (No 2),[19] to be applied under r26.08 in order to determine costs consequences of a failure to accept an offer of compromise as follows:
In determining the proper application of r 26.08, the first question is whether, in terms of r 26.08(8), the appellant’s offer was’ of a genuine compromise’. The onus lies on the plaintiff in that regard. If that onus is discharged, the second question, which is not in issue in this matter, is whether the judgment obtained is no less favourable than the offer. The third issue is whether, notwithstanding an affirmative answer to the second question, the Court should order ‘otherwise’ than in the terms set out in r 26.08. In that regard, the onus lies on the defendant.
Accordingly, I shall address and consider each of these.
[18] [2021] VSC 688 at [38].
[19] [2016] VSCA 311 at [22] (per Kyrou and McLeish JJA and Elliott AJA). See also Enerka Apex Belting Pty Ltd v Vickers Systems Pty Ltd (No 2) [2002] VSC 409 at [9] (per Habersberger J).
36Critically, it should be noted that the party seeking to displace the prima facie rule in r26.08 bears the onus, which is not readily discharged. In Gamboni v Bendigo and Adelaide Bank Ltd,[20] Tate JA and Kyrou AJA referring to Ashley J’s ruling in Simonovski v Bendigo Bank Ltd (No 2)[21] stated:
In Simonovski, Ashley J stated that while the Court retains a discretion under r 26.08(2)(b) of the … Rules, an ‘order otherwise’ should not be lightly made, and that the prima facie position established by the rule ‘is a strong one, not easily displaced’.
[20] [2013] VSCA 282 at [51].
[21] [2003] VSC 139 at [17].
37In PCCEF Pty Ltd v Geelong Football Club (No 3)[22] the Court of Appeal observed that:
Whether the Court will “otherwise order” depends on whether doing so advances the purpose of [r 26 of the Rules]. That purpose, broadly speaking, is to encourage the compromise of litigation and the saving of the private and public costs associated with it’. The reasonableness of the rejection or non-acceptance of an offer is one matter that may be taken into account but is not of itself determinative.
….
It is not necessary to consider whether a comparison of the costs disposition proposed in the offer and the now likely disposition as to costs after trial suffices to meet that test, because it is plain in this case that the substantive relief the plaintiff has obtained is no less favourable to it than the acknowledgement would have been.
[22] [2019] VSCA 191 at [25] (per McLeish and Emerton JJA).
38The Court of Appeal in PCCEF Pty Ltd v Geelong Football Club (No 3)[23] concluded that r26.08(2) was clearly engaged and that judgment had been obtained on terms no less favourable to the plaintiff. No special circumstances were present “that would warrant this Court ‘otherwise ordering’ under r 26.08(2)” and no reason put forward for “otherwise ordering’ that would advance the purpose of O 26”. Additionally, that the ordinary course provided for under the Rules should follow given the defendant proceeded with the litigation and knowingly took the risk as to indemnity costs.[24]
[23] Ibid.
[24] Ibid [26] and [29].
39Justice McMillian in Re Saric; Saric v Vukasovic (No 2)[25] further emphasised that the Court must exercise caution in departing from the prima facie rule and should only do so when warranted such as in “compelling and exceptional circumstances” or for proper reasons which generally only arise in an “exceptional case” or “special circumstances”.
[25] [2018] VSC 254 at [16] (per McMillan J).
40In my view, and adopting the approach of the Court of Appeal in PCCEF Pty Ltd v Geelong Football Club (No 3)[26], it is clear that r26.08(2) is engaged in the present case. The plaintiff made an Offer of Compromise on 19 January 2022 and judgment has been obtained on terms that are no less favourable to the plaintiff than the terms of the offer.
[26] [2019] VSCA 191 at [26]-[27] (per McLeish and Emerton JJA).
41I reject the defendant’s suggestion that the Court is not in a position to determine whether or not an order is less favourable. Again, adopting the reasoning of the Court of Appeal in PCCEF Pty Ltd v Geelong Football Club (No 3),[27] it is unnecessary to consider a comparison, of the disposition proposed in the offer and now after, to satisfy the test. It is plain, on its face, that the substantive relief the plaintiff has obtained is no less favourable to it than the offer would have been given the plaintiff offered to pay the defendant $150,000.00 in addition to the agreed price.
[27] Ibid at [26]-[27], [29].
42In respect of the defendant’s submission that the offer was expressed in unquantifiable terms which the plaintiff neither sought nor was ever entitled to, in my view, and in agreeance with the plaintiff, the execution of formal option documents was clearly in contemplation within the Agreement itself. There is no difference in substance if the Offer of Comprise was expressed by the plaintiff to require execution of the formal option documents or simply outright conveyance. Both expressions would eventuate to what the plaintiff was granted in the proceeding, being performance of the Agreement which was concluded to be binding and specifically enforceable.
43The plaintiff’s offer to pay $150,000.00 in addition to the agreed price to execute and perform the formal option document, prepared by the defendant’s lawyers, was and offer “of a genuine compromise”. There is no submission to the contrary from the defendant and, therefore, judgment has been obtained on terms no less favourable to the plaintiff than the terms of the Offer of Compromise dated 19 January 2022.
44In my view, there are no special circumstances that warrant the Court from “otherwise ordering” under r26.08(2). The defendant has advanced no reasons or evidence for “otherwise ordering” which would advance the purpose of O26.[28] Instead, the defendant proceeded with the litigation and knowingly took the risk as to indemnity costs and the ordinary course provided for under the Rules should, therefore, follow.
[28] Ibid at [29].
45Accordingly, I will order that the defendant pay the plaintiff’s costs of the proceeding, to be taxed in default of agreement on the standard basis in respect of costs incurred up to and including 21 January 2022 and on an indemnity basis in respect of costs incurred from 22 January 2022 thereafter.
Conclusion
46For the reasons set out above the orders for specific performance and costs are to be as follows:
THE COURT ORDERS:
1 There is judgment for the plaintiff.
2 The defendant’s counterclaim is dismissed.
3 Subject to any variation that the parties may agree, the plaintiff and the defendant are to specifically perform their respective obligations under the agreement between the Plaintiff and the defendant (headed “Offer to Purchase”) dated 1 April 2021 (“Agreement”).
4 For the purposes of these Orders, ‘Land’ means the land known as 41 to 43 William Angliss Drive, Laverton North, Victoria, being Lot 58 on Plan of Subdivision 516116E, and being the land contained in Certificate of Title Volume 10733 Folio 454.
5 Upon the making of these Orders, the plaintiff shall:
(a)forthwith pay to the solicitors for the defendant (“P & B Law”) the sum of $545,000; and
(b)forthwith instruct Colliers International to forthwith pay to P & B Law the sum of $5,000 as currently held by it as stakeholder under the terms of the Offer to Purchase,
(c)such sum of monies (deposit monies) to be received and held by P & B Law as stakeholder pursuant to section 24 of the Sale of Land Act 1962 (Vic).
6 Within 60 days of the making of these Orders, the plaintiff and the defendant shall do all things necessary to settle the contract of sale so that its nominee, being K8 Property Pty Ltd as trustee for the K8 Property Trust (“nominee”), becomes the registered proprietor of the Land on the terms and conditions specified in the Agreement and, subject to the defendant’s compliance with paragraph 7 below, on the terms of the lease to Board Pro Pty Ltd (ACN 114 730 808) (“Board Pro”) specified in the Agreement (“Lease”).
7 Within 7 days of the date of these Orders, the defendant shall deliver to the plaintiff’s solicitors a copy of the Lease that is duly executed by Board Pro.
8 At settlement the plaintiff shall:
(a)pay to the defendant, or procure the payment by the nominee of, the balance of the purchase price due under the contract of sale, being the sum of $4,950,000, and procure release to the defendant of the deposit monies; and
(b)deliver to the defendant a fully executed copy of the Lease (subject to the defendant having complied with paragraph 7 above).
9 The defendant must pay the plaintiff’s costs of and incidental to the proceeding, on a standard basis in respect of costs incurred until 21 January 2022, and thereafter on an indemnity basis to be taxed in default of agreement.
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Certificate
I certify that these 17 pages are a true copy of the ruling of her Honour Judge Burchell delivered on 10 February 2023.
Dated: 10 February 2023
Nikki Thomson
Associate to Her Honour Judge Burchell
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