The Hancock Family Memorial Foundation Ltd v Fieldhouse [No 5]

Case

[2013] WASC 121 (S)

16 MARCH 2016

No judgment structure available for this case.

THE HANCOCK FAMILY MEMORIAL FOUNDATION LTD -v- FIELDHOUSE [No 5] [2013] WASC 121 (S)



SUPREME COURT OF WESTERN AUSTRALIACitation No:[2013] WASC 121 (S)
Case No:CIV:1802/1995ON THE PAPERS
Coram:LE MIERE J16/03/16
14Judgment Part:1 of 1
Result: Plaintiff pay costs of the second defendants in the action
Plaintiff pay the second defendants' cost of pre-action discovery application
Indemnity costs order refused
Plaintiff pay 50% of the second defendants' costs of this application
B
PDF Version
Parties:THE HANCOCK FAMILY MEMORIAL FOUNDATION LTD
CARNEGIE RICHMOND HALLETT FIELDHOUSE
DR LOWE AS REPRESENTATIVE ON BEHALF OF THE UNDERWRITING MEMBERS OF LLOYD'S SYNDICATE 657
R J WALLACE AS REPRESENTATIVE ON BEHALF OF THE UNDERWRITING MEMBERS OF LLOYD'S SYNDICATE 683
A M SHARPE AS REPRESENTATIVE ON BEHALF OF THE UNDERWRITING MEMBERS OF LLOYD'S SYNDICATE 839
J H BENTON AS REPRESENTATIVE ON BEHALF OF THE UNDERWRITING MEMBERS OF LLOYD'S SYNDICATE 376
R J KILN AS REPRESENTATIVE ON BEHALF OF THE UNDERWRITING MEMBERS OF LLOYD'S SYNDICATE 510

Catchwords:

Costs
Costs of the action
Costs incurred by other parties
Turns on own facts
Costs
Reserved costs
Unidentified reserved costs
Turns on own facts
Special costs order
Scale amount inadequate
Unusual difficulty, complexity or importance
Turns on own facts
Costs
Indemnity costs
Calderbank offer
Reasonable rejection of offer
Turns on own facts
Costs
Costs of application
Turns on own facts

Legislation:

Insurance Contracts Act 1984 (Cth), s 51
Legal Profession Act 2008 (WA), s 280
Probate and Administration Act 1989 (NSW), s 61
Rules of the Supreme Court 1971 (WA), O 17, O 26A

Case References:

Calderbank v Calderbank [1973] 3 All ER 333
Electricity Generation and Retail Corporation trading as Synergy v Woodside Energy Ltd [2014] WASC 469(S)
Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115
Frank Jasper Pty Ltd v Glew [No 3] [2012] WASC 24(S)
Heartlink Ltd v Jones [2007] WASC 254(S)
The Hancock Family Memorial Foundation Ltd v Fieldhouse [No 5] [2013] WASC 121
The Hancock Family Memorial Foundation Ltd v Lowe [2015] WASCA 38


JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
    IN CIVIL
CITATION : THE HANCOCK FAMILY MEMORIAL FOUNDATION LTD -v- FIELDHOUSE [No 5] [2013] WASC 121 (S) CORAM : LE MIERE J HEARD : ON THE PAPERS DELIVERED : 16 MARCH 2016 FILE NO/S : CIV 1802 of 1995 BETWEEN : THE HANCOCK FAMILY MEMORIAL FOUNDATION LTD
    Plaintiff

    AND

    CARNEGIE RICHMOND HALLETT FIELDHOUSE
    First Defendant

    DR LOWE AS REPRESENTATIVE ON BEHALF OF THE UNDERWRITING MEMBERS OF LLOYD'S SYNDICATE 657
    R J WALLACE AS REPRESENTATIVE ON BEHALF OF THE UNDERWRITING MEMBERS OF LLOYD'S SYNDICATE 683
    A M SHARPE AS REPRESENTATIVE ON BEHALF OF THE UNDERWRITING MEMBERS OF LLOYD'S SYNDICATE 839
    J H BENTON AS REPRESENTATIVE ON BEHALF OF THE UNDERWRITING MEMBERS OF LLOYD'S SYNDICATE 376
    R J KILN AS REPRESENTATIVE ON BEHALF OF THE UNDERWRITING MEMBERS OF LLOYD'S SYNDICATE 510
    Second Defendants

Catchwords:

Costs - Costs of the action - Costs incurred by other parties - Turns on own facts



Costs - Reserved costs - Unidentified reserved costs - Turns on own facts

Special costs order - Scale amount inadequate - Unusual difficulty, complexity or importance - Turns on own facts

Costs - Indemnity costs - Calderbank offer - Reasonable rejection of offer - Turns on own facts

Costs - Costs of application - Turns on own facts

Legislation:

Insurance Contracts Act 1984 (Cth), s 51


Legal Profession Act 2008 (WA), s 280
Probate and Administration Act 1989 (NSW), s 61
Rules of the Supreme Court 1971 (WA), O 17, O 26A

Result:

Plaintiff pay costs of the second defendants in the action


Plaintiff pay the second defendants' cost of pre-action discovery application
Indemnity costs order refused
Plaintiff pay 50% of the second defendants' costs of this application

Category: B


Representation:

Counsel:


    Plaintiff : No appearance
    First Defendant : No appearance
    Second Defendants : No appearance

Solicitors:

    Plaintiff : K & L Gates
    First Defendant : No appearance
    Second Defendants : DLA Piper Australia



Case(s) referred to in judgment(s):

Calderbank v Calderbank [1973] 3 All ER 333
Electricity Generation and Retail Corporation trading as Synergy v Woodside Energy Ltd [2014] WASC 469(S)
Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115
Frank Jasper Pty Ltd v Glew [No 3] [2012] WASC 24(S)
Heartlink Ltd v Jones [2007] WASC 254(S)
The Hancock Family Memorial Foundation Ltd v Fieldhouse [No 5] [2013] WASC 121
The Hancock Family Memorial Foundation Ltd v Lowe [2015] WASCA 38



1 LE MIERE J: On 12 April 2013 I dismissed the claim of the plaintiff against the second defendants: The Hancock Family Memorial Foundation Ltd v Fieldhouse [No 5] [2013] WASC 121. An appeal by the plaintiff was subsequently dismissed: The Hancock Family Memorial Foundation Ltd v Lowe [2015] WASCA 38. The circumstances giving rise to the plaintiff's claim, the issues in the action, the evidence and my findings are set out in those judgments which, for convenience, I will not repeat in these reasons.

2 On 12 April 2013 I made the following orders:


    1. Action against the second defendants be dismissed.

    2. The second defendants have liberty to apply within 28 days for orders in relation to costs.


3 The second defendants subsequently applied for the following orders:

    1. For the period up to and including 20 April 2012, the Plaintiff pay the Second Defendants' costs of the Action, including any reserved costs, on a party and party basis, to be taxed if not agreed.

    2. In relation to order 1.1 above, that the costs be assessed:


      2.1. without reference to the limits provided for in respect of the following items of the Legal Practitioners (Supreme Court) (Contentious Business) Reports and Determinations 2008, 2010 and 2012 respectively ('the Scales'):

        2.1.1. Item 3(b) - Defence;

        2.1.2. Item 6(b) - Giving particulars of a pleading;

        2.1.3. Item 10(a) - Proceedings in Chambers;

        2.1.4. Item 17 - Getting up; and

        2.1.5. Item 20(a), (b), (c), and (d) - Counsel fees.


      2.2. without reference to the hourly rates and the daily rates provided for Senior Counsel and Junior Counsel in the Scales; and

      2.3. including reasonable allowances for work undertaken by Senior Counsel.


    3. There be an allowance under Order 26A rule 7(2)(a) of the Rules of the Supreme Court 1971 (WA) ('the Rules') for the costs incurred by the Second Defendants in receiving, and responding to the Plaintiff's application pursuant to Order 26A rule 4 of the Rules for non-party discovery.

    4. For the period from and including 21 April 2012, the Plaintiff pay the Second Defendant's costs of and incidental to the Action, including any reserved costs, on an indemnity basis, to be taxed if not agreed.

    5. In the alternative to order 4 above, the Plaintiff pay the Second Defendants' costs of the Action, including any reserved costs to be taxed if not agreed:


      5.1. without reference to the limits provided for in respect of the following items of the Legal Practitioners (Supreme Court) (Contentious Business) Reports and Determination 2012:

        5.1.1. Item 17 - Getting up; and

        5.1.2. Item 20(a), (b), (c), and (d) - Counsel fees.


      5.2. without reference to the hourly rates and the daily rates provided for Senior Counsel and Junior Counsel in the Scales; and

      5.3. including reasonable allowances for work undertaken by Senior Counsel.


    6. The Plaintiff pay the Second Defendants' costs of this Application, including any reserved costs, to be assessed if not agreed.

    7. There be liberty to apply with 3 days notice.

    8. Such further or other order as the Court considers fit.

    9. The question of the First Defendant's entitlement to costs in the period prior to November 2007 be reserved.





Costs sought by second defendants

4 The second defendants seek orders removing the relevant scale limits in relation to the specified items referred to. In addition, the second defendants seek orders that their costs be taxed without reference to the hourly rates and daily rates provided for Senior and Junior Counsel in the relevant scales and 'including reasonable allowances for work undertaken by Senior Counsel'. The second defendants further seek an order for allowance under O 26A of the Rules of the Supreme Court 1971 (WA) for the costs incurred by them in receiving and responding to the plaintiff's application pursuant to O 26A r 4 for non-party discovery. The second defendants also seek an order that the plaintiff pay their costs on an indemnity basis from 21 April 2012 on the basis of a Calderbank letter of 28 March 2012. The written submissions of the parties give rise to a number of issues. I will address them in turn.




Costs of the action

5 The second defendants seek an order that the plaintiff pay their costs of the action. The plaintiff submits that the appropriate costs order is that the plaintiff pay the costs of the second defendants referable to the plaintiff's claims against the second defendants. The plaintiff submits that to use the term 'costs of the action' without the qualification could have the effect that the plaintiff would become liable for the whole of the costs of the first defendant, Mr Fieldhouse, and the Proposed Parties. The Proposed Parties is a reference to the Law Society of New South Wales (as owner of the New South Wales Solicitors Mutual Indemnity Fund) which the plaintiff unsuccessfully applied to join as a party.

6 The second defendants submit that, as overall successful parties, they ought to be granted all the costs of the action notwithstanding the fact that some costs may strictly be attributable to other parties. In essence, they submit that the test ought to be whether the work would have had to have been performed for all defendants jointly, in any event, which is a question for a taxing officer to determine at the taxation of costs hearing. The second defendants further submit that they were involved in the conduct of Mr Fieldhouse's defence and the responses to the interlocutory applications following Mr Fieldhouse's death.

7 In the course of interlocutory proceedings, Senior Counsel for the plaintiff informed the court that Mr Fieldhouse died intestate and no person had applied for or been granted administration of his estate. Senior Counsel further informed the court that Mr Fieldhouse lived and died in New South Wales and that the effect of s 61 of the Probate and Administration Act 1898 (NSW) is that his estate vested in the New South Wales Trustee. No order was made under O 18 r 7 joining Mr Fieldhouse's estate. Mr Fieldhouse's estate has taken no part in the action.

8 At the trial of this action the court tried the issues between the plaintiff and the second defendants only. The appropriate order is that the plaintiff pay the costs of the second defendants. To be clear, those costs do not include any costs incurred by the second defendants, or any insurer, in conducting the defence of the first defendant, Mr Fieldhouse. Nor do those costs include any costs incurred by the Proposed Parties, or insurers on their behalf, in responding to applications to join them as defendants. It is not appropriate to award the second defendants costs incurred by other parties, or proposed parties, notwithstanding that those costs may have been borne by the second defendants as a result of the relationship between the second defendants and those parties.




Reserved costs

9 The second defendants seek a costs order including any reserved costs. The only reserved costs order identified by the second defendants is an order for reserved costs which was made in respect of the pre-action discovery order made on 8 August 2008. It is appropriate that the plaintiff pay the second defendants' costs of that application. It is not appropriate to order that the plaintiff pay other, unidentified, reserved costs. When costs are reserved it is necessarily implied that there is reserved the question of the incident of those costs, quite apart from any question whether they are to be paid by the party who is ultimately successful in the litigation. Where the reserved costs have not been identified, the court is unable to determine whether the costs should be borne by the plaintiff, the second defendants or neither.




Special costs order

10 As I have said, the second defendants seek a special costs order under s 280(2) of the Legal Profession Act 2008 (WA) removing the limits under the Scales in respect of certain items of work.

11 Section 280(2) of the Legal Profession Act confers on the court a discretion to order that any particular allowance in a scale be raised or a limit removed. Section 280(2) requires a two-step process. First, the court must form a view that the costs allowable in respect of a matter under a cost determination are inadequate. That opinion will usually be formed if the applicant for an order under the section shows a fairly arguable case that a bill to be presented to a taxing officer may properly tax at an amount greater than the limit imposed by the relevant costs determination because of one or other of the unusual difficulty, complexity or importance of the case: Frank Jasper Pty Ltd v Glew [No 3] [2012] WASC 24(S) [23] (Martin CJ). Second, the court must then determine whether or not that inadequacy flows from the unusual difficulty, complexity or importance of the matter. If both steps are resolved in the applicant's favour, the court has the power to make the special order, and it must then determine whether to exercise its discretion to do so. The onus of establishing that both steps are satisfied and the discretion should be exercised in favour of the applicant is on the applicant and a special order will not be lightly made.

12 The 'matter' which must be unusually difficult, complex or important in order to enliven the jurisdiction conferred by s 280(2) is the whole of the 'matter' in respect of which legal services were provided and which comes within the scope of the legal costs determination made by the Legal Costs Committee pursuant to pt 10 div 5 of the Act: Electricity Generation and Retail Corporation trading as Synergy v Woodside Energy Ltd [2014] WASC 469(S) [5] (Martin CJ). Nevertheless, the court must consider potentially applicable items in a relevant costs determination because, before the powers conferred by the subsection can be exercised, the court must form the opinion that the amount of costs allowable under the costs determination is inadequate because of the unusual difficulty, complexity or importance of the 'matter'. The question which must be addressed either in respect of individual items or a costs determination as a whole is whether the costs allowable in respect of the work done are inadequate because of the particular characteristic or characteristics of the 'matter' which has or have enlightened the jurisdiction of the court, that is, unusual difficulty, complexity or importance: Electricity Generation [12].

13 The reference to 'importance' in s 280(2) directs the court's attention to the question of whether the work done was appropriate to the significance of the issues in the litigation. That may stem from the significance of the issues to the parties, or the significance of the issues to other prospective parties or to the public or to the community generally: Heartlink Ltd v Jones [2007] WASC 254(S) [19] (Martin CJ).

14 A special costs order may be sought in relation to three aspects of the scale. First, it may be that the scale items do not cover an area of work performed in conducting the litigation that has resulted in the incurring of costs. In such a case, the special order sought would describe the area of work and state the hourly rates to be applied to that area of work. Second, the successful party might contend that the time allowed by the scale for the performance of the work is inadequate. Third, a special costs order may be made in relation to the hourly rates provided for in an item in the scale, which might be thought to be too low in the circumstances.

15 Although an applicant for a special costs order often, as in this case, submits to the court a draft bill of costs, it is unnecessary to do so. The function of the court in making a special costs order under s 280(2) of the Act is limited to setting the parameters within which the taxing officer will tax the relevant bill, and providing any specific directions which will assist the taxing officer to assess the quantum of the costs to be allowed on taxation. The quantum of costs to be allowed is to be determined by taxation. Therefore, the powers conferred upon the court by s 280(2) of the Act are to be exercised as a matter of impression rather than science, taking into account the greater expertise of taxing officers in fixing the amount of costs properly and reasonably allowed: Electricity Generation [4] (Martin CJ).




Scale amount inadequate

16 I am of the opinion that the amount of costs available in respect of this matter under the relevant costs determinations is inadequate. I reach that opinion on the basis of the following materials:


    (a) the matters sworn to by Richard Edwards in his affidavit sworn 17 April 2015 concerning the work done by the second defendants' legal representatives;

    (b) the matters sworn to by Richard Edwards in his affidavit sworn 20 July 2015 concerning the work done by the legal representatives of the second defendants and the revised bill of costs produced; and

    (c) my knowledge of the matter as the case manager and trial judge.


17 I find it unnecessary to consider each item of the draft bill. My task is to form an opinion whether the amount of costs allowable in respect of the 'matter' is inadequate, not to carry out an evaluation of each item of work done by the legal representatives of the applicant party. It is, of course, a matter for the taxing officer to determine the amount that will be allowed for each item in the bill of costs presented by the second defendants. The taxing officer might determine in relation to one or more items that the proper amount to be allowed does not exceed the amount in the scale.


Unusual difficulty, complexity and importance

18 The second defendants submit that the action was one of unusual difficulty, complexity and importance. I am of the opinion that the matter was one of unusual difficulty, complexity and importance and that the amount allowable under the scale is inadequate because of the unusual difficulty, complexity and importance of the matter. I have formed that opinion having regard to the following matters. First, the amount in issue in the action was large. If the plaintiff had been successful the second defendants would have been liable to pay the plaintiff a sum in the order of $10,000,000 plus interest. Secondly, in defending the case the second defendants were concerned not only with insurance issues, which themselves raised questions of fact and interpretation of relevant insurance policies, but also questions relating to the claims against Mr Fieldhouse. In my judgment I set out that the case gave rise to the following issues:


    1. Was Mr Fieldhouse retained by the plaintiff?

    2. In the circumstances, did Mr Fieldhouse owe the plaintiff a duty of care?

    3. Did Mr Fieldhouse breach his retainer or the duty of care he owed to the plaintiff?

    4. If so, did the plaintiff suffer loss as a consequence of that breach?

    5. Does the excess insurance the second defendants provided to Mr Fieldhouse provide cover in respect of any liability he may be found to have to the plaintiff?

    The second defendants' defence was made more complex because Mr Fieldhouse passed away in November 2007 and was unable to provide instructions or assistance in responding to the allegations made against him. Furthermore, most of the people involved in the relevant events had passed away prior to trial including Mr Hancock and Mr Dalby in addition to Mr Fieldhouse. The action took 18 years to come to trial and concerned events dating back to 25 years before the trial. There were lengthy and complex legal submissions based upon a review of numerous authorities. Both parties engaged senior counsel. Of course, the mere fact that the second defendants engaged senior counsel does not of itself establish the unusual difficulty, complexity or importance of the case. However, that both parties engaged senior counsel is an indication that both parties considered the matter one that warranted senior counsel.


19 Having considered all of the matters I am of opinion that the matter was one of unusual difficulty and of complexity and of importance.


Removal of limits on hourly rates

20 The rates charged by the solicitors and counsel for the second defendants, and incurred by those defendants, exceeds the hourly rates allowed under the scale. The court should not order that the hourly rates to apply in assessing costs should be in excess of the hourly rates allowed in the scale merely because a party's solicitor or counsel has charged at a higher rate. The rates in the scale are struck by reference to what has been charged within the profession. Those hourly rates can only be an average or median of the upper rates determined in the surveys conducted by the Legal Costs Committee in drawing the scales and there will be some cases where the unusual difficulty, complexity or importance of the case warrants the special expertise of the practitioner involved and warrants an increase in the hourly rate.

21 I have found that the matter is one of unusual difficulty, complexity and importance. In the circumstances it was reasonable for the second defendants to engage solicitors and counsel who charge rates higher than those allowed in the Scales. However, it is appropriate to raise the allowable hourly rate rather than to remove any limit on those rates. It is appropriate to raise the limit on hourly rates for solicitors and counsel by 25%.




Indemnity costs

22 The second defendants seek indemnity costs for the period from and including 21 April 2012 on the basis of a Calderbank letter of 28 March 2012. In that letter the second defendants offered to settle the action on the following terms:


    1. the proceeding against the second defendants is discontinued;

    2. the plaintiff and the second defendants bear their own costs in respect of the proceeding against the second defendants, including the costs of the second defendants providing non-party discovery;

    3. the settlement is to be confidential save for disclosures required by law to professional advisers or insurers or prospective insurers;

    4. the settlement is to be recorded in written settlement terms which reflect the terms of the offer.

    The offer was stated to be open for acceptance on or before 21 April 2012.

23 The test which must be applied in determining whether to award indemnity costs against a party who has rejected a Calderbank offer is whether the rejection was unreasonable in the circumstances: Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115 [23]. The onus is on the offeror to demonstrate unreasonableness: Lo Presti [21].

24 In considering whether it is unreasonable to have rejected a Calderbank offer, the court should ordinarily have regard to at least the following factors:


    1. the stage of the proceedings at which the offer was received;

    2. the time allowed to the offeree to consider the offer;

    3. the extent of the compromise offered;

    4. the offeree's prospects of success, assessed as at the date of the offer;

    5. the clarity with which the terms of the offer were expressed; and

    6. whether the offer foreshadowed an application for indemnity costs in the event of rejection.

    I will consider each of those factors.


25 The offer was made at a comparatively late stage in the proceedings in that the action had been on foot for 17 years when the offer was made. However, the second defendants were not joined as party to the action until 2010. The offer was made one month before the trial of the action. The offer was made at a stage of the proceedings at which the issues had sufficiently crystallized and the plaintiff was sufficiently aware of the material that would be before the court to enable it to make an informed assessment of its prospects of success at trial.

26 The offer was open for a period of 24 days. At the time it was made, the plaintiff had a proper opportunity to assess the offer and make an informed and considered decision whether or not to accept it.

27 The second defendants' offer was a 'walk away' offer. A 'walk away' offer can, in an appropriate case, exhibit the requisite element of compromise to be treated as a Calderbank offer. The compromise may be the offeror's giving up of a claim for costs, which, if the offeror succeeded at trial, may otherwise by payable by the offeree. The second defendants' offer involved giving up a claim to recoverable costs. There are circumstances where an offer to walk away does not involve any real compromise. However, in this case the walk away offer must be regarded as a genuine offer of compromise. The proceedings between the plaintiff and the second defendants had progressed for some time and the second defendants' costs would have been substantial. In its letter the second defendants said that they had incurred costs to date of approximately $400,000 in defending the proceeding brought against them. In the circumstances of this case, the second defendants' offer involved a genuine compromise.

28 The second defendants' offer was expressed clearly. Furthermore, the letter in which the offer was made set out in detail the basis of the offer and analysed the plaintiff's case against Mr Fieldhouse and the contracts of insurance between Mr Fieldhouse and the second defendants which gave rise to the plaintiff's claim against the second defendants.

29 The letter of offer foreshadowed an application for indemnity costs in the event of rejection. The letter did not expressly refer to indemnity costs but it stated if the offer was not accepted and the plaintiff recovered an amount no more favourable than the offer, the letter would be tendered in support of an application for costs against the plaintiff in accordance with the principles of Calderbank v Calderbank [1973] 3 All ER 333 and Lo Presti [115].

30 The second defendants' letter stated that for the plaintiff to recover anything from the second defendants it would need to prove that the insurance contracts cover the claim made against Mr Fieldhouse and that no exclusions apply to deny cover. The letter stated the second defendants' assertion that the insurance contracts with the second defendants:


    [D]o not cover the claim because Condition C of each policy provides the underwriters for each policy will only be liable to pay after the underlying insurers have paid or admitted liability or have been held liable to pay the full amount of their indemnity under the underlying insurances ie the Underlying Layer.
    The second defendants' solicitors went on, in effect, to assert that Condition C was not satisfied and the second defendants considered that they are not liable under either policy.

31 A central issue between the plaintiff and the second defendants at trial concerned the construction of Condition C. I found against the construction of Condition C advanced by the plaintiff, found that the condition was not satisfied and that therefore the second defendants were not liable under the contract of liability insurance between them and Mr Fieldhouse in respect of Mr Fieldhouse's liability in damages to the plaintiff. It followed that the plaintiff was not entitled to recover from the second defendants under s 51(1) of the Insurance Contracts Act 1984 (Cth). The plaintiff appealed against the judgment in favour of the second defendants. On appeal, the plaintiff contended that I had erred in the construction of Condition C. The Court of Appeal dismissed those grounds of appeal. However, the plaintiff's contentions were arguable. This aspect of the plaintiff's case depended on questions of construction of the relevant insurance policies, and their application to the facts.

32 In their letter of offer the second defendants also contended that the plaintiff's claim against them would fail because the plaintiffs would not establish their claim against Mr Fieldhouse. The second defendants' letter of offer sought to summarise the plaintiff's case against Mr Fieldhouse and noted: 'the obvious limitations in summarising a claim which has some complex contested issues'. In my opinion, that is a fair observation about the claim.

33 I am not satisfied that the plaintiff's rejection of the second defendants' Calderbank offer was in all the circumstances unreasonable so as to warrant an indemnity costs order. The second defendants' offer involved a genuine compromise in that it involved the second defendants abandoning its claim to substantial recoverable costs. However, from the perspective of the plaintiff the offer amounted to a capitulation. The plaintiff's claim was for a sum in excess of $10,000,000. Had it accepted the offer it would have recovered nothing and had to bear its own substantial costs. The case involved difficult and complex contested issues. Indeed, the basis of the second defendants' claim for a special costs order is that the matter is one of unusual difficulty, complexity and importance.




Costs of this application

34 The defendant has succeeded in obtaining a special costs order but has failed in its claim for indemnity costs, all reserved costs and its claim that the costs of the action should include some of the costs incurred by the first defendant and the Proposed Parties. The appropriate order is that the plaintiff pay 50% of the second defendants' costs of this application.

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