Vesic v Vesic (No 2)
[2022] ACTSC 123
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
| Case Title: | Vesic v Vesic (No 2) | ||
| Citation: | [2022] ACTSC 123 | ||
| Hearing Date: | On the papers | ||
| Decision Date: | 26 May 2022 | ||
| Before: | Crowe AJ | ||
| Decision: |
| ||
| (2) The plaintiff pay the second defendant’s costs of the |
proceedings as agreed or assessed on a party and party
basis up to and including 29 April 2022.
(3) The plaintiff pay the second defendant’s costs as agreed or assessed on an indemnity basis on and from 30 April 2022. (4) There is no order as to costs in relation to the Notice claiming
contribution or indemnity dated 26 March 2021.
| Catchwords: | CIVIL LAW – COSTS – Calderbank offers – whether a special |
| costs order should be made | |
| Legislation Cited: | Court Procedures Rules 2006 (ACT) rr 1720, 1725 |
| Cases Cited: | Calderbank v Calderbank [1975] 3 All ER 333 Hulanicki v Walton (No 2) [2015] ACTCA 45 Vesic v Vesic [2022] ACTSC 109 |
| Parties: | Lillian Vesic (Plaintiff) John Jovan Vesic (First Defendant) William Love & Nicol Lawyers Pty Ltd trading as Bradley Allen Love Lawyers (Second Defendant) |
| Representation: | Counsel |
| M Noakhtar (Plaintiff) A Muller (First Defendant) A R Zahra SC (Second Defendant) | |
| Solicitors | |
| McInnes Wilson Lawyers (Plaintiff) | |
| Reuben George Lawyers (First Defendant) Sparke Helmore (Second Defendant) | |
| File Number(s): | SC 295 of 2020 |
| Crowe AJ |
1. On 19 May 2022 I delivered judgment in this matter: see Vesic v Vesic [2022] ACTSC 109. I made the following orders:
(1) Judgment for the plaintiff against the first defendant in the sum of $31,654.45. (2) Judgment for the second defendant. (3) The Notice claiming contribution or indemnity filed on 26 March 2021 and issued by the second defendant against the first defendant is dismissed.
2. I also reserved the question of costs and gave directions for the filing of evidence and submissions in relation to that issue.
3. The three parties have filed and served affidavits setting out the history of settlement offers made in an attempt to avoid the hearing of the case, which was listed for commencement on 2 May 2022. Written submissions have also been filed and served by each party.
4. The following assumes familiarity with my reasons for decision published on 19 May
2022. As in those reasons, I refer to the plaintiff as “Lillian”, the first defendant as “John”
and the second defendant as “BAL”.
5. The chronology of the offers made by John and/or BAL were as follows:
3 June 2021 Offer by John. Property to be sold, net proceeds (after payment
in full of existing mortgage debt (around $350,000) and costs of
sale) to be paid to the plaintiff. Proceedings to be dismissed with
no order as to costs15 March 2022 Offer by John. New Deed to replace the 2014 Deed. No sale of
property. Mutual releases, with proceedings to be dismissed with
no order as to costs.
Under the new Deed John would be responsible for the rates,
land tax and insurance outgoings in relation to the property, and
Lillian would be responsible for the utility outgoings and the
maintenance costs. In other respects the Deed would operate
broadly in line with the provisions of the 2014 Deed.24 March 2022 Offer by BAL. Proceedings to be dismissed with no order as to
costs.6 April 2022 Offer by John. Largely as per the 3 June 2021 offer. 20 April 2022 Offer by John and BAL. Essentially as per Lillian’s offer of 14 April 2022, however with John’s maintenance contribution limited
to $50 per month, and no lump sum payment for maintenance.
29 April 2022 Offer by BAL. BAL to pay Lillian $10,000. Mutual releases.
Proceedings against BAL to be dismissed with no order as to
costs.6. Lillian also made a number of offers. I summarise those which are relied upon thus:
20 July 2021 This offer was to both defendants. It proposed that the
defendants discharge the mortgage debt. The property would
then be sold with John receiving the sum of $174,000 and Lillianreceiving the balance of the proceeds of sale. The plaintiff’s costs
of the proceedings were to be paid on a party/party basis.
14 April 2022 Largely along the lines of John’s 15 March 2022 offer, but with the defendants to pay Lillian’s disbursements in the proceedings in the sum of $23,500, and John to pay $32,000 for maintenance costs and further $200 per months for such costs on an ongoing basis. 7. All of the offers were said to have been made pursuant to the principles in Calderbank v Calderbank [1975] 3 All ER 333.
8. Lillian submits that having succeeded in part of her claim against John, it would be fair and just for her to recover 50 per cent of her costs against him, such costs to be agreed or assessed on a party/party basis. John should bear his own costs. Failing that,
Lillian’s fallback position is that there should be no order as to costs as between herself
and John. Lillian argues that it is not possible to take much account of the various Calderbank offers because they involved settlement terms and conditions which were not comparable to the outcome which Lillian achieved by the judgment in her favour.
9. In relation to BAL, Lillian concedes that it must be entitled to its costs on a party/party basis. As to the 24 March 2022 offer, she says that it required the dismissal of the whole proceedings, which would have resulted in the abandonment of her successful claim against John.
10. Lillian argues that the 29 April 2017 offer was only open for 24 hours, which was insufficient time. It was, therefore, not unreasonable for her to reject it.
11. John submits that Lillian only succeeded in her claim against him on a basis which she had not pleaded nor pressed in her submissions put to the Court. She had failed in the substantive claims which she had litigated. Overall, John should be seen as the victor in the case, and thus entitled to his costs.
12. Moreover, it is said that Lillian failed to achieve an outcome equal to or better than
John’s 3 June 2021 offer, and that as a result she should pay John’s costs on an
indemnity basis from that date.
13. In the event that the Court was minded to order any costs in Lillian’s favour, it is pointed
out that r 1725 of the Court Procedures Rules 2006 (ACT) would operate to limit her recovery to a proportion of her disbursements (having regard to the fact that the judgment recovered was less than $50,000). It is argued that there is no demonstrable reason for the Court to make an order altering the operation of that rule.
14. John also submits that it is appropriate in all of the circumstances of the case for the Court to award a fixed amount for costs pursuant to r 1720(3)(c), rather than to require the parties to undergo a formal assessment.
15. BAL relies on the two offers which it made (on 24 March 2022 and 29 April 2022) to argue that Lillian should be required to pay its costs on a party/party basis up to the first (or alternatively the second) of those dates, and thereafter on an indemnity basis.
BAL submits that the offers were made at a time when the risks of the failure of Lillian’s
claim against it should have been obvious. It was unreasonable for her to have rejected
the offers.16. In relation to the argument that the time in which to consider the second offer was too short, BAL points to the fact that Lillian in fact rejected the offer within the 24 hour period during which it was open.
17. As to its notice of contribution, BAL suggests that the appropriate order, given the circumstances of the case, is that there be no order as to the costs of the notice. Alternatively, if there is to be an order, it should be made against Lillian.
Consideration
There is force in Lillian’s submission that the settlement offers made by John cannot
really be compared with the result achieved by the judgment which she has recovered against him. It is apparent from the addressed in the settlement offers that the negotiations between the parties focussed on the detailed terms and conditions of the relationship which Lillian and John found themselves in following the events of 2014. Unfortunately, it appears that the prospect of bringing that relationship to an end by the sale of the property would have created new difficulties. It appears, from the correspondence annexed to the affidavits relied upon in relation to the costs issue, that Lillian was concerned that the sale of the property would leave her without the necessary resources to buy a replacement home.
19. I accept that the terms of the offers made by John cannot really be assessed against the judgment for a money sum which Lillian has recovered. Ordinarily this would result in the costs following the event. However, there is also considerable force in the submissions made by John that Lillian succeeded on an issue which was not pleaded or pressed on her behalf at the hearing. While I do not accept that John should be seen
as the “victor” in this litigation, it does seem to me that the Lillian’s failure to clearly
articulate and press her claim for the unpaid $25,000 must affect the issue of costs. I also take into account the default position created by r 1725. Having regard all of the circumstances of the case, it seems to me that the fair and just order as between Lillian and John is that each should bear her/his own costs.
20. The situation between Lillian and BAL is more straightforward. The 24 March 2022 offer was, in retrospect, a good one for Lillian in relation to her claim against BAL. However,
the difficulty, as pointed out in Lillian’s submissions, is that there is a lack of clarity in the offer. The term of the offer included that “The proceedings (including BAL’s counter-
claim) be dismissed.” It may be, having regard to the context of the letter of 24 March
2022 that BAL intended to suggest that only that part of the proceedings against it was to be dismissed. However, that is by no means clear. In the circumstances it is preferable, in my view, not to make a special costs order based on the contents of that letter.
21. The 29 April 2022 offer was in clear terms. It was sufficiently clear for Lillian to respond to it without seeking clarification or, importantly, further time in which to consider the terms. I do not accept that in the circumstances where the case was to commence on
the following Monday, and where Lillian’s solicitor was able to obtain clear and firm
instructions within the 24 hours allowed, that the time for acceptance of the offer was
unreasonably short.22. The considerations to be taken into account were summarised by Murrell CJ, Refshauge and Penfold JJ in Hulanicki v Walton (No 2) [2015] ACTCA 45 at [13]-[16]. Having regard to the clarity of the offer, the time at which it was made, the fact that the case was ready to commence, the extent of the compromise offered by BAL and the prospects of Lillian succeeding having regard to the stark inconsistencies between her recollection of events and the contents of the contemporaneous documents (in addition
to the evidence of both John and Mr Morton) I consider that the rejection of BAL’s offer
was so unreasonable as to justify the special costs order sought. Lillian was specifically put on notice that BAL would be seeking a order for indemnity costs should it succeed in defeating her claim. I propose to make such an order from 30 April 2022, which was the date on which Lillian could have brought the litigation against BAL to an end.
BAL’s notice claiming contribution or indemnity occupied no time during the hearing. It
seems to me that it was a step taken to deal with a contingency which did not arise.
The appropriate order is that there be no order as to costs in relation to the notice.
Orders of the Court
24. The orders of the Court are:
(1) There is no order as to costs as between the plaintiff and the first defendant. (2) The plaintiff pay the second defendant’s costs of the proceedings as agreed or
assessed on a party and party basis up to and including 29 April 2022.
(3) The plaintiff pay the second defendant’s costs as agreed or assessed on an
indemnity basis on and from 30 April 2022.
(4) There is no order as to costs in relation to the Notice claiming contribution or
indemnity dated 26 March 2021.
I certify that the preceding twenty-four [24] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Justice Crowe.
Associate: Jake Hester
Date: 26 May 2022
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