Victorian WorkCover Authority v Myer Pty Ltd (Ruling)

[2016] VCC 1798

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMON LAW DIVISION

Revised
Not Restricted
Suitable for Publication

GENERAL LIST

Case No. CI-14-04854

VICTORIAN WORKCOVER AUTHORITY	Plaintiff
v
MYER PTY LTD	Defendant

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JUDGE:	HER HONOUR JUDGE KINGS
WHERE HELD:	Melbourne
DATE OF HEARING:	23 November 2016
DATE OF RULING:	28 November 2016
CASE MAY BE CITED AS:	Victorian WorkCover Authority v Myer Pty Ltd (Ruling)
MEDIUM NEUTRAL CITATION:	[2016] VCC 1798

RULING AS TO COSTS
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Subject:  PRACTICE AND PROCEDURE

Catchwords:             Costs – recovery proceeding – application for costs orders – indemnity costs – non-common costs – three Calderbank offers by defendant – defendant entitled to costs on indemnity basis.

Legislation Cited:     Accident Compensation Act 1985; County Court Civil Procedure Rules 2008 (Vic), O26.08

Cases Cited:Daud v TS 14 Plus Australia Pty Ltd & Myer Pty Ltd (Ruling) [2016] VCC; Calderbank v Calberbank [1975] 3 All ER 333; Commissioner of State Revenue v Challenger Listed Investments Ltd [2011] VSCA 398; Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; Eshuys v St Barbara Ltd (No 2) [2011] VSC 150

Ruling:  Unreasonable for plaintiff to reject third Calderbank offer – plaintiff pay defendant’s costs of proceeding on a standard basis to 14 November 2016 and costs on an indemnity basis from 15 November 2016.  Proceeding otherwise dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N Y Rattray	Hall & Wilcox
For the Defendant	Ms M Britbart QC with Mr P Hamilton	Wotton + Kearney

HER HONOUR:

1 The plaintiff brought this proceeding under s138 of the Accident Compensation Act 1985 (“the Act”) seeking an indemnity from the defendant in respect to compensation paid under the Act to the injured worker, Ms Meagan Daud.

2       On 22 November 2016, the Court entered judgment for the second defendant in the main proceeding, Daud v TS 14 Plus Australia Pty Ltd & Myer Pty Ltd (proceeding number CI-15-01650), who is the defendant named in this recovery proceeding, and I made costs orders with the consent of the parties.

3       On 23 November 2016, Counsel appeared before me on the issue of costs in the recovery proceeding.

4       The parties were in agreement that the defendant was entitled to have its legal costs paid by the plaintiff but argued before me as to the form of the costs order that I should make, principally regarding two matters.

Indemnity costs

5       In the ordinary course of events, costs are awarded in favour of the successful party on a standard basis.

6 Order 26.08 of the County Court Civil Procedure Rules 2008 (Vic) provides that where an offer of compromise is made by the defendant and the plaintiff unreasonably fails to accept the offer, then unless the Court otherwise orders, the defendant shall be entitled to an order against the plaintiff in respect of the defendant’s costs taxed on an indemnity basis.

7       Counsel for the defendant relied upon three letters, or “Calderbank offers”[1] that were rejected by the plaintiff during the proceedings as the basis for which the defendant was entitled to indemnity costs.

[1]Calderbank v Calderbank [1975] 3 All ER 333

8       To put the offers into context, the defendant emailed the letters to the plaintiff as follows:  

(a)     on 19 June 2015, very early in the proceeding and with an offer that expired at 4.00pm on 3 July 2015 (“the first Calderbank offer”);

(b)     on 25 October 2016, after mediation but two weeks prior to the trial date and with an offer that expired at 4.00pm on 2 November 2016 (“the second Calderbank offer”); and

(c)    on 11 November 2016, after the plaintiff had finished giving evidence at trial and with an offer that expired at 4.00pm on 14 November 2016 (“the third Calderbank offer”).

9       The terms of the offers of compromise made to the plaintiff were in substance the same in all three of the letters.  

10      The first and second Calderbank offers stated as follows:

“Notwithstanding the above, in a genuine attempt to resolve the claim against our client and to avoid the costs associated with preparing the matter for hearing on 8 November 2016, we are instructed to offer to consent to your client discontinuing its claim against our client on the basis that each party bears its own costs to date.”

11      The third Calderbank offer stated:

“Notwithstanding the above, in a genuine attempt to resolve the claim against our client and to avoid further costs associated with defending your client’s claim during the current trial, we are instructed to offer to consent to your client discontinuing its claim against our client on the basis that each party bears its own costs to date.”

12      There was no issue as to the form or validity of the Calderbank offers.

13      Counsel for the defendant submitted that the plaintiff unreasonably rejected three Calderbank offers emailed to the plaintiff and, as such, should be entitled to the following costs orders:

(a)     the plaintiff pay the defendant’s costs on a standard basis until 3 July 2016 and costs on an indemnity basis from 4 July 2016; or

(b)     in the alternative, the plaintiff pay the defendant’s costs on a standard basis until 2 November 2016 and costs on an indemnity basis from 3 November 2016; or

(c)     in the alternative, the plaintiff pay the defendant’s costs on a standard basis until 14 November 2016 and costs on an indemnity basis from 15 November 2016.

14      In summary, Counsel for the plaintiff resisted the defendant’s argument and submitted that each of the Calderbank offers were an invitation to capitulate or discontinue her claim and as such, rejection of the offer was not unreasonable in accordance with Commissioner of State Revenue v Challenger Listed Investments Ltd.[2]  Accordingly, Counsel for the plaintiff submitted that the defendant’s costs should be taxed on a standard basis, and if the Court disagreed with its submission, then taxed on an indemnity basis from the expiry of the third Calderbank offer.

[2][2011] VSCA 398 at paragraph [13]

15      As outlined by the Court of Appeal in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2),[3] the Court’s discretion with respect to costs orders requires assessment as to whether the rejection of the Calderbank offer was “unreasonable” and having regard to a number of factors, including:

[3](2005) 13 VR 435

(a)     the stage at the proceeding at which the offer was received;

(b)     the time allowed for the offeree to consider the offer;

(c)     the extent of the compromise offered;

(d)     the offeree’s prospects of success, assessed at the date of the offer;

(e)     the clarity with which terms of the offer were expressed; and

(f)      whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it.

16      It is a well recognised legal principle that the party seeking a special costs order bears the onus of persuading the Court that the plaintiff’s failure to accept one or more of the above offers was “unreasonable” and warrants a departure from ordinary costs orders.  The question of reasonableness is assessed at the time each offer was made.[4]

[4]Eshuys v St Barbara Ltd (No 2) [2011] VSC 150

17      Taking into account the relevant factors outlined in Hazeldene’s Chicken Farm, in my assessment and considering the submissions made by both Counsel in all of the circumstances, I form the following views:  

(a)     It was reasonable for the plaintiff to reject the first Calderbank offer given that it was made at a very early stage in the proceeding and, as to the plaintiff’s prospects of success, subsequent evidence showed it was improbable that the ladder referred to as safe and appropriate in the letter was unlikely to be the one the plaintiff fell from.  It was not a genuine offer of compromise.

(b)     Similarly, it was reasonable for the plaintiff to reject the second Calderbank offer shortly prior to trial as it was made on the same terms as the first offer and did not seek to address any further strength or aspect of the plaintiff’s claim.  It was effectively another offer to capitulate.

(c)     However, I consider that, in all the circumstances, it was unreasonable for the plaintiff to reject the third Calderbank offer.  In my opinion, as the plaintiff had finished giving her evidence in Court, Counsel had ample opportunity to assess the risk that there would be a less favourable outcome than what was offered in the third Calderbank offer.  As costs incurred by the plaintiff would have been significant, the offer to discontinue proceedings with both parties bearing their own costs was of significant value in these circumstances.  The short timeframe of the offer was not unreasonable given the proceeding was on foot.

18      As the third Calderbank offer expired at 4.00pm on 14 November 2016, I order that the plaintiff pay the defendant’s costs on an indemnity basis from 15 November 2016.

Non-common costs

19      Counsel for the plaintiff asserted that, as the principal proceeding was conducted to a conclusion and substantive costs orders were made, it was appropriate that any order for costs in this proceeding be “non-common” to the principal proceeding.  However, Counsel admitted that there was no universal practice or hard authority that he could hand up to support his argument.

20      Counsel for the defendant asserted that an order for non-common costs could potentially leave the defendant in the position where some of its costs are unpaid.  Further, Counsel submitted that there was no basis for making an order for non-common costs given the inability of the plaintiff to hand up authority supporting its argument.

21      I am inclined to agree with Counsel for the defendant and follow the ordinary practice of costs orders in this Court.  

22      For the reasons above, I consider it appropriate to make the following orders:   

(1)    The plaintiff pay the defendant’s costs of the proceeding on a standard basis to 14 November 2016 and costs on an indemnity basis from 15 November 2016, to be taxed by the Costs Court in default of agreement.

(2)    Certification for two counsel:

(a)     Senior Counsel’s fee on brief fixed at $5,500.00;

(b)     Junior Counsel’s fee on brief fixed at $2,500.00.

(3)    The proceeding be otherwise dismissed.

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