Australian Super Developments Pty Ltd v David Wellesley Marriner & Ors

COSTS - Costs of original trial and remitter hearing - Plaintiff sought a 'special' costs order - Calderbank offer - Offer of compromise - Whether offer of compromise should be treated as an effective Calderbank offer - Indemnity costs

1 The background and events that gave rise to the dispute between the parties in this proceeding are canvassed in the remitter decision.[1] The litigation arose from activities undertaken in the course of a joint venture conducted by interests associated with the first defendant, Mr David Wellesley Marriner, on the one hand and the Construction and Building Unions Superannuation Fund ('CBUS') on the other. Contemporaneous with the demise of their joint venture relationship in about mid-2000, Mr Marriner expressed interest in acquiring the Laguna Quays resort, which was one of the joint venture projects operated by the plaintiff, Australian Super Developments Pty Ltd ('ASD'), the corporate vehicle through which the joint venture was conducted. The completion of the sale of Laguna Quays to entities associated with Mr Marriner did not take place until 17 April 2002.

2 In 2005, ASD commenced this proceeding. It brought numerous claims for damages and equitable compensation against Mr Marriner and some of his associated companies (the second to sixth defendants). ASD also brought claims against the partners of Wallace & Wallace, a firm of solicitors based in Mackay, North Queensland, for alleged breaches of a solicitor's trust. In essence, ASD claimed that Mr Marriner had induced or procured payments to be made by Wallace & Wallace in breach of trusts of which it was the beneficiary. It also claimed that Mr Marriner, as Chief Executive Officer ('CEO') and a director of ASD, exceeded an expenditure limit imposed on him by the board of directors of ASD, by some $824,890, without its approval. Mr Marriner and his associated companies counterclaimed against ASD, United Super Pty Ltd, in its capacity as the trustee of CBUS, and Mr Ian Patience, who was the new CEO of ASD, and Messrs Ralph Willis, George Wason and Barrie Frost, who were members of the ASD board at the relevant time, for misleading and deceptive conduct and unconscionable conduct, amongst other things.

3 The first trial commenced before the Honourable Justice Byrne in mid-August 2009. As events transpired, the trial involved only (what may be conveniently called) 'the ASD parties' and 'the Marriner parties', the claims pleaded against the partners of Wallace & Wallace having been settled prior to its commencement.[2] The trial occupied some 20 sitting days. His Honour delivered judgment on 26 February 2010, upholding ASD's claim in part and dismissing the Marriner parties' counterclaim.[3] On 16 April 2010 his Honour delivered his reasons for dismissing the counterclaim,[4] and pronounced final orders, including as to costs. He ordered that there be judgment for ASD against Mr Marriner on the claim in the amount of $412,113, plus interest in the amount of $224,336.25, and that there be judgment for ASD on the counterclaim. As to costs, his Honour ordered that ASD's costs on the claim be paid by Mr Marriner and that there be no order for costs on the counterclaim.

4 The Marriner parties appealed to the Court of Appeal against the orders requiring Mr Marriner to pay $412,113 to ASD and dismissing his counterclaim for damages. The ASD parties cross-appealed, seeking an order that Mr Marriner pay them the sum of $929,800 on the basis that his Honour should have awarded ASD the entire amount claimed.[5] The appeal was heard in November 2011 and occupied two days. On 3 August 2012, the Court of Appeal (Neave and Mandie JJA and Judd AJA) delivered judgment, allowing the appeal and setting aside the orders made by the original trial judge requiring Mr Marriner to pay $412,113 to ASD.[6] The Court of Appeal also allowed ASD's cross-appeal in part and remitted several issues to be determined by a judge of the trial division.

5 The Court of Appeal reserved the question of costs and directed that written submissions be filed. Later, following the retirement of Mandie JA, the parties agreed to have the costs issue dealt with by a bench of two judges. The Court of Appeal (Neave JA and Judd AJA) delivered its reasons and pronounced orders on 5 December 2012.[7] The Court held that as the Marriner parties were substantially successful in their appeal, they were entitled to an order for costs, save that some allowance should be made for ASD's success on its cross-appeal. This success was reflected in the proportionate reduction in the costs ordered in favour of the Marriner parties. The Court ordered the ASD parties to pay the Marriner parties 80% of the costs of the appeal and that there be no order for costs with respect to the cross-appeal. The Court also granted the ASD parties a certificate under s 4 of the Appeal Costs Act 1998 (Vic) in respect of their liability for the costs of the appeal.

6 In their reasons concerning costs issues, their Honours succinctly described, by way of 'background', the nature of the 'hard-fought' litigation taking place between the parties. That account bears repeating in the context of the current applications for costs:

[3] The issues raised on the appeal and cross-appeal were complex. The complexity was, for the most part, a product of overworked and sometimes ambiguous pleadings, and the failure of the parties at trial to address what became important issues on appeal. The way in which the trial was conducted made the resolution of the issues unusually difficult for the trial judge.

[4] In essence, the dispute between the parties raised two overlapping issues. First, ASD claimed that Marriner had induced or procured payments of bond moneys expended in breach of a trust of which ASD was the beneficiary. It was alleged that the bond moneys were held on a Quistclose[8] trust in favour of ASD. It was also alleged that some of the bond moneys were held on a solicitor's trust by ASD's solicitors, Wallace & Wallace ('Wallaces'). ASD failed on these issues at the trial and cross-appealed.

[5] On the cross-appeal, the Quistclose trust claim failed, as did ASD's contention that Marriner procured or induced a breach of that trust by Mr Peter Jephson, the company secretary of ASD ('Jephson'). The one area on the cross-appeal in which ASD achieved a measure of success was in relation to funds held on a solicitor's trust by Wallaces. The Court concluded that the trial judge erred in holding that Wallaces were not liable for payments made in breach of the solicitor's trust.

[6] Thus, the real issue on the cross-appeal became whether Marriner was, or his associated companies were, liable for a breach of trust which occurred as a consequence of directions given by Jephson to Wallaces to disburse the money to third party creditors, or for a payment of $80,000 which Marriner directed Wallaces to pay to WS Group. The trial judge stopped short of reaching any conclusion on that issue, having erroneously found that there was no breach of the solicitor's trust by Wallaces.

[7] The Court concluded that it would be unfair to both sides to reach any conclusion on that issue, for the reasons expressed in paragraph 164 of the judgment. Instead, this part of the case was remitted for determination by a judge in the trial division.

[8] Secondly, ASD claimed that an expenditure limit of $4.7 million, which was imposed on Marriner as Chief Executive Officer and Director of ASD, was exceeded by him to the extent of $824,890, without ASD Board approval. The capital expenditure claim succeeded in part at the trial.

[9] There were 35 grounds of appeal relating to ASD's claims and two grounds of appeal relating to the trial judge's dismissal of Marriner's counterclaim. Grounds 1 to 17 related to the capital expenditure claim. Marriner's main arguments on appeal related to that claim. Although Marriner succeeded in having the trial judge's order requiring him to pay $412,113 as compensation for expending money in excess of the limit set aside, his success was, to a significant extent, based on an argument about the effect of the alleged expenditure cap, which was not advanced at trial.

[10] Marriner also appealed against the decision of the trial judge rejecting various defences raised by him at trial (grounds 18 to 35). On appeal, the Court concluded that Marriner's reliance on cl 11(b) of an agreement made on 19 October 2001 as a release from liability failed. However, Marriner also relied upon the conduct of ASD in the period leading to that agreement. He alleged that ASD had failed to disclose an intention to sue him or his companies to recover the bond moneys, as well as an amount equal to the excess capital expenditure. These affirmative defences relied upon a complex web of facts and inferences. Unfortunately, the trial judge failed to provide adequate reasons for rejecting the defences.

[11] The Court remitted these issues for determination by a trial division judge. The same course was adopted in relation to the appeal against the trial judge's dismissal of the counterclaim made by Marriner (grounds 36 and 37), which was based on the same or similar facts and matters as those relied upon by him as affirmative defences to ASD's capital expenditure claim.

[12] The question of the liability of Marriner companies, Goldworthy Pty Ltd, Laguna Australia Pty Ltd, and Stage Design Pty Ltd for the breaches of trust committed by Wallaces (including the applicability of any defences and related counterclaims), and the liability for the costs of the hearing before the trial judge, were also remitted for determination by a trial division judge.[9]

7 The Court of Appeal remitted the question of liability for the costs of the original hearing because, it seems, their Honours apprehended that despite the Marriner parties' apparent success on appeal, the resolution of the substantive issues remitted could effect a substantial change in the overall outcome of the proceeding. The Court stated:

[20] Having regard to the fact that a number of potentially significant issues have been remitted to the trial division which might, following their determination, substantially change the outcome as between the parties, it is not appropriate to make any order for the costs of the trial. For that reason, we will also remit the question of the order which should be made relating to the costs of the trial for determination by the judge in the trial division.[10]

8 Against that background, the focus of the remitter hearing was on the two main issues remitted by the Court of Appeal:

• Questions arising on the ASD claim in chief - namely, whether Mr Marriner and his associated companies are liable for the breaches of the 'solicitor's trust' which the Court of Appeal found, arising from facts and circumstances that took place in 2000 and 2001 in respect of the third tranche of the electricity bond monies and alleged to involve a species of liability under the Eaves v Hickson[11] principle and (second limb) Barnes v Addy;[12] and
• Questions arising on the Marriner parties' counterclaim - in essence, whether the Marriner parties were misled and deceived or Mr Marriner was otherwise the object of unconscionable behaviour on the part of the ASD/United Super group of defendants by counterclaim, in respect of the negotiations that occurred during the winding up of the joint venture and the sale of Laguna Quays to the Marriner parties in 2000 and 2001.[13]

9 The orders made by the Court of Appeal required that those issues 'be determined by a judge of the Trial Division and, subject to any contrary order of that trial judge, on the basis of the evidence already adduced in the trial'.[14] (I note that, for the purposes of the remitter, no contrary order was made.)

10 Relevantly, in relation to the third tranche funds, the Court of Appeal found that his Honour had erred in holding that Wallace & Wallace were not liable for payments made in breach of the solicitor's trust because they did not act dishonestly. Rather, the Court of Appeal held, '[a] trustee is strictly liable for any breach of trust, even if the breach is entirely innocent.'[15] Accordingly, under the orders made by the Court of Appeal, the innocent breaches of trust committed by Wallace & Wallace were the starting point for the remitter hearing, in the sense that it was those breaches of trust that the ASD parties alleged Mr Marriner knowingly induced and procured.

11 In the written submissions filed in advance of the remitter hearing, each of the parties touched on the settlement that had been reached with Wallace & Wallace in advance of the commencement of the original trial. It is convenient to reproduce the relevant passages here.

12 In ASD's written submissions, the alleged liability of Mr Marriner is addressed under two headings:

C.2 Marriner's liability as to $80,000

[38] It is clear on the undisputed findings of Byrne J, and the reasons of the Court of Appeal, that on 22 May 2001 Mr Marriner personally directed Wallace & Wallace to pay $80,000 of the third tranche funds to a third party, namely the WS Group, which was a breach of trust. ...

[39] ... The Court of Appeal made clear that Mr Marriner's liability for the $80,000 should be considered. There is no reason for Mr Marriner not to be liable for the unauthorised instruction to use ASD's funds to pay a debt owed by one of his companies. ...

...

[43] The fact is that Mr Marriner breached both the first and second limbs of Eaves v Hickson: he knowingly induced or directly procured a breach of trust which resulted in $80,000 of ASD's money being paid to a third party who had no claim as against ASD for the money. Mr Marriner is submitted to be liable to pay damages on that basis.

C.3 Marriner's liability for the balance

[44] As discussed above, the balance of the third tranche was disbursed on directions given by Mr Jephson to Wallace & Wallace. On Mr Jephson's instructions, $86,500 was paid to Mr Marriner's family solicitors in Colac for the purchase of land in Victoria by Goldworthy, and the balance of $686,700 was paid to creditors of Mr Marriner's companies to discharge debts for which ASD was not liable. ...

...

[66] In these circumstances, the Court should infer that Mr Marriner authorised Mr Jephson to disburse the funds (save for the $80,000 which was the subject of his personal direction) knowing of "circumstances which indicated the facts to a honest and reasonable person". That test, set out by the Court of Appeal at [162], is submitted to have been easily satisfied. Subject to any possible defences or offsetting counterclaims there should on the basis of the submissions set out above be judgment against Mr Marriner for the whole of the third tranche amount of $853,200. As ASD has already received as a settlement $350,000 from Wallace & Wallace it will agree not to enforce the judgment against Mr Marriner to that extent.

(emphasis added)[16]

13 In their responding written submissions, under the heading 'Quantum issues', the Marriner parties submitted:

D.1 Wallace & Wallace settlement sum

[98] During the First Trial the parties reached an agreement in respect of this payment and how it would impact on the assessment of damages, if any, payable to ASD. The parties agreed that, if ASD succeeded on any claims relating to the disbursement of the third tranche funds, the relevant Marriner parties were entitled to a credit of $350,000.00 in the assessment of damages. In his closing address, senior counsel for the Marriner parties related this agreement to Byrne J in the following terms [T 1815]:

MR BICK: The next matter, your Honour, is that your Honour was informed jointly by the parties through your Honour's associate yesterday that the sum of $350,000 was to be deducted from any liability in respect of the third tranche of bond moneys by reason of a contribution made by or on behalf of Wallace & Wallace.

HIS HONOUR: Now what does that mean? I guess that's something for Mr Anderson [Senior Counsel for ASD] but I'm not told anything about it other than I'm to deduct $350,000.

MR BICK: Yes, your Honour.

[99] This agreement is also reflected in ASD's Notice of Cross-Appeal dated 26 March 2010 (under the heading "Orders Sought"). The relevant order sought is expressed in these terms:

1. An order that the respondents to the cross appeal pay compensation to the appellant by cross appeal in the sum of $929,800 (being the sum of $426,000 and $853,200 less $350,000 received from Wallace & Wallace) plus interest pursuant to statute.

[100] It follows that, if it is found that one or more of the Marriner parties must pay damages to ASD, the sum of $350,000.00 must be deducted from the amount awarded. This deduction is consistent with (1) the agreement described in paragraph 98, above and (2) the principle against double recovery. In summary, if ASD enjoys complete success against the Marriner parties in this stage of the litigation, the liability of the Marriner parties could not exceed $503,200.00 plus interest and costs.

[101] The Marriner parties refer to the last two sentences in [66] of ASD's submissions. In substance, in relation to any judgment sum in its favour, ASD suggests that no deduction of $350,000 is required. By reference to the matters set out in the preceding paragraphs, that suggestion is wrong.[17]

14 ASD responded to those submissions of the Marriner parties in its reply submissions, as follows:

[31] Having regard to the $350,000 received from Wallace & Wallace it is accepted (as submitted by the defendants at [100]) that ASD cannot recover more than $503,200, plus interest and costs from Mr Marriner.[18]

15 At the remitter hearing, when Senior Counsel for the ASD parties opened, he outlined the claims as pleaded against Mr Marriner for misappropriation of the third tranche bond monies and the claim pleaded against Wallace & Wallace for the innocent breach of trust. He explained the effect of the settlement, as follows:

MR O'BRYAN: ... So they [Wallace & Wallace] were innocently in breach of trust, which is not an answer unfortunately for them because it doesn't matter whether a trustee is innocently in breach of trust, the trustee is in breach of trust, it's strict liability, so they were strictly liable in respect of their breach of trust, and of course they were proceeded against, Your Honour, and settled for an amount which of course we must credit and we do credit towards our claim against the Marriner interests. I think it is $350,000.

HER HONOUR: I think you have noted that in your written submissions. I read that somewhere.

MR O'BRYAN: Yes. It is connected a little bit with Mr Bick's so-called all or nothing defence, but we will come to that in due course, Your Honour. We say yes, of course we give credit for $350,000 but that still leaves us out of pocket $503,000 because it was a total of 853 plus interest over a very long period of time, et cetera.

So, Your Honour, paragraph 48 [of the Further Amended Statement of Claim], in the event that Wallace & Wallace are unable to account for the 853, then Marriner knowingly induced and assisted LQ Management to commit a breach of trust and is liable to compensate. That's the first limb of the claim.

Then the claim against Wallace & Wallace themselves, Your Honour, commences next. You will see the subheading above paragraph 49.[19] Further and in the alternative, when those moneys went into the Wallace & Wallace trust account they were impressed with the trust, so there's the solicitor's trust pleaded in [paragraph] 49. That is the solicitor's trust, Your Honour, the one pleaded in [paragraph] 49, which the Court of Appeal found existed and had been breached.

Then in [paragraph] 50, February 2001 upon receiving the trust money Wallace & Wallace owed various duties in their capacity as trustee. I don't need to take Your Honour through the duties of care because this is all now by-the-by. That complaint, as it were, has been resolved by the settlement between us and Wallace & Wallace.[20]

16 Senior Counsel for ASD then continued, to outline the claim ASD pleads as against Mr Marriner personally, in paragraphs 59 - 62 of the Further Amended Statement of Claim, which concerns the remitted matter, for knowingly inducing and procuring Wallace & Wallace as trustee of the trust monies to commit a breach of trust.[21]

17 Senior Counsel for the Marriner parties also addressed the effect of the payment by Wallace & Wallace in his oral submissions, as follows:

MR BICK: ... Can I then make a point about quantum, Your Honour, which is this - - -

HER HONOUR: Just on that, so, for example, the point that you were making earlier this morning, that there was no allegation that Mr Jephson, as an employee of Stage Design Pty Ltd, et cetera, was involved, you say the only relevant case for these related companies is to the extent that Mr Marriner had some involvement, that's all that's pleaded and that's all I need to have regard to?

MR BICK: Yes, that's the way in which the case was run. Can I now draw Your Honour's attention to the fact that the maximum liability for Mr Marriner and his companies in respect of the third tranche bond moneys is, of course, the full amount of $853,000. By agreement of the parties, there is to be deducted from any amount Your Honour may find liability for the sum of $350,000, which was an amount received by ASD by way of settlement of its claims against Wallace & Wallace.

HER HONOUR: I think that is addressed in the reply submissions of Mr O'Bryan. Reference was made to the form of an order that was being sought and rather than entering judgment for the whole amount, the 853,200, it was acknowledged that it would be for the lesser sum, taking away the 350.

MR BICK: Yes. There's no dispute about that. ...[22]

18 The remitted issues were heard over 6 days in August and September 2013. The remitter hearing was conducted by reference to a Court Book that was prepared by the parties, containing the evidence relied upon by them. Importantly, for present purposes, the Court Book did not include any documentation pertaining to the settlement agreement reached with the Wallace & Wallace parties.

19 In the remitter decision delivered on 19 September 2014, the outcome was summarised as follows:

[23] For the reasons which follow, I have found that ASD has made out its claim that Mr Marriner knowingly induced or procured the innocent breach of trust by Wallace & Wallace in paying the sum of $80,000 to WS Group on or about 22 May 2001. As that payment was directed by Mr Marriner personally, and did not purport to be undertaken on behalf of any associated company, there is no basis for fixing any of them with responsibility for procuring or inducing that breach of trust. Nor was any associated company a knowing recipient of those funds. Furthermore, as there was no clear evidence as to what the $80,000 paid to WS Group related to, save for general assertions that the money was spent on Laguna Quays and was legitimately incurred, I have rejected the Marriner parties' defence that because the monies were spent on the resort ASD was benefited, and I am not satisfied that there is any proper basis for commensurately reducing the loss suffered by ASD.

[24] I am not satisfied that ASD has made out its case in respect of the balance of the third tranche bond monies that Mr Jephson directed Wallace & Wallace to pay [i.e., $773,200], including the sum of $86,500 that he directed be paid to the trust account of Larkins McCarthy, solicitors, in Colac.

[25] I have also dismissed all of the affirmative defences and counterclaims brought by the Marriner parties. For the reasons set out below, I am not satisfied that Mr Marriner relevantly suffered from a special disadvantage in his dealings with ASD and was the subject of unconscionable conduct. Nor am I satisfied that ASD made the representations contended for by the Marriner parties and thereby engaged in misleading and deceptive conduct or that ASD was estopped by representation from acting as it did. It follows that the agreements made between the parties are effective according to their terms, with the result that ASD is not disentitled from making the bond monies claim and the Marriner parties are precluded from bringing the claims they now seek to make.[23]

20 Accordingly, the net result after almost 10 years of litigation, the expenditure of many millions of dollars in legal fees, costs and disbursements on both sides, and the involvement of a significant amount of court time, is that ASD has succeeded in making out only one aspect of the many claims it advanced against the Marriner parties at trial and on the remitter, namely a small component of the claim against Mr Marriner in respect of the 'third tranche' bond monies. That is, the Court ultimately found that of the claim for $853,200 argued on the remitter, Mr Marriner was liable only in respect of the sum of $80,000 referable to the innocent breach of trust by Wallace & Wallace which he knowingly induced or procured on or about 22 May 2001. However, ASD also succeeded in striking out the counterclaims brought by the Marriner parties. In addition, prior to the commencement of the original trial, ASD received the sum of $350,000 by way of settlement of its claims against the Wallace & Wallace partners.

21 Following delivery of the remitter decision, the parties filed written submissions as to the final orders to be made, including as to the costs of the original trial before Byrne J and the remitter hearing, as follows:

(a) ASD's submissions on final orders dated 8 October 2014 (with accompanying annexures);

(b) submissions of the Marriner parties on costs dated 17 October 2014 (with accompanying annexures, an affidavit of Mr James Murray Pergl sworn 16 October 2014 and an affidavit of Mr Ariel Weingart sworn 19 October 2014); and

(c) ASD's submissions in reply on costs dated 24 October 2014 (with accompanying annexures and an affidavit of Mr David Neil Atkin affirmed 24 October 2014).

Hearing as to final orders and costs issues on 3 December 2014

22 The further hearing as to final orders and costs issues took place on 3 December 2014.

23 At the hearing, ASD sought orders in its favour as follows:

1. There be judgment for the plaintiff against the first defendant in the amount of $80,000 plus interest pursuant to s 60 of the Supreme Court Act in the sum of $ [insert sum].
2. The counterclaims brought by the defendants and plaintiffs by counterclaim are dismissed.
3. The first defendant and the plaintiffs by counterclaim pay the costs of and incidental to plaintiff's claims and the counterclaims, including the costs of the proceeding before Byrne J.
4. Such costs are to be taxed (in default of agreement) on a party and party basis[24] up until 4pm on [18 October 2012/22 February 2013] and thereafter on an indemnity basis.

24 The alternative dates mentioned in paragraph 4 of ASD's proposed order are references to, in the case of 18 October 2012, the date of expiration of a Calderbank[25] letter dated 2 October 2012 served by the solicitors for ASD, and in the case of 22 February 2013, the date of service by ASD of an offer of compromise made under Rule 26 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) ('the Rules'). ASD proposes an alternative form of order that would apply in the event that the Court were to find that neither the Calderbank letter nor the offer of compromise has any consequence, namely:

1. Such costs are to be taxed (in default of agreement) on a party and party basis up to and including 31 March 2013 and on a standard basis as from 1 April 2013.

25 The ASD parties contend that the starting position as to costs is that where a party has been partially successful, costs should, as a general rule, follow the event and a successful party should be permitted to recover all of its costs of the action even though it failed to establish some of the alternative heads of its claim: see Investec Bank (Australia) Limited v Glodale Pty Ltd.[26] In seeking its costs in relation to the counterclaim, ASD acknowledges that there was some overlap between the principal claim and the counterclaim, in the sense that the evidence put on by ASD was also relevant to the counterclaim. The ASD parties rely upon the fact that the counterclaim overlaps the principal claim as a basis for opposing any reduction in the costs awarded in relation to the principal claim.

Final orders contended for by the Marriner parties

26 The Marriner parties oppose both the first order sought by ASD, concerning judgment, and the two costs orders for which ASD contends. They do not oppose the second order sought dismissing the counterclaims.

The Marriner parties contend that the form of judgment proposed by ASD would result in 'double recovery'

27 The Marriner parties oppose the making of the first order sought by ASD, concerning judgment, on the basis of arguments about 'double recovery' that they contend arise from the payment of $350,000 made by or on behalf of Wallace & Wallace to ASD in order to settle the claims made against the partners of the firm.

28 The Marriner parties contend that during the first trial, the parties reached an 'agreement' in respect of the payment of the $350,000 and how it would impact on the assessment of damages, if any, payable to ASD. They say that at or around the time of commencement of closing addresses at the original trial, the ASD parties and the Marriner parties agreed that 'if ASD succeeded on any claims relating to the disbursement of the third tranche funds, the relevant Marriner parties were entitled to a credit of $350,000 in the assessment of damages.'[27] They point to several passages in closing addresses before Byrne J and submissions that they say bear this out.

29 The payment of the $350,000 by Wallace & Wallace was not pleaded by either party, nor did it feature extensively or prominently in the oral submissions made on the remitter. Indeed, no evidence about the settlement reached with Wallace & Wallace or its terms was tendered by either party at the remitter hearing. The decision on the remitter records the position advanced by the parties as follows:

[234] Of these pleaded claims, ASD has since settled its 'claim against Wallace & Wallace for unauthorised disbursement of trust funds' for the sum of $350,000. The parties are agreed that ASD must give credit for that sum and reduce accordingly the amount now sought to be recovered from the Marriner interests.[28]

ASD says that after application of the $350,000 credit, the amount sought to be recovered from Mr Marriner was $503,200, ASD having originally claimed in its pleading the whole of the sum of $853,200 that comprised the third tranche funds.

The ASD parties submit that the Marriner parties, in their outline of submissions concerning final orders and costs, seek to effectively re-cast that position insofar as they now maintain that 'the agreement does not operate to reduce accordingly the amount of ASD's claim against the Marriner parties. Rather the agreement operates to reduce accordingly any sum recovered by ASD.'[29] Further, they say that the Marriner parties do not rely on the so-called agreement simply in relation to costs, but now seek to rely upon it, in effect, as a substantive defence to the claims the subject of the remitter hearing.

30 The ASD parties contend that an agreement of the kind now asserted by the Marriner parties was never reached,[30] nor was it ever pleaded or proven to have existed. ASD says that the Marriner parties have never articulated relevant matters such as when the so-called agreement was reached, and between whom, whether it was oral or written or to be implied, and if so by reference to what material facts, nor have they identified the relevant consideration for the agreement. Accordingly, the primary submission made by Mr Broadfoot, who appeared as counsel for the ASD parties at the first hearing concerning the final orders to be made,[31] was that the Court should not entertain any submission about the so-called agreement now being asserted by the Marriner parties, in circumstances where it was never pleaded. He said:

MR BROADFOOT: ... There is no application been made to re-open the trial, there is no evidence put forward by the defendants to support the existence of it. We haven't had the opportunity to get discovery, et cetera, et cetera. If however, Your Honour is going to enter into the field and determine whether an agreement was made and if so how, and what the terms of it were and what the consequence of it is, then the affidavit of Mr Atkin is relevant, in my submission, and is determinative of the issue, and I wish to tender it on that basis.[32]

31 The reference to 'the affidavit of Mr Atkin' is a reference to an affidavit affirmed by Mr David Neil Atkin on 24 October 2014. Mr Atkin was the Chief Executive Officer of United Super Pty Ltd (in its capacity as trustee of CBUS) at all relevant times and the person responsible for providing instructions in relation to the litigation. As there was no objection from the Marriner parties to the tender by ASD of Mr Atkin's affidavit, it was marked and identified as having been tendered and received by the Court without objection.[33] Contemporaneous with its tender and receipt, however, Mr Bick, Senior Counsel for the Marriner parties, stated that 'although we don't object to it going in as evidence of some sort in relation to this application we will be making submissions as to relevance and weight'.[34]

32 In his affidavit, Mr Atkin deposes that following a mediation held on 31 July 2009, ASD received the sum of $350,000 from Wallace & Wallace in return for withdrawing the claims made against them. He produced the terms of settlement made between ASD and Wallace & Wallace dated 31 July 2009 ('the ASD-Wallace & Wallace terms of settlement'), in advance of the trial commencing.[35]

33 It appears that terms of settlement were also entered into between ASD, Wallace & Wallace and the Marriner parties on the same date. A copy of these terms of settlement was produced by Mr James Murray Pergl, a senior associate with the solicitors for the Marriner parties, in his second affidavit which was tendered, without objection, on behalf of the Marriner parties.[36] Under those terms of settlement, each of the Wallace & Wallace parties consented to the dismissal of their claim against the Marriner parties with no order as to costs and released each of the Marriner parties and ASD from all claims they have, or may have, comprised in or arising out of the subject matter of the proceedings. Similarly, each of the Marriner parties and ASD released each of the Wallace & Wallace parties from all claims they have or may have comprised in or arising out of the subject matter of the proceedings. The Marriner parties also agreed not to make any claim for costs against the Wallace & Wallace parties consequent upon the withdrawal of their claim. The costs incurred by the Marriner parties in relation to the Wallace & Wallace claim were expressed, by cl 3, 'to be agreed, or failing agreement, taxed and once agreed or taxed are to be costs in the cause as between [ASD] and the Marriner parties in these proceedings.'

34 In his affidavit, Mr Atkin refers to the Marriner parties' submissions as to costs and deposes as to his understanding about their assertion that the parties reached an agreement 'during the course of the first trial that any liability for damages found against any of the Marriner parties would be credited with the sum of $350,000, being the settlement sum paid by Wallace & Wallace to ASD.'[37] In essence, Mr Atkin says that 'no such agreement was ever reached'[38] and he never gave instructions to ASD's legal representatives to enter into any such agreement.[39]

35 As noted earlier, the Marriner parties, on the other hand, contend that the effect of the settlement ASD reached with Wallace & Wallace was that the sum of $350,000 so paid does not operate to reduce the amount of ASD's claims against the Marriner parties; rather it operates to reduce accordingly any sum recovered by ASD. The Marriner parties rely upon 4 matters:

(2) the way in which ASD treated the $350,000 payment in the original trial;

(3) the way in which ASD treated the $350,000 payment in the Court of Appeal; and

(4) the way in which ASD treated the $350,000 payment in the remitter hearing.

36 In essence, the Marriner parties contend that 'an agreement' was reached between ASD and the Marriner parties during the first trial to the effect that if ASD succeeded on any claims relating to the disbursement of the third tranche funds, the relevant Marriner parties were entitled to a credit of $350,000 in the assessment of damages ('the agreement'). They rely on the first portion (italicized below) of the following exchange during closing submissions before Byrne J on 16 September 2009 as evidencing the agreement. ASD, however, relies on the portion that follows it, and in particular the bolded words, where Senior Counsel for Mr Marriner explains the significance of the $350,000 payment:

MR BICK: The next matter, your Honour, is that your Honour was informed jointly by the parties through your Honour's associate yesterday that the sum of $350,000 was to be deducted from any liability in respect of the third tranche of bond moneys by reason of a contribution made by or on behalf of Wallace & Wallace.

HIS HONOUR: Now what does that mean? I guess that's something for Mr Anderson but I'm not told anything about it other than I'm to deduct $350,000.

MR BICK: Yes, your Honour.

HIS HONOUR: So whether that represents a particular transaction or some sort of global paying off to avoid the risk or what.

MR BICK: Certainly true it is that your Honour hasn't been told the nature or the reason for the payment. However, your Honour, for what your Honour has to decide that deduction is significant in that it reduces the liability in respect of the third tranche of bond monies to $553,000[40] and the total liability in respect of both tranches of bond monies to less than the $950,000 that Laguna Australia reimbursed ASD for the purchase of the converted leasehold land ... (emphasis added)[41]

37 A little later during the same closing address before Byrne J, Senior Counsel for the Marriner parties said that 'it has been agreed that it [the W & W settlement sum] comes off the damages in respect of the third tranche bond monies.'[42] Counsel for ASD apparently did not comment upon or challenge those statements or explanations about the effect of the payment of the settlement sum. In particular, the Marriner parties refer to and rely upon the following exchange that took place between his Honour and Senior Counsel for ASD in the final stages of the first trial:

HIS HONOUR: I am contemplating the situation whether [sic] the amount recovered might be less than $350,000. If that were to happen is that just a bonus for you or is that brought to account elsewhere?

MR ANDERSON: No, your Honour, we can't double-dip. It would have to be brought to account.

HIS HONOUR: So if I was to find that the liability under the third tranche was, say, $150,000, so there's $200,000 surplus available, although you did get that for presumably - no, that's from the solicitors so it only deals with that claim. Could that be brought to credit against Mr Marriner's other liabilities?[43]

MR ANDERSON: No, it can only deal with the Wallace & Wallace, your Honour.

HIS HONOUR: So you could theoretically make a profit.

MR ANDERSON: Well, Wallace & Wallace paid an amount of money, your Honour.

HIS HONOUR: That's right, and they may have paid too much.

MR ANDERSON: They may have paid too much. Your Honour is correct. It could be your Honour may find we get less but we have received 350. So be it.

HIS HONOUR: And if it's more then you might be able to recover it from Mr Marriner. That is to say if your loss is greater than 350 he might be able to cover that surplus.[44]

38 The Marriner parties contend that the statements made on behalf of ASD in this exchange accord with the effect of the 'agreement' that was announced to the Court two days earlier. It is said that ASD's acknowledgment of an inability to 'double-dip' recognizes the principle against double recovery. Further, the Marriner parties argue that in this exchange ASD also acknowledges that it has received the $350,000 from Wallace & Wallace by way of settlement of the claims based on the disbursement of the third tranche funds, and the claim against Mr Marriner for the disbursement of the $80,000 from the solicitor's trust account falls within that group of third tranche fund claims.

39 Secondly, the Marriner parties refer to ASD's Notice of Cross-Appeal (dated 26 March 2010) which relevantly seeks:

1. An order that the respondents to the cross appeal pay compensation to the appellant by cross appeal in the sum of $929,800 (being the sum of $426,600 [the second tranche funds] and $853,200 [the third tranche funds] less $350,000 received from Wallace & Wallace) plus interest pursuant to statute.

The Marriner parties submit that before the Court of Appeal, it was never argued, or suggested, that the $350,000 amount operated to reduce the amount of the claim rather than the amount recovered.

40 Thirdly, in its written submissions filed in advance of the remitter hearing (dated 8 July 2013), the ASD parties stated:

Subject to any possible defences or offsetting counterclaims there should on the basis of the submissions set out be judgment against Mr Marriner for the whole of the third tranche amount of $853,200. As ASD has already received as a settlement $350,000 from Wallace & Wallace it will agree not to enforce the judgment against Mr Marriner to that effect.

(I have already noted above that the ASD parties further clarified this statement in their written outline of reply submissions.)

41 Fourthly, in opening ASD's case at the remitter hearing, Senior Counsel for ASD said:

We say yes, of course we give credit for $350,000 but that still leaves us out of pocket $503,000 because there is a total of 853 plus interest over a very long period of time, et cetera.[45]

The Marriner parties argue that this submission was predicated on the argument that, in respect of the disbursement of the third tranche funds, Mr Marriner was liable to ASD in the full amount claimed (i.e., $853,200). That is, they say that ASD accepted that the sum of $350,000 should be deducted from the amount awarded (rather than the amount claimed).

42 Fifthly, the Marriner parties refer to their closing submissions made at the remitter hearing where the following exchange took place:

MR BICK: ... Can I now draw Your Honour's attention to the fact that the maximum liability for Mr Marriner and his companies in respect of the third tranche bond moneys is, of course, the full amount of $853,000. By agreement of the parties, there is to be deducted from any amount Your Honour may find liability for the sum of $350,000, which was an amount received by ASD by way of settlement of its claims against Wallace & Wallace.

HER HONOUR: I think that is addressed in the reply submissions of Mr O'Bryan. Reference was made to the form of an order that was being sought and rather than entering judgment for the whole amount, the 853,200, it was acknowledged that it would be for the lesser sum, taking away the 350.

MR BICK: Yes. There's no dispute about that. ...[46]

43 The Marriner parties submit that ASD never argued or suggested at the remitter hearing that the $350,000 amount was to operate to reduce the amount of the claim rather than the amount recovered. Relevantly, they say, ASD is bound by the way in which it conducted the first trial, the appeal and the remitter hearing and it cannot now contend for a different outcome.[47]

44 In oral submissions, Senior Counsel for the Marriner parties submitted that what was set out at paragraph 234 of the remitter reasons:

summarises one of two effects for the settlement for $350,000 to Wallace & Wallace. The other effect, Your Honour, is that Mr Marriner is to be given credit for that amount, and we say that that was firstly a matter of application of the correct leading principle and didn't require any agreement, and secondly it was what was agreed in any event.[48]

A little later, Mr Bick QC clarified that by 'effect No. 1' he meant that the sum of $350,000 was to be deducted from any liability in respect of the third tranche bond monies by reason of a contribution made by or on behalf of Wallace & Wallace, and that 'effect No. 2' was a reference to the fact that the total amount that could ever be recovered from Mr Marriner was reduced by $350,000[49] and thus ASD had to recover more than $350,000 in order to be entitled to recover anything.[50]

45 In summary, the Marriner parties contend that in circumstances where the Court has found in respect of the third tranche claims that Mr Marriner is liable to ASD in the sum of $80,000, the effect of the 'agreement' concerning the payment of $350,000 by Wallace & Wallace means that Mr Marriner is not liable to pay the sum of $80,000 to ASD. In this regard, they rely on the principle that a plaintiff may not recover more than it has lost.[51]

46 The claim for the $80,000 that was paid out in breach of the solicitor's trust was not the subject of a separate plea against either Wallace & Wallace or Mr Marriner. Rather, it was, in each case, part of the rolled-up claim brought in respect of the third tranche funds. The Court of Appeal, in its remitter, identified the claim for the $80,000 as a separate issue for determination. But, in a pleading sense, it was an integral part of both the claim for the third tranche bond monies of $853,200 brought against Wallace & Wallace, and also the similar claim for knowingly inducing or procuring the breach of the solicitor's trust brought against Mr Marriner. No amendment was made to the pleadings following the settlement with Wallace & Wallace. Thus, the Marriner parties contend that ASD has received the sum of $350,000 from Wallace & Wallace in respect of claims based on the disbursement of the third tranche funds (which included the disbursement of the sum of $80,000 at Mr Marriner's direction on 22 May 2001), and to permit ASD to now recover a further $80,000 from Mr Marriner in respect of the same cause of action would amount to 'double recovery'. That is, while the Marriner parties accept that under the remitter decision ASD has established an entitlement to a judgment for $80,000, they contend that no order by way of judgment should be made giving effect to that entitlement. They argue that in circumstances where ASD has already received $350,000 from Wallace & Wallace in respect of claims based on the disbursement of the third tranche funds (including the $80,000 disbursed on 22 May 2001), it should not receive a further $80,000 from Mr Marriner in respect of the same facts. That is to say, at least initially, the Marriner parties did not contest that ASD has established an entitlement to a judgment against Mr Marriner for the sum of $80,000 but they say that if there were to be any recovery against Mr Marriner in respect of the $80,000, it would offend the principle against double recovery.[52]

47 In addition to its claim for recovery of the sum of $80,000 from Mr Marriner, ASD also claims that it is entitled to interest, pursuant to s 60 of the Supreme Court Act 1986 (Vic), on $80,000 from the date on which the proceeding commenced to the date of judgment. Section 60(1) provides:

The Court, on application in any proceeding for the recovery of debt or damages, must, unless good cause is shown to the contrary, give damages in the nature of interest at such rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 as it thinks fit from the commencement of the proceeding to the date of judgment over and above the debt or damages awarded.

48 The Marriner parties dispute that ASD is entitled to interest on the sum of $80,000. They argue that s 60 applies only to a proceeding for the recovery of debt or damages, and say that by reason of the receipt of the $350,000 from Wallace & Wallace, ASD is not entitled to an award for the recovery of debt or damages. Further, they say that even if ASD were entitled to $80,000 plus interest, which is not accepted, the combined amount would be less than $350,000. Accordingly, they oppose the entry of any judgment sum (including as to interest) against Mr Marriner.

The Marriner parties' application in December 2014 for leave to file a summons and further affidavit of Mr Pergl

49 On 10 December 2014, Mr Pergl, the solicitor acting on behalf of the Marriner parties, sent an email to the Court, copied to the ASD parties, seeking leave to file a summons and further affidavit. In his email, he referred to the earlier hearing on 3 December 2014 and the reference Senior Counsel for the Marriner parties made at that hearing to Byrne J having been informed about the settlement with the Wallace & Wallace parties. Mr Pergl stated that:

Following the hearing, Senior Counsel has been able to locate with some difficulty, email exchanges between counsel at the time bearing on this subject, and also the email sent to Justice Byrne's Associate stating the agreement reached by the parties regarding the effect of the W&W settlement and the Associate's response.[53]

50 In his email, Mr Pergl said the solicitors for the Marriner parties had informed the solicitors for the ASD parties that they now wished to place before the Court the earlier email exchange that took place with the Associate to Byrne J, and the solicitors for the ASD parties had responded, stating that they objected to the Marriner parties doing so without leave of the Court and foreshadowed that they would oppose any application for leave. Attached to the email was a proposed summons and a further affidavit of Mr Pergl sworn 10 December 2014.

51 The solicitors for the ASD parties confirmed their position by email to the Court later that day, stating that they object to the Marriner parties being granted leave to file supplementary material given that the hearing had concluded. That email referred to correspondence between the solicitors for the respective parties setting out the reasons why they say that no agreement was reached and the basis upon which they objected to the filing of the supplementary material at this late stage. Further, they said, if leave to file were granted, they would require at least 7 days to file responding material before the matter could be heard.

52 After consultation with the solicitors for the parties, and with a view to accommodating the availability of all counsel, the Marriner parties' application for leave to file the proposed summons and affidavit was listed for hearing on 25 February 2015. The Court informed the parties that if the ASD parties wished to rely upon any material in response, it should be filed by 12 noon on 19 December 2014. On that day, ASD filed its submissions opposing leave.

53 In their proposed summons, the Marriner parties sought the following orders:

1. The Defendants/Plaintiffs by Counterclaim have leave to file, serve and rely on an Affidavit of James Murray Pergl sworn on 10 December 2014.
2. Such further or other order including as to the costs of the application as the Court considers appropriate.

54 In his affidavit in support, Mr Pergl summarises the background to the application for leave and the reasons why leave is sought. He commences by saying that at the hearing on 3 December 2014, counsel for the ASD parties 'disputed the existence of an agreement that the Marriner parties would be given a $350,000 credit by reason of the settlement reached by ASD with the Wallace & Wallace parties in 2009.' (Lest it not be obvious, I should record here that the fact that the ASD parties actively disputed the existence of the so-called agreement could not have come as any kind of a surprise to the Marriner parties, it having been stated clearly in ASD's reply submissions on costs filed on 24 October 2014 for the purposes of the 3 December 2014 hearing).

55 Mr Pergl deposes that prior to the hearing on 3 December 2014, both his firm and Senior and Junior Counsel 'searched for, but were unable to locate, correspondence relating to the $350,000 agreement reached in September 2009.' I note that, read in context, this statement tends to suggest that no efforts had earlier been made to locate the correspondence, for example for the purposes of inclusion in the Court Book for, or for use at, the remitter hearing. In any event, neither the written submissions filed by the Marriner parties in advance of the hearing, nor the oral submissions made on their behalf at the hearing mentioned that they had been searching for and were unable to locate the correspondence with the Court communicating the settlement reached with the Wallace & Wallace parties.

On 4 December 2014 I was informed by Mr Bick QC that with considerable difficulty, he had been able to locate on 4 December 2014 from archived and deleted emails from September 2009, emails relating to the $350,000 credit agreement from Mr Broadfoot to Mr Bick copied to Mr Anderson SC for ASD and Mr Heath for the Marriner Parties, and from Mr Bick to Mr Broadfoot in response sent on 15 September 2009 at 10.29 am, 12.24 pm and 3.17 pm (two emails). In addition, Mr Bick located an email from Mr Broadfoot to Mr John Molloy, Associate to the Honourable Justice Byrne, copied to Mr Bick, Mr Anderson and Mr Heath, sent at 3.17 pm on 15 September 2009, and Mr Molloy's response acknowledging receipt sent to Mr Broadfoot, and copied to Mr Bick, Mr Anderson and Mr Heath at 4.47 pm on 15 September 2009.[54]

57 Mr Pergl then produces (as exhibit 'JMP-1') Mr Broadfoot's email to Mr Molloy, the Associate to Byrne J, sent at 3.17 pm on 15 September 2009 and (as exhibit 'JMP-2') Mr Molloy's response sent at 4.47 pm that day acknowledging receipt. Mr Pergl says that the Marriner parties wish to rely on the emails exhibited as 'JMP-1' and 'JMP-2' 'in connection with their submissions to the Court on costs made on 3 December 2014, and, if necessary, seek leave to do so.' He then adds:

It is my belief that the email provided to the Honourable Justice Byrne on 15 September 2009 was likely to have been placed on the Court file at the time by reason of the fact that exhibit 'JMP-1' was an email sent by Mr Broadfoot to the Court on behalf of both ASD and the Marriner Parties, recording what was stated in the email to be an agreement between the parties concerning a credit to be given to the Marriner parties arising from the settlement between ASD and the Wallace and Wallace parties.[55]

58 I am informed that neither email was tendered as an exhibit at the original hearing before Byrne J. They were not included, or sought to be included, in the Court Book for the remitter hearing. Nor were they produced at the first hearing as to final orders and costs issues held on 3 December 2014.

59 In ASD's written submissions, opposing the grant of leave to the Marriner parties to file the summons and further affidavit of Mr Pergl, the ASD parties contended that leave should be refused because:

(a) the [Marriner parties] have had ample opportunity to present their case and should not now be permitted to make a new case or adduce further evidence;

(b) if the application is granted then if, as ASD apprehends, the [Marriner parties] want to rely on the so-called $350,000 credit agreement referred to in their submissions on costs, there will need to be further pleadings filed in relation to the alleged agreement, there will need to be further evidence adduced (highly probably from new witnesses) and there will need to be a resumption of the trial to deal with matters that:

(i) go beyond the scope of the remitter; and

(ii) should not be permitted in light of the fact that, as the Court noted in the remitter reasons at [267], the Court of Appeal did not regard ASD as being precluded from obtaining judgment for some but not all of the third tranche funds; and

(c) there is no substance to any suggestion that any conduct of ASD at the trial, including the email of 15 September 2009, affected the evidence in chief, the cross-examination, or the outcome of the trial such that ASD might be bound by any agreement of the kind alleged by the [Marriner parties] (the existence of which is denied) as a consequence of the trial before Byrne J. [56]

60 Further, in the written submissions, ASD observed that:

Although [the Marriner parties] have not been candid enough to say so, they seek in substance to amend the defence and to re-open the trial after the delivery of reasons for judgment and at a time when final orders are pending. The precise nature of the amendment and the scope of the proposed re-opening are unclear, but the principles applicable to the re-opening of a case after the conclusion of a trial (or appeal) and the tendering of new evidence are well understood, as are the principles applicable to amendments.[57]

61 The Marriner parties did not seek to file any written outline of submissions in response. At the hearing of their application for leave on 25 February 2015, Senior Counsel for the Marriner parties opened by referring to the hearing on 3 December 2014 and said that ASD having 'accepted that there was an agreement', the contest between the parties was whether the agreement 'operated to limit the amount that could be recovered.' He then proceeded to explain that the email exchange exhibited to Mr Pergl's affidavit 'was not before the court in the sense that the parties did not place it before the court and its existence would seem to have been forgotten as at 3 December.' Further, he said:

Not being aware of the existence of the email on 3 December both sides were constrained to make submissions as to the substance of the agreement to be derived from various sources. Principally dialogue between His Honour Justice Byrne and the parties in the course of final submissions at the trial in September 2009, and then subsequent submissions and references to the $350,000 credit agreement up to and including at the remitter hearing before you.[58]

62 At the hearing on 25 February 2015, the Court queried the correctness of that submission, in circumstances where the passages of the transcript of the hearing before Byrne J to which reference had been made clearly stated that the Court had been informed about a position as between the parties and then went on to set out the substance of what it was that the Court was informed. Importantly, when the parties were before the Court on 3 December 2014, the Court was not informed that the parties had been looking for, but were unable to locate, the communication made to the court in September 2009. Rather, in the oral submissions made that day, neither counsel suggested that there was a relevant document that they had not been able to locate. Furthermore, the notion that on 3 December 2014 both sides were unaware of the existence of the email does not accord with what is stated in paragraph 4 of Mr Pergl's affidavit. He states, on the basis of information and belief, that counsel for the Marriner parties had 'searched for but were unable to locate correspondence relating to the $350,000 credit agreement reached in September 2009.' If that be correct, it is difficult to understand how counsel could have been 'unaware' of the existence of the email exchange. It is also a little surprising that the emails that could not be located prior to the hearing were able to be located 'with considerable difficulty' on the day following the hearing.

63 Be that as it may, the emails having now been located, the Marriner parties contend that the Court should have regard to exhibit 'JMP-1' because it records 'what the court was informed actually was the agreement' and 'it resolves, we would submit - our learned friends will dispute this - the debate as to exactly what the agreement was, rather than going to secondary sources ... It is the best evidence of the actual agreement.'[59]

64 The submission made by the Marriner parties in support of their application for leave to rely upon the affidavit of Mr Pergl was put on the basis that 'there is a very real possibility the court may be led into error if the agreement the court was informed of in 2009 is not within the evidence the court may have regard to.'[60] They contend that the Court could have regard to the email exchange as it was 'a communication already sent to the court and we don't need to apply for leave to put it in. It's already in. But if we're wrong about that then we do apply for leave to rely on the affidavit of Mr Pergl to put the email in.'[61]:

65 A little later, even though no application had been made to 're-open' the remitter hearing, Senior Counsel for the Marriner parties made the following submission:

So, Your Honour, should Your Honour regard the application as, in fact, being an application for leave to reopen after final submissions, but before judgment, then the law, in our submission, is clear, and there's no dispute between our learned friends and we in respect of what the law is.[62]

66 Reference was then made to a number of authorities said to support such a re-opening: Matthews v SPI Electricity Pty Ltd (Ruling No.28),[63] Inspector-General in Bankruptcy v Bradshaw,[64] and Nicholson v Hilldove Pty Ltd.[65] In Bradshaw, where an application to re-open was made for the purpose of pursuing issues in relation to quantification, Kenny J summarised the four recognised classes of case in which a court may grant leave to re-open, as follows:

The authorities indicate that, broadly speaking, there are four recognised classes of case in which a court may grant leave to re-open, although these classes overlap and are not exhaustive. These four classes are (1) fresh evidence (Hughes v Hill; Smith v New South Wales Bar Association [No. 2]); (2) inadvertent error (Brown v Petranker (application to recall a witness); Murray v Figge (application to tender answers to interrogatories); Henning v Lynch (application to re-open)); (3) mistaken apprehension of the facts (Urban Transport Authority of NSW v NWEISER ('UTA')); and (4) mistaken apprehension of the law. In every case the overriding principle to be applied is whether the interests of justice are better served by allowing or rejecting the application for leave to re-open: see UTA; also The Silver Fox Co Pty Ltd as Trustee for the Baker Family Trust v Lenard's Pty Ltd (No. 2).[66]

67 It was suggested by Senior Counsel for the Marriner parties that the present case might fall into the recognised category of 'inadvertent error', the 'inadvertent error being the forgetting by the parties of the existence of the email or the inadvertent error in failing to locate the email'.[67] Alternatively, it was said the Court could find 'that there is a mistaken apprehension as to the facts, that is, the court was clearly informed of the terms of the agreement in writing, but the parties appear to have misapprehended that that was the case in forgetting the existence of the email.'[68] That submission, made by reference to the decision of Sifris J in Nicholson v Hilldove,[69] was advanced on the asserted basis that 'both sides and the court forgot the existence of the document'[70] and that if the application were granted, there would be no prejudice to the ASD parties.[71] In closing, it was submitted on behalf of the Marriner parties that:

Your Honour should grant leave, should leave be necessary for the plaintiff to rely on the affidavit of Mr Pergl sworn on 10 December, and Your Honour should have regard to the emails that are Exhibits 1 and 2 to that affidavit, in the context of the parties' submissions made on 3 December. There is no prejudice to ASD, beyond the fact that it might not like what the agreement was, and it's something, in our submission, ASD, had it been aware of the existence of the emails, had it remembered their existence, would have been obliged to advise the court of, and we of, as I submitted earlier.

If any power be needed to grant the application we make, Your Honour, one need look no further than s.9 of the Civil Procedure Act which was referred to by His Honour Justice Forrest in ... paragraph 24 [of Matthews v SPI Electricity (Ruling No.28)].[72]

68 In oral submissions, Senior Counsel for the ASD parties reiterated their objection to the receipt of the affidavit, and primarily on grounds of relevance. First, the point was made that the Marriner parties do not actually seek leave to re-open. It was said that although they disavow it, their submissions make clear that what they are in effect seeking to do is to re-open so as to tender further evidence. Secondly, ASD submitted that the email exchange sought to be relied on by the Marriner parties was not 'evidence before Justice Byrne' because no-one tendered it and 'that's because no-one treated it as relevant to any issue between the parties.'[73] Indeed, ASD says, the reason why Mr Pergl's affidavit has been prepared is so that they can tender the email exchange in evidence. But, as ASD submitted, the position is that the email exchange and the existence of the so-called credit agreement have never been pleaded or articulated as a defining issue between the parties at any point in the 10 years that the proceeding has been on foot, and it is only being relied on at the final hour when the Court has delivered its reasons on the remitter and turned to consider the question of final orders and costs. ASD contended that there is no 'inadvertent error' demonstrated here; rather '[t]here was a forensic decision made not to seek to re-open, not to seek to re-plead, not to seek to make any of this relevant.'[74] Accordingly, ASD submits, the application for leave should be refused.

69 ASD also referred to the decision of the Court of Appeal in Spotlight Pty Ltd v NCON Australia Ltd[75] and the requirement that 'exceptional circumstances' must be demonstrated before a court may allow a case to be re-opened in circumstances where the case has closed and judgment has been reserved. There, the Court (Harper and Tate JJA and Beach AJA) in a joint judgment, referred with approval to the decision of Kenny J in Bradshaw and said (footnotes omitted):

[17] There are good reasons why the circumstances must be exceptional before a court may allow a case, having been closed and judgment reserved, to be reopened. The need for finality in litigation is one. It is no answer to this point to say that the further evidence sought to be adduced by the respondent in this case is confined to the quantum of damages. Were applications to reopen to be allowed almost as of course, such applications would be regularly made. That would add enormously to inefficiencies in the administration of justice, even if the reopened hearing was strictly confined. The discipline which ought to attend the conduct of litigation by highly competent litigators would also inevitably decline.

[18] The very strict rule that, subject to any applicable process of appeal or review, the presentation of their cases by parties to litigation must conclude with the end of the trial, has another important justification. It is that, very often, the boundaries of the reopened issues would be hard to define and as difficult to protect. The reopened hearing would then be bedevilled by arguments about whether one party or the other was seeking to take advantage of the reopening to polish parts of its case which were more or less within the scope of the reopened proceeding but not clearly on one side or the other of the prescribed limits.[76]

70 Where, as here, reasons for judgment have actually been delivered and all that remains is the making of final orders for the entry of judgment and costs, truly exceptional circumstances would be required to be demonstrated before the case could be re-opened. Furthermore, the applicant would also be required to satisfy the court that there was no lack of reasonable diligence on its part to bring forward the recently obtained evidence: see Commonwealth Bank of Australia v Quade.[77]

Conclusion on the Marriner parties' application for leave

71 In my view, the present circumstances do not satisfy the high hurdle of 'exceptional circumstances'. The Marriner parties have waited until the eleventh hour, and then some, to raise directly what they now appear to contend was always their view of the effect of the settlement monies paid by Wallace & Wallace, notwithstanding that they have never pleaded it or addressed it by way of evidence before the original trial judge or on the remitter. That is, they now contend, and for the first time with any real clarity, that the legal effect of the email exchange is that unless ASD is successful in having judgment entered for more than $350,000 then it cannot recover any sum from Mr Marriner. That contention calls into question both the utility of the remitter of Issue 4 by the Court of Appeal and also the finding made on the remitter about the effect of the settlement monies paid by Wallace & Wallace. Furthermore, in circumstances where the Court of Appeal ordered that the remitted issues were to be determined, subject to any contrary order, 'on the basis of the evidence already adduced in the trial', if this Court were to permit a fresh issue to be agitated now, the boundaries of the re-opened issues would be difficult to delineate - for example, because there is no reference in the pleadings to the payment of the settlement monies by Wallace & Wallace as giving rise to a 'real issue' between the parties - and it is likely that the ASD parties would be severely prejudiced by a re-opening and a further continuation of the remitter hearing.

72 Moreover, the proceedings between these parties have been on foot for 10 years. The original trial occupied 20 sitting days, the appeal was heard over two days with a further day for submissions on costs and final orders, and the remitter hearing occupied some six days, and a further day and a half of Court time has been taken up with submissions on costs and final orders and the hearing of the application for leave. The Civil Procedure Act 2010 (Vic) requires the Court to seek to give effect to the overarching purpose of facilitating the just, efficient, timely and cost effective resolution of the real issues in dispute between the parties when exercising any of its powers (s 7). Under s 9, when making any order the Court is expressly required to further the overarching purpose by having regard to certain stated objects, which relevantly include:

(a) the just determination of the civil proceeding;

...

(c) the efficient conduct of the business of the court;

(d) the efficient use of judicial and administrative resources;

...

(f) the timely determination of the civil proceeding.

73 As the plurality of the High Court observed in Aon Risk Services Aust Ltd v Australian National University,[78] in the context of an application to amend the pleadings at a late stage in the proceeding, for an issue to be regarded as a 'real issue', 'the relevant dispute or controversy must exist at the time of the application' for it is only then that 'it is necessary for the court to allow it properly to be raised to enable a determination upon it.' And while the courts do not take an unduly narrow approach to what are the real issues in controversy, even though they are not, or are not sufficiently expressed in the pleading, here, the Court has already made a determination in the remitter decision by reference to the submissions that were made at the remitter hearing. To the extent that any issue in contention between the parties, real or otherwise, was raised it has been decided.

74 Furthermore, as ASD points out, no application for leave to re-open was made directly by the Marriner parties. In their oral submissions made by way of reply on 25 February 2015, the following exchange took place in the concluding exchange between the Court and Senior Counsel for the Marriner parties and the ASD parties respectively:

MR BICK: ... If Your Honour ultimately concludes that it's necessary for us to apply for leave to reopen our case, well, then we do, and our learned friend Mr O'Bryan said, "In reality that's what they're doing".

HER HONOUR: Well, no application has been made and I don't see how that would arise unilaterally from the court. No submission has been made that I should even give consideration to reopening. Mr O'Bryan said no application is made so he's not requiring one to be made and you're not making one. So that seems to be the end of that point, doesn't it?

MR BICK: No, Your Honour. That overstates the position we took, but if I haven't made it clear I'll make it clear now. We don't believe that it's a matter where we require leave to reopen because the parties chose to put their agreement before the court in a non-evidentiary form, but if we do need to reopen then in the alternative we'll apply - we do apply, sorry.

MR O'BRYAN: Your Honour - - -

HER HONOUR: That's a different submission to the one that you made before you sat down this morning.

MR BICK: No, with respect, Your Honour, I would submit that's not right, but let me make it quite clear. Order 1 of our summons seeks leave to file, serve and rely on the affidavit of Mr Pergl. That was the application I endeavoured to make this morning. My learned friend says that's, in effect, an application for leave to reopen. My submission this morning as I intended to make it, and thought I had made it, was if we need leave to reopen then we apply for it, but I made primary submissions, I would hope, forcefully that no leave was required.

Because the document we seek to rely on was never intended to form part of the evidence in the case, rather, it was intended to record an agreement between the parties the court was invited to act on, and should act on, which Your Honour correctly and accurately summarised. And it remains our primary position this is not a situation where we need to apply for leave to reopen our case. It's simply to put before the court that which the trial judge had before him, both parties being bound by the way in which they conducted the trial in that regard and every other regard for that matter.[79]

75 To the extent that such an application may be regarded as having been made indirectly, by the Marriner parties seeking leave to file and rely upon the further affidavit of Mr Pergl, in the circumstances outlined above and for the reasons stated, the application is refused. In my view, when the relevant circumstances are viewed as a whole, 'the justice of the case' (to adopt the expression used by Kenny J in Bradshaw) would not favour the grant of leave to re-open. If the Marriner parties had wished to place further evidence before the Court for the purposes of the remitter hearing they had the opportunity to seek to do so. I am not satisfied that their conduct in the present circumstances could be regarded as 'inadvertence' in the relevant sense.

76 The position is that findings have now been made on the remitter on the basis of the evidence presented and submissions made. The notion of 'the justice of the case' must address the position of all parties. The issues remitted by the Court of Appeal having now been heard and determined, any re-opening would, in my view, be productive of unfairness to the ASD parties. Furthermore, when regard is had to the Civil Procedure Act 2010, and the matters set out in subsections 9(a), (c), (d) and (f) in particular, the overarching purpose would not be furthered if the Marriner parties were given leave to re-open their case.

Does ASD's claim for $80,000 amount to 'double recovery'?

77 I turn now to consider whether ASD's claim to recover the $80,000 amounts to 'double recovery', as contended by the Marriner parties. The claims ASD made against Wallace & Wallace were set out in paragraphs 49 - 58 of the pleading. The claims it made against Mr Marriner in respect of the third tranche bond monies were set out in paragraphs 59 - 65 of the pleading. ASD argues that the claims it pleaded against Wallace & Wallace on the one hand, and Mr Marriner on the other, were separate claims based on separate causes of action, albeit that they were brought in respect of the same loss. That is, the claim against Wallace & Wallace as solicitors was for breach of their obligations as trustees, whereas the claim against Mr Marriner was framed as Eaves v Hickson liability for knowingly inducing or procuring those breaches, and thus demonstrating clearly that it constitutes a different cause of action from that alleged against Wallace & Wallace. Accordingly, ASD says that, in the circumstances, subject to the application of the rule against double recovery, ASD's entitlements as against Mr Marriner were not in any way affected by its recovery of the sum of $350,000 from Wallace & Wallace.

78 It is clear that, in any given case, the terms of settlement will need to be construed. ASD acknowledges that if, for example, a plaintiff has agreed that it will receive a sum from a defendant upon the basis that it will be received in full discharge of all claims, it would ordinarily be unconscientious for the plaintiff to pursue a further claim. That is to say, where a single loss has been fully recouped, there is no further remedy for the plaintiff to pursue.[80] That is the rule against double recovery. But, ASD contends, when regard is had to the terms of settlement entered into between the parties here, while the consequence of the payment of the sum of $350,000 is to reduce the total of its claims in relation to the third tranche monies, it is not expressed to be a payment made to ASD in part or in full satisfaction of its loss.

79 The real difference between the rival contentions concerning double recovery is that ASD acknowledges that it must bring the $350,000 it recovered from Wallace & Wallace to account but submits that that is done by reducing the $853,200 sought to be recovered from Mr Marriner by $350,000, whereas the Marriner parties contend that it is not open to ASD to recover anything from Mr Marriner unless his liability is shown to be more than $350,000. On the other hand, the Marriner parties' primary position is that notwithstanding the finding recorded in the remitter judgment,[81] no judgment should be entered against Mr Marriner, so as to make it quite clear that there is nothing to be enforced against him. Alternatively, it was said that if there is to be a judgment ordered against Mr Marriner for the sum of $80,000, there needs to be recited in the order for judgment or in other matters, that ASD has already recovered compensation in respect of the amount the subject of that judgment with interest, and cannot now recover any more from Mr Marriner.

80 In the remitter judgment, I rejected the Marriner parties' argument that ASD had advanced an 'all or nothing case' at the first trial. I found that the identification by the Court of Appeal of 'Issue 4', dealing with the isolated payment of $80,000 to the WS Group on 22 May 2001, as a separate issue 'clearly suggests that the Court of Appeal did not approach the case advanced by ASD as an "all or nothing case"'[82] and I was not persuaded that ASD was 'foreclosed or precluded from now arguing that issue as a separate ground.'[83]

81 Against that background, ASD submits that if the Court of Appeal had considered ASD was precluded from recovering the $80,000 by reason of any 'agreement' reached before the original trial judge of the kind now contended for by the Marriner parties, there would have been little or no point in the Court remitting the question of Mr Marriner's liability for the $80,000 payment as a separate issue. I agree with that submission. The position was that the Court of Appeal found the trial judge was in error in finding that there was no breach of trust. The Court of Appeal stated:

Was there a breach of trust?

[147] In our view, his Honour erred in holding that Wallaces were not liable for payments made in breach of the solicitor's trust, because they did not act dishonestly. A trustee is strictly liable for any breach of trust, even if the breach is entirely innocent.

[148] His Honour may have considered that ASD should be estopped from claiming compensation for the breaches, because at the time when Jephson gave instructions for payment out of the third tranche, ASD had not informed Wallaces that Marriner and Jephson no longer had authority to give instructions on ASD's behalf.[84] But estoppel was never argued. Nor was it considered whether Marriner could take the benefit of the estoppel (if any). His Honour might also have considered that Wallaces should be relieved of personal liability for their breach of trust because Penridge acted honestly and reasonably and ought fairly be excused.[85] However, the power which statute confers on the Court to relieve a trustee from liability in such circumstances does not mean that the breach did not occur. [86]

82 It is clear that the Court of Appeal was of the view that there was a breach (or breaches) of trust by Wallace & Wallace and that they were strictly liable for their breach(es) of trust in making the payments out of the third tranche monies, even if the breach was entirely innocent. Indeed, the way that their Honours framed Issues 3 and 4 makes clear that they regarded the sum of $853,200 as being held by Wallace & Wallace on trust for ASD.[87] But as the claims ASD made against Wallace & Wallace were effectively withdrawn by the terms of settlement, it was only necessary for the Court to remit for determination the issue of whether Mr Marriner or one or more of his associated companies induced or procured an innocent breach (or breaches) of trust by Wallace & Wallace in respect of the third tranche bond monies.

83 It should also be noted that the Marriner parties never advanced any 'agreement' between the parties of the kind they now contend for, as a reason why there would be no utility in the Court of Appeal remitting 'Issue 4'. In that regard, ASD also points to the letter from Mr Marriner's solicitors dated 16 October 2012, sent by way of response to the Calderbank offer it made dated 3 October 2012.[88] This exchange of correspondence took place after the Court of Appeal had heard and determined the appeal and cross-appeal, and pronounced orders for the remitter. ASD submits that if an agreement of the kind contended for by the Marriner parties had been reached, having the effect on the remitter proceeding now contended for, one would expect reference to have been made to it in that correspondence. After all, if it were the case that there was an agreement concerning the manner in which the $350,000 was to be dealt with as between the parties, and the practical effect of that agreement was that ASD had to recover more than $350,000 in order to be entitled to recover anything from Mr Marriner, such that 'Issue 4' was of no utility as a stand-alone issue, it is surprising that such an agreement was not mentioned as a relevant factor in the context of the Marriner parties' rejection of the offer. Indeed, at the first hearing concerning final orders, Senior Counsel for the Marriner parties accepted that it would have been 'a good point' to raise.'[89] However, he said the fact that the Marriner parties did not refer to the rule against 'double recovery' and the agreement they contend for 'does not mean there was no such agreement.'[90]

84 Given the long history of this matter before the Court, it is both surprising and a cause for real concern that at this late stage in the remitter hearing this matter is now being put forward as a substantive defence and not merely an issue that would affect the exercise of the Court's discretion as to costs. It is not mentioned in the pleadings. It was only touched on in the outline of contentions and oral submissions and was not articulated in a way that exposed what is now contended to be the real effect of the so-called agreement.

85 For the reasons set out above, in my view, the parties are bound by the finding made in paragraph 234 of the remitter judgment and no exceptional circumstances have been demonstrated that would permit any re-opening of the case. Further, having regard to the orders made by the Court of Appeal concerning the conduct of the remitter hearing, I do not propose to allow any further evidence to be adduced concerning the so-called agreement.

86 But even if a different view were to be taken, when regard is had to all of the evidence now sought to be placed before me, I am not persuaded that an agreement of the kind contended for by the Marriner parties is made out, essentially for the reasons that have been advanced by ASD.

87 In my view, the passages of transcript from the original trial before Byrne J referred to above are somewhat equivocal - this is perhaps best demonstrated in the passage of the closing address of Senior Counsel for the Marriner parties before the original trial judge extracted above, where he first refers to the sum of $350,000 as being an amount 'to be deducted from any liability in respect of the third tranche of bond monies' but in the next breath says that the deduction is 'significant in that it reduces the liability in respect of the third tranche of bond monies to $553,000 and the total liability in respect of both tranches of bond monies to less than the $950,000 ...'.[91]

88 Mr Atkin did not understand any agreement of the kind contended for to have been arrived at, and such an agreement would patently not have made any commercial sense from ASD's perspective. And if the alleged agreement had the effect contended for by the Marriner parties, there would have been no utility in the remitter of 'Issue 4' by the Court of Appeal. No amendment of the pleadings was made by either side to reflect any such agreement having been reached. Furthermore, no reference was made during the remitter hearing to the agreement as now contended for, or to the futility of any determination of 'Issue 4', and such an agreement would, in my view, not accord with that which is described and recorded in the remitter judgment (at [234]) as the position that applied as between the parties. The position was that in respect of the third tranche bond monies, ASD could not recover in total more than $853,200. Having received $350,000 from Wallace & Wallace, ASD could not recover more than the net amount of the third tranche bond monies remaining outstanding from Mr Marriner, but, as ASD contends, the payment of the $350,000 'does not mean that Mr Marriner is somehow entitled to set off the partial recovery against his separate liability' to ASD.[92]

89 Having formed that view, it is not necessary for me to deal with the legal arguments the Marriner parties raised about 'double recovery'. Nevertheless, should a different view later be taken, I make the following summary observations about the arguments raised.

90 The rule against double recovery is, as ASD contended, concerned to ensure that a plaintiff does not recover in the aggregate more than the amount of his or her total loss. In Tang Man Sit v Capacious Investments Ltd[93] Lord Nicholls, delivering the judgment of the Privy Council, addressed the position where 'cumulative remedies' are sought and the limitations that apply. His Lordship said:

A third limitation is that a plaintiff cannot recover in the aggregate from one or more defendants an amount in excess of his loss. Part satisfaction of a judgment against one person does not operate as a bar to the plaintiff thereafter bringing an action against another who is also liable, but it does operate to reduce the amount recoverable in the second action. However, once a plaintiff has fully recouped his loss, of necessity he cannot thereafter pursue any other remedy he might have and which he might have pursued earlier. Having recouped the whole of his loss, any further proceedings would lack a subject matter. The principle of full satisfaction prevents double recovery. (emphasis added)[94]

91 The position is, as Lord Nicholls makes clear, that the courts are not concerned with restricting the ability of a plaintiff to settle with one defendant for part of the plaintiff's total loss, and then pursue alternative defendants to seek to recoup the remainder, but rather with making sure that a plaintiff does not recover more than the full amount of his or her loss.

92 In Baxter v Obacelo Pty Ltd,[95] former clients of a solicitor sued both the solicitor and his employee, who had undertaken work for the clients, in negligence, and also the solicitor alone for breach of contract in relation to the work done. The damages claimed were in excess of $430,000. A settlement was reached with the solicitor for $250,000 inclusive of costs and with a release of all claims. The solicitor paid the sum of $250,000 to the plaintiffs on the footing that judgment had been entered for $250,000, and a deed of release provided for the amendment of the statement of claim against the employee. The employee applied by motion for summary judgment. The plaintiffs acknowledged that if judgment were given against the employee, credit would have to be given for the $250,000 received from the solicitor. The employee contended that judgment having been given, and satisfied, the plaintiffs were precluded by s 5(1)(b) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) and the general law rule against double satisfaction from recovering any further amount from him.

93 The High Court, in dealing with the question of whether the judgment amount was received in full satisfaction of the plaintiffs' claim, relevantly held that they were not precluded from continuing with the claim against the employee. In a joint judgment, Gleeson CJ and Callinan J discussed generally the position that arises in litigation where cumulative claims are made and a plaintiff resolves its claim against one tortfeasor by judicial decision or settlement. Their Honours observed:

[42] ... Settlement may or may not be accompanied by, or result in, a consent judgment. Judicial decision will result in judgment for an amount usually (although not invariably) assessed as the full amount of the plaintiff's loss or damage (subject to any question of contributory negligence). A settlement may, or may not, expressly or by implication reserve a plaintiff's rights against other tortfeasors and may or may not make it clear that, if a consent judgment is entered pursuant to the terms of settlement, such judgment is not intended by the parties to the settlement to represent the full amount of the plaintiff's loss or damage.[96]

94 Their Honours referred to Lord Hoffman's judgment in Jameson v Central Electricity Generating Board,[97] where his Lordship discussed the approach the court adopts when seeking to ascertain whether an agreement reached between a plaintiff and a concurrent tortfeasor operates to extinguish the plaintiff's claim against another concurrent tortfeasor. His Lordship identified the 'critical question' as being whether the plaintiff's claim for damages has in fact been satisfied, and he said:

I think that the answer to it will be found by examining the terms of the agreement and comparing it with what has been claimed. The significance of the agreement is to be found in the effect which the parties intended to give to it. The fact that it has been entered into by way of compromise in order to conclude a settlement forms part of the background. But the extent of the element of compromise will vary from case to case. (emphasis added)[98]

95 In Baxter, Gleeson CJ and Callinan J continued to observe that Lord Hoffman had 'pointed out that the fact that a settlement sum involves an element of compromise does not mean that it is not intended to be paid, or received, in full satisfaction (using the term with the meaning it has in the expression accord and satisfaction) of a plaintiff's claim or claims.'[99] The element of compromise in any particular case will depend on the agreement reached and between whom, and in many cases where disputes arise, the second tortfeasor will often not be a party to the settlement agreement. Their Honours said:

[46] Nevertheless, the significance of the contractual basis upon which a plaintiff settles with one tortfeasor, and its consequences as between the plaintiff and another tortfeasor, may be found in both the equitable principle which prevents double satisfaction, and in the common law principle that a plaintiff who has fully recouped the loss cannot obtain a further award of damages. If a plaintiff has agreed with one tortfeasor to accept a sum upon the basis that it will be received in full discharge of all claims for compensation for the loss or damage incurred by the plaintiff, it would ordinarily be unconscientious to pursue a further claim in relation to the same damage against another tortfeasor. And if a single loss has been fully recouped, there is no further remedy for a plaintiff to pursue.

...

[48] ... If, either expressly or by implication, a settlement agreement manifested a common intention of the parties to the agreement that the settlement sum was to be paid and received in full satisfaction of the rights of the plaintiff, against the defendant or anyone else, in relation to the loss or damage incurred, then, for both of those reasons, a further claim would fail. The most obvious way to negative such an intention would be by express reservation of rights. ... Bearing in mind the obligation to give credit for the amount already recovered, a defendant who could show that the actual loss or damage incurred by the plaintiff did not exceed the amount already recovered would succeed in any event. Leaving aside questions of onus of proof, to say that there is no such excess is simply to say that the loss has been fully recouped.[100]

96 Their Honours found that in Baxter, the parties to the settlement, by their conduct and entry into the deed of release and the terms of settlement, 'clearly showed that it was contemplated' that the plaintiffs would pursue their claims against the employee and that they were not accepting the sum of $250,000 in full satisfaction of the loss or damage that they incurred.

97 Justices Gummow and Hayne JJ reached a similar conclusion.[101] Their Honours noted that '[w]here it is accepted that the recovery under a settlement of the first action is of a sum less than that otherwise recoverable by judgment in the second action, it is not apparent that a question of "double recovery" will arise.'[102] They confirmed that there 'will be no breach of the universal rule that the plaintiff cannot recover more than he or she has lost if the judgment in the second action gives credit for the recovery upon settlement of the first.'[103]

98 However, their Honours went on to consider the decision of the House of Lords in Jameson, pointing out that '[d]ifficult questions may arise where words such as "in full and final satisfaction" are used in a negotiated settlement with one tortfeasor for a sum less than the formulated claim.'[104] Having discussed the type of difficult questions that may arise, their Honours said they 'do not regard the reasoning of the majority of the House of Lords in Jameson as foreclosing debate upon any of these questions in an appropriate case at any level in the Australian court system.'[105]

99 Kirby J likewise dismissed the appeal. In his Honour's view, it was 'unnecessary on this appeal to identify the precise legal source of the rule against double satisfaction: whether it be a principle of the common law, a rule of equity based on good conscience and the prevention of unconscientious conduct or a principle founded in notions of preventing unjust enrichment.'[106] In essence, this was because as the proceedings now stand, the employee's claim of double satisfaction, 'is not made good in the facts to which reference may be had.'[107]

100 Turning to the present case, when regard is had to the terms of settlement entered into between ASD and the Wallace & Wallace parties, which the parties acknowledged and agreed were 'made and are to be construed in conjunction with' the terms of settlement entered into between ASD, the Wallace & Wallace parties and the Marriner parties, the $350,000 was payable by way of settlement of the claims made against the Wallace & Wallace parties. It was only those claims that were withdrawn by ASD. Further, the terms of settlement entered into between ASD, the Wallace & Wallace parties and the Marriner parties provided for two releases: first, that the Wallace & Wallace parties would release each of the Marriner parties and ASD from all claims that they may have against them; and secondly, that each of the Marriner parties and ASD would release each of the Wallace & Wallace parties from all claims that they may have against them. Importantly, no provision was made for any release of the claims made by and between ASD and each of the Marriner parties. On the contrary, the tripartite terms of settlement made clear that the respective parties contemplated that the proceedings on foot between them would continue, because cl 3 provided that the costs incurred by the Marriner parties in respect of the Wallace & Wallace parties' claim 'are to be agreed, or failing agreement, taxed and once agreed or taxed are to be costs in the cause as between [ASD} and the Marriner parties in these proceedings.'

101 In my view, there is no element of 'double recovery' in the present case. The Court of Appeal found (at [146]) that there was no basis for disturbing Byrne J's finding that the third tranche bond monies were held on a solicitor's trust for ASD. Having settled with the Wallace & Wallace parties in respect of the claims made against them, ASD was entitled to pursue the separate claims it had made against the Marriner parties in respect of the third tranche funds, with a view to recouping the remainder and achieving a full recovery. What was required, however, was that ASD should bring the $350,000 to account, thereby reducing the sum sought to be recovered from the Marriner parties to $503,200.

102 Section 24(1) of the Supreme Court Act 1986[108] and s 49(3)(k)[109] and Part 4.5 of the Civil Procedure Act 2010 dealing with the Court's powers as to costs, and rules 63.02, 63.03 and 63.04 of the Rules,[110] provide that the Court has a broad discretion in determining questions of costs. Further, s 65C(1) of the Civil Procedure Act also now permits the Court to make 'any order as to costs it considers appropriate to further the overarching purpose.'

103 Generally, where a party is successful, costs will follow the event and a successful party will usually obtain all of the costs of the action even though it may have failed in establishing some of the alternative heads of claim. In Oshlack v Richmond River Council, McHugh J conveniently summarised the general position concerning the 'usual order as to costs', and the objectives the Court seeks to meet in exercising its discretion as to costs, as follows:

[67] The expression 'the usual order as to costs' embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party.[111] If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.

...

[69] The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd[112], Devlin J formulated the relevant principle as follows:

'No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct.'

'Misconduct' in this context means misconduct relating to the litigation[113], or the circumstances leading up to the litigation[114]. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation;[115] unnecessarily protracts the proceedings;[116] succeeds on a point not argued before a lower court;[117] prosecutes the matter solely for the purpose of increasing the costs recoverable;[118] or obtains relief which the unsuccessful party had already offered in settlement of the dispute.[119] [120]

104 Accordingly, in determining how to exercise its discretion as to costs, it is permissible for the Court to have regard to the conduct of the respective parties in the litigation. Further, the Court is permitted, in the exercise of its discretion, to award costs by reference to issues in the proceeding or to order that the successful party recover only a proportion of its costs, as was done by the Court of Appeal in the costs order made in this case.

105 In a case where there are jointly represented defendants, the liability of an unsuccessful plaintiff for their costs is to be assessed in all of the circumstances, with the aim of achieving substantial justice. A successful defendant cannot claim more than a proportionate share of the costs not solely referable to the plaintiff's case against that defendant.[121]

106 In the present case, ASD seeks orders that costs be awarded on an indemnity basis because it made two offers to the Marriner parties to resolve the proceeding, neither of which was accepted.

107 First, ASD relies on a Calderbank offer, made by letter dated 3 October 2012 from ASD's solicitors, Holding Redlich, to the solicitors for the Marriner parties, Meerkin & Apel.[122] This letter was sent after the Court of Appeal had delivered its decision on the merits (handed down on 3 August 2012) but prior to delivery of its decision on the costs of the appeal (handed down on 5 December 2012). In the letter, which was headed or referenced 'Court of Appeal of the Supreme Court of Victoria ... File No: S APCI 2010 0019' and expressed to be 'Without Prejudice Save as to Costs', ASD pointed to the fact that the 'legal costs incurred by both parties now dwarf the relief to be determined by the trial judge.' ASD then summarised the reasons why it maintained that it was 'almost certain to succeed at least in part'. Nevertheless, ASD said, being aware of the inherent risks of litigation, it was 'willing to offer to resolve this matter on a commercial basis.'

108 ASD then offered expressly 'without any admission of liability' to resolve the proceeding on the basis that the Marriner parties pay ASD 'the sum of $70,000 with each party bearing their own costs (including the costs of the appeal) in full and final satisfaction of our ASD's claims against your clients, and in full and final satisfaction of your clients' counterclaim against our clients.' The letter also stated '[f]or the avoidance of any doubt, this offer includes the costs of the appeal, even if between the date of this letter and time that the offer expires the Court of Appeal makes costs orders against either party.' Holding Redlich informed the Marriner parties that ASD's legal costs to that point (excluding the appeal) were in excess of $2.5 million. Further, they said that if the Marriner parties did not accept the offer and ASD were successful on the remitter, they would be seeking 'full reimbursement of their costs on an indemnity basis' from the date of the offer 'calculated according to the fee agreements with [ASD].' The offer so made was expressed to be 'open for 14 days, expiring at 4pm on 18 October 2012.'

109 Secondly, ASD relies on an offer of compromise made under the Rules, served by ASD on 22 February 2013, being after the Court of Appeal's decision on the costs of the appeal. The offer of compromise, prepared by Holding Redlich under Order 26 of the Rules, was conveyed to Meerkin & Apel as solicitors for the Marriner parties under cover of sent a letter marked 'Without Prejudice Save as to Costs', and was accompanied by signed proposed minutes of consent order.[123] In the letter, which was similarly headed or referenced 'Court of Appeal of the Supreme Court of Victoria ... File No: S APCI 2010 0019', Holding Redlich explained that the 'enclosed consent orders and the offer of compromise operate in unison.' They said that if the Marriner parties were to accept the offer of compromise and sign the consent orders, then 'the end result will be that both parties walk away from the proceeding with no order as to costs and the claims and the counterclaims will be dismissed.' The covering letter also confirmed that if the Marriner parties accepted the offer of compromise, ASD would not seek costs and the Marriner parties would not be entitled to costs against the ASD parties other than pursuant to the costs orders made by the Court of Appeal.

Has ASD demonstrated a basis for a 'special' costs order?

110 The Marriner parties contend that it was not unreasonable for them to reject the Calderbank offer. First, they maintain they had a good argument that, on the remitter, they would effectively have the benefit of the $350,000 paid by Wallace & Wallace. In other words, they say that ASD would have to recover more than that sum before an order for costs would be made against the Marriner parties. I note, however, that in their solicitors' response to the Calderbank letter dated 16 October 2012, which sought to explain 'why, in our [i.e., Merkin & Apel's] view, [the Marriner parties'] rejection of the Offer is an entirely reasonable position', the solicitors for the Marriner parties never advanced that argument as a reason for, or in support of, their clients' rejection of the offer. Secondly, they say it was likely that the Marriner parties would receive a favourable costs order, representing a significant sum. As yet, the Marriner parties have not sought to recover the costs they were awarded by the Court of Appeal but they are said to be substantial, and in the order of $315,468,[124] which when discounted to 80% would equal approximately $252,374.[125] Thirdly, in their response to the Calderbank letter, the solicitors for the Marriner parties outlined the reasons why they contended it was reasonable for them to reject the offer. Importantly, they were of the view that ASD could not establish that Mr Marriner knowingly induced or immediately procured, or was the instigator of, the breaches of the solicitor's trust in relation to the third tranche bond monies. But they recognised that the narrower case, concerning the direction given by Mr Marriner to Mr Penridge about the $80,000, may have better prospects. Further, they said that even if ASD did succeed on this narrower case, they did not agree that ASD would be entitled to receive a full indemnity costs order. The solicitors for the Marriner parties said they were of the view that in circumstances where there are a multiplicity of issues and mixed success has been enjoyed by the parties:

the Court will take a pragmatic approach in framing the order for costs, taking into consideration the success (or lack of success) of the parties on an issues basis. See McFadzean v Construction Mining and Energy Union [2007] VSCA 289; (2007) 20 VR 250 at [157] & [158]. Generally, if such an order is made, it is reflected in the successful party being awarded a proportion of its costs but not the full amount. See Spotless Group Limited v Premier Building and Consulting Pty Ltd and Northern Suburban Properties Pty Ltd [2008] VSCA 115 at [14] & [15].[126]

They also referred to the fact that the Court of Appeal had remitted the defences and counterclaims for further consideration as indicating that the Court did not share the ASD parties' view on the merits of those claims.

111 Against that background, the Marriner parties submit that the Calderbank letter dated 3 October 2012 was not, in any real sense, a true compromise or an attractive compromise when viewed from their perspective. Further, they contend that when regard is had to the outcome of the proceeding, ASD has not been successful in 'bettering' or exceeding the proposed compromise at trial. Importantly, they maintain that because of the settlement sum of $350,000 paid by Wallace & Wallace, ASD is not entitled on the remitter judgment to payment of the sum of $80,000 plus interest.

112 The principles concerning the exercise of the Court's discretion in the context of the rejection of a Calderbank offer were conveniently summarised by the Court of Appeal in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2).[127] There, the Court of Appeal confirmed that the correct approach is to 'treat the rejection of a Calderbank offer as a matter to which the court should have regard when considering whether to order indemnity costs.'[128] The Court of Appeal referred to the policy objectives underlying the availability of special orders for costs where offers of compromise are rejected, and in particular to the following objectives:

(1) to encourage the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise by defendants which amount to a realistic assessment of the plaintiff's real claim which can be placed before its opponent without risk that its 'bottom line' will be revealed to the court;

(2) to save the public costs which are necessarily incurred in litigation which events demonstrate to have been unnecessary, having regard to an earlier (and, as found, reasonable) offer of compromise made by a plaintiff to a defendant; and

(3) to indemnify the plaintiff who has made the offer of compromise, later found to have been reasonable, against the costs thereafter incurred. This is deemed appropriate because, from the time of the rejection or deemed rejection of the compromise offer, notionally the real cause and occasion of the litigation is the attitude adopted by the defendant which has rejected the compromise. In such circumstances, that party should ordinarily bear the costs of litigation.[129]

113 Their Honours also endorsed[130] the observations made by Redlich J in Oversea-Chinese Banking Corporation v Richfield Investments Pty Ltd to the effect that there are other competing objectives of equal importance, namely that '[p]otential litigants should not be discouraged from bringing their dispute to the Courts. It is such considerations which underlie the general rule that an order for special costs should only be made in special circumstances'.[131]

114 The Court of Appeal found that these competing considerations can be sufficiently accommodated by applying a test of (un)reasonableness. Their Honours said that the critical question is 'whether the rejection of the offer was unreasonable in the circumstances'[132] and recognised that in deciding whether conduct is 'reasonable' or 'unreasonable' will always involve matters of judgment and impression 'about which different judges might properly arrive at different conclusions.'[133]

115 In Stewart v Atco Controls Pty Ltd (In Liq) [No 2],[134] the High Court confirmed the relevance of a Calderbank offer to an application for indemnity costs. There, in a joint judgment, their Honours stated:

This Court has a general discretion as to costs. The non-acceptance of a Calderbank offer is a factor, in some cases a strong factor, to be taken into account on an application for indemnity costs. The respondent submits that its rejection of the offer was not unreasonable. If that be the test, it would appear to require at the least that the respondent point to a reason for not accepting the offer beyond the usual prospects of being successful in the litigation.[135]

116 In Hazeldene's, the Court of Appeal said that the discretion with respect to costs, like every other discretion, must 'be exercised taking into account all relevant considerations and ignoring all irrelevant considerations.'[136] And while it is neither possible nor desirable to give an exhaustive list of relevant circumstances, their Honours stated that in considering a submission that the rejection of the Calderbank offer was unreasonable, the court should ordinarily have regard at least to the following matters:

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

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

(c) the extent of the compromise offered;

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

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

(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it.[137]

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

118 At the time the Calderbank letter was sent, if the offer made therein was not to be accepted, all that remained to be determined between the parties were the issues on the remitter and the costs of the appeal. At that point, the outcome of the Court of Appeal's decision on costs was not known, but the Marriner parties apparently believed that having enjoyed a substantial measure of success in the appeal, the Court would likely exercise the discretion in their favour. ASD, on the other hand, believed that it had good grounds for success in relation to the third tranche bond monies, and the $80,000 in particular.

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

119 The offer was open for 14 days, being the minimum time prescribed by rule 26.03 for offers of compromise.

120 In the Calderbank letter, ASD's solicitors expressed the view that 'our client's claims will succeed and costs will follow the event' and 'at the very least, our client will be awarded at least $80,000 as a result of your client's knowing procurement and/or knowing receipt of a breach of trust.' In these circumstances, they said that ASD's 'offer to accept $70,000 with parties bearing their own costs is highly unlikely to be beaten.' That is, if ASD were successful in recovering only the amount of $80,000 that Mr Marriner personally directed Mr Penridge of Wallace & Wallace to pay, it would also be entitled to interest on that sum (at the rates under the Penalty Interest Rates Act 1983 (Vic)) which would be a not insignificant sum given the time period involved. Furthermore, given the decision that Byrne J had reached on the Marriner parties' counterclaim, the ASD parties believed that they had a strong case on remitter for its dismissal, with costs.

(d) the offeree's prospects of success, assessed as at the date of the offer

121 The making of the Calderbank offer required the Marriner parties to undertake a robust assessment, or re-assessment, of the strengths and weaknesses of their case, and having regard to their overarching obligations, to treat seriously with the observation made by the solicitors for the ASD parties that 'the legal costs incurred by both parties now dwarf the relief to be determined by the trial judge.'

122 The Calderbank letter made clear the reasons why ASD contended that its claim was likely to succeed, and the defences and counterclaims raised by the Marriner parties were likely to be rejected.

123 The response from the solicitors for the Marriner parties implicitly acknowledged that the strength of ASD's case lay in the claim regarding the $80,000 payment directed by Mr Marriner. They maintained that because ASD had advanced the third tranche claims on an 'all or nothing' basis and had not separately pleaded the $80,000 claim 'it is highly unlikely that the new trial judge would permit ASD to re-frame and limit its knowing inducement case to focus on the Marriner Direction.' Further, even if ASD did succeed, the Marriner parties did not agree that ASD would receive a full indemnity costs order in circumstances where there had been a multiplicity of issues and mixed success had been enjoyed by the parties, suggesting that the Court would take a pragmatic approach to the framing of the order for costs and recognise the relative success of the parties on each of those issues. In the case of the counterclaim, the Marriner parties did not agree with their views. Rather, their response was to the effect that if the Court of Appeal shared those views, the matters would not have been remitted for further consideration.

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

124 ASD's offer was clearly expressed. The offer involved two components that were inextricably linked. First, there was ASD's offer to accept $70,000 from Mr Marriner in full and final settlement of the claim. Secondly, ASD also stipulated that each party would bear their own costs, including the costs of the appeal, in full and final satisfaction of ASD's claims against the Marriner parties, and in full and final satisfaction of the Marriner parties' claims against the ASD parties. In other words, acceptance of the Calderbank offer would put an end to all of the claims made between them.

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

125 The cost consequences of the letter, and how the indemnity costs were to be calculated, were clearly spelt out.

126 Notwithstanding that the Marriner parties are likely now in a worse position than they would be had they accepted the offer, I am not satisfied that it was unreasonable for them to reject the Calderbank offer. Contrary to the tenor of ASD's submissions, the outcome of the remitter proceeding was not predictable, in the sense of being obvious or a foregone conclusion. Central to ASD's case was the claim based on the Eaves v Hickson line of authorities, which had not been considered and applied in Australia in recent times in more than a few cases. The Marriner parties rely on the fact that, as the Court of Appeal observed,[138] there had been no fact-finding or analysis by the original trial judge on the question of whether Mr Marriner had procured or induced the innocent breach of trust by Wallace & Wallace or detailed argument as to the nature of the applicable principles and their interaction with the findings of fact that might be open. In those circumstances, the Marriner parties believed that the outcome of all of the remitted claims was uncertain, that being the effective reason for them being remitted. The Marriner parties also believed that they had an arguable counterclaim against the ASD parties, which the Court of Appeal acknowledged had effectively been dismissed summarily by the original trial judge without giving adequate reasons. The Court of Appeal remitted the counterclaim in order that the considerable body of evidence and matters raised in the counterclaim could be fully evaluated and considered on their merits.[139]

127 Given the success that the Marriner parties enjoyed in the Court of Appeal, they were justified in believing that they would receive a significant portion of their costs of the appeal. They appear to have identified and recognised that their real weakness on the remitter lay in the claim made in respect of the $80,000 payment directed by Mr Marriner. But it was likely that the quantum of costs awarded to them on the appeal would exceed the sum of $80,000, even if awarded with interest. Were they to accept ASD's offer, the Marriner parties were required to pay the sum of $70,000 and forego their award of costs. The likely fate of the counterclaim on the remitter was somewhat unclear, and the fact that the Court of Appeal did not decide it but instead remitted it to a trial judge appears to have conveyed the impression that their counterclaim had greater prospects than was ultimately found to be the case.

128 Further, if, as they now contend, the Marriner parties believed that on the remitter they would effectively have the benefit of the $350,000 paid by Wallace & Wallace, such that ASD would have to recover more than that sum before an order for costs would be made against the Marriner parties, then the approach taken by them is readily understandable. However, this argument was never raised before the Court of Appeal as a reason why there would be no utility in the remitter of Issue 4 nor was it ever deployed or advanced in their correspondence with the solicitors for ASD in October 2012 as a reason justifying the rejection of the offer.

129 In the case of the offer of compromise ASD made under the Rules, served on 22 February 2013, ASD contends that this offer was made on terms even more favourable than those under the Calderbank letter, offering a 'complete walk away' and with the Marriner parties retaining the benefit of the costs order made in their favour by the Court of Appeal. The Marriner parties disagree with that assessment and contend that the offer, as made, was an 'all-in' offer containing a costs-inclusive term and therefore it did not comply with rules 26.03(7) and (8) and was ineffective.

130 At that time, rule 26.03 relevantly provided as follows:

(7) Upon the acceptance of an offer of compromise in accordance with paragraph (4), unless the Court otherwise orders, the defendant shall pay the costs of the plaintiff in respect of the claim up to and including the day the offer was served.

(8) If an offer of compromise contains a term which purports to negative or limit the operation of paragraph (7), that term shall be of no effect for any purpose under this Part.[140]

131 In Nolan v Nolan (No. 2),[141] Dodds-Streeton J expressed the view that 'Order 26 does not allow for "all in" offers' providing that each party bear their own costs, contrary to what is stated in rule 26.03(7).[142] Further, her Honour observed, '[t]he possibility that the court might "otherwise order" does not overcome the express terms of rules 26.03(7) and (8).'[143]

132 Here, the Marriner parties say that if one treats the term relating to costs, which appears in the letter and the proposed orders, as having 'no effect for any purpose', then the offer becomes one which is not capable of being clearly understood. That is, in circumstances where the offer ASD made was expressly one that operated in unison with the consent orders, the Marriner parties argue that they could not reasonably regard the term relating to costs as having no effect.

133 The ASD parties dispute the correctness of that position, pointing out that the offer of compromise itself made no mention of costs at all and cannot, therefore, be regarded as an 'all-in' offer. In that regard, it appears the ASD parties rely on the accompanying letter, rather than the offer itself, to clarify the position with respect to costs. The letter confirms that 'if the offer is accepted, our clients will not seek costs against your clients and similarly your clients will not be entitled to costs against our clients, other than pursuant to the orders made by the Court of Appeal.' The minute of proposed orders further confirms that is the intended outcome. ASD argues that even if the offer had referred to costs, the consequence would not be that the offer of compromise was ineffective; rather, under rule 26.03(8) only 'that term' (being the term concerning costs) would be of no effect.

134 The difficulty with the ASD parties' position is that if the offer were accepted, the provisions of the Rules would render ineffective any term of the agreement between the parties that did not conform with rules 26.03(7) and (8), unless the Court otherwise ordered. ASD says that the offer of compromise was made in the proceeding as remitted and if accepted would not have affected Mr Marriner's entitlement to costs as ordered by the Court of Appeal. Further, although the offer, read with the covering letter and the minutes of proposed order, represented a departure from the ordinary practice, nevertheless it offered a benefit to the Marriner parties in the sense that they were given the opportunity to settle the proceeding on a more favourable basis than would apply under the Rules.[144] Indeed, ASD says that short of offering to pay Mr Marriner's costs, its offer to 'walk away' was the most generous offer it could make.

135 In circumstances where it is unclear what effect an acceptance of the offer would entail, I am not satisfied that the offer of compromise as made, being one that expressly operated in unison with the consent orders, was one that was reasonably capable of acceptance in accordance with the Rules. If the Marriner parties accepted the offer, they were at risk that unless and until the Court determined otherwise, they may be ordered to pay ASD's costs in accordance with rule 23.03(7).[145]

Alternatively, should the Court treat ASD's offer of compromise as an effective Calderbank offer?

136 The Marriner parties argued that if the Court were to find that ASD's offer of compromise made under the Rules was not a valid offer because it is not to be regarded as one that falls strictly within the scope of Order 26, then the Court should not proceed to treat the offer as being an effective Calderbank offer. First, they said that the offer failed to set out the basis for the contention that the Marriner parties should accept the compromise, and the extent of the compromise was illusory. Secondly, the offer did not explain why the Marriner parties should give up their claims in respect of the costs of the first trial. But even if the offer could be regarded as an effective Calderbank offer (which is not accepted), they say its rejection was not unreasonable. First, they maintain that the status of the $350,000 payment was a material consideration. Second, the question of liability for the costs of the first trial was open to be argued given the terms of the remitter, and thirdly, the counterclaims themselves had been remitted for further argument. Further, in the case of the claim regarding the $80,000 payment directed by Mr Marriner, if not all of the remitted claims concerning the third tranche funds, the outcome of the remitter hearing was neither obvious nor predictable.

137 Aside from the non-compliance with the Rules, the offer ASD made - to walk away completely and with the Marriner parties retaining the benefit of the costs order made by the Court of Appeal - was, in my view, an attractive one. Whilst the covering letter did not set out all of the reasons why ASD contended the offer was attractive and should be accepted, the basis for doing so had been canvassed at some length in the earlier Calderbank letter. I do not propose to re-visit each of the matters discussed under paragraphs (a) to (f) above in relation to the earlier Calderbank letter. Importantly, the Marriner parties were no longer required to pay $70,000 to ASD and they were entitled to retain the benefit of the costs order made in their favour by the Court of Appeal. Had they accepted, the ongoing litigation risk would have ceased and they would also have avoided the costs and expenses of the remitter hearing, and the prospect of them facing an adverse costs order from the original trial. In that regard, I note that in the Court of Appeal's costs reasons, their Honours observed that Mr Marriner's success on the appeal 'was, to a significant extent, based on an argument about the effect of the alleged expenditure cap which was not advanced at trial.'[146]

138 With the introduction of the Civil Procedure Act in 2010, the legislature made clear, if it was not already, that the parties to litigation, the practitioners representing them, and the Court are each required to promote the just, efficient, timely and cost effective resolution of the real issues in dispute. Viewed objectively, the substance of the offer ASD made was directed to furthering those objectives, in circumstances where the costs incurred by the parties in running the proceeding had reached the point where they now dwarfed the quantum of the relief to be determined on the remitter. In my view, the offer as made, even though not one that fell strictly within Order 26, was nevertheless one that invoked the principles discussed in decisions such as Calderbank.

139 The Marriner parties contend that when regard is had to the whole of the course of the litigation between the parties in this proceeding, no proper basis is demonstrated for any special costs order in favour of the ASD parties. Rather, they submit, in a situation where ASD as plaintiff has spent millions to recover a mere $80,000, the folly of pursuing this litigation is patent, and having regard to the provisions of the Civil Procedure Act 2010, the more appropriate course would be to order that the lion's share of the costs incurred by the Marriner parties be paid by ASD. In my view, that submission further bears out the very reason why ASD made offers to settle the proceedings, recognising that little would be gained from pursuing the litigation in circumstances where the costs incurred had dwarfed the sums capable of being recovered.

140 In the present case, I am satisfied that the overarching purpose would be furthered by treating the offer of compromise made by ASD on 22 February 2013 as being effective as a Calderbank offer. In the circumstances, I am also satisfied that it was not reasonable for the Marriner parties not to accept the offer. Although the offer was not one that conformed strictly with Order 26, when the offer, the proposed orders and the covering letter were read together, the gist of what was being put forward for consideration by ASD was clear, as was the reason why it was put forward. If the Marriner parties were in any doubt, it would have been sensible for them to seek clarification.

141 In circumstances where ASD, by making an offer, has taken appropriate and timely steps in the litigation that were directed to furthering the overarching purpose, but the offer was not accepted by the Marriner parties even though it would have been reasonable for them to do so, it follows that any costs ordered to be paid by the Marriner parties are to be assessed on an indemnity basis. Under Calderbank offer principles, the indemnity costs would ordinarily be payable from the date of expiry of the offer, being 4.00 pm on 8 March 2013, rather than from 22 February 2013, being the date the offer was made, as would apply under Order 26. Accordingly, any costs ordered to be paid by the Marriner parties are to be assessed on an indemnity basis from 4.00 pm on 8 March 2013.

142 The Marriner parties advanced a second reason as to why no costs order should be made in favour of the ASD parties, based on rule 63.24.[147] They contend that even if ASD were entitled to recovery in respect of the $80,000 payment, it would not be entitled to recover an amount (exclusive of costs) that would exceed $100,000. Accordingly, they say rule 63.24 operates to limit the costs able to be recovered to those to which ASD would have been entitled had it commenced the proceeding in the County Court.

143 In the present case, rule 63.24 is not engaged. First, ASD is entitled to judgment for $80,000 plus damages in the nature of interest pursuant to s 60 of the Supreme Court Act 1986. It is common ground that damages in the nature of interest should be taken into account in determining whether the plaintiff recovers more than $100,000.[148] Secondly, even if there were any doubt about that, I am satisfied that this case is one where the Court should 'otherwise order' if the rule were applicable. As the ASD parties submit, the proceeding was a complex one involving difficult issues concerning liability for procuring breaches of trust and the counterclaim also involved complex allegations. Further, the fact that both the claim and counterclaims sought more than $200,000 meant that when the proceeding was commenced in 2005, and the counterclaims issued in 2006, they would have exceeded the then jurisdiction of the County Court.[149]

144 The ASD parties seek an order that Mr Marriner and the plaintiffs by counterclaim pay their costs of the remitter hearing. The Marriner parties on the other hand contend that the matter should be determined by adopting either an 'issues-based' approach and/or by adopting a pragmatic 'apportionment-based' approach, resulting in an order that ASD pay 65-75% of the Marriner parties' costs of the remitter hearing.

145 As has been noted earlier, the remitter hearing was conducted on the basis of the evidence that was adduced at the first trial. Counsel for the respective parties opened the evidence that they relied upon and made submissions directed to the substantive issues on the remitter. There was, in my view, a considerable overlap between the factual matters pertaining to the remitted issues on ASD's claim and those concerning the defences and counterclaims brought by the Marriner parties. Each counsel spent some considerable time taking me through the factual matters on which they relied to make good those claims.

146 I am not persuaded that it would be appropriate for me to deal with the question of costs of the remitter hearing on an 'issues basis' referable to the causes of action pleaded. Much has already been said by the original trial judge and the Court of Appeal about the unsatisfactory state of the pleadings in this matter. Suffice it to say that the lack of clarity in the pleadings in this case has not assisted in the resolution of the issues between the parties.

147 ASD has succeeded on the main issue, albeit only to the extent of $80,000 rather than the entirety of the third tranche funds. Because the claim for the $80,000 that Mr Marriner directed Wallace & Wallace to pay was itself a component of the third tranche funds, and all of the defences raised regarding the third tranche funds responded to it, it could not reasonably be said that significantly less evidence or submissions would have been required on that claim alone. In my view, the remitter hearing was conducted efficiently by both sides, and most, if not all, of the time spent in Court on ASD's claim in chief was required for it to make good the claim for the $80,000.

148 Similarly, with the Marriner parties' counterclaim. Much of this part of the case was put forward as a defence to ASD's claim in chief, as well as being a counterclaim. Having considered the issues raised at some length in the remitter reasons, I determined that each of those claims must fail in their entirety.

149 ASD contends that the Court should treat Mr Marriner's characterisation of the counterclaims as 'defensive' as being an acknowledgment of the fact that there was a significant overlap on the facts between the claims brought by ASD (including those on which it did not ultimately succeed, namely the second tranche and capital expenditure claims and the third tranche claims except for the $80,000) and the counterclaims. I tend to agree with the submission made by the ASD parties to the effect that the overlap between the counterclaims (on which they succeeded) and the claims on which ASD did not succeed favours an award of costs in favour of ASD because the factual underpinnings of ASD's claims had to be addressed in the counterclaims.

150 When viewed against the final outcome on the remitted issues, it is clear that the ASD parties have enjoyed considerably more success than the Marriner parties. That is, the ASD parties have succeeded on both the primary claim and on the counterclaim. In my view, as the successful party, it is appropriate that the ASD parties be awarded their costs of the remitter.

Costs orders relating to the hearing before Byrne J

151 ASD submits that the same costs orders should be made in both the remitter hearing and the first trial. ASD says the usual rule is that, having succeeded in part, it should have its costs of the first trial paid in full. They rely on the fact that his Honour found that there were no 'special circumstances' that would justify a departure from the general rule that costs follow the event. That is the order that Byrne J made and ASD submits that no change should now be made to that order.

152 In his reasons for judgment, Byrne J was critical of the way the Marriner parties had conducted the first trial.[150] In his costs reasons, Byrne J noted that 'in this case it is really not practical to sever issues ... so as to make an issues-based [costs] order.'[151]

153 In his reasons for judgment, Byrne J did not deal with the Marriner parties' counterclaim in any detail. On 16 April 2010, his Honour then delivered short reasons dismissing the counterclaim.[152] When making his final orders that same day, Byrne J ordered that there be no order for costs on the counterclaim. On the remittal, as I have noted, a good deal of time was spent on the Marriner parties' counterclaims but those counterclaims were also put forward as defences, and they have been dismissed in their entirety.

154 The counterclaims heard on the remitter were directed at both ASD and its directors, and each was required to defend them. There was, however, common representation so it is unlikely that any significant additional costs were incurred by reason of the presence of the additional parties on the counterclaims. ASD accepts that no specific order for costs should be made in relation to the individuals that were successful in defending the counterclaims, and no such order is sought.

155 As was noted at the outset of these reasons, the Court of Appeal remitted to the trial judge hearing the remitter the question of liability for the costs of the original hearing because, it seems, their Honours apprehended that despite the Marriner parties' apparent success on appeal, the resolution of the substantive issues remitted could effect a substantial change in the overall outcome of the proceeding. The position is that the ASD parties have been successful on their claim and on the Marriner parties' counterclaim. In the circumstances, I see no reason to depart from the orders Byrne J made on the primary claim, however, in the case of the counterclaim, an award of costs should also be made in ASD's favour.[153]

156 ASD's claims against each of the Marriner companies failed. It submits, however, that as the claims made against them were inextricably intertwined with those made against Mr Marriner, no order for costs should be made in favour of those corporate defendants. The Marriner companies were jointly represented with Mr Marriner by the same legal team, they ran a joint defence and counterclaim, and relied upon essentially the same documents, evidence and submissions. On the remitter, the resolution of the question of the companies' liability was disposed of in a single paragraph of the reasons for decision.[154] In the circumstances, I am satisfied that no separate order should be made in favour of those corporate defendants.

157 For the reasons set out above it is proposed that final orders be made substantially as follows:

1. There be judgment for the plaintiff against the first defendant in the amount of $80,000 plus interest pursuant to s 60 of the Supreme Court Act in the sum of $ [insert sum].
2. The counterclaims brought by the defendants and plaintiffs by counterclaim are dismissed.
3. The first defendant and the plaintiffs by counterclaim pay the costs of and incidental to plaintiff's claims and the counterclaims, including the costs of the proceeding before Byrne J.
4. Such costs are to be taxed (in default of agreement) on a party and party basis up until 4.00 pm on 8 March 2013 and thereafter on an indemnity basis.

158 I will direct the parties to consult and bring in orders giving effect to these reasons. If necessary, I will hear the parties on the precise form of the final orders.

[1] Australian Super Developments Pty Ltd v David Wellesley Marriner & Ors [2014] VSC 464 ('remitter decision').

[2] See Australian Super Developments Pty Ltd v David Wellesley Marriner & Ors [2010] VSC 41, at [27] where Byrne J observed:

It will be seen that claims (vi) to (ix) [knowingly inducing and procuring Wallace & Wallace's breach of trust etc] depend upon the fact that Wallace & Wallace acted in breach of trust or other duties owed by it to ASD. Until recently, the solicitors were defendants to this proceeding and relief was sought against them for those breaches. I was told that the claims against Wallace & Wallace have been resolved so that this part of the proceeding was struck out and Wallace & Wallace did not participate as a party in the trial. Notwithstanding this, it remained part of the proofs of ASD that, in disbursing the third tranche funds in accordance with Mr Jephson's instruction, Wallace & Wallace acted in breach of duties owed to ASD.

(emphasis added)

[4] Australian Super Developments Pty Ltd v Marriner (No 2) [2010] VSC 66.

[5] The amount claimed on the cross-appeal was $929,800, made up of the 'second tranche' sum of $426,600 plus the 'third tranche' sum of $853,200, which was said to be the amount to which the cross-appellants were entitled, minus the sum of $350,000 received from Wallace & Wallace by way of settlement, plus statutory interest.

[6] Marriner & Ors v Australian Super Developments Pty Ltd [2012] VSCA 171 ('Court of Appeal's Reasons').

[7] Marriner & Ors v Australian Super Developments Pty Ltd [2012] VSCA 290 ('Court of Appeal's Costs Reasons').

[9] Court of Appeal's Costs Reasons, at [3]-[12].

[11] [1861] EngR 831; (1861) 30 Beav 136; 54 ER 840.

[12] (1874) LR 9 Ch App 244.

[14] See order of the Court of Appeal authenticated on 3 August 2012.

[15] Court of Appeal's Reasons [2012] VSCA 171, at [147].

[16] ASD's Submissions for Resumed Hearing dated 16 August 2013 (revised version - to include references to volumes of the Court Book) (footnotes omitted).

[17] Submissions of the Marriner Parties for Resumed Hearing dated 26 July 2013 (footnotes omitted).

[18] ASD's Submissions in Reply dated 13 August 2013.

[19] The sub-heading reads: 'Claim against Wallace & Wallace for unauthorised disbursement of trust funds'.

[20] Transcript 19/08/13, at p. 14 (line 18) - p. 15 (line 24).

[21] Transcript 19/08/13, at p. 16 (line 21) - p. 18 (line 5).

[22] Transcript 30/08/13, at p. 437 (lines 4 - 27).

[23] Remitter decision, at [23]-[25].

[24] ASD later clarified that the reference to 'party and party' costs should be read as a reference to costs being taxed 'on a standard basis' in relation to costs incurred on or after 1 April 2013, if the Court is not minded to make an award of indemnity costs.

[25] Calderbank v Calderbank [1976] Fam 93.

[26] [2009] VSCA 113, at [4], where the Court of Appeal (Neave and Redlich JJA and Forrest AJA) endorsed the approach summarised by Eames J in Pricom Pty Ltd v Sgarioto (Unreported, Supreme Court of Victoria, Eames J, 10 April 1995, 24 April 1995, BC9503266, 5, and cited with approval in Spotless Group Ltd v Premier Building & Consulting Pty Ltd [2008] VSCA 115, at [13] and in McFadzean v Construction Mining and Energy Union [2007] VSCA 289, at [152]) as follows:

As a general rule costs should follow the event, and a successful party should obtain all of the costs of the action even although it failed to establish some of the alternative heads of its claim: Ritter v Godfrey (1920) 2 KB 47. However, in the exercise of its discretion the court may decline to order costs in favour of a successful party, or may order the successful party to pay the costs of the unsuccessful party, where the plaintiff failed to establish discrete heads of claim, or failed to establish issues which it pursued in its claim, although ultimately succeeding on the basis of another discrete head of claim: Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748, per Toohey J at 48,136.

[27] Submissions of the Marriner Parties on Costs dated 17 October 2014, at [10], [51].

[28] [2014] VSC 464, at [234].

[29] Submissions of the Marriner Parties on Costs dated 17 October 2014, at [6].

[30] See affidavit of Mr David Neil Atkin, CEO of United Super Pty Ltd (in its capacity as trustee of CBUS, affirmed 24 October 2014.

[32] Transcript 03/12/14, at p. 624 (lines 4-13).

[34] Transcript 03/12/14, at p. 624 (lines 22-25).

[36] See Exhibit 'JMP-1' to the affidavit of Mr Pergl sworn 3 December 2014, (Exhibit 'M2').

[40] Actually, $503,000 rather than $553,000.

[41] Transcript, 16/09/09, at pp. 1814-1815, referred to in the Marriner parties' written submissions on costs at [10].

[42] Transcript, 17/09/09, at p. 1901, referred to in the Marriner parties' written submissions on costs at [12].

[43] It will be recalled that in addition to ASD's claim against Mr Marriner in respect of the third tranche bond monies there were also claims brought by ASD against Mr Marriner for the capital expenditure 'overspend' and the second tranche bond monies (which did not involve Wallace & Wallace).

[44] Transcript 18/09/09, at p. 2094 (line 15) - p. 2095 (line 8), referred to in the Marriner parties' written submissions on costs at [14].

[45] Transcript 19/08/13, at p. 15 (lines 1-4).

[46] Transcript 30/08/13, at p. 437 (lines 13-27).

[47] See Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1, at 7 (Mason CJ, Wilson, Brennan and Dawson JJ).

[48] Transcript 03/12/14, at p. 636 (lines 18-25).

[51] See Robert Deutsch & Ors v Erwin Deutsch & Ors (No 3) [2014] VSC 494, at [4] per Hargrave J.

[52] Transcript 03/12/14, at p. 651 (lines 3-5). Later in the hearing, at pp. 665-668, the Marriner parties moved away from that position, contending that there should be no judgment against Mr Marriner.

[53] Email from Mr Pergl to the Associate to Justice Sloss dated 10 December 2014.

[54] Affidavit of Mr Pergl sworn 10 December 2014, Exhibit 'MFI M4', at [5].

[56] See ASD's submissions opposing leave to file the defendants' summons and affidavit of James Pergl dated 19 December 2014, at [2].

[58] Transcript 25/02/15, at p.2 (lines 16-24).

[63] [2013] VSC 523.

[64] [2006] FCA 22 ('Bradshaw').

[65] [2013] VSC 231.

[66] [2006] FCA 22, at [24] (citations omitted).

[69] [2013] VSC 231.

[72] Ibid, at pp. 21-22. See also Kuek v Devflan [2012] VSC 327, at [44].

[75] [2012] VSCA 232.

[77] (1991) 178 CLR 138, at 141 (Mason CJ, Deane, Dawson, Toohey and Gaudron JJ).

[78] [2009] HCA 27; (2009) 239 CLR 175, at 205 [71].

[79] Transcript 25/02/15, at pp. 59-60.

[80] See Baxter v Obacelo [2001] HCA 66; (2001) 205 CLR 635, at 661, [64], [65] per Gummow and Hayne JJ; at 669, [89] per Kirby J.

[81] To the effect that ASD has made out its claim that Mr Marriner knowingly induced or procured the innocent breach of trust by Wallace & Wallace in paying the sum of $80,000 to WS Group on or about 22 May 2001.

[82] [2014] VSC 464, at [271].

[84] Mr Ian Patience, who became the CEO of ASD on 17 November 2000, gave evidence that he had sent a circular letter on 6 February 2001 indicating that any expenditure commitment must be made by him. His Honour accepted that Penridge did not see a copy of the letter until about August 2001: [2010] VSC 41, at [140] - [142].

[85] Trustee Act 1958, s 67. The equivalent Queensland provision which may have applied to Wallaces, which was a Queensland firm, is contained in the Trusts Act 1973 (Qld) s 76.

[86] Court of Appeal's reasons, at [147]-[148].

[87] The issues as formulated by the Court of Appeal in its reasons were:

Issue 3. Did Marriner procure breaches of trust by Jephson in relation to the $853,200 held on trust by Wallaces?

Issue 4. Did Marriner induce or assist a breach of trust by directing Wallaces to pay $80,000 from the third tranche moneys to a third party?

Further, the Court of Appeal found (at [146]) that there was no basis for disturbing the original trial judge's finding that the third tranche was held on a solicitor's trust for ASD. The Court of Appeal also noted (at [126]) that in his separately published reasons dismissing Mr Marriner's counterclaim (Australian Super Developments Pty Ltd v Marriner (No 2) [2010] VSC 66, at [10]), Byrne J reiterated his finding that the third tranche bond monies were held by Wallace & Wallace in their capacity as solicitors for ASD.

[88] See Annexure B to the submissions of ASD dated 8 October 2014.

[91] Transcript 16/09/09, at pp. 1814 - 1815.

[92] ASD Submissions in Reply on Costs, 24 October 2014, at [9].

[93] [1996] AC 514.

[95] [2001] HCA 66; (2001) 205 CLR 635 ('Baxter').

[99] Baxter [2001] HCA 66; (2001) 205 CLR 635, at 655-656.

[100] Ibid, at 656-657, [46], [48].

[108] Section 24(1) provides:

(1) Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid.

(3) Without limiting subsection (1) [court may give any direction or make any order it considers appropriate to further the overarching purpose], a court may give any direction or make any order it considers appropriate with respect to -

...

(k) costs, including the proportions in which the parties are to bear any costs;

[110] Rules 63.02, 63.03 and 63.04 relevantly provide as follows:

63.02 The power and discretion of the Court as to costs under section 24 of the Act shall be exercised subject to and in accordance with this Order.

63.03 (1) The Court may in any proceeding exercise its power and discretion as to costs at any stage of the proceeding or after the conclusion of the proceeding.

...

63.04 (1) The Court may make an order for costs in relation to a particular question in or a particular part of a proceeding.

(2) Where the Court makes an order under paragraph (1), the Court shall fix the proportion of the total costs of the proceeding which is attributable to the particular question in or particular part of the proceeding.

[111] Latoudis [1990] HCA 59; (1990) 170 CLR 534 at 543, per Mason CJ; at 562-563, per Toohey J; at 566-567, per McHugh J; Cachia v Hanes [1994] HCA 14; (1994) 179 CLR 403 at 410, per Mason CJ, Brennan, Deane, Dawson and McHugh JJ.

[112] [1951] 1 All ER 873, at 874.

[113] King & Co v Gillard & Co [1905] 2 Ch 7; Donald Campbell & Co Ltd v Pollak [1927] AC 732, at 812.

[114] Bostock v Ramsey Urban District Council [1900] 2 QB 616.

[115] Jones v McKie [1964] 1 WLR 960; [1964] 2 All ER 842; Bostock [1900] 2 QB 616 at 622, 625, 627.

[116] Forbes v Samuel [1913] 3 KB 706.

[117] Armstrong v Boulton [1990] VicRp 20; [1990] VR 215 at 223.

[118] Hobbs v Marlowe [1978] AC 16.

[119] Jenkins v Hope [1896] 1 Ch 278.

[120] [1993] HCA 11; (1998) 193 CLR 72, at 97-98.

[121] See the discussion of the authorities in Currabubula Holdings Pty Ltd v State Bank of NSW [2000] NSWSC 232, at [89] - [106] and the statement of principle at [95].

[122] See Annexure B to ASD's Submissions on Final Orders dated 8 October 2014.

[123] A copy of the offer of compromise is set out in Annexure C to ASD's Submissions on Final Orders dated 8 October 2014.

(iii) estimated external disbursements - $6,488.00.

(See affidavit of James Murray Pergl sworn 16 October 2014, at [9].)

[125] As a result of the Court of Appeal's decision on costs, ASD is indebted to the Marriner parties for 80% of the Marriner parties' costs of the appeal. Mr Pergl, in his affidavit sworn 16 October 2014, opines that the likely outcome on the costs of the appeal is that the Marriner parties will recover taxed costs of approximately $252,374.00 (being 80% of their estimated costs of the appeal). In arriving at his opinion, Mr Pergl consulted Mr Ariel Weingart, a solicitor practising as a legal costing consultant. Mr Weingart has also filed an affidavit (sworn 19 October 2014, Exhibit M3) in which he deposes (at [7]) that if the procedure and methodology described in Mr Pergl's affidavit is followed, the sum indicated 'provide[s] a broad approximation of the likely costs recoverable by Mr Marriner pursuant to the [Court of Appeal] costs order, on an assessment of Mr Marriner's costs by a taxation in the Supreme Court of Victoria Costs Court conducted in accordance with the Supreme Court Rules.'

[126] Letter from Merkin & Apel to Holding Redlich dated 16 October 2012, at p.3, [12].

[127] [2005] VSCA 298; (2005) 13 VR 435 ('Hazeldene's').

[128] Ibid, at 441, [20] per Warren CJ, Maxwell P and Harper AJA.

[129] Ibis, at 441, [21] referring to Grabavac v Hart [1996] VSC 37; [1997] 1 VR 154, at 164-165 where Hayne JA cited with approval what the New South Wales Court of Appeal had said in Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721, at 724.

[130] [2005] VSCA 298; (2005) 13 VR 435, at 441, [22].

[131] [2004] VSC 351, at [60].

[132] [2005] VSCA 298; (2005) 13 VR 435, at 441, [23].

[134] (2014) 252 CLR 331.

[135] Ibid, at 334, [4] per Crennan, Kiefel, Bell, Gageler and Keane JJ.

[136] [2005] VSCA 298; (2005) 13 VR 435, at 442, [25] (citations omitted).

[138] Court of Appeal's Reasons, at [163]-[165].

[139] Ibid, at [292]-[293], [296]-[297].

[140] See Authorised Version No. 042, incorporating amendments as at 1 January 2013.

[141] [2003] VSC 136. See also Aquatec-Maxcon Pty Ltd v Barwon Region Water Authority (No. 8) [2007] VSC 363, at [16]; Victorian Education Foundation Ltd v A C Hall Airconditioning Contracting Pty Ltd [2013] VSCA 32, at [24]-[25], [28].

[142] [2003] VSC 136, at [32].

[144] Under rule 26.03(7) as applicable at the time, the ordinary consequence of acceptance of an offer by a defendant was that the defendant was required to pay the plaintiff's costs in respect of the claim up to and including the day the offer was served.

[145] That is, in respect of the claim up to and including the day the offer was served.

[146] Court of Appeal's Costs Reasons, at [9].

(1) Subject to paragraph (1.1), where in a proceeding for debt or damages the plaintiff recovers by judgment or otherwise an amount (exclusive of costs) not exceeding $100,000, the plaintiff shall, unless the Court otherwise orders, be entitled only to the costs to which the plaintiff would have been entitled if the plaintiff had brought the proceeding in the County Court less an amount equal to the additional costs properly incurred by the defendant by reason of the proceeding having been brought in the Supreme Court instead of the County Court ...

[148] The Marriner parties submissions expressly acknowledge that the debt or damages recovered by judgment is taken to include damages by way of interest - see Brenner v First Artists' Management Pty Ltd [1993] VicRp 71; [1993] 2 VR 221, at 275 per Byrne J.

[149] This was the effect of s 37(2) of the County Court Act 1958 (Vic) as then applicable, and the definition of 'jurisdictional limit' in s 3. Note that the amending provisions set out in Part 2 of the Courts Legislation (Jurisdiction) Act 2006 (Vic) did not commence until 1 January 2007, being after the counterclaims had been issued.

[150] [2010] VSC 41, at [26]-[28]).

[151] Australian Super Developments Pty Ltd v Marriner & Ors (Unreported, Supreme Court of Victoria, Byrne J, 16 April 2010, at [7]).

[152] [2010] VSC 66.

[153] This sentence was revised on 22 July 2015.

[154] See remitter decision, at [380].