Berrigan Shire Council v Ballerini & Anor

1 Jason Ian Ballerini ("the plaintiff") sued Berrigan Shire Council ("the Council") and the Forestry Commission of New South Wales ("the Commission") in the Supreme Court for damages for injuries sustained by him when he dived from a log into an anabranch of the Murray River.[1] The log jutted out from a park managed by the Council. The anabranch was on land belonging to the Commission. The trial judge found both defendants liable and the plaintiff contributorily negligent. The plaintiff's contributory negligence was assessed at 30%. Judgment was entered for the plaintiff in the sum of $5,600,000. The division of responsibility between the defendants, in the contribution proceedings between them, was 80% to the Council and 20% to the Commission.

2 The Council and the Commission each appealed on liability and the plaintiff cross-appealed on contributory negligence. On 22nd June 2005 the Court of Appeal dismissed the Council's appeal and the plaintiff's cross-appeal but allowed the appeal by the Commission. Leave was reserved to each of the parties to make written submissions concerning costs. Each of them did so and an opportunity was later given to them to supplement those submissions following the decision in Hazeldene's Chicken Farm Pty. Ltd. v. Victorian WorkCover Authority (No. 2)[2]. In the meantime the Council sought special leave to appeal to the High Court. Special leave was refused on 16th December 2005.

3 I propose that the Court make the following further order for the reasons given below:

1. The Council is to pay the Commission's and the plaintiff's costs of the Council's appeal.

2. The Council and the plaintiff are to pay the Commission's costs of the Commission's appeal.

3. The plaintiff is to pay the Council's and the Commission's costs of his cross-appeal.

4. In lieu of paragraph 3 of the order made below[3], it is ordered -

(a) that the first defendant pay the plaintiff's costs, including any reserved costs, on a party-party basis up to and including 19th May 2004 and on a solicitor and client basis thereafter;[4] and

(b) that the plaintiff pay the second defendant's costs, including any reserved costs.

5. In lieu of paragraphs 6 and 7 of the order made below, it is ordered that there be judgment for the second defendant in the contribution proceedings between the first and second defendants and that the first defendant pay the second defendant's costs of those proceedings, including any reserved costs.

The "other matters" part of the authenticated order should record, as was done in the order made on 22nd June 2005:

"In these orders 'the Council' means Berrigan Shire Council, 'the Commission' means Forestry Commission of New South Wales and 'the plaintiff' means Jason Ian Ballerini."[5]

The Plaintiff's Calderbank letter to the Council

4 On 16th September 2004 the plaintiff's solicitors sent a Calderbank[6] letter to the Council's solicitors. The letter acknowledged receipt of the Council's notice of appeal and advised of the cross-appeal to challenge the finding of contributory negligence. If the plaintiff succeeded on the cross-appeal, the letter continued, he would achieve a verdict of $8,000,000. Independently, interest on the judgment already entered was accumulating at the rate of $12,384 per week. The plaintiff offered to resolve all proceedings between the plaintiff and the defendants by accepting a payment by them of $4,750,000 inclusive of costs and interest. In arriving at that figure, the plaintiff's solicitors estimated their costs and disbursements pursuant to the order made below to be approximately $600,000.

5 The letter stipulated that the offer would remain open for acceptance for 14 days but, at the Council's request, that deadline was later extended until 14th October 2004. The penultimate paragraph of the letter read:

"If the above offer is not accepted and the plaintiff's cross-appeal is successful, then this letter shall be used on the issue of costs with an application being made that the defendants pay our client's costs on an indemnity basis from the date of this letter in accordance with the principles applied in Calderbank v. Calderbank [1975] 3 All E.R. 333 and Cutts v. Head [1983] EWCA Civ 8; [1984] 1 All E.R. 597 and adopted in an unreported decision of Mr. Justice Byrne in the Supreme Court of Victoria on 28th April 1993 in the case of Mutual Community Limited v. Lorden Holdings Pty. Ltd. & Ors."

The offer was rejected on 19th October 2004.

6 The plaintiff originally submitted that the Council should pay his costs of the Council's appeal incurred up to and including 16th September 2004 on a party-party basis but thereafter on a solicitor and client basis. In submissions following the Hazeldene case, that was amended to costs on an indemnity basis.

7 Rule 26.12 of the Supreme Court (General Civil Procedure) Rules 2005 provides:

"26.12 (1) Where notice of appeal to the Court of Appeal has been served, a party may serve on another party an offer to compromise the appeal on the terms specified in the offer.

(2) The offer to compromise may be on terms that take into account any cross-appeal.

(3) Where on an appeal -

(a) a party has made an offer in writing to the other party (whether or not expressed to be without prejudice) to compromise the appeal on the terms specified in the offer;

(b) the offer was open to be accepted for a reasonable time, but was not accepted;

(c) the party making the offer obtains an order on the appeal no less favourable to that party than the terms of the offer -

the Court of Appeal shall take those matters, and also the stage of the appeal at which the offer was made, into account in determining what order for costs to make in respect of the appeal.

(4) The Court of Appeal may, in exercising its discretion as to costs in accordance with paragraph (3), order that the party on whom the offer was served pay the costs of the party who made the offer, taxed on a solicitor and client basis, from the commencement of the appeal, from the day the offer was served or from any other time that the Court thinks fit.

... "

8 It will be observed that Rule 26.12(4) speaks of solicitor and client costs, not costs on an indemnity basis. (The difference between the two appears from Rules 63.30 and 63.30.1.) The point was adverted to in State of Victoria v. McIver (No. 2)[7] and received further attention in the Hazeldene case, where the respondent applied for indemnity costs. Warren, C.J., Maxwell, P. and Harper, A.J.A. said[8]:

"In providing for an award of solicitor-client costs where an appeal offer has been rejected, r. 26.12(4) does not purport to exhaust the options open to the Court of Appeal in the exercise of its costs discretion. That is, this Court clearly has power to entertain the respondent's application for indemnity costs. For the future, however, we can see no justification for maintaining this difference between the rules respectively governing trial offers and appeal offers. As a matter of history, the difference appears to have been the unintended result of various rule changes. Consistently with the most recent of those changes, the rules for appeal offers should also be expressed by reference to indemnity costs." (Footnotes omitted.)

9 Directing myself in accordance with that passage and bearing in mind that the plaintiff's Calderbank letter foreshadowed an application for costs on an indemnity basis, I do not think it matters in this case that the rule refers only to costs on a solicitor and client basis. The question is whether the Council should be ordered to pay the plaintiff's costs of the Council's appeal after 16th September 2004 on an indemnity basis.

10 Some of the parties' original submissions have been overtaken by the Hazeldene case. For example, there are no preconceptions about when the rejection of a Calderbank offer should lead to the making of a special costs order.[9] The correct approach is to treat the rejection of a Calderbank offer as a matter to which the Court of Appeal should have regard when considering whether to order indemnity costs. In the end the question is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rules as to costs.[10] The test to be applied is whether the rejection of the offer was unreasonable in the circumstances.[11]

11 In my opinion it was not unreasonable for the Council to reject the offer. The letter of 16th September 2004 began by referring to the cross-appeal. The offer related to all proceedings between the plaintiff and the defendants. An application for costs on an indemnity basis was threatened if the offer was not accepted and the cross-appeal was successful. The Council correctly assessed that the cross-appeal would fail. The Council should not have to pay the plaintiff's costs of its appeal on an indemnity basis. The ordinary rule as to costs should apply.

A Bullock or Sanderson order

12 The plaintiff also submits that we should make orders to achieve the effect that the Council, rather than the plaintiff, bear the Commission's costs of the trial and of the Commission's appeal. It primarily seeks a Sanderson order[12]. Its fall back position is a Bullock order[13]. The Council concedes that it should pay the Commission's costs of the contribution proceedings below but resists the making of a Sanderson or Bullock order. The Commission submits that, if such an order is made, it should be a Bullock order.

13 There are two principal issues to be resolved. The first is whether the plaintiff's claim against the Commission was interdependent with, or in a real sense alternative to, his claim against the Council.[14] The second issue is whether it was reasonable for the plaintiff to have joined the Commission and whether the Council's conduct was such as to make it just to require the Council to pay the Commission's costs.[15] It will be apparent that that second issue sometimes involves two questions, but in truth it is a matter of convenience whether to adopt a two-step analysis or to ask a single question, namely whether it is fair, as between the plaintiff and the unsuccessful defendant, that the latter should pay the successful defendant's costs.[16] Translated into the circumstances of this case, the single question relating to the second issue would be whether it is fair, as between the plaintiff and the Council, that the Council should pay the Commission's costs.

14 Neither of those issues should be resolved in any narrow or technical way. In my opinion, both should be resolved against the Council because it denied that the log jutted out from the land it managed. The Council claimed that the whole of the exposed part of the log was located on the Commission's land, which would have meant that the Council simply managed the approaches to the boundary.[17] The Council's denial made the claims interdependent in a practical sense and made it reasonable for the plaintiff to continue the proceeding against both defendants. The judge's finding as to the location of the log was challenged in the notice of appeal. The point was not abandoned until the first day of the hearing. The Council still maintained that the accident occurred wholly on the Commission's land and that the Commission was solely responsible.[18] I would make a Bullock order in relation to the Commission's costs of both the trial and the appeal. There is no occasion for a Sanderson order, particularly as there are complications attending the Council's insurance. The other members of the Court are of a different opinion. The orders proposed in [3] above reflect their view.

The Commission's Calderbank offer to the Council

15 On 8th December 2003, before the trial, the Commission's solicitors wrote to the Council's solicitors. They said that their expert evidence indicated that the land from which the accident site was accessed was under the Council's management and control and the log was embedded in that land. Accordingly, the letter continued, if by 13th January 2004 the Council withdrew its notice of contribution against the Commission and agreed to indemnify the Commission in respect of the proceeding the Commission would be prepared to bear its own costs.[19] A warning followed that, if the offer were not accepted and the matter proceeded to judgment and the Council obtained a result no more favourable than that offered by the Commission, the letter would be produced on the question of costs. Reference was made to the same three cases as in the plaintiff's subsequent Calderbank letter to the Council.

16 The Commission originally submitted that, as the Council failed to achieve an outcome more favourable than the offer, it should pay the Commission's costs of the contribution proceedings from 13th January 2004 on a solicitor and client basis. In

submissions following the Hazeldene case, that too was amended to costs on an indemnity basis. Specifically, the Commission submits that, in lieu of paragraphs 6 and 7 of the order made below, there should be judgment for the Commission in the contribution proceedings between the Council and the Commission and that the Council should pay the Commission's costs of those proceedings, including any reserved costs, on a party-party basis up to and including 13th January 2004 and on an indemnity basis thereafter.[20]

17 I accept the Council's submission in response that the letter of 8th December 2003 was not so much an offer of compromise as a demand to capitulate and that it was reasonable for the Council not to accept it. That conclusion is reflected in paragraph 5 of the order I have proposed in [3] above.

Indemnity certificates

18 The parties' submissions also refer to indemnity certificates. In my opinion, the plaintiff and the Council should each have a certificate pursuant to s.4 of the Appeal Costs Act 1998 in respect of the Commission's appeal. The "other matters" part of the authenticated order proposed in [3] above should also record that those certificates were granted.

19 I have had the advantage of reading the draft reasons for judgment of Callaway and Nettle, JJ.A. in this matter. There are three essential costs issues that remain to be resolved in the appeal. The first is whether the plaintiff's costs of the appeal, which the Council accepts it must pay, should be taxed on an indemnity basis after 16 September 2004. I agree with the other members of the Court that, for the reasons given by them, it was not unreasonable for the Council to reject the plaintiff's Calderbank letter of 16 September 2004. In the circumstances, it follows that

it would be inappropriate to order that it pay the plaintiff's costs of the appeal on an indemnity basis.

20 The second issue relates to the Commission's Calderbank letter to the Council of 8 December 2003. As Callaway, J.A. explains, the offer in that letter was for the Commission to "walk away" - it offered to bear its own costs - if the Council withdrew, by 13 January 2004, its notice of contribution against it and indemnified it against the plaintiff's claim. That was effectively an invitation to the Council to capitulate. In the circumstances, I agree with their Honours that the Commission should not have its costs of the contribution proceeding paid on an indemnity basis.

21 On the third issue - whether a Sanderson or a Bullock order should be made in respect of the Commission's costs that are payable by the plaintiff - the difference between the views of Callaway, J.A. and Nettle, J.A. rests primarily on whether the plaintiff's claim against the Commission was relevantly interdependent with his claim against the Council and whether, in the circumstances of this case, it is fair that the Council pay the Commission's relevant costs.

22 As I understand the position, in order for the unsuccessful plaintiff to be relieved of the ordinary burden of bearing the successful defendant's costs, more must be shown than just that it was reasonable for the plaintiff to have joined such a defendant in the proceeding. It also must be established that the claim against the successful defendant was interdependent with or, in a real sense, alternative to the claim against the unsuccessful defendant and the conduct of the unsuccessful defendant was such that it would be fair to make a Sanderson or Bullock order.[21]

23 It is plain enough that it was reasonable for the plaintiff to bring the proceeding against the Council and the Commission. I think, however, that the two claims in this case are not interdependent in the relevant sense. The plaintiff

proceeded against both defendants - against the Council, in large part on the basis that it induced local people like him to use the log as a jumping off point into the river, and against the Commission, on the basis that the log protruded over its land. Thus, his case has always been that both were liable to him (and he succeeded in that claim below).

24 I also consider that the Council's conduct was not such that it would be fair for it to bear the Commission's relevant costs. It is true that the Council denied liability principally because, it said, the land from which the log protruded was not under its control but was under the control of the Commission. And it is also the case that it did not abandon that position until the first day of the trial. But I doubt that this attitude by the Council induced the plaintiff to proceed against the Commission or that it otherwise amounted to conduct that makes it just for a Sanderson or Bullock order be made against it. For the reasons given, I think that the plaintiff would have proceeded against the Commission in any event, given his claim that the log protruded over its land. In the circumstances, as I have said, I do not consider that there was anything in the Council's conduct of its case that would make it fair that it bear the Commission's costs of its defence against the plaintiff. Consequently, I would not exercise my discretion in favour of making a Sanderson or Bullock order in respect of the Commission's relevant costs.

25 On 22 June 2005 the court ordered that the appellant's (the Council's) appeal against the orders of Smith, J of 1 September 2004 be dismissed and that the first respondent's (Mr Ballerini's) cross-appeal also be dismissed but that the second respondent's (the Commission's) cross-appeal be allowed. It remains now to deal with costs.

26 The Council accepts that it is liable to pay Mr Ballerini's party/party costs of the Council's appeal and of the trial of Mr Ballerini's claim against the Council. The Council also accepts that it is liable to pay the Commission's party/party costs of the

trial of the Council's claim for contribution against the Commission. Otherwise, however, there is general disagreement as to where the liability for costs should fall and the basis on which they should be assessed.

27 Mr Ballerini seeks an order that the Council pay his costs of his appeal against the Council on an indemnity basis. The application is based on a Calderbank letter of offer which his solicitors served on the Council's solicitors on 16 September 2004 and which was rejected on 19 October 2004. The offer was in substance to resolve all proceedings between Mr Ballerini and the Council for $4,750,000 inclusive of interest and costs. The Council contends that the offer was not a reasonable offer of compromise and therefore or in any event that it would not be reasonable to require it to pay costs on an indemnity basis.

28 Mr Ballerini also seeks an order in the nature of a Sanderson order or alternatively in the nature of a Bullock order that the Council pay the Commission's costs of the trial of Mr Ballerinas' claim against the Commission or that the Council indemnify him against liability to pay those costs. The Council contends that it did not do anything in the conduct of the litigation or otherwise to warrant an order of either kind.

29 The Commission seeks an order that the Council pay its costs of the Council's appeal in respect of contribution, on an indemnity basis. That application is based on a Calderbank letter of offer which the Commission's solicitors served on the Council's solicitors on 8 December 2003 and which expired on 13 January 2004. The offer was in substance that the Commission would bear its own costs of the Council's appeal in return for the Council giving up its claim for contribution against the Commission and indemnifying the Commission against liability to Mr Ballerini. The Council contends that that offer too was not a reasonable offer of compromise and therefore or in any event that it would not be reasonable to require it to pay the Commission's costs on an indemnity basis.

Mr Ballerini's Calderbank letter to the Council

30 Mr Ballerini's Calderbank letter of offer - being "an offer to compromise the appeal" - was an offer of compromise within the meaning of Rule 26.12 of the Supreme Court (General Procedure) Rules 1996.[22] Therefore the Council's failure to accept the offer attracts the operation of Rules 26.12(3) and (4).

31 Rule 26.12(3) provides that:

(a) a party has made an offer in writing to the other party (whether or not expressed to be without prejudice) to compromise the appeal on the terms specified in the offer;

(b) the offer was open to be accepted for a reasonable time, but was not accepted; and

(c) the party making the offer obtains an order on the appeal no less favourable to that party than the terms of the offer -

the Court of Appeal shall take those matters, and also the stage of the appeal at which the offer was made, into account in determining what order for costs to make in respect of the appeal."

32 Under r.26.12(4), the Court of Appeal has power to make an order for costs on a solicitor and client basis. Such a costs order may be expressed to operate "from the commencement of the appeal, from the day the offer was served or from any other time that the Court thinks fit ". It is, however, not in issue that this court has power to entertain Mr Ballerini's application for indemnity costs. Rule 26.12(4) does not purport to exclude the options open to the court in the exercise of its discretion as to costs.[23]

33 The rejection of a Calderbank offer not later bettered by judgment does not lead automatically to an indemnity costs order in favour of the offeror. The question in each case is whether the offer was a reasonable offer of compromise, and whether the rejection of the offer was unreasonable, and the answer to that question turns in each case on all the circumstances of the case. The making of an offer and its rejection are but two albeit important circumstances to which the court will have regard in the exercise of its costs discretion.[24] As the court explained in Hazeldene's Chicken Farm:

"The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations.[25] It is neither possible nor desirable to give an exhaustive list of relevant circumstances. At the same time, a court considering a submission that the rejection of a Calderbank offer was unreasonable 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;

f) whether the offer foreshadowed an application for an indemnity costs [order] in the event of the offeree's rejecting it."[26]

34 In my judgement it was not unreasonable for the Council to refuse Mr Ballerini's Calderbank offer. At the stage of the proceedings at which the offer was made, the Council was liable to Mr Ballerini for $5.6 million with costs of approximately $600,000 (against which it had appealed and Mr Ballerini had cross-appealed) offset however by the benefit of a 30% contribution order against the Commission (against which the Commission had appealed). In the result the Council's net liability to Mr Ballerini stood at $4.75 million and in effect the only way in which that amount was likely to be increased was by Mr Ballerini succeeding in his cross-appeal against the Council or the Commission succeeding in its appeal against Mr Ballerini. The Calderbank offer did not offer the Council any safeguard against the risk of the Commission succeeding in its appeal against Mr Ballerini (or the consequent risk of less contribution from the Commission) and did not allow anything (except $600,000 costs) for the possibility that the Council might succeed in its appeal.

35 Therefore, putting to one side the $600,000 costs, the only benefit to the Council in accepting the offer was protection against the risk that Mr Ballerini might succeed in his appeal against the Council.

36 As events have turned out, Mr Ballerini did not succeed in his appeal against the Council. It follows that, apart from the $600,000 costs, he has not done better in judgment than he would have done under the Calderbank offer had it been accepted. The Council is in a worse position than it was before the appeal. But apart from the $600,000 costs, that has nothing to do with Mr Ballerini. It is because of the success of the Commission in its appeal and the consequent loss to the Council of the benefit of the order for contribution against the Commission. Since the Calderbank offer did not offer the Council any protection against that risk, it is for present purposes irrelevant.[27]

37 That leaves the issue of whether Mr Ballerini's offer to give up $600,000 costs was large enough to make a difference. I do not think that it was. On one view of the matter Mr Ballerini's willingness to give up $600,000 of costs was a substantial discount to settle, even as against an aggregate of claim and costs of more than $5.6 million, and therefore a reasonable offer. In some cases, refusal of an offer of that kind could well result in an indemnity costs order.[28] But, as has been seen, each case turns on its own facts and the question is not to be judged only by reference to the reasonableness of the offer but also by reference to the reasonableness of the refusal of the offer. The exercise of discretion turns on an assessment of what is fair and reasonable in all the circumstances of the case and, in the circumstances of this case, I do not think that it would be fair or reasonable to burden the Council with an indemnity costs order. It is true, as Mr Ballerini contends in his further written submissions as to costs, that few of the facts on which the Council's liability depends were hardly ever in doubt. In particular, it was never really in doubt in the appeal that the log from which Mr Ballerini dived so as to be injured was within a park under the management and control of the Council and that it was known or should have been known by the Council that the log was popular as a diving board. But in this litigation, as in so much other similar litigation in recent times, the real issue was never so much the facts as the legal consequences of the facts and, as the course of recent high authority tends to show, that is rarely certain until the case is finally determined.[29] Judged at the time of the offer, and as it were in advance of some recent authorities, the prospects of the Council succeeding might well have been thought to be reasonable.

The Commission's Calderbank offer to the Council

38 The Commission's application for an indemnity costs order as against the Council may be dealt with more briefly. In substance the offer was that the Commission would bear its own costs of the appeal if the Council would give up the benefit of its judgment (for contribution of 30%) against the Commission and indemnify the Commission against Mr Ballerini's claims against the Commission (which included a claim to have reduced the percentage of contributory negligence determined against him at trial). In effect it was an offer to walk away in return for the Council agreeing to give up against Mr Ballerini and protect the Commission from him.

39 In Transport Accident Commission v Coyle [30] this court left open the possibility that an offer to compromise which offers no discount at all on the offeror's claim may still lead to the infliction of the costs penalty provided for in s.112 of the Victorian Civil and Administrative Tribunal Act 1998. But the position here is not constrained by the considerations which operate under that section. The position here depends upon more general conceptions of what is fair and reasonable. Accordingly, even if the Commission's offer had been one for the Council to agree to give up without indemnifying the Commission, I should have doubted that it was any sort of basis for an indemnity costs order. Given the requirement for indemnity, I do not see how the refusal of the offer could ever be thought of as likely to attract an order of that kind.

Mr Ballerini's claim for Sanderson or Bullock order

40 The conditions for a Sanderson or Bullock order were recently restated by this court in State of Victoria v Horvath (No2).[31] As Vincent, J.A., with whom Winneke, P. and Chernov, J.A. agreed, put it:

"In general terms, a plaintiff who seeks to have the losing defendant pay the costs of the successful defendant pursuant to a Bullock or a Sanderson order must establish that, in the circumstances of the case, it would be reasonable and just for such an order to be made - see for example, Sanderso__n, Rei__d and Gould v. Vaggelas. Additionally, a court will ordinarily not make such an order unless a number of requirements are satisfied. For example, a costs order in the Bullock or Sanderson form will not be made if the plaintiffs' claims against the two or more defendants are not interdependent or are not, in essence, alternative claims. Thus, for example, in Norwest Refrigeration Services Pty. Ltd. v. Bain Dawes (W.A.) Pty. Ltd., the majority refused to make a Bullock order requiring the unsuccessful defendant (the Co-operative) to indemnify the plaintiff against the costs it was required to pay to the successful defendant (the insurer). Their Honours considered that the plaintiff's unsuccessful claim on the policy was "a straightforward action which was not interdependent with or in any real sense alternative to the claim against the Co-operative." See also in this regard Bankamerica. ...

If that requirement is satisfied, a plaintiff who seeks a Bullock or a Sanderson order must also ordinarily show that it was reasonable for him to have joined the successful defendant and that the conduct of the unsuccessful defendant was such as to make it just to require him to indemnify the successful defendant..." [32]

41 In short an order will not ordinarily be made unless:

(a) the plaintiff's claims against the two defendants are interdependent or essentially alternative claims; and

(b) it is reasonable for the plaintiff to have joined the successful defendant and the conduct of the unsuccessful defendant has been such as to make the order just.

42 I do not consider that either of those conditions is satisfied in this case. As the Council submits, Mr Ballerini's claims against the Council and the Commission were not interdependent or alternative in the relevant sense. Mr Ballerini claimed to be entitled to recover against each defendant under individual duties of care which each was said to have owed him. The only interdependence between the claims was that some of the facts relied upon to establish liability against the Council were also relied upon to establish liability against the Commission. It was never a case of one or the other but not both being liable and indeed at trial Mr Ballerini recovered judgment against both, in each case for the amount of his claim less a percentage for contributory negligence.

43 Just as importantly, although the Council denied that it was liable to Mr Ballerini and alleged that, if anyone were liable, it was the Commission, it can hardly be doubted that Mr Ballerini would have joined the Commission regardless of the Council's allegations. It is true that the Council denied that the log emanated from its land, and it contended that it could not be liable unless it were demonstrated that the log did emanate from its land. And it is true that it was found at trial that the log did emanate from its land. But the Council also denied liability on the basis that, even if the log emanated from its land, Mr Ballerini's injuries did not occur on its land but on or over the land of the Commission. Faced with such an argument, it was more or less inevitable that Mr Ballerini would have to join the Commission.

44 Ultimately, the argument failed, but not as a matter of fact. Rather, it was upon the basis that the Council had so exercised its powers of control and management over its land as to attract people to use the log for diving. There was nothing about the argument which could have misled Mr Ballerini on the facts, or otherwise induced Mr Ballerini to believe that he had a case in fact against the Commission that he did not have and, inasmuch as Mr Ballerini's advisers were as able as the Council to interpret the law, nothing which the Council said on the law should have been or so far as one knows was relied on by Mr Ballerini. Nor is there anything else said about the conduct of the Council which would make it fair that the Council bear the Commission's costs of successfully defending Mr Ballerini's claim.

Conclusion and orders

45 For the reasons given, I see no reason to depart from the orders as to costs which were proposed by Callaway, J.A. on 22 June 2005.

[1] The parties are so described in the order made by the Court of Appeal on 22nd June 2005.

[2] [2005] VSCA 298.

[3] Paragraphs 3, 6 and 7 of that order have already been set aside by the order made by the Court of Appeal on 22nd June 2005.

[4] This order reflects the order below. The provision for solicitor and client costs is unrelated to the issues of solicitor and client costs and costs on an indemnity basis considered later in these reasons.

[5] See also [18] below.

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

[7] [2005] VSCA 126 at fn. 4.

[8] At [13].

[9] At [19].

[10] At [20].

[11] At [23]. Their Honours went on to point out that reasonableness always involves matters of judgment and impression and to provide a non-exhaustive list of factors to which the Court should ordinarily have regard in considering whether the rejection of a Calderbank offer was unreasonable.

[12] Sanderson v. Blyth Theatre Co. [1903] 2 K.B. 533.

[13] Bullock v. London General Omnibus Co. [1907] 1 K.B. 264.

[14] Norwest Refrigeration Services Pty. Ltd. v. Bain Dawes (W.A.) Pty Ltd. [1984] HCA 59; (1984) 157 C.L.R. 149 at 163; State of Victoria v. Horvath (No. 2) [2003] VSCA 24 at [9].

[15] Gould v. Vaggelas [1984] HCA 68; (1985) 157 C.L.R. 215 at 229 - 230; State of Victoria v. Horvath (No. 2) at [10].

[16] McCracken & McCracken v. Pippett [2000] VSCA 20 at [11]; State of Victoria v. Horvath (No. 2) at [10].

[17] Each defendant conceded at trial that, if the log emanated from land under its control or management, it owed a duty of care to the plaintiff and denied owing such a duty if the log did not emanate from its land: Ballerini v. Shire of Berrigan [2004] VSC 321 at [12].

[18] Compare Altamura v. Victorian Railway Commissioners [1974] VicRp 4; [1974] V.R. 33.

[19] The Commission's further submissions dated 6th February 2006 interpret that to mean its own costs to that time.

[20] Compare Rule 26.08.

[21] See State of Victoria v. Horvath (No.2) [2003] VSCA 24 at [9]; McCracken & McCracken v. Pippett [2000] VSCA 20 at [9]- [11] per Callaway, J.A.; Norwest Refrigeration Services Pty Ltd v. Bain Dawes (W.A.) Pty Ltd [1984] HCA 59; (1984) 157 C.L.R. 149 per Gibbs, C.J., Mason, Wilson and Dawson, JJ. and Gould v. Vaggelas [1984] HCA 68; (1984) 157 C.L.R. 215 at 230 per Gibbs, C. J.

[22] Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298 at [10].

[23] Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority [2005] VSCA 298 at [12].

[24] See, for example, Jones v Bradley (No. 2) [2003] NSWCA 258 at [7]- [9] ; MGICA (1992) Pty. Ltd. v Kenny & Good Pty Ltd. (No. 2) (1996) 70 F.C.R. 236 at 238-9; PCRZ Investments Pty Limited v National Golf Holdings Limited [2002] VSCA 24 at [33], per Chernov, J.A.; Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority [2005] VSCA 298 at [23]- [25].

[25] See House v R [1936] HCA 40; (1936) 55 CLR 499 at 505.

[26] [2005] VSCA 298 at [25].

[27] See and compare SMEC Testing Services Pty Limited v Campbelltown City Council [2000] NSWCA 323 at [26] and [47]-[48].

[28] cf. Tickell v Trifleska Pty Ltd (1990) 25 N.S.W.L.R. 353 at 355; Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 N.S.W.L.R. 358 at 369.

[29] See Swain v Waverley Municipal Council [2005] HCA 4; (2005) 220 C.L.R. 517; Waterways Authority v Fitzgibbon; Mosman Municipal Council v Fitzgibbon; Middle Harbour Yacht Club v Fitzgibbon [2005] HCA 57; (2005) 79 A.L.J.R. 1816, 221 A.L.R. 402; Vairy v Wyong Shire Council [2005] HCA 62; (2005) 80 A.L.J.R. 1, 221 A.L.R. 711; Mulligan v Coffs Harbour City Council [2005] HCA 63; (2005) 80 A.L.J.R. 43, 221 A.L.R. 764.

[30] [2001] VSCA 236; (2001) 3 V.R. 589 at 597 [24].

[31] [2003] VSCA 24.

[32] [2003] VSCA 24 at [9], citations omitted; see also McCracken & McCracken v Pippett [2000] VSCA 20 at[10] and [11], per Callaway, J.A.