Boorer v HLB Mann Judd

The circumstances in which the First Offer was made 14At the time the defendant made the First Offer, the parties had engaged in discovery (by categories). 15The plaintiff had served his own affidavits dated 16 December 2010, 16 March 2011 and 30 March 2011 and an affidavit of Neville Christie sworn 30 March 2011. 16The defendant had served affidavits from the following deponents: (a) Mariana Von-Lucken sworn 11 March 2011; (b) Sven Anthony Fittler sworn 11 March 2011; (c) Bruce Rose sworn 10 March 2011; (d) Brian Dougherty sworn 8 March 2011; (e) Dennis Mattiske sworn 8 March 2011; (f) Ben Lyons sworn 22 March 2011; and (g)Cassandra Woolley sworn 24 March 2011. 17At the time of the First Offer the plaintiff knew the following: (1) The documents of retainer did not support the broad retainer of the defendant by Techontap for which the plaintiff contended; (2) At no time did the plaintiff ask the defendant to advise, warn or counsel Techontap about its solvency; (3) Techontap had not provided the defendant with the books and records needed so as to advise the plaintiff about Techontap's solvency; (4)the defendant's evidence was that the Form 484 had been submitted to ASIC on the plaintiff's express instructions; (5)the evidence that the plaintiff had given to each of ASIC and the AAT was, at least to some extent, inconsistent with the plaintiff's case against the defendant; and (6)the defendant proposed to apply for an indemnity costs order if the offer was not accepted. 18The defendant submitted that although the offer was not for a significant sum, it still represented a compromise: Prosperity Advisers Pty Ltd v Secure Enterprises Pty Ltd [2012] NSWCA 192 at [110] since on any view by the date of the offer the defendant must have incurred significant legal costs in drafting a defence, complying with its discovery obligations, reviewing the plaintiff's discovery and lay evidence and serving evidence in response. In making an offer that 'each party pay their own costs' the defendant was giving up the benefit of what would have been a significant costs order. 19The defendant submitted that the First Offer contained a genuine compromise and the plaintiff's refusal of the offer was unreasonable. 20The plaintiff submitted that the First Offer effectively required total capitulation and did not contain any element of real and genuine compromise. 21Although I accept that the First Offer contained at least a formal element of compromise, I do not consider that the amount offered, together with the defendant's offer to bear its own costs contained a real and genuine compromise. 22Furthermore although it was unreasonable, with the benefit of hindsight, for the defendant to refuse the offer, particularly having regard to the substantial amount which it could be inferred that the defendant had spent on costs when the First Offer was made, I do not consider that it is appropriate, in all the circumstances, to order the plaintiff to pay the defendant's costs on an indemnity basis from the time of the First Offer. For it to have been unreasonable for the plaintiff to have refused the First Offer, must have been unreasonable for the plaintiff to continue to pursue the proceedings. I do not consider that the amount offered was such that it was unreasonable for the plaintiff to refuse it.

The circumstances in which the Second Offer was made 23At the time the defendant made the Second Offer: (a) all evidence (both expert and lay) had long been served with the plaintiff's evidence in reply having been served by 10 April 2012; (b) the plaintiff had served the affidavit of Len King sworn 7 October 2011; (c) the defendant had incurred additional legal costs by reason of the engagement of an expert; (d) discovery had long since concluded; (e) the plaintiff had also obtained additional documents from the defendant pursuant various notices to produce, with the last documents provided to the plaintiff 18 October 2011. 24The plaintiff properly conceded in written submissions that the defendant's offer not only to pay the plaintiff $250,000 and also to bear its own costs represented a real compromise, particularly since it had incurred additional costs by reason of the engagement of an expert. 25The plaintiff opposed the alternative costs order sought by the defendant on the basis of the Second Offer on the basis that: "[the] plaintiff at that time was justified in thinking that he had good prospects of success, armed as he was with the affidavit of Len King which deposed of [sic] an admission by the defendant of wrongdoing. There was no reason for the plaintiff to apprehend that the evidence of Len King would be rejected." 26Although the plaintiff had served the affidavit of Len King, he knew that the "admissions" said to have been made by Ms Von-Lucken to which Mr King deposed were disputed by Ms Von-Lucken. The plaintiff also knew that in May 2005 Brett King had informed him that the register incorrectly recorded him as a director of Techontap and that he had done nothing about it, although he had undertaken to do so. The plaintiff knew that he had not served an affidavit from Brett King which might otherwise explain or modify the stark effect of the email exchange in May 2005. He also knew that neither ASIC nor the AAT was aware of this exchange. He ought to have appreciated that the exchange would be likely to affect his credibility. 27The plaintiff also opposed the alternative costs order sought by the defendant on the basis of the Second Offer on the basis that he had an accountant's report which was said to support his claim for over two million dollars. However, in my view, the plaintiff, of all people, knew that the level of his historical earnings did not support a claim of such magnitude. He also knew of the circumstances in which the contract between his company and the Western Australian Chamber of Commerce had come to an end. He was aware that the accountant's calculation of his damages depended entirely on the assumptions he had provided, including as to his maintainable income, which he ought to have appreciated were unreasonable. 28The plaintiff also submitted that the breadth of the defendant's retainer "was always hard-fought and was a matter that required adjudication by the Court". Although the breadth of the retainer was hard-fought, there was no real factual dispute about the documents which were sent at its commencement, or what was done by the defendant to perform it. In these circumstances, I do not consider that the plaintiff could have been in any real doubt as to the risks he was running in pursuing a claim based on a broader retainer. 29In these circumstances, I consider that it was unreasonable of the plaintiff to refuse the Second Offer, which was for a substantial sum, having regard to the plaintiff's actual historical earnings and also the risks associated with the litigation, including that Ms Von-Lucken's version of disputed conversations would be accepted.

Order 30For the foregoing reasons, I make the following orders: (1) Vacate the order made on 6 December 2012 that the plaintiff pay the defendant's costs of the proceedings. (2) The plaintiff to pay the defendant's costs of the proceedings on the ordinary basis until 10 August 2012 and then on an indemnity basis from 11 August 2012.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 December 2012