Resolution
16The matter which fundamentally informs my decision on this question is that, as is clear from the statement of claim, at all times from the commencement of the proceedings Brian's case was primarily and overwhelmingly one under the Act. This meant the main issue was always whether the agreement, transfer and lease were relevantly unjust. That did not change. The claim for a life tenancy was clearly in the alternative.
17Brian accepts that the Offer involved an element of compromise by Mark. Brian's submissions, with respect, correctly identified that the central issue for my consideration was whether his rejection of the Offer was unreasonable in all the circumstances at the time the Offer was made.
18The starting point of this analysis must be that it will not be unreasonable to reject an offer that is itself unreasonable. I find that the Offer was reasonable both in its terms and as to the period for which it was open. I consider that the proposed payment of $30,000 demonstrated not only an element of compromise but was, in and of itself, a reasonable offer in circumstances where Brian had not articulated at the time of the Offer (either in the statement of claim or otherwise) the precise relief he would be seeking under the Act, monetary or otherwise. That did not come until the first day of the hearing.
19The Court of Appeal in Gretton at [15] recorded the trial judge in that case as having identified three circumstances when rejection of an offer might be considered unreasonable: if no proper consideration was given to the offer; if the plaintiff could not reasonably hope to match the offer by proceeding to a hearing; or if rejection of the offer involved disregarding serious problems confronting the plaintiff in establishing liability. While that list is not exhaustive, it provides, with respect, some useful guidelines.
20I accept Mark's submission that it was unreasonable of Brian to reject the Offer because the basic elements of his case at the time of the Offer were the same as at hearing, namely the claim under the Act. The Offer put Brian's entitlement to relief under the Act squarely in issue. To adopt the language of the trial judge in Gretton, the effect of Mark's submission is that the rejection of the Offer involved disregarding serious problems confronting Brian in establishing liability. In my view, that is correct. Those problems were present at the time of the Offer and it is not an impermissible exercise of hindsight from what in fact occurred to conclude objectively that those problems should have been apparent and taken into account at the time the Offer was rejected.
21I should make clear that the conclusion I have reached is an objective one. It does not involve, and is not the product of, subjective analysis or criticism of the decision taken on behalf of Brian not to accept the Offer. There is nothing before me to suggest that the Offer was not given proper consideration.
22The problems relate to both how Brian was going to have his evidence admitted and, even if it was admitted, whether it was sufficient to make out his claim under the Act. In relation to the former, at the time of the Offer there is no doubt that those advising Brian intended to apply for his written evidence to be admitted under an exception to the hearsay rule because he was not mentally competent to give evidence. However, in circumstances where at the time of the Offer the parties' evidence was largely filed, no medical evidence had been filed for Brian supporting that proposition. In the absence of such evidence there would or should have been a real issue in the minds of Brian's advisers as to his whether or not his evidence would ultimately be admitted.
23There was also the problem that faced Brian even if his evidence were to be admitted. If his evidence was admitted in circumstances where he was unavailable for cross-examination, it must or should have been anticipated that there would be a serious question as to the weight of that evidence when compared to contemporary documents. This had to be particularly so when it was no part of Brian's case that he did not understand that the Property was being sold at a considerable under value and that his own version of events did not suggest any improper pressure being applied to him by Mark.
24Insofar as some consideration may have been given to the allegation that Mark had told Brian that it was not possible to grant more than a seven year lease, that case was arguably contradicted, and certainly not supported by, RBS's contemporary correspondence in relation to the transaction (see especially RBS's letter of 23 December 2003 addressed to both Brian and Mark referred to in paragraph 96 of the principal judgment).
25In summary, at the time of the Offer Brian's side of the record was or ought to have been aware of the evidentiary problems confronting Brian in making out his main case under the Act. Those problems cast real doubts over whether his evidence would be admitted at all and, even if it was admitted, whether in its terms that evidence would assist his case, even if it was given weight. RBS's contemporary correspondence was unhelpful to the case Brian wanted to advance. Approaching the matter objectively having regard to the circumstances that were known or which ought to have been known to the parties at the time the Offer was made, in particular what was known or ought to have been known by Brian's side, I am satisfied that it was unreasonable for Brian not to have accepted the Offer.
26None of the three main arguments put on behalf of Brian dissuade me from the conclusion I have reached. I will deal with each argument in turn.
27Brian submitted that none of the arguments raised in the Offer were in fact arguments which the Court decided in Mark's favour. In the circumstances of this case where the fundamental nature of Brian's claim did not change between the time of the Offer and the hearing, I do not think this is relevant.
28Not all Calderbank letters include reasons as to why they should be accepted. However, parties sometimes include reasons to fortify their submission of unreasonable refusal if the offeror succeeds for some or all of the reasons set out in the Calderbank letter. That is legitimate and will usually be relevant to the question of whether refusal of the offer was unreasonable. However, I am not persuaded that in all cases a submission of unreasonable refusal is necessarily neutralised where an offeror succeeds for reasons other than those that were proffered in the Calderbank letter. That fact will simply be one of the circumstances which the Court should take into account.
29In this case the Offer does touch on matters which the Court found persuasive, albeit in a slightly different context to how it was deployed in the Offer, e.g. the reasons given for why a claim in undue influence would not succeed. Those reasons capture some of the facts which were at the heart of my conclusion that Brian's claim under the Act failed, namely the lack of predatory or colourable conduct by Mark. However, in the present case the fact that Mark succeeded for reasons different to those dealt with in the Offer is in my assessment irrelevant or neutral, having regard to the fact that at all times Brian's case remained one primarily for relief under the Act.
30Brian's second major submission was that the case had changed by the time it came to trial so that some of the matters relied on in the Offer were overtaken by events and never had to be considered. Undoubtedly there will be cases where that consideration is highly relevant. For a Calderbank offer to be able rationally to affect the exercise of the discretion to displace the usual consequence of the costs following the event and being assessed on the ordinary basis, the event the subject of the Calderbank letter must be substantially the same as the event constituted by the issues at the hearing. That nexus will be broken for the purposes of determining whether a refusal was unreasonable if the issues in or shape of the case at the time of a Calderbank offer are materially different to those which ultimately were the subject of the hearing.
31I do not think that consideration is applicable in the present case for two reasons. First, as I have already said, the fundamental nature of Brian's case as being one for relief under the Act never changed. Second, insofar as some issues fell away, the cause of that was Brian finally articulating at the hearing (and not before) with precision how his case was put and precisely what relief was sought under the Act. Mark (correctly in my view) then recognised that the limitation defence should not be pressed, which had the further consequence of Brian not pressing his alternative claim for a life tenancy. The fact that Brian was able to attend for cross-examination seems to have come as a surprise to everybody and therefore should not weigh in anyone's favour for the purposes of the present application.
32Finally, Brian submitted that if Mark's solicitor client costs exceed $15,000.00 (which I assume for the sake of the argument must be so), the application is futile as a practical matter because the maximum Mark can recover under the Legal Aid guidelines is $15,000.00. Whether a party will or will not recover all or any of the costs ordered in its favour will rarely, if ever, be a factor relevant to the exercise of the Court's discretion in relation to costs, including the basis on which those costs should be assessed. Entitlement to a particular costs order is quite different to actually recovering those costs.
33Because costs are discretionary and the circumstances in which the discretion is to be exercised are innumerably various, I do not go so far as to say the prospect of recovery will never be relevant to the exercise of the discretion. However, I do not see any reason why that consideration should have any application to the present case. While it is unclear whether the effect of Brian's submission goes so far, I should also record my view that the fact that the subject of a costs order is legally aided and that the amount of costs recoverable are therefore capped are matters which, in and of themselves, do not disentitle the successful opponent from an order for indemnity costs if it is otherwise appropriate.
34Finally, as the Offer was expressed to be open for acceptance up to and including 23 April 2013, it is appropriate that Brian's liability for Mark's costs on the indemnity basis should commence from the next day.