Ciccone v Ark Projects Pty Ltd [1999] VSC 122

Supreme Court of Victoria|1999-04-23|Before: Hansen J.

SALE OF LAND - Relief in favour of vendor who rescinded - Damages - Interest. COSTS - Whether on solicitor and client basis.

On 31 March I gave judgment for Ark in its proceeding and for the defendants in Mr and Mrs Ciccones' proceeding. I concluded my judgment by saying that I would hear counsel as to the damages to be awarded in Ark's proceeding and as to the costs of the proceedings. To recapitulate, by a contract of sale dated 4 March 1995 Mr and Mrs Ciccone agreed to purchase from Ark Projects Pty Ltd the vacant land at 77-79 Rufus Street, Epping, for $225,000 payable as to $22,500 by way of deposit on that day and the balance on 3 May 1995. Stockdale and Leggo acted as agents for Ark on the sale and had conducted an auction of the property on 4 March 1995 following which Mr and Mrs Ciccone agreed to purchase the property and signed the contract.

Mr and Mrs Ciccone did not pay the deposit. On 17 March 1995 Ark commenced a proceeding in the Magistrates' Court for the recovery of the unpaid deposit and interest thereon at the rate provided in the contract of 17.2% per annum. On 28 April 1995 Mr and Mrs Ciccone filed a defence in which they alleged that the contract was null and void. They have at all times sought to avoid liability under the contract.

On 30 June 1995 Mr and Mrs Ciccone commenced a proceeding in this Court against Ark and Stockdale and Leggo. On the same day Mr and Mrs Ciccone's solicitors referred the Magistrates' Court proceeding to the Designated Judicial Officer under the Courts (Case Transfer) Act 1991 as a proceeding which is or may be suitable to transfer to the Supreme Court under Part 3 of that Act. I refer to the result of this reference below but first mention the relief claimed by Mr and Mrs Ciccone in their proceeding in the Supreme Court.

As against Ark the relief claimed by Mr and Mrs Ciccone is declaratory to the effect that the contract is void and should be avoided, damages at common law or under s.82 of the Trade Practices Act or s.37 of the Fair Trading Act. As against Stockdale and Leggo the relief claimed is contribution in respect of any sum including costs that Ark may recover in its proceeding or declarations as to the contract being void or voidable, and the like claim for damages as is made against Ark. In the statement of claim the damages were particularised as follows: it was alleged (in para 36) that Stockdale and Leggo had caused Ark the same damage as Ark alleges against Mr and Mrs Ciccone and seeks to recover in its proceeding; as against both Ark and Stockdale and Leggo the loss and damage of Mr and Mrs Ciccone is alleged to be their liability (if any) to Ark for "damages, interest and costs".

Still Mr and Mrs Ciccone did not pay the deposit or honour their obligations under the contract. Their proceeding in this Court manifested an intention not to be bound by the contract.

On 27 September 1995 Ark, by letter from its solicitors, accepted Mr and Mrs Ciccone's repudiation of their obligations and rescinded the contract.

Ark then attempted to resell the property but an auction held on 21 October 1995 was unsuccessful. The property was passed in without a genuine bid. The property was ultimately sold by a contract of sale dated 24 December 1996 for $180,000 payable as to 10% by way of deposit and the balance on 24 March 1997. Settlement under the contract occurred on 9 April 1997.

On 13 November 1995 the Registrar of the Magistrates' Court ordered that Ark's proceeding be transferred to the Supreme Court pursuant to s.21 (1) of the Courts (Case Transfer) Act. By letter dated 27 December 1995 the Prothonotary advised Mr and Mrs Ciccones' solicitors that Ark's proceeding had been transferred.

On 23 February 1998 Ark filed an amended statement of claim in its proceeding. After pleading the relevant factual matters, Ark alleged that pursuant to the contract Mr and Mrs Ciccone remained indebted to Ark for the deposit of $22,500 together with interest thereon at 17.2% from 4 March until 27 September 1995 and interest on the balance of the purchase money at 17.2% from 3 May to 27 September 1995. In the next paragraph of the pleading it was alleged that Ark had suffered loss and damage which was particularised as being:

2. Interest on the deposit at 17.2% from 4 March until 27 September 1995: $2,158.

3. Interest on the balance of purchase price from 3 May until 27 September 1995: $13,396.

4. The difference between the sale price of $225,000 and $175,000 being the value as at 19 October 1995, namely $50,000 less the deposit: $27,500.

6. Cost of valuation of land on 19 October 1995: $700.

8. Interest from 27 September 1995 until judgment.

In the prayer for relief the amounts in 1 - 3 were claimed as specific sums due while the amounts in 4 - 8 were claimed as damages.

I concluded in favour of Ark and Stockdale and Leggo as against Mr and Mrs Ciccone whose case is to be dismissed. As mentioned, I now have to determine the damages to which Ark is entitled and questions of costs. Before doing so there is one matter I wish to mention.

The proceedings were fixed for trial on all issues. The trial spanned six days. In his final address counsel for Mr and Mrs Ciccone made submissions on Ark's damages. Counsel for Ark followed but he did not address on his client's damages. The failure to do so resulted in me not dealing with damages in my judgment. I thought that I should not do so. I did not wish there to be any unfairness to Ark on the matter of damages. Thus I had to put over resolution of that issue. In the result there has been an additional appearance with submissions on damages with attendant extra costs and the necessity for a further judgment on the matter of relief. Of course costs also had to be dealt with. The point is that counsel must do what they can to shorten proceedings and keep costs to a minimum. If in final address counsel for Ark had addressed on all issues of liability and quantum I could have dealt with all those issues in the one judgment, leaving only the matter of costs for submission. Legal practitioners should not think that it is appropriate to defer submissions on the matter of relief without the prior concurrence of the judge and without considering what is appropriate from the point of view of their client and the court in terms of the efficient and economic disposal of a proceeding.

I now turn to the submissions on relief. Ark seeks judgment for the amount of the deposit ($22,500) as a liquidated amount that is due and payable under the contract: Bot v Ristevski [1981] VicRp 13; [1981] VR 120. Counsel for Ark seeks a separate judgment for this amount whereas counsel for Mr and Mrs Ciccone include it within the amount of Ark's loss on the resale. The discussion of Ockenden v Henly (1858) EB and E 485; [1858] EngR 757; 120 ER 590, in Bot at 126-127, indicates the former as the correct approach. That is because there is a distinction drawn between the deposit which fell due for payment prior to discharge of the contract and for which the defaulting purchasers remain indebted, and a claim for unliquidated damages upon the discharge of the contract by recession of the innocent vendor. On that basis there would be judgment for the amount of the deposit and damages.

The difference on resale is the difference between the sale price of $225,000 and the resale price of $180,000. That difference is $45,000. The value of the property at the date of discharge of the contract (27 September 1995) was not agitated in the evidence at trial and is to be taken in my view at the same amount of $180,000. The valuer whom Ark engaged (see judgment at para 17) reported on 19 October 1995 that the value of the property was between $175,000 and $182,000. That was admitted by counsel for Mr and Mrs Ciccone and in consequence counsel for Ark did not call the valuer and his report did not go into evidence. The mid-point between these figures is $178,500 which is only $1,500 short of $180,000 which in my view, as an approximate figure, is properly to be taken as the value of the property at the time only a few weeks before when the contract was discharged. In view of the way the trial was conducted, if any genuine point existed as to the value of the property at the date of discharge I would have permitted Ark to reopen its case to call the valuer and I could then make a finding on the evidence thus given. I would still do so. For these reasons the amount of $45,000 was the short fall on the sale price at the date of discharge and the date of resale. Of course that includes the amount of the deposit of $22,500.

Mr and Mrs Ciccone seek interest on the amount of the deposit from 4 March 1995 (the date of the contract) until 27 September 1995 (the date of discharge) under condition 4 of Table A as varied by special condition 9 of the contract of sale. As varied the rate of interest is 17.2%. Whether or not interest commenced on 4 March or 17 March on which latter date Ark commenced its proceeding in the Magistrates' Court and made its demand for the deposit and interest, counsel were agreed on a figure of $2,158.

Counsel were also agreed on $14,027 as the figure for interest on the balance of the purchase price ($202,500 after allowing for the deposit) from 3 May 1995 (the date of settlement) to 27 September 1995.

Then, there is agreement as to the allowance of the following expenses incurred by Ark: outgoings $587, valuation fees $700, and agent's commission and expenses $5,760. These amounts total $7,047.

The final amount claimed by Ark in its statement of claim was interest from 27 September 1995 until judgment at the rate prescribed by the Penalty Interest Rates Act 1983. The date of discharge is ordinarily the date at which Ark's loss would be ascertained: see Victorian Economic Development Corporation v Clovervale Pty Ltd [1992] VicRp 40; [1992] 1 VR 596 at 604.

(a) Under s.60(1) of the Supreme Court Act 1986, as damages in the nature of interest on:

(i) The resale price of $180,000 from 27 September 1995 until payment of the deposit of $18,000 on the resale (24 December 1996) at 13.2%: $29,553.

(ii) The balance of purchase price on the resale ($162,000) from 24 December 1996 until settlement on the resale ( 9 April 1967): $6,151.

(b) Under s.58(1) of the Supreme Court Act, on the unpaid deposit of $22,500 from 27 September 1995 until judgment, which at 9 April 1999 was $10,276.

In my view the latter claim for interest on the unpaid deposit, liability for which is in the nature of a debt, is properly made and should be allowed. I think that regarding the statement of claim overall, it is clear that the amount was claimed as a liquidated sum in contradistinction to the claim for damages.

The question is whether the former claim for interest is to be allowed.

What has been allowed thus far is interest up to the date of discharge (27 September 1995) and since then on the deposit of $22,500. If one was to simply regard the matter at that date and put interest aside for the moment the loss which Ark had suffered is:

amount payable under contract $225,000 less the deposit of $22,500 for which there will be judgment and is thus treated as recovered

Of course there are the other amounts totalling $7,047. Ark does not separately seek interest upon the amounts which make up the $7,047. In that regard I note that Ark has not paid the amount of $5,760 owed by it to Stockdale and Leggo. However, to this point interest has been allowed only to 27 September 1995 on the sale price including the deposit. Putting aside the deposit and related interest, the issue now is as to an allowance for interest or damages in the nature of interest from 27 September 1995 to allow for Ark's loss. As stated, interest is sought under s.60 (1) of the Supreme Court Act which provides that the Court, on application in a proceeding for the recovery of debt or damages, must, unless good cause is shown to the contrary, give damages in the nature of interest. The rate of interest is not exceeding that prescribed under the Penalty Interest Rates Act as the Court thinks fit from the commencement of the proceeding to judgment over and above the debt or damages awarded.

Counsel for Mr and Mrs Ciccone submitted that no such interest could be allowed because it would represent damages for loss of money when Ark gave no evidence in its case about the use to which it may have put any money. He also submitted that the interest claimed was well in excess of market rates.

It is correct that Ark did not lead evidence to establish any particular lost opportunity in use of the sale proceeds. In Clarke v Foodland Stores Pty Ltd [1993] VicRp 81; [1993] 2 VR 382 at 396, it was said by the Full Court in relation to s.58(1) of the Supreme Court Act that the purpose of the section:

". . . is to compensate the plaintiff for being kept out of his money, although not because he has on that account lost the opportunity to invest it, but because he has thereby been deprived of its use."

The same consideration applies in relation to an award of damages in the nature of interest. In my view Ark is entitled to interest on this account as it has claimed.

I do not overlook that counsel for Mr and Mrs Ciccone submitted that the interest claimed was well in excess of market rates. I have no evidence as to that. There is of course the rate under the contract of 17.2% which is much more than the rate under the Penalty Interest Rates Act. There is no material before me on which I could conclude that a rate any different or other than that which is prescribed under that Act should be allowed as appropriate in the circumstances of this case and having now had a trial on liability and further submissions on the matter of relief I do not think it appropriate to order an inquiry. I will allow interest at the rate under the Penalty Interest Rates Act as sought. In my view it is appropriate to do so.

On this basis Ark is entitled to judgment for $103,936 together with interest on the deposit until judgment. That interest is $10,276 to 9 April and must now be calculated to this date.

I now turn to the matter of costs. There is a wide divergence between counsel on this issue.

Counsel for Ark seeks costs on a solicitor and client basis on the Supreme Court scale. In support of that submission counsel relied on the following matters which are partly fact and partly contention: that in its proceeding commenced in the Magistrates' Court on 17 March Ark had claimed only the deposit and interest; that Mr and Mrs Ciccone filed a defence but not a counterclaim in that proceeding; that Mr and Mrs Ciccone issued in the Supreme Court seeking relief which essentially was to escape liability under the contract and which they could have sought in the Magistrates' Court - further, their claim for damages was quantified only as I have described it; it was only after Ark's proceeding had been uplifted to the Supreme Court that Ark amended its claim to seek the wider relief it has now recovered upon; and that once Ark's claim had been transferred to the Supreme Court it could not be transferred again (s.23 of the Courts Case Transfer) Act. I should add that counsel also seeks the costs of the contribution proceeding which Ark brought against Stockdale and Leggo in Mr and Mrs Ciccone's case. This claim for contribution, and a like claim by Stockdale and Leggo against Ark, was made by a simple notice in which contribution was claimed under the Wrongs Act, s.23B.

I can immediately dispose of the point that the proceeding could not be transferred again. That is incorrect, as a transfer could have been effected under Part 6 of Act: see s.30 and s.32.

Stockdale and Leggo was involved as the second defendant to Mr and Mrs Ciccone's claim. On 23 October 1997 its solicitors wrote to Mr and Mrs Ciccone's then solicitors and put an offer that if Mr and Mrs Ciccone "will discontinue the Supreme Court proceedings against [Stockdale and Leggo] it will agree to bear its costs to date of the proceedings". The offer was stated to be open to be accepted by 7 November 1997. It was stated that if Stockdale and Leggo were successful in defending the claim the letter would be produced on the question of costs and Stockdale and Leggo would seek solicitor and client costs against Mr and Mrs Ciccone in accordance with the principles laid down in Calderbank v Calderbank [1975] 3 All ER 333, and Cutts v. Head [1983] EWCA Civ 8; [1984] 1 All ER 597, and adopted by Byrne J in Mutual Community Limited v Lorden Holdings Pty Ltd (Supreme Court of Victoria, 23 April 1993, unreported). The letter requested advice of Mr and Mrs Ciccone's attitude by 7 November 1997. The offer was not accepted and the case rolled on.

Counsel for Stockdale and Leggo submitted that while in the normal course a letter such as this might found an order for solicitor and client costs from the date until which it was open for acceptance, in the circumstances of the present case the order should be made from the commencement of the proceeding. He based this submission on the fact that the case of Mr and Mrs Ciccone had failed at so many points in the evidence. That is to say, on so many points I preferred the evidence of other witnesses to their evidence. He submitted that I could regard their case as one that had been improperly brought. See Colgate Palmolive Co. v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 at 233 - 234.

As against these submissions counsel for Mr and Mrs Ciccone, who have entirely failed in the proceedings, presented a range of submissions.

The first submission was that as Ark's damages were less than $100,000 rule 63.24(1) of the Supreme Court Rules is applicable. Assuming for the moment that the rule is applicable, then, unless the Court otherwise orders, Ark is entitled only to the costs to which it would have been entitled if it had brought its proceeding in the County Court less an amount equal to the additional costs properly incurred by Mr and Mrs Ciccone by reason of the proceeding having been brought in the Supreme Court. For several reasons, this submission is not soundly based.

First, the fact is that Ark has recovered an amount which exceeds one-half of the amount to which the jurisdiction of the County Court is limited. For this reason rule 63.24(1) does not apply.

Secondly, para (4) of rule 63.24 provides that para (1) does not apply to a proceeding commenced in another Court and transferred to the Supreme Court under the Courts (Case Transfer) Act. For this reason too rule 63.24 (1) does not apply. I note that although counsel for Mr and Mrs Ciccone referred to rule 63.24(4) in his written submissions he did not state why or how, in the face of para (4), para (1) was applicable.

I should add that even if para (1) had been applicable I would have regarded this as a case in which the Court should "otherwise order" Supreme Court costs. We are here of course talking about the proceeding brought by Ark, and not the proceeding brought by Mr and Mrs Ciccone. The reason why I would otherwise order is found in the history of the proceedings. Ark had a proceeding in the Magistrates' Court for the recovery of the deposit and interest. It was a simple debt claim. Mr and Mrs Ciccone filed a defence to that claim. They did not file a counter claim. Just over two months later on 30 June 1995 Mr and Mrs Ciccone commenced their proceeding in the Supreme Court. The relief was declaratory and for damages. At the same time they instituted the process of referral of Ark's claim to the Supreme Court. They did that without counterclaiming in the Magistrates' Court proceeding or seeking any necessary consent to having the parties' differences resolved in the Magistrates' Court or the County Court. Ark never sought to be litigating in the Supreme Court, but in November 1995 an order was made that its case be transferred to the Supreme Court. In this period, on 27 September 1995 to be precise, Ark rescinded the contract. The discharge of the contract meant that in law Ark's entitlement then was to the deposit and damages for breach. In other words, although Ark did not amend to formulate its claim in this way until February 1998, the claim as it then came to be by amendment was readily to be anticipated. Of course, the fact of the resale and that the total claim was then within the jurisdiction of the County Court was not known until it happened, but these were foreseeable events. In the meantime the two proceedings were in the Supreme Court, Ark's as a result of Mr and Mrs Ciccone's endeavours.

It was reasonable that Ark did not move to have both proceedings transferred to the County Court under s.30 of the Courts (Case Transfer) Act. After all, Ark had been brought into the Supreme Court at the instigation of Mr and Mrs Ciccone and, as well, it had, as I have concluded, a claim which with interest has come to exceed one-half of the amount that was recoverable in the County Court. The greater unreasonableness lies with Mr and Mrs Ciccone in my view. They could have reviewed the case and at one time or another sought a transfer of the proceedings to the County Court. Not having done so, and having created the situation as it were, it hardly lies in their mouth to lay the blame for Supreme Court costs at the feet of Ark.

The submission of counsel for Mr and Mrs Ciccone was that Ark's case was not attended by complexity such as would warrant it proceeding in the Supreme Court. Indeed in my judgment I described Ark's case as straightforward. So, too, was Mr and Mrs Ciccone's case. Counsel then submitted that there was no reason why Ark's case could not have been transferred back to the County Court, especially once Ark was aware of the quantum of its claim. On this submission, it seems, Ark's proceeding would have been transferred to be heard and determined in the County Court while Mr and Mrs Ciccone's proceeding would have remained in the Supreme Court. Not only is this a curious inversion of responsibility in the events which happened, but it would have resulted in the parties litigating in two courts. It is idle to allow that Mr and Mrs Ciccone might have sought a transfer of their proceeding in view of the fact that they never suggested it.

It is appropriate that costs should follow the event and that Ark should have its costs both on its proceeding and on Mr and Mrs Ciccone's proceeding. Unless the Supreme Court "otherwise orders", the former costs are, pursuant to s.22(1)(f) and (g) of the Courts (Case Transfer) Act, payable on the Magistrates' Court scale in respect of the conduct of the proceeding in that Court, and on the Supreme Court scale thereafter. For reasons which I have already given I would not otherwise order as counsel for Mr and Mrs Ciccone seeks. The latter costs of Mr and Mrs Ciccone's proceeding are payable on the Supreme Court scale.

The contention of Ark's counsel is that I should "otherwise order" and give Ark its costs on a solicitor and client basis. It is not clear to me whether that was intended to be from the commencement of the proceeding in the Magistrates' Court or from its transfer. Whatever may have been the intention of the submission I consider that Supreme Court costs should not commence to be payable until after the transfer.

The question is whether those costs should be on a solicitor and client basis. I consider not. I have regard to the matters relied upon by counsel for Ark as warranting the solicitor and client order. I consider that they do not constitute reasons why in justice between the parties that special order for costs should be made. It cannot be said that Mr and Mrs Ciccone's proceeding was brought improperly in the sense in which that expression is used in Colgate Palmolive and other cases. That is because their case was, in my view, brought bona fide. The fact that they have failed, and failed in the sense that their evidence has not been accepted, does not alter that fact. Further, as to Ark's proceeding and their instigating its transfer to the Supreme Court: when they sought that transfer the contract of sale was still on foot and Ark's claim under it, as matters stood, could have been for the balance of the price which was an amount which exceeded the limit of the jurisdiction of the County Court. Then, following rescission in September 1995, Ark did not reformulate its claim until February 1998 by which time the cases were well advanced in the Supreme Court. There they remained and neither party sought a transfer to the County Court. I conclude that, on balance and having regard to all that has been submitted and to the litigation overall, that the just result here is that Ark's costs in the Supreme Court should be paid on a party and party basis. Those costs will include the costs of the contribution proceedings.

I now turn to the submissions of counsel for Stockdale and Leggo.

As mentioned Stockdale and Leggo seek costs on a solicitor and client basis relying on their Calderbank type letter dated 23 October 1997. Counsel submits that the letter is to be treated as an offer for the purpose of rule 26.11, and reliance is placed on statements of Murphy J in Henderson v Simon Engineering (Australia) Pty. Ltd. [1988] VicRp 77; [1988] VR 867 at 869, 872, as to the purpose of and the approach of the Court to O.26. Murphy J stated (at 869) that:

"The purpose of O.26 is, no doubt, to provide a spur to enable a defendant to bring litigation to an end, to lessen costs and to shorten litigation. It also enables a reasonable defendant to protect itself against incurring costs occasioned by the unreasonable conduct of a fellow defendant."

The weakness in this submission is that rule 26.11 only applies to a plaintiff. The right of a defendant, in the circumstances of this case, was to serve an offer of compromise under rule 26.02(2). The letter of 23 October 1997 was not such an offer of compromise. Accordingly the issue is whether the letter of itself and in the circumstances of the case, is sufficient to warrant an order for solicitor and client costs.

As already mentioned, that order for costs is sought from the commencement of Mr and Mrs Ciccone's proceeding, and not merely from the date specified in the letter for acceptance of the offer. This submission was based on the fact that on so many points the evidence of Mr and Mrs Ciccone was not accepted. Counsel for Stockdale and Leggo submitted that Mr and Mrs Ciccone's case could properly be characterised as having been improperly brought in the sense referred to in Colgate Palmolive at 233.

There is of course no doubt that the result for Stockdale and Leggo is far more favourable than its offer.

Counsel for Mr and Mrs Ciccone submitted that this factor alone was insufficient to warrant an order for solicitor and client costs. He submitted that there should be present one of the factors that was identified in Colgate Palmolive at 233-234. That is to say, there must in the circumstances of the case be something that in the proper exercise of the judicial discretion on costs warrants a departure from the ordinary rule that costs are on a party and party basis.

It is clear that a Calderbank letter of the type given here may properly be regarded in this context and provide a basis for departing from the ordinary rule and ordering solicitor and client costs. The letter does not give an automatic entitlement to such an order as would an offer of compromise served under O.26. It is unnecessary to refer to the many cases in which Judges have considered how the discretion should be exercised. I have mentioned some and I was referred to others: MGICA (1992) Ltd v Kenny & Good Pty. Ltd. (No. 4) (1996) 140 ALR 707 at 711; Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425 at 451; Grbavac v Hart [1996] VSC 37; [1997] 1 VR 154 at 160, where Tadgell JA, with whose judgment Winneke P agreed, said in relation to Calderbank type offers of compromise that such an offer:

"... if reasonably made but unreasonably ignored, may properly influence the exercise of judicial discretion as to costs ... I find it difficult to discern in these decisions a specific principle of general application ..."

See too Hayne JA at 164-167. The question, as it seems to me, is one of reasonableness in the circumstances. The circumstances include matters such as the clarity of the offer and the time when it is made. In Colgate Palmolive the statement by Sheppard J of the grounds on which an order for solicitor and client costs may be made include "an imprudent refusal of an offer to compromise" (at 233), which I regard as including an offer by a Calderbank type letter as in the present case. Sheppard J further said (at 234):

"The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis."

I have already concluded that Mr and Mrs Ciccone did not bring their proceeding for an improper purpose. It is true that they have lost their case, and lost badly on the evidence, but this does not mean that their proceeding was improperly brought. Yet it remains the fact that as events have turned out the refusal of Stockdale and Leggo's offer was imprudent. Whereas they could have withdrawn their claim against Stockdale and Leggo on the basis of each party bearing their own costs, they pressed on with their case, fought it through a six day trial and lost. Stockdale and Leggo now face an obviously heavy costs bill and if they only recover party and party costs will have to pay the balance of the costs that they do not recover from Mr and Mrs Ciccone.

At one point in his submissions counsel for Mr and Mrs Ciccone said that "one can confidently assume that [Stockdale and Leggo] was insured" against liability for costs. This seemed to be put as a fact militating against an order for solicitor and client costs as distinct from party and party costs. There are two questions. The first is whether, as counsel submits, it is to be inferred that Stockdale and Leggo held professional indemnity insurance which indemnified it in respect of its costs in the proceeding. In my view the fact of such insurance is not established on the evidence and nor is it to be inferred from the evidence. Secondly, even if there be such insurance it is, at least in this case, not an answer to the claim for the solicitor and client component of Stockdale and Leggo's costs. The issue involves an assessment of the reasonableness of Mr and Mrs Ciccone's response to the offer and their conduct of their proceeding. Whether or not Stockdale and Leggo held any insurance that might cover the particular component of their costs is irrelevant to those matters. I note that counsel for Mr and Mrs Ciccone did not suggest that his client's attitude to the offer was affected by any understanding they had as to Stockdale and Leggo having insurance cover which indemnified them against costs.

There is a third point. Even if there be such insurance I have no evidence as to whether it is subject to the payment of any excess or other burden on Stockdale and Leggo. Thus, if I was to infer the existence of a cover under which Stockdale and Leggo was indemnified for its costs and on that basis refused to award solicitor and client costs an injustice could thereby be done to Stockdale and Leggo.

At another point counsel for Mr and Mrs Ciccone submitted, in effect, that an offer to withdraw and bear one's own costs is to be distinguished from an offer under which money is to be paid. Counsel submitted that "the offer did not benefit the Ciccones". Counsel asked how the Court is to assess a case which is genuinely arguable and in which an offer such as the present has been made. In my view the submission misses the point. One must consider the offer in the context of the particular case. Here the offer gave Mr and Mrs Ciccone an opportunity to stop its case against Stockdale and Leggo without paying the latter any costs. Consider what has now happened. The benefit to the Ciccones, both actual and potential at the time of the offer and actual following judgment, was very appreciable indeed. It may be said that the case was "genuinely arguable" but that is to assume something in relation to the evidence in Mr and Mrs Ciccone's case. If one is not careful one might be lulled into thinking that any case was "genuinely arguable" as long as there was someone prepared to go into the witness box to give some evidence about a relevant matter. Here there was a conflict of evidence. It was a fact case. Mr and Mrs Ciccone were confronted not merely by Ark but by evidence to be called by Stockdale and Leggo. It was obvious that there was a real risk that the evidence in Mr and Mrs Ciccone's case would not be accepted at one or another critical point. Yet Mr and Mrs Ciccone pressed on, prepared to face the decision of the Court. The decision is that at every critical point their evidence not be accepted. More particularly, the evidence on the other side, including that called in Stockdale and Leggo's case, was preferred. As an exercise in damage control the response to the offer was ill-advised and imprudent.

In a sense a measure of the imprudence is provided by the number and extent of the conflicts of fact in the evidence. I discussed these in my judgment. I will not repeat the discussion or the findings which I made. A simple but telling area of conflict which I resolved against Mr and Mrs Ciccone was their evidence, and that of their son Anthony, that only Dare was present in the office when the contracts were completed and signed. I concluded that that evidence was incorrect, false if you like, and I rejected it. The issue to which their evidence was directed was who was present and who said what and to whom at the office. It was important that their evidence be believed. Their evidence excluded Broderick as being present. Yet Broderick was present: he assisted in completing the contracts in the office. In this and other respects the case presented stark choices as to which evidence to accept. That is risky litigation. This was the litigation which Mr and Mrs Ciccone chose to run.

Against the possibility that I might order solicitor and client costs, counsel for Mr and Mrs Ciccone submitted that an order in the nature of a Bullock order should be made against Ark as to the difference between Stockdale and Leggo's party and party costs on the one hand and solicitor and client costs on the other. This order was sought on the basis that Ark had denied that Stockdale and Leggo was "appropriately" its agent. On 12 November 1998 (which, incidentally, was over a year after Stockdale and Leggo's offer) solicitors for Mr and Mrs Ciccone wrote to Ark's solicitors and asked that Ark admit not merely that Stockdale and Leggo was its agent for the sale of the property (as Ark had admitted in its defence) but that Ark admit that it was liable "for any acts carried out by its agent in the course of the selling process". The solicitors pointed out that the involvement of the agent would add time to the trial. They said that if Ark is found liable for the conduct of Stockdale and Leggo and accordingly the claim against Stockdale and Leggo failed, a Bullock order for costs would be sought against Ark. The solicitors threatened that unless Ark acknowledged that it was liable for the acts of Stockdale and Leggo and the proceeding continues and Mr and Mrs Ciccone are required to prove agency "a copy of this letter will be produced to the Court on the question of costs, including costs on a solicitor/client basis". A reply was requested by 18 November 1998 but no response was received.

This letter is a clear manifestation that the solicitors for Mr and Mrs Ciccone were concerned about the costs consequences of Stockdale and Leggo continuing in the case. It was submitted for them that Ark's refusal to admit liability for all acts of the agent "necessitated the continuation of the action against the agent" and "meant that it was difficult for the Ciccones to accept the Calderbank letter: had agency been admitted they could have obtained all their relief against Ark Projects as principal".

There are several answers to this submission. First, Mr and Mrs Ciccone sued both Ark and Stockdale and Leggo when they issued their proceeding on 30 June 1995. Stockdale and Leggo were not joined as a result of any allegation in Ark's defence in that proceeding. It was the positive decision of Mr and Mrs Ciccone to include Stockdale and Leggo as a defendant to their case.

Secondly, from the commencement of the proceeding Ark admitted that Stockdale and Leggo was its agent in relation to the marketing and sale of the property but denied that Stockdale and Leggo was acting within its authority if it did what Mr and Mrs Ciccone alleged they had done in breach of duty etc. There was no failure to observe a pleading rule or error of law in so pleading the defence. The defence was responsive to the allegations in the statement of claim. It denied the material allegations of breach and wrongful conduct and alleged that if they are established then to that extent or in acting in that way Stockdale and Leggo had acted outside the scope of its agency. This could hardly have been a surprising way of pleading Ark's defence. The expression used by counsel for Mr and Mrs Ciccone was that Ark should have "appropriately" admitted liability for the acts of its agent. In effect this meant that Ark should have admitted that in every respect in which Stockdale and Leggo was alleged to have acted Ark should have admitted that Stockdale and Leggo acted as its agent. I see no reason why it was incumbent upon Ark to make that admission covering all of the conduct alleged. Indeed in my view counsel's submission savours of an impertinence. Mr and Mrs Ciccone and their legal advisers chose to bring the proceeding against both defendants and, having done so, and pushed the proceeding through to judgment, they should be prepared to accept the consequences of their judgment at the inception and throughout the conduct of the litigation.

Thirdly, I reject the submission that the stance of Ark "necessitated the continuation of the action against the agent". The alleged stance was constituted by not admitting the agent was "appropriately" the agent of Ark, and declining to do so following the solicitor's letter dated 12 November 1998. Those matters are not the only factors to consider. Further to what I have said above the Ciccones had commenced their proceeding almost three and a half years earlier, and defences had been filed as long ago as August 1995. The Court file reveals that the case was active in the following years. In other words, Mr and Mrs Ciccone prosecuted the case as they had structured it and as the defendants pleaded to it. Then, in October 1997 Stockdale and Leggo made its written offer. The time for acceptance was 7 November 1997. The offer was not accepted. Mr and Mrs Ciccone continued to prosecute their case. On 21 April 1998 Master Kings fixed the proceeding for hearing on 22 October 1998 on an estimate of duration of five days. It would seem that the case could not then be heard. On 19 November 1998 the trial was refixed for 12 March 1999. It came on before me three days later.

This background exposes the context in which the solicitor's letter of 12 November 1998 was sent, and in which Mr and Mrs Ciccone determined to proceed with the case as it was originally structured. The letter was sent after the date when the proceedings had been due to be heard. Further, if the trial had proceeded in October 1998 it would have been completed prior to the sending of the letter in November. As it happened the trial came on a few months later but by this time, and certainly by November 1998, the case had run its course to the hearing stage. In other words, the cost of preparation had been incurred, and Mr and Mrs Ciccone had been prepared to run their case on the pleadings.

In my view it is artificial and wrong to contend, as counsel did, that Ark's stance in its pleading and its refusal to agree to the request in the letter dated 12 November "necessitated the continuation of the action against the agent". It is more accurate to say, in my view, that Mr and Mrs Ciccone desired to sue the agent and they never wavered from that course notwithstanding Stockdale and Leggo's offer to withdraw. The letter is seen as coming at the very last moment, relatively speaking, before the refixed date for trial. In my view the letter was a relatively last minute effort to devise a buffer against a risk on the agent's costs. That risk was not just, as the letter stated, one that would materialise in the event that Ark was found liable for the conduct of the agent, but (as the letter did not state) if Mr and Mrs Ciccone lost their case on the merits.

Finally, I reject the submission that Ark's stance made it difficult for the Ciccones to accept the Calderbank letter dated 27 October 1997. In the first place, the offer was not accepted and there is no evidence of any response by Mr and Mrs Ciccone in which they sought to take up a difficulty in responding to it or sought a variation of the terms. Further, all that counsel submitted was that it was "difficult" for the Ciccones to accept the offer. It was not impossible, merely difficult. Making difficult decisions is a feature of the conduct of litigation. Mr and Mrs Ciccone coped with the "difficulty" by letting the offer pass, pressing on with the litigation, and belatedly, over a year later, and following the first fixture for trial, making an approach to Ark to admit agency.

For all of these reasons I would not make a Bullock order.

That leaves one issue requiring determination and that is whether Stockdale and Leggo should have an order for solicitor and client costs. In my view it is just and appropriate that such an order be made as from 7 November 1997. I arrive at that conclusion having regard to all of the relevant circumstances concerning the offer which was clear in its terms, and the conduct of the litigation by Mr and Mrs Ciccone in not accepting the offer and pressing on with the case at considerable expense to Stockdale and Leggo. I concluded that Mr and Mrs Ciccone's case was without substance at each critical point, and, in particular, that their evidence was not to be accepted. The issues were identified in the pleadings and readily to be understood. Parties are to be encouraged to bring litigation to an end at an early time and with a minimum of costs both for themselves and for the other parties involved. I refer in this respect to the remarks of Murphy J quoted earlier, the sentiment in which is applicable to the present circumstances.

However difficult it may have been for Mr and Mrs Ciccone to deal with the offer, they let it go and Stockdale and Leggo are now left with what must be a substantial burden of costs. I do not accept that that difficulty is to be catered for by Stockdale and Leggo, whom I have acquitted on the evidence of any wrongdoing, being left with a mere order for their party and party costs when so long ago they were prepared to withdraw and bear their own costs. They have succeeded in litigation in which they had no claim of their own, they made a reasonable offer to withdraw and bear their own costs but were forced to defend the case through to judgment. In my view Mr and Mrs Ciccone's refusal of the offer was unreasonable or imprudent. It was such as in the particular circumstances of the case warrants the order for solicitor and client costs which I have mentioned.

In the result Ark will have judgment in its proceeding and in that proceeding it will be ordered that the defendants pay the plaintiff $103,936 together with interest on $22,500 from 27 September 1995 until this day under the Penalty Interest Rates Act and costs including reserved costs. In Mr and Mrs Ciccone's proceeding there will be judgment for the defendants and it will be ordered that the proceeding be dismissed; that the plaintiff pay the first defendant's costs including reserved costs (due allowance being made for costs incurred by the first defendant in its proceeding No. 8346 of 1995) and the costs of its contribution proceedings against the second defendant; and that the plaintiff pay the second defendant's costs including reserved costs and the costs of its contribution proceedings against the first defendant, the second defendant's costs of and incidental to the plaintiff's proceeding to be paid on a solicitor and client basis as from 7 November 1997.

(Case Transfer) Act 1991

Interest Rates Act 1983

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