Clarke v ABC [2001] VSC 274

Supreme Court of Victoria|2001-08-09|Before: Ashley J

Costs - application for solicitor and client costs - exercise of discretion - Calderbank letter - whether O. 26 procedure available - offer late made - short period of time for acceptance of offers - order made for costs on solicitor and client basis limited to the trial.

When seeking an order for costs on the final day of the trial plaintiffs' counsel submitted that I should order that the defendants pay costs on a solicitor and client basis. That application was opposed by Mr Dreyfus for the ABC. Dr Morris made no submission concerning this matter but I thought it right to treat him as having endorsed the submission made by Mr Dreyfus. I reserved upon the question.

In oral submissions counsel for the plaintiffs relied upon a letter dated 4 June 2001 which was sent to the solicitors for the ABC and to Dr Morris. In later written submissions plaintiffs' counsel relied also upon conduct of the defendants which was alleged to disclose these features:

v persistent refusal of the second defendant to comply with my rulings at trial;

v highhandedness of the defendants, exemplified by "blind refusal" to admit the defamation, constant refusal to apologise, and unnecessarily putting Mr Clarke to proof of his reputation as an environmentalist.

It is quite clear that the solicitors for the ABC received the letter of offer, which was appropriately endorsed "without prejudice save as to costs", on 4 June. Dr Morris told me that he had not seen the letter, but in answer to questions which I asked him he told me that he had become aware that an offer had been made, and of the terms of the offer. It was not clear from what he told me when he became aware of the offer, and its terms. However, according to the written submissions of counsel for the plaintiffs, senior counsel for the ABC made an offer to dispose of the matter on behalf of the defendants on the evening of 7 June. I should act upon that assertion. The ABC was given the opportunity of disputing it, and did not do so. In the circumstances it is a fair inference that Dr Morris became aware of the existence and content of the plaintiffs' letter of offer at least on 7 June, and perhaps earlier.

By the letter of 4 June the plaintiffs made an offer to the defendants jointly and severally to settle the proceeding on terms that the defendants pay to the plaintiffs damages in the sum of $75,000, together with party and party costs on the Supreme Court Scale. The offer was stated to remain open for acceptance until noon on Friday, 8 June.

I should put the letter of offer into chronological perspective. The writ was filed on 7 January 2000. Defences were filed by the ABC in late February and by Dr Morris in early March. Replies to those defences were filed respectively in March and May. An amended defence was filed by the ABC in October. Synopses of the evidence of all witnesses called at the trial, and of others besides, were filed well before trial. The trial date itself was fixed well in advance. The trial was fixed for hearing on Tuesday, 12 June, that is, the day following the Queen's Birthday holiday. In fact, the trial did not commence until 14 June.

In opposing the application for solicitor and client costs Mr Dreyfus submitted that:

v the plaintiffs had not availed themselves of the O. 26 procedure;

v the offer was late made, the proceeding having been instituted some 18 months earlier; and

Mr Dreyfus accepted, rightly in my opinion, that the existence of the O. 26 procedure does not preclude a plaintiff's successful reliance upon a Calderbank letter. But he submitted that authority supports the proposition that a court is not likely to regard an informal letter of offer as giving the offeror any special advantage in costs where the statutory procedure is not availed of by the offeror. He referred in that connection to the reasons for decision of Kelly J in Biernacki v Klenka[1].

In support of his submission that the plaintiffs' offer was made, in effect, too late, and had been left open for an unreasonably short period, Mr Dreyfus pointed to the fact that the synopses of evidence had been filed many months earlier. His point was that the plaintiffs must have known long before trial what the strength of their case was. So why wait until the death knell before making their offer? Moreover, what could be the justification for making the offer very late and (presumably because it was very late made) leaving it open for a period shorter than that for which it must have been left open had an offer of compromise been made in accordance with the Rules.

Mr Wilson submitted, initially orally, later in writing, that the Calderbank letter was necessary because it would have been impossible, or at least difficult, to frame an offer of compromise under O. 26 in the same terms. He submitted in this connection that under the Rules the consequence of an offer of compromise is that the Rules themselves dictate the costs consequences. But here the plaintiffs wished to indicate their willingness to accept $75,000 in settlement of their claim on the footing that the defendants also agreed to pay Supreme Court costs. The ordinary consequence of judgment for such a sum in the Supreme Court would be, subject always to the exercise of judicial discretion to the contrary, an order of the kind set out in R. 63.24. Likewise in the case of acceptance of an offer of compromise. The plaintiffs wished to make an offer which did not leave open the possibility of a costs order under R. 63.24 which was adverse to them.

Mr Wilson further submitted that this was a case of multiple plaintiffs suing multiple defendants, but in circumstances where their joint and several liability might not have been identical. He argued that O. 26 does not provide a mechanism which would have enabled the plaintiffs, in effect, to propose a settlement sum with respect to the ABC, in respect of part of which sum only Dr Morris should be jointly and severally liable. He raised for my consideration the possibility of different responses by the different defendants to the offer, this being said by him to illustrate the unsuitability of the plaintiffs adopting the O. 26 procedure.

Concerning Mr Dreyfus' submission that the offer had been late made, Mr Wilson submitted that the time at which the offer was made cut both ways. The defendants, most particularly the ABC, then had all the material at their disposal which would permit a proper evaluation of the claim. That included the synopses of evidence, which had been exchanged between the parties months before.

Concerning the short time for which the offer was left open, Mr Wilson submitted that the plaintiffs' intention had been to produce a resolution of the matter before the trial began. In supplementary written submissions plaintiffs' counsel contended that the defendants had in fact been able to consider the matter within the available time - for they had made an offer on the evening of 7 June.

Mr Wilson submitted that, in all the circumstances, the plaintiffs should at least have solicitor and client costs of the trial; although he maintained as his principal submission a contention that the plaintiffs should have solicitor and client costs of the proceeding generally.

In my opinion the proper order is that the plaintiffs have solicitor and client costs of the trial, but not otherwise. They should do so for the following reasons:

First, I consider that the issue for my consideration involves the exercise of a discretion. It does so whether or not the O. 26 procedure was available to the plaintiffs; although in fact I consider that the procedure was unavailable having regard to the particular offer which the plaintiffs wished to make.

In that connection, I consider that Mr Wilson was correct in submitting that the O. 26 procedure could not be used as a vehicle for making the plaintiffs' offer having regard to their requirement that Supreme Court costs be paid to them. I need express no opinion whether the alleged difficulties in the O. 26 procedure upon which Mr Wilson otherwise relied made the procedure impossible to apply; although I am inclined to the view that there would have been at least difficulty in formulating an O. 26 offer in clear and unambiguous language in circumstances where the plaintiffs wished to say that the ABC was liable for the entirety of the broadcast and that Dr Morris was jointly and severally liable for a proportion only of the broadcast.

But even if the O. 26 procedure had been available, I do not consider that the letter of offer must have been disregarded for costs purposes. I respectfully consider that there is a very great deal to commend the approach of Gillard J in M.T. Associates Pty Ltd v Aqua Max Pty Ltd and Anor (No.3)[2]. His Honour analysed authorities and ultimately reached the conclusion that even though an offer should be made in accordance with the Rules if it could be so made, nonetheless an offer not made in accordance with the Rules despite the availability of the Rules procedure was still a relevant matter to take into account on the question of costs. His Honour said, and I entirely agree, that:

"...any form of offer assuming it can be adduced into evidence should be considered by the court on the question of costs and overly technical reasons given by the other party for not seriously considering an offer should be rejected[3]."

"In days of old, points were taken justifying the refusal of an offer because of some point but in this day and age where costs in heavy litigation are high litigants and their lawyers must consider all offers of settlement, bona fide and reasonably[4]."

I do not consider that the authority to which Mr Dreyfus referred, nor the cases cited in Williams, Civil Procedure Victoria, paragraph 26.01.75, compel a different outcome. I note in passing that Williams does not cite Aqua Max; that Mutual Community Ltd v Lorden Holdings Pty Ltd and Ors[5] doubtfully supports the proposition for which it is cited in Williams; and that the reasons for decision of Oliver LJ and Neill J in Corby District Council v Holst and Co Ltd [6] doubtfully support to the hilt the statement by Oliver LJ in Cutts v Head[7] concerning the effect of a Calderbank letter where a formal procedure is available under the Rules and is not taken.

Second, it is plainly the fact that the plaintiffs' offer was late made, and was left open only for a short while. But it was made when the defendants should have been well able, and without much delay, to assess both the probable and possible outcomes of the proceeding; and thus resolve upon a response to the plaintiffs' offer. True it is that Dr Morris not being represented added a possible complication. But it was not suggested in argument either by counsel for the ABC or Dr Morris that this consideration precluded the defendants agreeing upon acceptance of a response to the plaintiffs' offer. Moreover, the fact that some offer was made by the defendants on the evening of 7 June tends to show that the defendants were not disabled by the lateness of the plaintiffs' offer, or by the short period of time for which it was left open for acceptance, from giving it proper consideration and agreeing upon a response.

Third, it is plainly the fact that the result at trial gave the plaintiffs an outcome beyond that which they indicated preparedness to accept by the letter of 4 June. By the date of the letter of offer the pleadings had been in final form for months. Discovery was complete. Synopses of evidence had been exchanged much earlier. The circumstances were ripe for consideration of offers of settlement - whether made by plaintiffs or defendants. The defendants were not entitled to assume that the Calderbank letter would carry no costs consequences if the plaintiffs achieved a favourable outcome at trial. It could not be assumed that a court would necessarily or even probably ignore such a letter in its consideration of the appropriate costs order if the plaintiffs obtained a better result at trial than they offered to accept before trial. Moreover, regardless of the actual jury verdict the plaintiffs' offer showed willingness to accept a very moderate amount to settle their claims. In the circumstances that did not bespeak weakness of their case. The trial, if it proceeded, was unlikely to have been short. It was sure to have been costly. The offer bears the appearance of a genuine attempt to compromise the matter. I think that the circumstances, all in all, speak powerfully in favour of the plaintiffs having solicitor and client costs, at least to an extent. That is so whether or not the O. 26 procedure was available to the plaintiffs.

Fourth, it would be inappropriate to make an order for solicitor and client costs in respect of the proceeding in its entirety. That would give the plaintiffs, in substance, a better outcome than they could have achieved had the Rules procedure been open to them and availed by them. I see no reason why the plaintiffs should have an order conferring such a benefit upon them.

In concluding that the plaintiffs should have costs of the trial only on a solicitor client basis, it has been enough to consider the significance of the Calderbank letter. I have not had to consider the validity or otherwise of the matters additionally raised by counsel for the plaintiffs in their written submissions. I say nothing about those matters.

I have not ignored, in deciding that the defendants should pay solicitor and client costs of the trial, the fact that the ABC had highly qualified professional representation throughout whilst Dr Morris has represented himself. I have given consideration to the question whether Dr Morris should be differently treated because he represented himself. But in the end I have been unable to regard that circumstance as providing a justification for differentiating between the order which should be made in Dr Morris' case and the order which should be made against the ABC.

Subject to anything that counsel may say I consider that the appropriate order I should make is that paragraph 3 of my orders made 4 July 2001 be amended by adding after the words "party and party basis" the words and figures "up to and including 13 June 2001 and thereafter on a solicitor and client basis".

[5] Byrne J, judgment 28 April 1993, unreported.

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