Love v State of Victoria & Anor

Love v State of Victoria & Anor - [2009] VSC 531 - VSC 2009 case summary — Zoe

[24]

(a) VicRoads and your client must each bear the legal costs they have incurred in the acquisition validity proceeding. Specifically, VicRoads will not seek to obtain the benefit of the costs orders against Mr Love of 28 February 2003, 24 September 2004 and 20 March 2006 which amounts to a sum in the order of $310,000. VicRoads will also forego its entitlement to its legal costs incurred to date in this proceeding which on a party-party basis we estimate to be in the order of $1 million and which would be recovered by VicRoads at the culmination of the proceeding. VicRoads will also forego its right to claim the loss and damage it has incurred as a result of the injunction obtained by Mr Love in respect of the Protected Area which amounts to a sum in the order of $4.1 million. Accordingly in making this offer our client is foregoing the opportunity to obtain from your client costs and damages in the sum of approximately $5,410,000; and

(b) VicRoads will consent to the discharge of the unconditional bankers guarantee provided by Bendigo Bank Limited of 3 August 2005 for $2,990,364, held as security for Mr Love's undertaking as to damages.

In return, Mr Love will:

(a) formally discontinue the acquisition validity proceeding against VicRoads with no orders as to costs;

(b) consent to an order discharging the injunction ordered on 6 March 2003 and varied on 4 June 2003;

(c) execute a deed of release which releases VicRoads from all actions, suits, claims, demands, costs and other liabilities of any nature which your client now has or at any time may have against VicRoads and its present or past officers and employees, that is in any way connected with the claims made in the acquisition validity proceeding or VicRoads' acquisition of your client's land save for his claims for compensation under the Land Acquisition and Compensation Act 1986.

(d) undertake to prevent anyone acting in his name or on his behalf or his successors or assignees, from bringing any actions, suits, claims and demands in any way connected with the claims made in the acquisition validity proceeding or VicRoads' acquisition of your client's land save for his claims for compensation under the Land Acquisition and Compensation Act 1986, and will continually indemnify VicRoads and its successors against any such actions, suits, claims and demands;

(e) undertake to keep the terms of the settlement confidential and Mr Love must not disclose the terms of this settlement to anyone else without the written consent of VicRoads. This does not apply to a disclosure required by law.

[51]

"[9] [In Hazeldene] it was held that the mere fact that the result achieved was less than the offer made does not shift the burden to the offeree to prove reasonableness. Rather, the onus lies always on the offeror to demonstrate unreasonableness in the offeree [His Honour then referred to the six circumstances which the Court of Appeal said in Hazeldene were matters which a trial judge should ordinarily have regard to in such a case.]

I remind myself that the Judges of Appeal was not there engaging in a kind of judicial legislative process; they were simply giving a direction that these are the matters which the trial judge should ordinarily have regard to, in addition to such other matters as the judge might consider relevant. And, having had regard to these matters, it is for the judge to give to each such weight, if any, as seems appropriate. The fact remains that the discretion as to costs conferred by statute is an unqualified one and must, therefore, be exercised judicially having regard to the circumstances which the trial judge considers to be relevant to the particular case before him or her. I am mindful of the warning of Fullagar J in 1991 against any judicial attempt to fetter such a discretion.[35]

[10] I was referred to authority in this court where trial judges have accepted that an unaccepted defendant's offer of compromise was a relevant factor in considering the offeror's application for a special costs order[36] and to my own early decision in Mutual Community Ltd v Lorden Holdings Pty Ltd.[37] In each of these cases the unaccepted offer was considered a significant factor warranting an order for costs more severe than a party and party costs order. Most of them, however, were decided before the Hazeldene's Chicken Farm case. In that case the Court of Appeal laid down the principle that a special order should not be made for non-acceptance of a Calderbank offer unless the offeror demonstrates that the offeree's failure to accept the offer was unreasonable.

[11] This apparently simple test contains its own difficulties. The offeror, who bears the burden of establishing this, is very often not in a position to demonstrate that the response of the offeree was or was not unreasonable. Whether this is so may depend upon the legal advice given to the offeree and to evidentiary uncertainties known only to that party. The offeror cannot know these matters without piercing the veil of professional privilege. Moreover, what is meant by unreasonable in this context? It is certainly not that the offeree's case was so hopeless that it might be struck out as an abuse of process. The clue to its meaning must be found in the policy behind the court's acceptance that an offer may be used in this way. This is of course to compel the offeree to consider seriously the offer by introducing into its decision-making process the prospect that a failure to accept it may in the appropriate circumstances attract a cost penalty. Where a party makes a Calderbank offer which is reasonable in all the circumstances, especially in comparison to the offeree's prospects of success or where the offeree's prospects of success were not good[38], the Court has displayed a readiness to make a special order. As I observed in the Lorden Holdings case, the policy of the court is to encourage litigating parties to undertake genuine settlement negotiations and, for the purpose, to face up to serious offers of settlement."

[69]

37 Closer still to the present case is Roads and Traffic Authority (NSW) v Refrigerated Roadways Pty Ltd (No 2)[63], a very recent decision of the Court of Appeal of New South Wales. There[64], an employee of the plaintiff was killed while driving a truck along a freeway in the southwest of Sydney when a concrete block, which had been deliberately dropped from an overhead bridge known as the Glenlee Bridge, penetrated the front windshield. The plaintiff employer brought an action in negligence against the RTA as the responsible roads authority claiming breach of a duty of care owed to road users by failing to screen the overhead bridge. The RTA was aware that there was a problem of people dropping objects from overhead bridges and had developed an order of priority for screening overhead bridges. Progress in screening the bridges was slow due to budgetary constraints and so the Glenlee Bridge had yet to be screened at the time of the incident. There was a mass of evidence before the trial judge about the internal workings of the RTA. The plaintiff employer succeeded at trial but the Court of Appeal allowed the RTA's appeal, holding that the RTA had not breached its duty of care to road users by failing to screen the bridge, taking into account the budgetary constraints under which the RTA operated, its decision-making processes and its expenditure priorities. It is true that the case was exclusively a tort case, rather than an administrative law case. There was no allegation of invalid decision-making. However, as in most claims against statutory authorities, there was a need to examine the statutory framework and to consider carefully the public duties and functions of the defendant. Mr Love's claim required a comparable exercise, albeit that it also involved his seeking to establish the existence of a novel duty of care (ie, a duty not to commit administrative law errors). On the fourth day of the trial in Refrigerated Roadways a large amount of relevant documentation came to light for the first time. The case had to be adjourned for several months to enable the parties to read it and deal with it. The RTA took the opportunity to send a Calderbank letter which offered a verdict for itself as the defendant and that the parties should bear their own costs. The offer was expressed to be open for 28 days. It was not accepted. As I have said, the plaintiff succeeded at trial (whereas, of course, Mr Love has failed). The RTA did not renew its offer or make any other offer concerning the appeal proceedings. Nevertheless, after the RTA succeeded in its appeal, it applied for indemnity costs for the trial from the time of the offer and for the appeal. Campbell JA (with whom McColl JA and Sackville AJA agreed) said[65]:

[80]

"The parties are agreed that [the] sum held in the interest bearing account [in effect as security for the plaintiff's undertaking as to damages] is now about $2.9m and is increasing by about $100,000 per annum compounding. If the undertakings which VicRoads now seeks were given by the plaintiff, the amount in that trust account would increase to about $3.4m.

...

VicRoads relies upon a mass of material in support of its claim that the security put up by the plaintiff is now inadequate. That material deposes to various claims made by Abigroup Ltd upon it and its resolution or attempted resolution of those claims at a compromised sum of about $3.378m. However there are a number of assumptions inherent in the attribution of all of this sum to the disruption to Abigroup's work by the existence of the injunction which are by no means beyond argument. If this question ever has to be litigated I can confidently predict a serious argument on the issue of the causation of the loss sought to be compensated by Abigroup's claim, not to mention the part perhaps played by VicRoads itself and other extraneous factors in the possible causation of that loss. About all that can be said is that whilst VicRoads may establish the necessary causal nexus between all of its loss and the existence of the injunction, that is to say, a causal link between the increased cost of the roadwork which it must pay to Abigroup and the injunction, it may not. Questions of delay and the cause of it, the intervention of other possible causes, cost overruns and similar factors, may all play a part.

It is inappropriate on an interlocutory application of this kind that I analyse the evidence further or go directly to those parts of it in respect of which I think VicRoads may have difficulties of proof. To do so would tend to prejudice ultimate issues which may have to be appropriately determined upon a trial. I do no more than say that I am not sufficiently satisfied that the damage contended for by VicRoads at $3.378m will all necessarily be recovered from the plaintiff should his undertaking as to damages have to be called upon. I am not satisfied that the $2.9m already standing as security will be inadequate."

At a glance

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Judgment (239 paragraphs)

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Legislation Cited (3)

Cases Cited (12)