Plaintiff v Defendant

1 On 1 September 2010, I handed down my reasons for decision in this proceeding with the result that the plaintiff had failed to establish its claims.[1] The background to this proceeding is set out in those reasons.[2] The plaintiff, Auswest Timbers Pty Ltd, is an owner and operator of timber mills. Timber mills require a right to timber, which is gained through the issue of a timber licence. Timber licences are issued and regulated by the defendant, the Secretary to the Department of Sustainability and Environment, and the Department. The plaintiff's claims were summarised in my reasons for judgment:[3]

"Broadly speaking, the plaintiff's case is that on or about 4 March 1998, the defendant represented, and continued to represent until 30 June 2005, that the holder of the licence which the plaintiff had taken from Monier would be the subject of an offer of renewal for 15 years with the same volume and log quality provided for in that licence, subject only to agreement on the price for the timber the subject of the licence. The defendant denied any such representation and, further, submitted that the plaintiff could not succeed on the basis of the relief which it claimed because the defendant was an emanation of the Crown, the activities of the defendant were not, at any relevant time, in "trade and commerce" and, in any event, if there were any representation made, the plaintiff did not establish that it had relied upon the representation in any relevant sense for the purpose of establishing its cause of action. The parties also joined issue with respect to the nature and extent of the loss and damage claimed by the plaintiff."

"...the plaintiff has failed to establish that the representations which it claims were made to it by the defendant constituted a breach of the provisions of either s 52 of the TPA or s 9 of the FTA. In relation to both pieces of legislation, the representations did not, in my view, amount to misleading or deceptive conduct and they were not, in any event, made in "trade or commerce". In relation to the TPA, the defendant is not subject to the provisions of s 52 or any of the related provisions because it is part of the Crown in right of the State of Victoria and, in any event, is not a "trading corporation" as defined in that Act. In relation to the FTA, its provisions do not apply because, even in the event that the representations had been found to amount to misleading or deceptive conduct under the provisions of s 9, they were not made in "trade or commerce". Finally, I have found that the defences available to the defendant under the provisions of the Forests Act apply to protect it from any liability for or in respect of the representations alleged to have been made by it to the plaintiff, with the result that at least under Victorian statute law, it can have no liability. Nevertheless, I have found that as a result of the operation of s 109 of the Commonwealth of Australia Constitution Act, the relevant provisions of the Forests Act would not operate to the exclusion of provisions of the Commonwealth TPA in the event that those provisions were otherwise applicable."

2 On 1 September 2010, I reserved the question of costs and the final form of orders. To avoid the costs of a further hearing the parties agreed to provide written submissions on these issues.

Positions of the parties in relation to costs

3 The defendant's position is set out in its written submissions:

"3. ... The Secretary seeks orders that follow the event, namely that the Plaintiff ... pay the costs of the Secretary. For the reasons submitted below, the Secretary seeks that Auswest pay those costs on the following bases:

1. costs incurred by the Secretary on and from 28 May 2010 on an indemnity basis, on the grounds that Auswest imprudently rejected a Calderbank offer made to it by the Secretary;
2. costs incurred by the Secretary up to 28 May 2010 (excluding the Terra Timbers claim as defined at [30] below) on a solicitor-client basis, on the grounds that Auswest's commencement and maintenance of the proceedings was plainly unreasonable and in wilful disregard of known facts and clearly established law, and on account of Auswest's unreasonable conduct of the proceedings; and
   1. costs incurred by the Secretary in relation to Auswest's Terra Timbers claim (as defined at [30] below) on an indemnity basis, on the grounds that the claim was plainly futile and such costs were thrown away by reason of Auswest's abandonment of the claim at the commencement of the trial."

4 The plaintiff's position is also helpfully summarised in its written submissions:

"2. The plaintiff resists the application for costs incurred by the Secretary up to 28 May 2010 on a solicitor-client basis. Those costs should be awarded on a party-party basis under O63 r31 of the Supreme Court Rules. The plaintiff otherwise consents to the application save for the date from which indemnity should be awarded as a result of the Calderbank letter. The approach in this Court is to award special costs in these circumstances from the date of the expiry of the offer, in this case 31 May 2010."

(a) the plaintiff should pay the defendant's costs relating to the Terra Timbers claim on an indemnity basis; and

(b) indemnity costs should be awarded as a result of the Calderbank offer.

(a) when the costs consequences of the Calderbank offer should commence; and

(b) whether a special costs order should apply prior to the costs consequences of the Calderbank offer.

6 The jurisdiction of the Court as to costs is conferred by sub-s 24(1) of the Supreme Court Act 1986 (Vic), in the following terms:

"24(1) Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid."

This general discretion must be exercised in accordance with Order 63 of the Supreme Court (General Civil Procedure) Rules 2005 ("the Rules").

7 The usual order as to costs is an award of costs to the successful party on a party and party basis.[5] This position is reflected in rule 63.31 of the Rules. While the Court has a discretion to make special costs orders, guidance is provided by previously identified categories of circumstances that warrant a special costs order. In Colgate Palmolive Company v Cussons Pty Ltd, Sheppard J identified some of the categories as:[6]

"...the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud ...; evidence of particular misconduct that causes loss of time to the Court and to other parties ...; the fact that the proceedings were commenced or continued for some ulterior motive ... or in wilful disregard of known facts or clearly established law ...; the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions ...; an imprudent refusal of an offer to compromise ...; and an award of costs on an indemnity basis against a contemnor..."

8 In relation to commencing or continuing proceedings with no chance of success, Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd said that a special costs order may be warranted when:[7]

"... it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established laws."

9 The Victorian Court of Appeal in Macedon Ranges Shire Council v Thompson said that:[8]

"Where the proceeding has no prospect of success

[15] Costs may be ordered whenever it appears that an action has been commenced in circumstances where the applicant properly advised should have known it had no chance of success. When a litigant presses on where on proper consideration their case should have been seen to be hopeless, the discretion to make a special costs order may be enlivened. French J (as he then was) in J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers Western Australia & Anor[9] considered that the discretion to award such costs would be enlivened when a party persisted, for whatever reason, in what should on proper consideration have been seen to be a hopeless case, and alluding to the presumption referred to by Woodward J in Fountain Selected Meats said that it was an unnecessary condition of the power to award such costs that a collateral purpose or some species of fraud be established. But where the litigant did not recognise that its case was without merit a court may be disinclined to make a special costs order.[10] The Court must measure the litigant's conduct against the facts then known or which ought to have been known, the inquiries that the litigant ought reasonably to have made and the legal advice which the litigant ought reasonably to have obtained.[11] This exercise may be subject to some qualification in respect of a self represented litigant."

10 As Sheppard J said in Colgate Palmolive Company v Cussons Pty Ltd,[12] a special costs order may be warranted when a party has engaged in misconduct leading to unnecessary costs or delay. French J (as he then was) considered an application for a special costs order on this basis in Re Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd:[13]

"[21] Counsel for the respondent next attacked the applicant's conduct of the proceedings saying that interlocutory steps had been protracted by its failure to comply with requests for particulars and discovery and with orders of the Court. Further, it was said, there were untenable applications to amend pleadings and for leave to appeal. Discontinuance of the action was at the last minute and no explanation had been advanced for it. He submitted that it should be inferred that there had been a sudden acceptance by the applicant of the hopelessness of its case and that this was a matter which should have been apparent very shortly after the commencement of the proceedings.

[22] I accept that the interlocutory processes were unduly protracted and that the applicant must bear much of the responsibility for this. However, costs orders were made in favour of the respondent where the applicant was responsible for wasted appearances. When, in an individual case, there is evidence of particular misconduct on the part of a party that causes loss of time to the Court and to other parties then an order for solicitor-client costs and/or costs to be paid forthwith may be made. In my opinion a global order of this kind is not warranted in this case."

The costs consequences of the Calderbank offer

11 The justification for special costs orders when Calderbank offers are rejected was discussed in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2):[14]

"Encouraging settlement

[21**]** In Grbavac v Hart,[15] Hayne JA cited with approval what the New South Wales Court of Appeal had said in Maitland Hospital v Fisher (No 2)[16] about the policy rationale underlying the availability of special orders for costs where offers of compromise are rejected. Like his Honour, we think that what was there said is equally relevant to the exercise of the costs discretion where a Calderbank offer has been made. The policy objectives were said to be:

(1) To encourage the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise by defendants which amount to a realistic assessment of the plaintiff's real claim which can be placed before its opponent without risk that its "bottom line" will be revealed to the court;

(2) To save the public costs which are necessarily incurred in litigation which events demonstrate to have been unnecessary, having regard to an earlier (and, as found, reasonable) offer of compromise made by a plaintiff to a defendant; and

(3) To indemnify the plaintiff who has made the offer of compromise, later found to have been reasonable, against the costs thereafter incurred. This is deemed appropriate because, from the time of the rejection or deemed rejection of the compromise offer, notionally the real cause and occasion of the litigation is the attitude adopted by the defendant which has rejected the compromise. In such circumstances that party should ordinarily bear the costs of litigation.

[22] At the same time, as Redlich J said in OCBC,[17] there are other competing objectives of equal importance.

... Potential litigants should not be discouraged from bringing their dispute to the courts. It is such considerations which underlie the general rule that an order for special costs should only be made in special circumstances."

12 Factors relevant to deciding when a rejection of a Calderbank offer will give rise to a special costs order were also discussed by the Court of Appeal:[18]

"The test of unreasonable rejection

[23] In our view, these competing considerations can be sufficiently accommodated by applying a test of (un)reasonableness. The critical question is whether the rejection of the offer was unreasonable in the circumstances. We see no justification for a more stringent test such as "manifestly" or "plainly" unreasonable.

[24] Of course, deciding whether conduct is "reasonable" or "unreasonable" will always involve matters of judgment and impression. These are questions about which different judges might properly arrive at different conclusions. As Gleeson CJ said recently, "unreasonableness is a protean concept". But a test of reasonableness is, we think, entirely appropriate to the exercise of a discretion such as this.

Factors relevant to assessing reasonableness

[25] The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations. It is neither possible nor desirable to give an exhaustive list of relevant circumstances. At the same time, a court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:

(a) the stage of the proceeding at which the offer was received;

(b) the time allowed to the offeree to consider the offer;

(c) the extent of the compromise offered;

(d) the offeree's prospects of success, assessed as at the date of the offer;

(e) the clarity with which the terms of the offer were expressed;

(f) whether the offer foreshadowed an application for an indemnity costs in the event of the offeree's rejecting it.

[26] It has been argued on occasion that the maker of a Calderbank offer should not be entitled to costs unless the offer sets out, with some reasonable specificity, the basis for the offeror's contention that the offeree should accept the compromise - for example, because the offeree's case was hopeless or because the offeree had no reasonable prospects of doing better in the proceeding than was being offered in advance.

[27] Once again, we think it neither necessary nor desirable to lay down any general rule in this regard. We agree with what Redlich J said in Aljade, as follows:

'Any attempt to prescribe the reasoning which must accompany [a Calderbank] offer should be resisted. Whether there is a need for the offeror to descend to specificity as to why the offer should be accepted must depend upon a consideration of all of the circumstances existing at the time of the offer. The extent to which the weakness of a party's position is exposed through the pleadings, affidavits and the various communications between the parties during the course of the litigation may bear upon the significance of the absence of specificity in the informal offer.'

[28] As we said at the outset, the unreasonable refusal of an offer of compromise is, by itself, a proper ground for the award of indemnity costs or - in the present case - the award of solicitor-client costs. It follows that it is not necessary for the applicant for such an order to establish matters which might be relevant to other, well-recognised, grounds for indemnity costs. Once again we would adopt what Redlich J said in Aljade, as follows:

'It is not necessary to establish misconduct by the offeree before the rejection of the offer can be viewed as unreasonable. Lack of merit in the way a party has conducted its case is not a pre-requisite for the making of an indemnity costs order [on this ground].'

[29] Nor is it necessary for the applicant offeror to show that the offeree acted with "wilful disregard of known facts or clearly established law", or that it acted with "high-handed presumption". We agree with Redlich J that such conduct is not a prerequisite for a finding that the rejection of a Calderbank offer was unreasonable."

13 The defendant's Calderbank offer, dated 28 May 2010, is contained in a letter from its solicitors to the plaintiff's solicitors ("the Offer"). The Offer is headed "without prejudice save as to costs" and relevantly states:

"[O]ur client has instructed us to put the following settlement proposal to your client:

1. Payment

To settle all claims made in this Proceeding, our client will pay to your client $720,000 within 14 days of acceptance of this offer, apportioned as follows:

(1) $350,000 on account of damages, including interest; and

(2) $370,000 on account of costs.

2. Dismissal of the proceeding

As soon as practicable after your client accepts this offer our respective clients will seek orders by consent in the Proceeding to the effect that:

(1) the proceeding be dismissed

(2) there be no order as to costs

3. Costs

Each party will bear their own costs of and incidental to the Proceeding.

...

If your client does not accept the offer and does not achieve a better result at trial, our client will:

(1) produce this letter to the Court on the question of costs; and

(2) seek an order that your client pay our client's costs of the proceeding from the date of this letter on an indemnity basis.

This offer is made without prejudice, save as to costs, in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333 and Cutts v Head [1984] Ch 290."

14 The parties are in agreement that the Offer is a Calderbank offer, and no issue was raised with respect to the application of Order 26 of the Rules relating to offers of compromise.[19] As discussed above,[20] the parties agree that the rejection of the Offer gave rise to a special costs order on an indemnity basis. The only issue between the parties in relation to the Calderbank offer is whether the special costs order should begin on the date of the offer, 28 May 2010, or on the date of expiry of the offer, 31 May 2010. Unlike the regime for costs consequences for offers of compromise under Order 26 of the Rules, the Court has discretion to decide when the costs consequences of a Calderbank offer commence. Cavanough J in Love v State of Victoria & Anor (No 2) said:[21]

"[62] There was debate before me as to the precise date from which any such obligation should apply. Senior Counsel for Mr Love submitted that it was usual to allow time for the offer to be considered in fixing any such date.

[63] Generally speaking, the provisions relating to offers of compromise in court rules envisage that the higher costs will be payable from the date of the (unaccepted) offer or a single day thereafter. The practice of the courts seems to vary in relation to Calderbank offers. I note that in Foster v Galea (No 2), the relevant offer had been made on 15 December 2005 and it expired on 15 January 2006. Byrne J specified the date on which the offer had expired (15 January 2006) as the relevant date.

[64] In the scheme of things, it should not make much difference in this case whether I pick the date of the offer or the date of expiry. On balance, I am inclined to follow the approach of Byrne J in Foster v Galea (No 2) and to nominate the expiry date in each case."

15 The defendant, within the Offer, informed the plaintiff that it would seek indemnity costs from the date of the offer. This is what the defendant now claims. The plaintiff seeks to pay costs on and from the date of the expiry of the offer.

16 In exercising this discretion, I am of the view that the plaintiff should pay the defendant's costs on an indemnity basis on and from the date of the expiry of the offer, which was 31 May 2010. The offer was made on 28 May 2010 and expired at 9:30am on Monday 31 May 2010. The trial was scheduled to commence, and did commence, at 10:00am on Monday 31 May 2010 - half an hour after the expiry of the offer. I take the view that, on balance, the offer of $720,000 was made by the defendant to avoid the costs of the trial, by either the plaintiff accepting the offer and discontinuing the proceeding or by relying on the offer in a costs application. The plaintiff had the period from 28 May to 31 May 2010 to accept, but as the plaintiff allowed the offer to expire they were, practically speaking, accepting the risk that they may need to pay the costs of the trial if unsuccessful. This approach is also consistent with that adopted by Cavanough J in Love v State of Victoria & Anor[22] and Byrne J in Foster v Galea (No. 2),[23] an approach which is, in my view, the preferable one in the circumstances. Additionally, regard should be had to the circumstances that it was the defendant which chose, at the "eleventh hour" to make the offer, in a proceeding issued in 2004. The defendant had in the timing of its offer itself created the possibility that if it succeeded at trial and the offer was not accepted within the time expressly limited the trial preparation costs would not be treated on a special basis.

17 The remaining issue to be determined is the costs payable by the plaintiff prior to the effect of the costs consequences of the Offer, that is on or before 30 May 2010. The defendant relies on two grounds in its application for solicitor-client costs prior to the Calderbank offer:[24]

"a. Auswest's commencement and maintenance of the proceeding was plainly unreasonable and in wilful disregard of known facts and clearly established law and, properly advised, it should have known that it had no chance of success; and

1. Auswest conducted itself unreasonably in relation to discovery and other aspects of the proceeding which resulted in wasted costs for both parties"

18 The first ground will only apply in rare cases. While costs are a matter of discretion for the Court, the cases referred to above[25] show that a special costs order will only be considered when proceedings are continued "in wilful disregard of known facts or clearly established law"; when the party has "no chance" of success; or the case is "hopeless".

19 The defendant, in its written submissions, raised a number of aspects of the plaintiff's case in submitting that the plaintiff should have known from the commencement of the proceedings that it had little prospect of success. After raising these issues with respect to the strength of the plaintiff's case the defendant, in its written submissions, relied on various pieces of evidence to establish that the plaintiff was aware of the "limited prospects or at least the risk that the [defendant] would succeed in at least one or more of its defences."[26]

20 The defendant submitted that the plaintiff knew or should have known that the plaintiff had slim prospects of proving reliance on the claimed representations in purchasing the Orbost Mill given the contemporaneous documents. The defendant also submitted that the plaintiff's chance of proving continuous reliance on the representations in the 4 March 1998 letter subsequent to purchasing the Orbost Mill was remote, at least especially from February 2002, when a change of Government forestry policy was advised.

21 The defendant further submitted that even if reliance was initially proven, it was clear from the relevant documents that the plaintiff's decision to forego the Voluntary Licence Reduction Program, which was open from 30 August 2002 to 31 July 2003, was a departure from reliance on the 4 March 1998 representations.

22 The plaintiff's submissions in reply focused on the fact that I preferred the defendant's evidence in relation to the issue of reliance rather than the evidence of three of the plaintiff's witnesses. In my view, inherent in the plaintiff's submissions was the position that this proceeding was not a situation in which "the applicant properly advised should have known it had no chance of success",[27] but rather a proceeding in which the trial judge in making findings of fact preferred the defendant's case. In other words, it was not a situation in which proceedings were continued in the face of known facts, but rather the proceeding was continued in circumstances of contested facts. I accept the plaintiff's submissions in this regard. It is clear from my judgment that I did find the evidence relied upon by the defendant, including contemporaneous documents, more convincing than the sworn oral evidence given by the plaintiff's witnesses of the events that occurred many years ago, and the documentary evidence relied upon by the plaintiff.[28] However, preferring one version of events over another does not, of course, necessarily provide any basis for the making of a special costs order from the date of the commencement of the proceedings, or at all. It is a situation common in the ordinary course of litigation. If I had accepted the evidence of the plaintiff's witnesses, the plaintiff may have been able to prove reliance on the representations. The plaintiff's case on the issue of reliance did fail, but it did not reach the high threshold of having no chance of success, or of being hopeless, so that a special costs order should be considered.

23 The defendant was ultimately successful at trial on a number of "statutory defences" to the plaintiff's claims. The "statutory defences" were that:

(a) the defendant was the Crown in right of the State of Victoria and therefore immune from the relevant provisions of the Trade Practices Act 1974 (Cth) (the "TPA");

(b) the defendant was not a trading corporation within the meaning of s 52 of the Trade Practices Act 1974 (Cth);

(c) the relevant conduct was not "in trade or commerce" within the meaning of either s 52 of the TPA or s 9 of the Fair Trading Act 1999 (Vic) (the "FTA");

(d) the Sustainable Forests (Timber) Act 2004 (Vic) and the Forests Act 1958 (Vic) barred the claim.

24 The defendant submitted that these defences were based on well-settled law and that the key facts underpinning those defences were not in dispute and the assessment of their merits did not depend on evidence to be led at trial. In my view, the defendant's submissions on this point overstate the simplicity of the issues inherent to the statutory defences. Even assuming, without deciding, that the law is well settled in the relevant areas, it was the application of the particular facts of the case to the law which was contentious. Very extensive submissions, both written and oral, were made by both parties at the trial in relation to the "statutory defences".

25 The defendant in its written submissions on costs did not state that the plaintiff had "no chance" or a "hopeless" case in relation to the statutory defences. Instead, the defendant, in its written submissions, described the strength of the statutory defences much more conservatively in stating that it was: "reasonably clear that the Secretary is part of the Crown"; "reasonably clear that the Secretary was not a 'trading corporation'"; "clear that the Secretary's conduct was not 'in trade or commerce'"; and "reasonably likely that the Sustainable Forests (Timber) Act 2004 (Vic) and Forests Act 1958 (Vic) provisions barred the claim" [emphasis added].

26 The statutory defences that the defendant was not a trading corporation and the relevant conduct was not in trade or commerce required a careful consideration of the relevant facts. The plaintiff's submissions on these defences were not, in my view, made in the face of known facts and established law, but rather sought a particular balancing and application of the facts to the law. The defence in relation to whether the defendant was the Crown in right of the State of Victoria required statutory construction in an area of law where, as the plaintiff contends, minds can differ.

27 The defences in relation to the Sustainable Forests (Timber) Act 2004 (Vic) and Forests Act 1958 (Vic) required consideration of sections of the legislation that had not been interpreted before. It could not be said that the interpretation of those acts was well settled or obvious.

28 In my view, the plaintiff's case was not continued or commenced in circumstances where there was "no chance" that the statutory defences could be avoided or that the plaintiff's chances of avoiding the defences was "hopeless".

29 Another key factor which weighs in the balance against making a special costs order is that the defendant refused to consent to the "statutory defences", or some of them, being dealt with as a preliminary question. The plaintiff, with reference to the transcript at trial, submitted that this is important to the exercise of my discretion in two ways:[29]

"(a) it demonstrates that, at least in the defendant's mind, the plaintiff's case in the face of those defences was not a "hopeless case" (Defendant's submissions at 26); and

(b) given that the plaintiff agreed to have those matters dealt with as preliminary questions, a course which would have shortened the trial and reduced the expense to the parties and to the Court, the Court in exercising its discretion should not award "special costs" not sought by the defendant."

I accept the plaintiff's submissions in this regard. While the defendant's refusal to agree to having the statutory defences heard as preliminary points is not a decisive point in itself, on balance, it is a factor which, in my view, favours not making a special costs order. If the defendant considered at the beginning of the trial that the "statutory defences" were as strong as it submitted in its submissions on costs it would seem reasonable to have expected it to embrace the suggested hearing of the preliminary questions, or at least some of them, as an efficient use of time and as a means of reducing the costs and expense of the trial. I say that this factor is not decisive because, in my view, if the plaintiff's case had "no chance", was "hopeless", or continued in the face of "known facts and established law" a special costs order may have been made despite the defendant's lack of consent to the hearing of all or some of the preliminary questions.

30 The defendant also submitted that the plaintiff's "loss of use of money" claim was "plainly futile". As issues of damages and quantum did not arise for my decision in the judgment, issues with respect to the exercise of my discretion in relation to costs on the basis of the strength or otherwise of the plaintiff's claim in this regard are not relevant. Nevertheless, it should be observed that such a claim by a plaintiff apparently engaged in significant commercial activity would not appear to be unusual or inherently unreasonable.

31 The defendant submitted that "at all times from the outset, [the plaintiff] was aware of its limited prospects or at least the risk that the Secretary would succeed in at least one or more of its defences." As I have decided that the plaintiff's case did not have "no chance" and was not "hopeless" to justify a special costs order, any evidence about the plaintiff's knowledge of the risks of failing at trial are irrelevant to the exercise of my discretion.

32 The second ground that the defendant relied upon in seeking a special costs order was that the plaintiff misconducted the proceedings in such a way as to waste costs and time. To make a special costs order for all costs from the date of commencement the misconduct of the proceeding would need to be, at the very least, substantial. This is made clear from the judgment of French J (as his Honour then was) in Re Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd.[30]

33 The defendant in its submissions on costs relied upon the plaintiff's conduct of discovery and other interlocutory steps. In relation to the plaintiff's discovery, the defendant submitted that discovery of documents was, on numerous occasions, unreasonably delayed; that some responses to requests for documents were misleading; and that highly relevant documents were discovered late. The defendant also submitted that there were lengthy delays by the plaintiff in completing various interlocutory steps.

34 In response, the plaintiff admitted that it made late discovery of documents, but stated that the defendant also made late discovery of documents, including documents that were relevant to the "reasonable grounds" defence.

35 In my view, the conduct of this case does not provide any basis for the making of a special costs order. Delays and costs of interlocutory steps are best dealt with at the relevant time so that costs orders can be made and the litigation can be managed. This is consistent with the approach of French J in Re Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd.[31] The defendant's submissions and evidence in relation to the plaintiff's conduct do not justify, even if I accepted them wholly, the making of a global costs order, on any basis, from the beginning of the proceeding. This is especially so when, at least in relation to discovery, the plaintiff makes similar allegations against the defendant.

36 As noted previously, the parties are in agreement as to the form of parts of the final orders. I will make those orders accordingly. The parties were, however, in dispute as to the timing of the commencement of the costs consequences of the Calderbank offer and whether a special costs order should be made prior to the operation of the costs consequences of the Calderbank offer. For the preceding reasons I have decided both these questions in favour of the plaintiff. The costs consequences of the Calderbank offer will commence on and from the date of the expiry of the offer, 31 May 2010. No special costs order will be made prior to this date.

37 The submissions did not address the costs of this application for costs. In all the circumstances and in light of the position I have reached with respect to the matters in issue I will make no separate costs order in this regard.

2. The Plaintiff pay the whole of the Defendant's costs (excluding costs relating to the Terra Timbers claim as defined in paragraph 3 below), including any reserved costs and the costs of the further amended defence dated 24 May 2010, to be taxed on a party-party basis up to and including 30 May 2010, costs thereafter to be taxed on an indemnity basis.

3. The Plaintiff pay the whole of the Defendant's costs, including any reserved costs, of and incidental to its defence of the Plaintiff's claim for loss or damage for its alleged investments in Terra Timbers, being the claim:

(a) pleaded in paragraph 11(c), and particularised in paragraph (2) to paragraph 11(c), of the Plaintiff's Statement of Claim and its subsequent Amended Statement of Claim; and

(b) further particularised in the Plaintiff's Further and Better Particulars of Loss and Damage dated 28 April 2010 under headings "Loss A" and "Loss C"

[1] Auswest Timbers Pty Ltd v Secretary to the Department of Sustainability & Environment [2010] VSC 389.

[5] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [67]- [69] (McHugh J).

[6] [1993] FCA 536; (1993) 46 FCR 225 at 233-234; and see also Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 at [7].

[7] [1988] FCA 202; (1988) 81 ALR 397 at 401. This passage has been cited with approval in many subsequent decisions, including by French J (as he then was) in J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers Western Australia (unreported, Federal Court of Australia, 9 February 1993), and in the Supreme Court of Victoria in Murdaca v Maisano [2004] VSCA 123 at [40]; Aljade and MKIC v OCBC [2004] VSC 351; and Macedon Ranges Shire Council v Thompson [2009] VSCA 209 at [15].

[8] [2009] VSCA 209 at [15]

[9] Unreported FCA, 9 February 1993 (French J).

[10] Hurstville Municipal Council v Connor (1991) 24 NSWLR 724; Monitronix Ltd v Michael (1992) 7 WAR 195; Ugly Tribe Co Pty Ltd v Sikola, [2001] VSC 189, [18] (Harper J); Clarke v Deputy Commissioner of Taxation [2002] FCA 75; (2002) 50 ATR 173.

[11] Aljade and MKIC v OCBC [2004] VSC 351.

[12] [1993] FCA 536; (1993) 46 FCR 225 at 233-234; and see above paragraph [7]

[13] [1991] FCA 187 at [21]- [22]

[14] [2005] VSCA 298; (2005) 13 VR 435 at [21]- [22].

[15] [1996] VSC 37; [1997] 1 VR 154 at 164-5.

[16] (1992) 27 NSWLR 721 at 724, see also MT Associates v Aqua-Max Pty Ltd (No 3) [2000] VSC 163 at [71].

[17] Oversea-Chinese Banking Corporation v Richfield Investments Pty Ltd [2004] VSC 351 at [60].

[18] Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 at [23]- [29].

[19] See Tenth Vandy Pty Ltd v Natwest Markets Pty Ltd (No 2) [2010] VSC 70; cf Charles Blackman and Ors v Peter Gant and Anor (No 2) [2010] VSC 246.

[21] [2009] VSC 531 at [62] to [64].

[22] [2009] VSC 531.

[23] [2008] VSC 331.

[24] Defendant's Submissions on Costs at [23].

[25] See above, paragraphs [7] to [9].

[26] Defendant's Submissions on Costs at [25].

[27] Macedon Ranges Shire Council v Thompson [2009] VSCA 209 at [15].

[28] Auswest Timbers Pty Ltd v Secretary to the Department of Sustainability & Environment [2010] VSC 389. See, for example, in relation to the purchase of the Orbost Mill at [78] to [101]; in relation to subsequent reliance at [102] to [117]; and in relation to the Voluntary Licence Reduction Program at [118] to [128].

[29] Plaintiff's submissions on costs at [13]; and see the trial transcript at pages 153 to 164.

[30] [1991] FCA 187 at [21]- [22], referred to above at paragraph 10.

[31] [1991] FCA 187 at [21]- [22], referred to above at paragraph 10.