Plaintiff v Defendants

2 I am not persuaded that I should reopen the matter and I do not propose to do so.

3 It is true that the order for costs has not yet been authenticated.[1] Further, I will assume without deciding that this was a case in which, in the circumstances, there was some misapprehension of the facts on the part of counsel for AGL or, in any event, that it was a case where - to use the expression used in De L v Director-General, NSW Department of Community Services (No 2)[2] - "the interests of justice" might otherwise have called for the matter to be reconsidered. But one of the matters that goes both to the question of whether to reopen and then, after reopening, to the substantive determination of the application is the merit or strength of the application sought to be made or of the points sought to be raised. And in my view there is little or no strength in AGL's application to have solicitor/client costs awarded on the basis of the offer of compromise.

4 The offer was, on my assessment, not a reasonable offer of compromise. It did not involve, in my view, a real and genuine element of compromise. As to its main feature, it was an offer to discount by 10 per cent the quantum of the claim that had been made by AGL for its costs pursuant to the costs determination in the defendants' favour previously made by the Panel. As I have just discussed with counsel, the effect of AGL's offer in that regard is unclear. It is not clear whether AGL was effectively saying "We will take approximately $290,000 for our costs of the Panel hearing". That figure would have been some ten per cent less than the approximately $320,000 that AGL's solicitors were, at the same time, claiming for the costs of the Panel hearing. Alternatively, AGL may have been saying, in effect: "We will take ten per cent less than whatever would otherwise be taxed or assessed or agreed in respect of our claim for the costs of the Panel hearing". The figure of approximately $320,000 was apparently the total of the actual bills that had been rendered to AGL by its solicitors in respect of the Panel hearing. It was not a figure based on an estimate of party-party or solicitor-client or even indemnity costs. There is an unresolved dispute between the parties as to the basis on which the costs of the Panel hearing were to be assessed.[3]

5 AGL urges me to look at the offer as though it referred to a 10 per cent discount on the taxed or assessed or agreed costs. However, even doing that, the amount said by AGL to be involved in this main part of the compromise is only between $19,400 and $24,800. In the context of the matters at stake in this case, that does not strike me as being in any way comparable with the sort of compromise that had been offered in the Love case to which reference has been made in argument.[4] Nor, indeed, in absolute terms, by comparison with what was at stake in this case, was it a very significant offer of compromise at all.

6 In my view, it does not involve a real and genuine element of compromise even taken together with the associated offer by AGL to bear its own costs of this proceeding. As at 25 September 2009, as Mr Caleo SC points out, the present proceedings had only reached an early point. The originating motion had been issued and then amended. There had been one directions hearing. AGL does not even essay the task of quantifying the costs it had incurred in this proceeding to that stage. In fact, it frankly says that those costs were not particularly great.

7 Acceptance of the offer would have required the plaintiff to discontinue the entire case (as against all defendants). In consequence the plaintiff would have been required to pay the costs of the defendants other than AGL unless the Court were somehow persuaded to make an order to the contrary. There is no basis for thinking that the Court would have ordered to the contrary in the absence of consent on the part of those other defendants. AGL says that the costs of the other defendants would not have been particularly great at that time, but there is no specific evidence one way or the other as to that. In any event, it was not an offer that was likely to be attractive in all of the circumstances. I do not think that it merits the description of a reasonable offer of compromise.

8 Similarly, if the appropriate way to approach the matter is to ask whether it was unreasonable for the plaintiff to reject the offer,[5] I am not satisfied that it was unreasonable for the plaintiff to reject it. The onus of showing unreasonableness is on the offeror, as Mr Caleo has pointed out. That onus has not been discharged, in my view.

9 The final result was, of course, more favourable to the plaintiff than the offer, but only in the sense that the plaintiff later incurred more costs itself together with a liability to pay the defendants' costs. Needless to say, the substantive result was effectively the same.

10 I have considered each of the factors that need to be considered according to Hazeldene's Chicken Farm v Victorian WorkCover Authority (No 2)[6].

11 The first matter is the stage of the proceedings at which the offer was made. It is true that the offer was made at a time before the bulk of the costs would have been incurred in this particular proceeding. In a sense, that tends in favour of the offeror, but it is not a factor of great weight in this proceeding given that it was an administrative law proceeding involving relatively discrete legal issues. It was not a fact-heavy case in the way Love was.

12 Further, as Mr Caleo pointed out, the parties had not been required to and had not yet, at that stage, formulated their written submissions. So the offer was made at a time before the issues were crystallised as between the parties. In that respect, at least, this factor does not favour the offeror's position.

13 Turning to the second factor, the offer was left open for the "standard" period of 14 days.[7] However, nothing additional to that was allowed. The offer expired before the submissions were exchanged.

14 Turning to the extent of the compromise, as I have already indicated in dealing with the question whether the offer was a reasonable offer of compromise, the extent of the compromise was, in my estimation, taking into account the matters at stake and all other relevant matters, not great at all. Indeed it was very little. The letter from AGL's solicitors conveying the offer amounted to little more than a "demand to capitulate" in the sense in which that expression is used in Berrigan Shire Council v Ballerini (No 2).[8]

15 I turn to the plaintiff's prospects of success as at the time of the offer, which was a matter that Mr Gray for AGL put particular emphasis on. It is true that I felt able to pronounce judgment against the plaintiff immediately after the conclusion of argument. However, the argument was conducted at a high level of sophistication; it had lasted two full days, with a weekend in between; and I had had the benefit of detailed written submissions in advance of the hearing. The outcome may have seemed clear with the benefit of hindsight, but that is not the test. Further, this was a case in which the provisions of certain detailed and complex subordinate legislation fell to be considered by the Court for the first time. I do not think that the plaintiff's prospects of success should be characterised as having been obviously hopeless from the outset. So I do not think that the absence of prospects of success tends particularly strongly in favour of the offeror.

16 The next factor is the clarity of the offer. I have already outlined the respects in which I regard the offer as having been unclear.

17 The last factor is whether there was a foreshadowing of a future application for indemnity or solicitor/client costs. That was satisfied in this case.

18 Taking all of these factors into account, I am not persuaded that it would be appropriate to depart from the ordinary principle that costs should be assessed on a party-party basis. Accordingly, even if it would otherwise have been appropriate to reopen the matter on the basis of the tests set out in the cases to which Mr Caleo has taken me,[9] I would have not exercised my discretion in favour of AGL.

19 For these reasons, I would refuse the application to reopen and vary the order as to costs made by the Court on 7 December 2009.

20 [Discussion followed as to the costs of the application to re-open.]

21 AGL will be ordered to pay the plaintiff's costs of this application to re-open.

[1] As to the significance of that circumstance, see De L v Director General, NSW Department of Community Services (No 2) [1997] HCA 14; (1997) 190 CLR 207 at 216.

[2] [1997] HCA 14; (1997) 190 CLR 207 at 215.

[3] The Panel's costs determination was expressed in terms of the "reasonable" costs of the defendants.

[4] Love v State of Victoria (No 2) [2009] VSC 531.

[5] Compare Love, supra at [25]-[26] and cases there referred to.

[6] [2005] VSCA 298; (2005) 13 VR 435.

[7] That is, a period equivalent to the minimum period specified by the offer of compromise regimes in most court rules: see, eg, Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 26.03.

[8] [2006] VSCA 65 at [17].

[9] De L, supra, Autodesk Inc v Dyason [1993] HCA 6; (1993) 176 CLR 300; Elliott v The Queen [2007] HCA 51; (2007) 234 CLR 38.