Plaintiff v First Defendant

2 The plaintiff seeks an order that the defendants pay his costs of the proceeding on a standard basis. The defendants rely on two offers to settle the proceeding made in accordance with the principles in Calderbank v Calderbank ('Calderbank')[2] and Hazeldene's Chicken Farm v VWA (No 2) ('Hazeldene's'),[3] and seek orders that:

(a) the defendants pay the plaintiff's costs on a standard basis to 2 August 2021; and

(b) the plaintiff pay the defendants' costs on an indemnity basis from 3 August 2021.

3 The proceeding was listed for trial on 27 July 2021. It was not reached on that day, and remained liable to be called on at short notice.

4 A judicial mediation of the proceeding took place on Friday 30 July 2021. The first Calderbank offer was served later that afternoon, and was open for acceptance until 4pm on Monday 2 August. The amount offered was $950,000 plus costs.

5 The trial commenced before me on 9 August 2021. At that stage the matters in issue included whether the defendants were directly and vicariously liable for the acts of the abuse perpetrated by Coffey, the nature and frequency of the abuse, and the assessment of damages.

6 The plaintiff completed his evidence on the afternoon of 11 August.

7 The second Calderbank offer was served at about 10am on the morning of 12 August, and was open for acceptance until 4pm that day. The amount offered was $1,100,000.

If the Plaintiff accepts the Offer, the Defendants will require him to sign a Deed of Release, including a solicitor's certificate.

If the Offer is not accepted before its expiry, and should the matter proceed to judgment and the Plaintiff obtain a result no more favourable than the terms of the Offer, then the Defendants will produce this letter to the Court on the question of costs and seek a special costs order. The Defendants will seek an order that the Plaintiff pay the Defendants' costs from the date of this letter on an indemnity basis, pursuant to rule 26.10(2) of the Supreme Court (General Civil Procedure) Rules 2015 and/or in accordance with the principles stated in Calderbank v Calderbank [1975] 3 All ER 333 and Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435.

If there is any aspect of this Offer you do not understand or require clarification, please contact us before the Offer lapses.

9 On Monday 17 August, after the plaintiff's case had effectively completed save for tendering documents, the defendants admitted negligence which was a cause of the abuse of the plaintiff and his injuries.

10 Evidence in the trial concluded on 19 August and final submissions were made on 3 September 2021.

11 The first Calderbank offer represented a serious attempt by the defendants to settle the proceeding. At the time the offer was made, notwithstanding its proximity to trial and the period for which it was open, the plaintiff ought to have been fully aware of the strengths and weaknesses of his case and should have been able to assess the probable and possible outcomes and respond without delay. The period for which the offer was open was reasonable in the circumstances, and the offer was expressed in clear terms, foreshadowing an order for costs in the terms sought.[4]

12 The Calderbank offer was so far in excess of the judgment sum that an order for indemnity costs from the date of the expiry of the offer is warranted.[5] Such an order would also give effect to relevant policy objectives.[6]

13 There is no presumption that a successful Calderbank offer results in indemnity costs.[7] The offeror must demonstrate an unreasonable rejection of the offer.

14 The Calderbank offers were made at a time when the defendants maintained their denial of liability, and had not admitted the particulars of abuse alleged by the plaintiff. Vindication as to the occurrence of the childhood sexual abuse and the defendants' liability for it were proper aims for the plaintiff to pursue.[8] It was not unreasonable for him to fail to accept offers that provided no such vindication.

15 The offers were made shortly before and during the trial, and were open for 7.5 and 6 business hours respectively. The plaintiff was at his home in Ouyen, and his legal representatives were in Melbourne when the first offer was open for acceptance. It can be expected that when the offers were made the plaintiff had a number of important matters on his mind. The court should not encourage use of Calderbank offers in those circumstances.[9]

16 Each offer required the plaintiff to sign a 'deed of release', the terms of which were not specified, leaving significant doubt as to what was proposed.

17 In all the circumstances it was not unreasonable for the plaintiff to fail to accept the offers.

18 The power to award costs, and to determine by whom and to what extent they are to be paid, is in the discretion of the court.[10]

19 The critical issue, when considering what consequences should flow from the failure to accept a Calderbank offer, is whether non-acceptance of the offer was unreasonable in the circumstances.[11] In Hazeldene's, the Court of Appeal stated that matters relevant to that issue would ordinarily include:

(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.[12]

Depending on the circumstances of the case there may be other matters which are also relevant to whether it was reasonable to reject an offer.

20 The policy objectives underlining the principle in Calderbank were identified in Gill v Gill (No 2) ('Gill') by Derham AsJ as including:

(i) That it is in the interests of the administration of justice that litigation should be compromised as soon as possible and so save both private and public costs;

(ii) To indemnify an offeror whose offer is later found to have been reasonable against the costs thereafter incurred. This is considered reasonable because from the time of rejection of the offer the real cause of the litigation is the offeree's rejection of the offer;

(iii) To this end, a party in receipt of an offer of compromise should have some incentive to consider the offer seriously. That incentive is the prospect of a special order as to costs;

(iv) It is nevertheless important not to discourage potential litigants from bringing their disputes to the Court;[13]

21 The Calderbank offers were made after the date on which the proceeding was listed for trial. By that time the pleadings were closed, interlocutory steps had been completed, and evidence marshalled in preparation for the trial. Accordingly, the plaintiff's lawyers were in a position to provide advice to him to assist him in assessing the probable and possible outcomes of trial against the offers. However, the plaintiff's counsel and lawyers could reasonably be expected to be extremely busy with trial preparation at the time the first offer was made, and with running the trial at the time of the second offer. Further, both offers were made at a time when the plaintiff would have necessarily had in his mind all of the complex matters in relation to liability and quantum which remained in issue in the proceeding.

22 The time allowed to the plaintiff to consider each offer was brief. The submission of plaintiff's counsel that the first offer was open for 7.5 business hours, and the second for 6 business hours, was not contested. There was a very limited opportunity for the plaintiff's counsel and lawyers to provide advice to him about the complex matters that remained in issue.

23 Further, the plaintiff's capacity to assess the offers in the time that they were open must be considered in context. When the first offer was open, the plaintiff was at his home in Ouyen, and his legal advisers were in Melbourne. This reduced the plaintiff's opportunity to sit with his lawyers and talk through the offer and all of the issues in contention in the proceeding to enable him to come to a considered conclusion about whether to accept or reject it. The second offer was only open for a number of hours during one sitting day.

24 Additionally, the plaintiff was at the time suffering from serious psychological ill health which made engagement with the litigation very difficult for him. It is likely he was experiencing significant stress and pressure. An important consequence of the abuse was the negative impact it has had on the plaintiff's relationship with the Catholic Church, represented in this proceeding by the Catholic Diocese of Ballarat and the Sisters of Saint Joseph, who the plaintiff alleged in this proceeding were responsible for the abuse and his injuries. Objectively these circumstances significantly increased the complexity and difficulty of assessment of the offers by the plaintiff.[14]

25 The amounts offered significantly exceeded the judgment and represented a serious attempt by the defendants to settle the proceeding. However, there was credible evidence which could have resulted in assessment of damages considerably in excess of the amounts offered.

26 Calderbank offers can assist the administration of justice by encouraging compromise of proceedings as soon as possible to save both private and public costs.[15] However, the interests of administration of justice were not advanced by the offers made in this case because they were made at such a late stage of the proceeding, and were only open for acceptance for a short time. Furthermore, this occurred in circumstances where it could be expected that consideration of whether to accept the offers was a complex and difficult task for an inexperienced litigant, who was under the additional burden of serious psychological ill health.

27 I conclude that viewed objectively at the time each offer was open, having regard to the circumstances to which I have referred, it is not established that the plaintiff's failure to accept either offer was unreasonable.

28 The conclusion I have reached is reinforced by both offers being expressed as requiring that the plaintiff sign a deed of release. The deed required by the defendants was not attached to either offer, or otherwise provided to the plaintiff. The terms of the deed were not set out in either offer. While each offer invited the plaintiff to contact the defendants if there was any aspect that required clarification, the time the offers were open meant there was little opportunity to do so. In any event it is for the offeror to express the offer on which it seeks to rely in unambiguous and certain terms. Any deed of release required by the defendants should have been provided with the offer to ensure there was no uncertainty as to the terms on which it was made.

29 Judgment will be entered for the plaintiff against the defendants in the sum agreed. I will order that the defendants pay the plaintiff's costs of the proceeding, including any reserve costs, on a standard basis.

[1] Lonergan v Trustees of The Sisters of Saint Joseph & Anor [2021] VSC 651 ('Lonergan').

[2] [1976] Fam 93 ('Calderbank').

[4] Mischel v Mischel Holdings Pty Ltd (in liq) (No 2) [2012] VSC 421 [33]-[34]; Stavrakijev v Ready Workforce (No 2) [2018] VSC 767 [26]-[28]; Primus Telecommunications Pty Ltd v CCP Australian Airships Limited (No 2) [2003] VSC 141 [14].

[5] See Grech v Deak-Fabrikant (No 4) [2016] VSC 35 [10].

[6] Gill v Gill (No 2) [2014] VSC 612 ('Gill') [14].

[8] ACCC v Harris Scarfe Australia Pty Ltd (No 2) [2009] FCA 433 [10].

[9] MacLean v Rottnest Island Authority [2001] WASCA 323 [36].

[10] Supreme Court Act 1986 (Vic) s 24.

[13] Gill (n 6) [14(c)] (citations omitted).