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[2016] VCAT 838
General information, not legal advice.
Victorian Civil and Administrative Tribunal
2016-05-26
Original judgment source is linked above.
particular defects in the vehicle which he said would cost $6,659.60 to repair[3], and he claimed out-of-pocket expenses of $4,243.95[4]. In terms of the amounts claimed, the most significant alleged defect was that the vinyl covering the dashboard needed repair. Not even the defect alleged in the footbrake was said to render the vehicle dangerous. This change to the claim was extraordinary.
Costs on a standard basis from 12 March 2014 and on an indemnity basis from 17 July 2014
Costs on a standard basis from 12 March 2014 and on an indemnity basis from 24 April 2015
Costs on a standard basis from 12 March 2014 and on an indemnity basis from 12 May 2015
Costs claimed on the basis of Mr Stalteri's conduct of the proceeding
Mr Stalteri's submissions in opposition to Traralgon's claim for costs
42. I note for completeness that in its submissions in reply to Mr Stalteri's claim, Traralgon simply submits that Mr Stalteri's submissions were irrelevant and that there was no basis for his claim for costs. However, in its submissions replying to Mr Stalteri's opposition to Traralgon's claim, Traralgon says that on 12 May 2015 when he expressly rejected Traralgon's offer of $10,000.00, Mr Stalteri demanded $13,001.77 amongst other demands. Unfortunately that communication has not been produced.
(1) Subject to this Division, each party is to bear their own costs in the proceeding.
(2) At any time, the Tribunal may order that a party pay all or a specified part of the costs of another party in a proceeding.
(3) The Tribunal may make an order under subsection (2) only if satisfied that it is fair to do so, having regard to -
(a) whether a party has conducted the proceeding in a way that unnecessarily disadvantaged another party to the proceeding by conduct such as -
(i) failing to comply with an order or direction of the Tribunal without reasonable excuse;
(ii) failing to comply with this Act, the regulations, the rules or an enabling enactment;
(iii) asking for an adjournment as a result of (i) or (ii);
(v) attempting to deceive another party or the Tribunal;
(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceeding;
(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law;
(e) any other matter the Tribunal considers relevant.
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. Of course, deciding whether conduct is "reasonable" or "unreasonable" will always involve matters of judgment and impression. There are questions about which different judges might properly arrive at different conclusions.
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(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; (and)
(f) whether the offer foreshadowed an application for an indemnity costs (order) in the event of the offeree's rejecting it"[9].
(T)he issue of the deployment of Calderbank offers in VCAT proceedings is not without its complexity. In particular, it does not appear to me to be settled law whether the common law principles which follow from Calderbank v Calderbank and subsequent authorities such as Hazeldene's Chicken Farm Pty Ltd v VWA are applicable when determining the costs consequences of settlement offers in VCAT proceedings, or rather, whether the statutory regime in sections 112, 113 and 114 of the Act is intended to "cover the field".
In Metricon Homes Pty Ltd v Sawyer [2013] VSC 518, Garde J appeared to presume that it was open to the Tribunal to consider whether the Calderbank principles should influence its discretion with respect to costs, but it is not apparent from the judgment that this question was squarely before him. My own researches have not been able to locate any authority of this Court dealing directly with this question. In VCAT itself, in Fasham Johnson Pty Ltd v Ware [2004] VCAT 1708, Senior Member Cremean expressed his doubts that it was open to the Tribunal to consider offers expressed to be in accordance with Calderbank principles in view of the statutory scheme provided for by sections 112, 113, 114 and 115 of the Act. However, Deputy President Mcnamara (as he then was) expressly rejected such a submission in Mildura City Council v Victorian WorkCover Authority [2006] VCAT 2366. In other proceedings[14] some tribunal members appear to have assumed that Calderbank principles are applicable to offers made in VCAT, while others[15] have taken Calderbank offers into account as a "relevant matter" under s109(3) of the Act. There is dicta of the Court of Appeal in Velardo & Anor v Andonov [2010] VSCA 38, that Calderbank principles may apply where an offer does not comply with s112 of the Act, but that does not establish whether the common law regime and statutory regimes can apply concurrently.
It is not the task of this Court in the context of this appeal to reconcile the apparent inconsistencies in approach referred to above.
83. At paragraph 34 of his judgment Ashley JA said that the Draft Notice of Appeal identified three questions: whether s114 of the VCAT Act empowered the Tribunal to give permission to withdraw an offer of settlement after written acceptance of the offer, absent fraud or mistake; if so, in the absence of fraud or mistake, whether an Applicant had to demonstrate a change of circumstances which warranted the withdrawal of the offer; and if so whether there was sufficient evidence for the Tribunal to conclude that there had been a change of circumstances. Given that description, I agree with Daly AsJ that the statements of Ashley JA at paragraph 47 were obiter dicta. But her statement that "There is dicta of the Court of Appeal in Velardo & Anor v Andonov that Calderbank principles may apply where an offer does not comply with s 112 of the Act, but that (it) does not establish whether the common law regime and statutory regimes can apply concurrently" needs careful examination.
84. In my view, Daly AsJ is not to be taken as casting doubt on whether Calderbank offers can be used in VCAT. Velardo concerned a Calderbank offer. Because it was an offer to make a payment in instalments, it is difficult to see how it could have been intended to be an offer under s112: because the Tribunal would not order an award to be paid in instalments it would be very difficult to compare the offer with the outcome of the case, for the purposes of working out whether the offer was more favourable than the award. The appeal Judges said it was not an offer under section 112.
(a) conducting the proceeding in a way that unnecessarily disadvantaged the other party (because the types of conduct in ss109(3)(a)(i) - (vi) are just examples, and rejecting a reasonable offer could disadvantage the offeror);
(b) prolonging unreasonably the time taken to complete the proceeding (because accepting a reasonable offer could end the proceeding sooner); and
(e) any other matter the Tribunal considers relevant (because, given the policy considerations set out in Hazeldene, the Tribunal should promote early offers of settlement based on a realistic assessment of an Applicant's claim, whilst not discouraging Applicants from bringing their disputes to the Tribunal).
86. In the case before me, Traralgon does not submit that its offers were made within s112 of the VCAT Act. Neither offer was open for acceptance for at least 14 days[19] and so for that reason alone they were not offers within that section. There is no question, then, of whether the common law regime and statutory regimes can apply concurrently in the case before me. I accept as good law, the statement of Ashley JA, that a party can make a Calderbank offer in the Tribunal.
87. Because in Velardo v Andonov it was held that the offer was not a s112 offer, the outcome was that the Tribunal's order was set aside to the extent only that it had given Andonov permission_, nunc pro tunc_, to withdraw his offer prior to its purported acceptance by the Velardos. The rest of the Tribunal's order was affirmed, with the result that there was no concluded settlement agreement. In other words, not being a s112 offer, it could be withdrawn before it was accepted. That result is irrelevant to the case before me: Traralgon did not purport to withdraw its offer.
92. I take the Calderbank offer into account when considering whether it is fair to award costs to Traralgon, under sub sections 109(3)(a) (b) and (e) of the VCAT Act, and I find that it is fair.
93. The question, then, is whether Traralgon should have its costs on an indemnity basis. Clearly, the offer of 24 April 2015 had warned Mr Stalteri that Traralgon would seek costs on that basis. Paragraph (f) in paragraph 25 of the judgment in Hazeldene listed as a factor for consideration, whether the offeror had foreshadowed seeking indemnity costs. However, the Tribunal is not bound to award indemnity costs when a Calderbank offer exceeded the outcome of the case. Put another way, the Tribunal would not improperly exercise its discretion under section 109 of the VCAT Act if it did not award indemnity costs. The reason for this is that the threat of costs contained in a Calderbank offer legitimately and properly puts pressure on the offeree to seriously consider accepting the offer, by increasing the offeree's exposure to a costs order. In Court proceedings where costs follow the event, the usual basis for assessing costs is the standard basis, previously called the party/party basis. So to give the offeree an incentive to accept the offer in a Court proceeding, it is appropriate for the offeror to say it will seek indemnity costs. However in the Tribunal, s109(1) of the VCAT Act makes clear that there is no presumption that costs follow the event, and so the incentive for an offeree to accept a Calderbank offer can be the offeree's exposure to an award of costs. The incentive is not that the offeree's exposure might increase from standard to indemnity costs, because the starting point in the absence of the offer would be that the parties would bear their own costs.
94. For these reasons I conclude that Traralgon's costs should be assessed on the standard basis.
95. Even though Mr Stalteri did not raise this, some of Traralgon's costs should be assessed on the Magistrates' Court Scale. Again, if Mr Stalteri had engaged a legal practitioner I would not have to expand on this point. In a nutshell, though, lawyers' charges are set by 'Scales', which list items of legal work and their values. Those values are highest in the Supreme Court and lowest in the Magistrates' Court. Applicants are given an incentive to sue in the lowest available Court. If a person sues in the Supreme Court and wins their case, but is awarded a low sum which could have been awarded by the Magistrates' Court, they may be awarded their costs on a standard basis assessed under the Magistrates' Court Scale. Whilst Mr Stalteri's proceeding was always heard in the Tribunal and there was no question of remitting it to the Magistrates' Court, from 17 May 2015 the quantum of the claim, $10,903.55, was such that the dispute could have been dealt with in the Magistrates' Court. Costs in the Tribunal are usually assessed under the County Court Scale but here, the Magistrates' Court Scale should be used from 17 May 2015. The Calderbank offer of 25 April 2015 expired at 12.00 noon on 30 April 2015, and after that date Mr Stalteri was given leave to amend his claim. He did so on 17 May 2015 and the hearing was then only a few weeks away. It would not be fair or reasonable to expect Traralgon to terminate the retainer of either the solicitors or Counsel after 17 May 2015. On the contrary, it was entirely appropriate that Traralgon continue to retain the legal practitioners who had represented it throughout the proceeding. However, Traralgon's costs are to be assessed on the Magistrates' Court Scale after 17 May 2015.
96. The last question is as to the date from which Mr Stalteri should pay Traralgon's costs. It is from 30 April 2015, when the Calderbank offer lapsed. In a Court proceeding in which costs follow the event, Mr Stalteri could have been awarded his costs up to 30 April 2015, but be ordered to pay Traralgon's costs after that date. As I have said, though, costs do not follow the event in the Tribunal and Mr Stalteri is not awarded any costs.
As to the first basis on which this claim is made, I do not consider it to be fair to award Traralgon its costs from 12 March 2014, which was before it first retained its legal practitioners, or on an indemnity basis. This application does not rely on any offer having been made, but essentially relies on the difference between the amounts claimed in the award made to Mr Stalteri, which is not a sufficient reason.
As to the second basis of this claim, that on 17 July 2014 Traralgon offered to pay Mr Stalteri $5,000.00 and to discontinue its counterclaim of $4,253.29, again I do not consider it to be fair to award Traralgon its costs. This offer was made one day before the first hearing date, which did not give Mr Stalteri sufficient time to consider the offer. As the amount offered did not exceed the amount later awarded to Mr Stalteri, I do not consider that the offer contained an appropriate compromise, or that it reflected Mr Stalteri's prospects of success as at 17 July 2014. I am not being critical of Traralgon's legal practitioners. To a degree I am reaching this decision with the benefit of hindsight. Nevertheless I think the most objective comparison, when considering whether the offer contained an appropriate compromise, is between the amount offered and the outcome of the case. Put simply, acceptance of the offer would not have been more favourable to Mr Stalteri than the outcome of the case. I do not accept Traralgon's submission that the difference between the two was a "mere" $636.80.
Costs on a standard basis from 12 March 2014 and on an indemnity basis from 24 April 2015
Costs on a standard basis from 12 March 2014 and on an indemnity basis from 12 May 2015
Costs claimed on the basis of Mr Stalteri's conduct of the proceeding
[1]Stalteri v Traralgon Contractors Pty Ltd [2015] VCAT 2032
[2]In its submissions Traralgon said that it engaged the legal practitioners in April 2014. The Tribunal's file only shows the date they first filed a document.
[3]Paragraphs 18-24 of the Amended Points of Claim
[4]Paragraphs 25-40 of the Amended Points of Claim
[5]In its submissions replying to Mr Stalteri's opposition to Traralgon's claim, Traralgon denied that its retention of legal practitioners was unreasonable
[6]It was also ameliorated by the Courts having different Scales of costs, where legal fees were lower in the lower Courts
[7]And other orders, which are irrelevant here
[8]That is, the old system of paying money into Court or its equivalent. See, for example, rules 63.16 and 26.08 of the Supreme Court (General Civil Procedure) Rules 2015. The practice of literally paying money into Court was abolished when the Rules were substantially reformed, and instead parties now offer to pay money. In Calderbank Cairns LJ said that there was such a regime in respect of damages claims between spouses, but not in relation to property division.
[11]At paragraph 17 Daly AsJ said that leave to appeal had been granted, on the limited issues of the adequacy of the Tribunal's reasons and an apparent inconsistency in them. So Daly AsJ was hearing the appeal, not an application for leave. At paragraphs 27 - 31 Daly AsJ held that the Tribunal's reasons were inadequate
[13]See paragraph 13 of Daly AsJ's decision
[16]Velardo v Andonov [2009] VCAT 1922
[17]The VCAT Order was made by a Vice President, so that in order to appeal, the dissatisfied party had to seek leave, from the Court of Appeal, to appeal. Court procedure required the Velardos to file a Draft Notice of Appeal
Stalteri
Traralgon Contractors Pty Ltd
Costs - Applicant succeeds in the case but for vastly less than the sum originally claimed - Applicant amends the quantum of his claim progressively through the proceeding but the amount awarded is still around one-half of the sum finally claimed - Respondent had made two Calderbank offers, the latter offering an outcome more beneficial to the Applicant than the sum awarded - Applicant seeks costs - Respondent seeks costs on five different bases - Victorian Civil and Administrative Tribunal Act 1998 section 109 - Calderbank v Calderbank [1975] 3 All ER 333 - Hazeldene's Chicken Farm v VWA (No 2) [2005] VSCA 298 - Hopkins v Hopkins [2014] VSC 319 - Velardo & Anor v Andonov [2010] VSCA 38.