Sweeney v He

The parties' submissions

1. There was no dispute between the parties about the applicable principles, namely that the effect of a Calderbank offer is not automatic but may be relevant to the exercise of the Court's discretion; it must reflect a genuine compromise; the successful offeror must achieve the same or a better outcome than if the offeree had accepted the offer; and the Court must be satisfied that it was unreasonable on the part of the offeree not to have accepted the offer.
2. It was submitted for the defendants: 1. There could no doubt that the defendants had obtained a significantly better outcome than if either the First Offer or the Second Offer had been accepted. Their case had been vindicated, the proceedings are to be dismissed and they are otherwise entitled to their costs. 2. In circumstances where the offers were generous, given that the defendants had maintained the view that Michael's case was untenable, and given the outcome of the proceedings, the rejection of both offers was therefore unreasonable. 3. Furthermore, the reasons supporting the offers set out in the letters had, in substance, been vindicated in the Principal Judgment. In paragraph [37] of the Principal Judgment, the Court had found Michael not to be a reliable witness, whereas the defendants have been found by the Court to be credible witnesses (Principal Judgment at [74] and [93]). Furthermore, the Court had noted (Principal Judgment at [132]) that there was no documentary evidence in support of the agreement alleged by Michael and the Court had unequivocally found (Principal Judgment [139]) for the conclusion advanced by the defendants that Kevin was always intended to obtain absolute ownership of the legal and beneficial interest in the Property.
3. The submissions for Michael sought to rehearse some aspects of the merits and suggested that the defendants' offers lacked the necessary certainty to warrant a special costs order. Given these submissions were concisely expressed, it is convenient to reproduce them: "… 2. The Plaintiff submits that at no point prior to the hearing was the Plaintiff's case untenable. The Plaintiff's case is one alleging a constructive trust based on an oral agreement. Significant issues of credibility were required to be determined by the Court. 3. The Defendants' case was inconsistent with key pieces of evidence, being the Suncorp Bank Statement showing the Defendants' change of behaviour around October 2016, the evidence given in NCAT by the Second Defendant on 15 February 2018, and the First Defendant's Centrelink records which showed that rental assistance was not claimed after the purchase of the property. All these pieces of evidence were consistent with the Plaintiff's case and inconsistent with the Defendants' case. 4. On this basis it is denied that the rejection of the offers was unreasonable. 5. The Defendants' submission that the evidence of the First and Second Defendant was found to be reliable is something that was determined after the fact, perhaps, given the circumstances of the case a necessary step in determining the proceedings. The Plaintiff denies that there was a lack of documentary evidence to support his claim. The writer refers to paragraph 3 above. 6. Both the Defendants' offers do not specify: a. An expiry date or; b. An amount for costs, separate to an amount for judgment. 7. Thus, both offers lack the requisite clarity as the basis for a special costs order. 8. The Plaintiff has made the attached offer [an offer of compromise purportedly under the Rules that he be paid $70,000 and his costs] in the proceedings, early on. Given the credit issues in the proceedings, it is submitted this was a reasonable offer made with a genuine attempt to settle the proceedings, early on. 9. Given the Plaintiff's health issues and lack of financial security a special costs order would be unjust and burdensome for an unsuccessful case brought in good faith and with good cause."

Consideration

1. The Court accepts the submissions made on behalf of the defendants.
2. In relation to the arguments advanced for Michael: 1. It is of no assistance to Michael to attempt to rehearse the merits. The fact that there were certain pieces of evidence, which the Court took into account, that were "consistent" with Michael's case does not affect the correctness of the proposition that at no time was there ever shown to be any contemporaneous documentary evidence which recorded or referred to the agreement for which Michael contended. That absence would have been apparent at the time of the two offers. 2. Contrary to the submission made, both offers contained an expiry date and time. Furthermore, it was not necessary for them to specify an amount for costs given that it was proposed that each party should pay their own. 3. The fact that Michael made an offer of compromise in March 2021 that he be paid $70,000 and that the defendants should pay his costs is irrelevant to the exercise of the Court's discretion. 4. While the Court has every sympathy for the position in which he now finds himself, Michael's poor health and financial circumstances are, with respect, irrelevant to the legal analysis which the Court must undertake in exercising its discretion as to costs. Michael was legally represented and chose to bring Supreme Court proceedings in which he has completely failed.
3. It is sufficient for present purposes for the Court to have regard to the First Offer. I am not persuaded by any of the reasons advanced on behalf of Michael. The First Offer represented a genuine compromise and the defendants have achieved a significantly better outcome than if Michael had accepted the First Offer. Furthermore, for the reasons advanced by Ms Boettcher I am satisfied that it was unreasonable for Michael not to have accepted the First Offer.
4. In reaching that conclusion I have not overlooked two matters that might be thought to be relevant.
5. The first is the time for the which the First Offer was limited to be open for acceptance. In the week before a hearing, when the issues are well and truly exposed between legally represented parties and turn upon alleged dealings amongst themselves, an offer open for three clear business days is not open to criticism as being open for too short a period.
6. The second is that the final paragraph of the First Offer does not expressly refer to an application for indemnity costs. While it is generally desirable that an application for indemnity costs should be expressly foreshadowed, it is not an absolute prerequisite. In any event, given that the parties were legally represented, I am satisfied that a legal practitioner who received the First Offer would understand the last sentence to encompass an offer for costs on the indemnity basis. No evidence has been adduced for Michael that his lawyers did not understand the First Offer in that way.

Conclusion

1. For these reasons, the Court will exercise its discretion as to costs to make an order for indemnity costs to run from the next business day after the First Offer expired.
2. The orders of the Court are: 1. Proceedings dismissed. 2. The plaintiff is to pay the defendants' costs of the proceedings: 1. On the ordinary basis up to and including 22 November 2021; and 2. On the indemnity basis on and from 23 November 2021.

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