Telstra Super Pty Ltd v Finch

1 I agree with Hansen AJA, for the reasons he has stated, that orders should be made for the costs of the trial, the appeal and cross-appeal as his Honour proposes.

2 I also agree that orders for costs should be made as Hansen AJA proposes.

3 On 23 December 2009 this Court made orders which allowed the appeal, dismissed the cross-appeal, set aside the orders made by the trial division and in lieu thereof gave judgment for the appellant, and adjourned to a date to be fixed the question of the costs of the appeal, the cross-appeal and the proceeding in the trial division. The order was authenticated on 14 January 2010.

4 The parties subsequently provided written submissions on costs, which can be summarised as follows.

5 The appellant sought its costs of the appeal and cross-appeal on a party/party basis, and its costs of the proceeding in the trial division on a party/party basis up to 19 December 2007 and thereafter on an indemnity, alternatively solicitor and client, basis. The appellant relied on a Calderbank letter, dated 6 December 2007, addressed to the respondent's solicitors, whereby the appellant offered to resolve the proceeding on the following basis:

(a) each party walk away from the proceeding bearing its own costs;

(b) the appellant forego its right to recover the amount of $5,500 which a Master had ordered the respondent to pay to the appellant; and

(c) the appellant forego its right to recover any costs the respondent might

be required to pay under rule 63.17 by reason of amendment of his pleadings; and

(d) the parties sign a Deed of Settlement and Release, cl 3 of which provided as follows:

Mr Finch releases and discharges Telstra Super, its directors, officers, servants, contractors, agents, successors, assigns and employees from any claim, action, damage, loss, liability, cost, charge, expense, outgoing or payment he has or may have against Telstra Super in respect of, or in any way arising out of:

(a) each of his applications for a total and permanent invalidity benefit (the Applications); and/or

(b) each of Telstra Super's decisions concerning the Applications (the Decisions);

the subject of this Proceeding, whether arising at common law or in equity or under statute **(**Telstra Super's Released Matters).

The offer remained open for acceptance until 4.00 pm on 19 December 2007.

6 The appellant submitted that having regard to the factors identified in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2)[1], the respondent's rejection of the offer was unreasonable in circumstances where the appellant ultimately succeeded for the reasons it had clearly expressed in the letter. Accordingly, a special order for costs was appropriate.

7 Before addressing costs, the respondent submitted that final orders should be made remitting the matter to the appellant to enable the appellant to consider exercising its discretion to waive or reduce the requirement under the trust deed that the respondent have been absent from active work at Telstra for at least six months at the time of ceasing employment in order to be eligible for TPI benefit.

8 As to the costs of the proceeding in the trial division, the respondent submitted that each party should bear its own costs, alternatively that the appellant should only have its costs after 5 November 2007 which is the date of the appellant's amended defence which first raised the construction point on which the appellant ultimately succeeded. If the construction point had been raised earlier, the respondent could either have sought an exercise of the appellant's discretion to waive the six-month requirement, or considered further whether to proceed with the action.

9 The respondent submitted that no order for indemnity costs should be made because:

(a) acceptance of the offer made in the Calderbank letter would have prevented the respondent from asking the appellant to consider waiving or reducing the six-month requirement, thus making him abandon a right which he then retained and still arguably retains;

(b) the offer was not a genuine compromise; and

(c) the respondent's rejection of the offer was not unreasonable in all the circumstances.

10 As to the costs of the appeal, the respondent conceded that the appellant was entitled to its costs, and to that end sought a certificate pursuant to the Appeal Costs Act 1998. The respondent submitted, however, that no order for costs should be made on the cross-appeal given that the cross-appeal was entirely dependant upon the outcome of the appeal, was ultimately not considered by the Court, and had not been determined against the respondent in circumstances where this Court concluded that it was unnecessary to consider it.

11 It is convenient to begin with the question of whether this Court should remit the respondent's application for TPI benefit to the appellant to enable the appellant to consider exercising its discretion to waive the six-month requirement. The respondent did not either at trial or on appeal resist an order that there be judgment for the appellant in order that he could seek waiver of the six-month requirement. Rather, the respondent was content to rely on his argument on the construction point which, if accepted, meant that he did comply with the six-month requirement and there was no need to seek any waiver. Now, having failed on the construction point, the respondent seeks for the first time to be put in a position to obtain a waiver. The difficulty is that this Court has dealt with the appeal and, the orders having been authenticated, is functus officio, save as to costs. It follows that there is nothing left to remit to the appellant. Even assuming, however, that this Court does have the power to remit the matter, that course would be futile in circumstances where the appellant's original decision to reject the claim was made on the merits, rather than on the basis of the six-month requirement, and has been held by this Court to be a decision open on the materials. Accordingly, the matter would, or ought, not be remitted to the appellant.

12 Turning now to costs, the first question is whether there should be an order for costs of the cross-appeal. The main issue on the cross-appeal, namely whether the trial judge erred in remitting the respondent's claim for TPI benefit to the appellant rather than deciding the claim himself, was raised by the respondent. The cross-appeal was always dependent on the result of the appeal. From the outset the respondent knew that if the appeal succeeded, and the appellant's original decision to reject the claim for TPI benefit was upheld, there would be no occasion to consider the cross-appeal. Accordingly, it is not to the point for the respondent to say that it should not pay the appellant's costs on this aspect of the case. On the contrary, the respondent's raising of the issue on the cross-appeal led the appellant, acting reasonably, to incur costs in preparing materials to meet the point in the cross-appeal should it arise. It follows that the respondent/cross-appellant should pay the appellant/cross-respondent's costs of the cross-appeal.

13 As to the costs of the proceeding in the trial division, it is true that the appellant ultimately succeeded on the construction point, which was raised for the first time by the amended defence dated 5 November 2007. However, the appellant successfully argued, both before the trial judge and on appeal, that the decision to reject the TPI claim was open on the materials and was not a decision so unreasonable that no reasonable trustee in the appellant's position could have made it. As this was the essence of the appellant's case from the outset, it cannot be said that viewing the whole of the proceeding in context, the appellant only raised the winning point after 5 November 2007. It follows that the appellant is entitled to its costs of the proceeding in the trial division.

14 As to the basis of the order for costs, the Court has an overall discretion on costs which is to be exercised in light of all the relevant circumstances; see Luxmoore Pty Ltd v Hydedale Pty Ltd.[2] As to whether a special order for costs should be made on the basis of the respondent's rejection of the Calderbank offer, the question is ultimately whether the respondent's rejection of the offer was unreasonable in all the circumstances; see Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2).[3] The appellant's submissions addressed the relevant factors comprehensively and it is not necessary to refer to them here. Certainly, as the appellant has pointed out, the terms of the offer were more favourable to the respondent than the position he ultimately obtained from the litigation. Nevertheless, I do not accept that the respondent was unreasonable to refuse the offer at the time that he did. At the least it was arguable that cl 3 of the Deed of Settlement and Release had the effect of precluding the respondent from asking the appellant to consider waiving or reducing the requirement as to a six month period of absence from employment. That was not an issue for determination in the litigation. That is to say, while the appellant had before making the Calderbank offer amended its defence to raise the construction point, at that time (and indeed at all times up until the written submissions now before us) the respondent had not raised the prospect of seeking waiver of the six-month requirement. The question of waiver was therefore not in controversy, yet the appellant sought a release which arguably had the effect of shutting off the respondent's right to seek waiver should he at some time be so advised.

15 Having regard to all the matters canvassed in the parties' submissions, and viewing the conduct of the litigation overall, in my view it is appropriate that the respondent pay the appellant's costs of the proceeding in the trial division including reserved costs on a party/party basis.

1. The respondent pay the appellant's costs of the appeal and cross-appeal including reserved costs on a party/party basis.
2. The respondent pay the appellant's costs of the proceeding in the trial division including reserved costs on a party/party basis.

[1] [2005] VSCA 298; (2005) 13 VR 435.

[2] [2008] VSCA 212; (2008) 20 VR 481.

[3] [2005] VSCA 298; (2005) 13 VR 435 at [19]- [20], and [25] for some factors relevant to assessing reasonableness.