W284 Pty Ltd v MRES Pty Ltd & Ors

(a) The parties file consent orders with the Court which deal with the question of costs as follows:

(1) The Plaintiff pay the Defendants costs of the proceeding (including reserved costs):

(i) on the standard basis up to 9 January 2020; and

1. On 6 April 2023, the defendants wrote to the plaintiff confirming that:

Further to our client's offer set out in our letter dated 24 March 2023, we confirm:

1. the offer includes the costs of the proceedings from commencement in the Magistrates' Court of Victoria and prior to the transfer to the County Court of Victoria and thereafter in that regard, costs on the standard basis for the proceedings while in the Magistrates' Court of Victoria and up to 9 January 2020 would be on Scale G of the Scale of Costs in the applicable Magistrates' Court General Civil Procedure Rules.
2. On 17 April 2023, Mr Hertz advised Ms Petreska that he was instructed by his client that it does not agree to the defendants' offer and was considering its options.
3. The defendants made an application for costs on the indemnity basis from either 2 December 2019, 19 December 2019, 3 March 2021, or 15 July 2022. These are the dates the defendants served their first through fourth Calderbank offers on the plaintiff. The defendants also sought costs of and incidental to the making of the application for indemnity costs on the indemnity basis.
4. The defendants filed their outline of submissions as to costs and the Petreska affidavit in support on 26 April 2023. The plaintiff filed its submissions on 3 May 2023. The defendants' submissions in reply were filed on 12 May 2023.
5. Upon invitation, neither party sought to make oral submissions. The costs application was determined on the papers.

Chronology of proceeding and Calderbank offers

1. On 7 March 2019, the plaintiff commenced proceedings in the Magistrates' Court of Victoria.
2. On 18 April 2019, the defendants filed and served their amended defence.
3. By the end of May 2019, each party had filed an affidavit of documents.
4. On 13 August 2019, the proceeding was set down for final hearing on 13 September 2019 in the Magistrates' Court.
5. The hearing was vacated by consent. It was relisted to commence on 4 December 2019.
6. By mid-September 2019, phone records subpoenaed by the plaintiff were produced. These records were included by the plaintiff in the Court Book prepared by the parties for the hearing in the Magistrates' Court and later in the Court Book prepared for the County Court trial.
7. On 2 December 2019, the first Calderbank letter (the first offer)[3] was sent to the plaintiff's solicitor on a 'without prejudice' basis.[4] The first offer set out the view of the defendants that the plaintiff's claims had no prospect of success and would ultimately fail. The first offer addressed the following matters:

(a) The allegations made against the defendants; > > (b) The allegations in the defence that the pleading was defective; the plaintiff's claims were "vague, embarrassing and are lacking in particulars" and the pleading appeared to rely on purported causes of action unknown to the law. > > (c) The following offer was made:

Mr Keleher and MRES offer to settle the whole of the Proceeding against them on the following terms:

(a) your client discontinues the Proceeding as against Mr Keleher and MRES;

(b) your client, Mr Keleher and MRES bear their own costs.[5]

1. The offer was open for one day, until 5.00pm on 3 December 2019.
2. The hearing did not proceed on 4 December 2019. It had been relisted to commence on 15 February 2021.
3. On 19 December 2019, the second Calderbank letter[6] (the second offer) was sent. This letter set out the defendants' position and issues with the claims as pleaded by the plaintiff, summarised as follows:

(a) The restraint provisions are prima facie void and unenforceable being an unreasonable restraint of trade; > > (b) The restraints go further than is necessary to protect a legitimate business interest, and furthermore the clauses do not identify a legitimate business interest; > > (c) There is no geographic limit on the restraints; > > (d) The consideration provided is insufficient to support the restraints; > > (e) The restraint duration, particularly the 6-to-12-month period, is unreasonable; > > (f) Should the Court accept that the restraints are void and unenforceable, the plaintiff would have suffered no loss; > > (g) Should the Court accept that the restrains are enforceable, it would be for 3 months as that was the period circled by Wilson at clause 1.6(c) of the Restricted Activity Agreement. This would mean that the plaintiff still had suffered no loss, as that period ended 5 January 2019, and the earliest loss allegation was from 22 January 2019; > > (h) If the plaintiff disagrees on the 3-month period, the clause should fail for uncertainty as there was no agreement as to duration; > > (i) In relation to the claims against MRES and Mr Keleher, they rely on breaches of the restraint and confidentiality provisions by Ms Wilson, which claims cannot succeed; > > (j) The second offer repeated the basis for the defendants' view that the claims against MRES and Mr Keleher were misconceived; > > (k) The defendants offered to settle the whole of the proceeding against them on the following terms: > > > (i) The plaintiff discontinue the proceeding; > > > > (ii) The parties bear their own costs.

4. The offer was open until 5.00pm on 10 January 2020. The plaintiff did not respond to the offer.
5. On 8 February 2021, the second and third defendants filed their written statements of evidence in the Magistrates' Court.
6. The hearing set for 15 February 2021 was adjourned to 2 August 2021.
7. On 3 March 2021, the third Calderbank letter[7] (the third offer) was sent to the plaintiffs. The defendants re-iterated the matters set out in the second letter, and further articulated their position as follows:

(a) The gaining of "particular skills or experience" by an employee in the course of their employment is not a legitimate business interest; > > (b) The restraints seek to cover any number of unidentified entities and business activities by using broadly defined terms; > > (c) The consideration provided by the third defendant is insufficient to support the restraints particularly where she received no compensation, there was no restraint of the kind or breadth in her earlier contract of employment and her remuneration remained unchanged; > > (d) The bargaining position between the parties was not equal so as to justify the restraints; > > (e) There is no evidence that the information barely alleged to be confidential was truly confidential in nature in accordance with the applicable and well-settled authorities like Wright v Gasweld Pty Ltd (1991) 39 IR 256 per Kirby J; > > (f) There is no evidence whatsoever that Ms Wilson misappropriated any database containing information which was treated by the plaintiff as confidential or at all; > > (g) The claims for alleged breaches of confidence are speculative at best; > > (h) In relation to the claims against MRES and Mr Keleher, there is no evidence filed by the plaintiff which could support or make out the alleged claims, and even if the claims against Ms Wilson succeeded, it does not follow that the plaintiff would succeed against MRES and Mr Keleher; > > (i) In respect of loss, the plaintiff's claim for capital losses is misconceived. The weight of the evidence demonstrates that the relevant landlords would likely have left in any event and did so despite unsuccessful efforts to retain them. Even if the plaintiff succeeded, it would be appropriate to assess damages on the basis of the commissions lost consistent with the decision of Bergin CJ in Helensburgh Property Management Pty Ltd v Brady [2016] NSWSC 253. This would be no more than $20,735.65; > > (j) In relation to the claim for lost commissions on the sale of one 'lost' property, there is no evidence that the transaction was lost because of an alleged breach of contract by Ms Wilson. The vendors were free to select an agency they viewed as appropriate to undertake the transaction and were under no obligation to engage the plaintiff; > > (k) The following offer was made: > > > (a) The defendants pay your client the sum of $20,735.65 plus interest calculated from the date the proceedings were commenced until the date of this letter in the sum of $4,130.09 within 28 days of a deed of settlement and release being executed by all parties; > > > > (b) The parties enter into a deed of settlement and release with standard terms relating to mutual releases, mutual non-disparagement and confidentiality; > > (c) your client discontinues the Proceeding as against our clients; > > (d) the parties bear their own costs.

8. The offer was open until 12.00pm on 16 March 2021. The plaintiff did not respond to the offer.
9. On 23 April 2021, the plaintiff made a Form 4 Application for Referral under the Courts (Case Transfer) Act 1991 to transfer the proceedings from the Magistrates' Court of Victoria to the County Court.
10. By 1 October 2021, the matter was transferred after the necessary forms and fees had been completed.
11. On 24 May 2022, the parties attended mediation, which was unsuccessful.
12. On 15 July 2022, the fourth Calderbank letter[8] (the fourth offer) was sent to the plaintiff. It incorporated the contents of the third offer by reference and maintained that the plaintiff's claims had no prospects of success and would ultimately fail. The defendants made the following offer:

(a) The defendants pay the plaintiff the sum of $20,735.65 plus interest of $6,964.91; > > (b) The parties enter into a deed of settlement and release; > > (c) The plaintiff discontinue the proceeding; and > > (d) The parties bear their own costs.

13. The offer was open for acceptance until 4pm on 22 July 2022. The plaintiff did not respond to the offer.
14. The matter proceeded to trial before me, commencing on 2 August 2022.

1. The defendants contended that the unreasonable rejection of a Calderbank offer is a relevant factor in determining whether the Court should depart from the usual order that costs be awarded on the standard basis.
2. The plaintiff's rejection of the four Calderbank offers was unreasonable as they were made at a stage after:

(c) the issues in the dispute had been ventilated at pre-hearing conference on 12 June 2019;

(d) the Plaintiff had issued and obtained subpoenaed documents including those which it would ultimately rely on at the trial of the proceeding (which subpoenaed documents did not assist in its claims, and most of which were not tendered or relied on).

1. Further, the plaintiff was "entirely unsuccessful" in its claims. The plaintiff "essentially failed at the very first hurdle", failing to establish the foundation to its claims that the post-employment restraint was enforceable. The plaintiff also failed with respect to the alleged confidential information claims on the basis that the limited information said to be confidential was not confidential information.
2. The issues with the plaintiff's claims were apparent before the proceeding was issued, or at the latest very early in the proceeding in the Magistrates' Court of Victoria. At the time of each of the offers being made, the plaintiff would have appreciated it had no prospects of success and its claims lacked merit.
3. Each of the Calderbank offers ventilated the reasons why the plaintiff was unlikely to succeed, and why the offers should be accepted. The reasons articulated were substantively consistent with the Court's reasons for decision.
4. Further, the amounts offered in the third and fourth offers exceeded what the plaintiff would have been entitled to had it succeeded in the case. Each offer warned that rejection would be cause for an application for indemnity costs.
5. As a result, the defendants submitted that an order for costs on the indemnity ought to be made.
6. Further, the defendants contended that the proceeding ought to have been commenced in the County Court. Therefore, costs in respect of the conduct of the proceeding before the transfer to the County Court ought to be calculated on the County Court scale, not on the Magistrates' Court scale.
7. The plaintiff should be ordered to pay the defendants' costs of an incidental to the application for costs on the indemnity basis.

1. The plaintiff submitted that it should be ordered to pay the defendants' costs on the standard basis.
2. In summary, the defendants' application for indemnity costs should fail for the following reasons:

(a) The defendants' costs submissions made no attempt to address each of their four Calderbank offers individually, instead they rolled them up and acted as if they were the same, without addressing important differences in each; > > (b) The formulaic approach to the application of the Hazeldene's Chicken Farm (Hazeldene)[9] factors caused the defendants to overlook the fact that the Court will be slow to award indemnity costs in a proceeding that involved complex questions of fact and law and will only order indemnity costs against an unsuccessful party when the conduct of that party can be said to have been unreasonable in all of the circumstances including by not accepting a Calderbank offer; > > (c) The defendants equated, with the benefit of hindsight, the plaintiff's failure to establish its case with it being hopeless and known to be so. The case was hard-fought, and the plaintiff acted properly in pursuing it. These considerations together with the small compromise offered militates strongly against the Court making a finding of unreasonableness of the plaintiff's rejection of the Calderbank offers and making an order for indemnity costs in favour of the defendants.

3. LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd (No 2) (LMI Australasia)[10] and Di Falco v Emirates (Ruling No 3 - Costs Ruling) (Di Falco v Emirates)[11] support the plaintiff's submission that, given the complexity of the matter, the offers were not unreasonably rejected. In LMI Australasia, His Honour Justice Barrett said as follows with regards to ordering indemnity costs:

I do not think that that conclusion follows in any inevitable way from the fact that the proffered settlement can, with hindsight, be seen to have been more advantageous to the plaintiffs than the result they achieved in the litigation...

In Nobrega (above), Powell JA (with whom Priestly JA and Sheppard AJA agreed) quoted with approval a passage in the judgment of the last mentioned judge as a judge of the Federal Court in Sanko Steamship Co Ltd v Sumitomo Australia Ltd (unreported, FCA, 19 December 1995):

"The ordinary rule is that costs when ordered in adversary litigation are to be recovered on the party and party basis. Any attempt to disturb that situation needs to be carefully considered. It should only be departed from where the conduct of the party against whom the order is sought is plainly unreasonable.

This was a difficult case involving a myriad of issues both of fact and of law...The case was certainly not clear cut and was hard fought. In those circumstances it seems to me very difficult to reach the conclusion that either party was acting at all unreasonably."[12]

1. His Honour Justice Barrett went on to observe, in respect of the case before him, that:

... this case was not clear cut and was hard fought, with a myriad of issues of some complexity on which it would have been by no means easy to predict the outcome in advance of full presentation of evidence and full argument. Those factors indicate that there should be no departure from the general rule of party and party costs, even though the rejected compromise turned out to be more favourable to the rejecting party than the eventual outcome.[13]

1. The plaintiff relied on Di Falco v Emirates, in which Her Honour Justice Forbes, stated that:

In those circumstances, assessing whether or not the plaintiff could establish an accident while still difficult, in light of the Emirates sworn evidence to that point, was at least arguable.

The question of reasonableness is not limited by the fact that ultimately the plaintiff did not establish liability. If so being wrong in judgment about one aspect of the case would almost always be seen to equate to an unreasonable rejection with hindsight.[14]

1. Her Honour highlighted how the extent of the compromise offered must be assessed in relation to the potential quantum of the claim:

Weighing the potential of a claim is part of the assessment of the extent of the compromise.

It is relevant, given the parties views about the potential quantum of the claim, that the defendant made no offer of damages. It was, in my view, properly characterized as an 'invitation to capitulate', made with the escalation of costs emphasized and the foreshadowing of an indemnity costs application. It is rather a re-statement of the outcome that it contends the Court should arrive at made for the purpose of seeking a cost advantage.

1. Of the Hazeldene factors, the extent of the offered compromise and the offeree's prospects of success are the most important to consider. A party who has a prospect of obtaining a substantial award of damages, even where the case faces difficulties, will not have acted unreasonably by rejecting a Calderbank offer to discontinue or accept a fraction of the damages claimed.
2. The first Calderbank offer was made only on behalf of the first and second defendants and was merely an offer to capitulate, as it did not offer any amount to the plaintiff. Instead, it only offered to discontinue the proceeding. In addition, the offer was only open for one day, which was not reasonable.
3. The second Calderbank offer suffered from the same fundamental vice as the first. No amount was offered, only the option to discontinue the proceeding and bear its own costs. This also rendered the second offer one merely to capitulate. The defendants assessed the plaintiff's prospects with hindsight overlooking that the issues for determination by the Court were complex and not easy to predict before a full presentation of evidence, as reflected in the detailed reasons for judgment. The case on both liability and relief were arguable. Rejection of the second offer at the time was not unreasonable.
4. The third Calderbank offer made a monetary offer of $20,735.65 plus interest of $4,130. In substance, this offer should also be considered not much more than an invitation to capitulate, because there was an arguable claim for damages over $280,000, and the Court can infer that substantial legal costs would have been incurred by that stage. It was not unreasonably rejected.
5. The only material difference between the third and the fourth offers was the interest sum. The plaintiff repeated its submissions in respect of the third offer.
6. In conclusion, the plaintiff should be ordered to pay the defendants' costs of the proceeding on the standard basis only. The defendants ought to pay the plaintiff's costs of the defendants' application for costs.

1. The defendants contended the test is whether or not rejecting the offer was unreasonable in the circumstances, not that it was "manifestly" or "plainly" unreasonable.[15]
2. The defendants rejected the plaintiff's submission that they offered only a hindsight analysis of reliance on the outcome to show the plaintiff's failure to accept the offers was unreasonable. The relevant principles in respect of enforceability of restraints of trade and confidential information are well settled.
3. Questions of law and fact, even where complex, do not preclude an objective reasoning of the risk involved in rejecting a Calderbank offer and continuing litigation.[16] Otherwise, no Calderbank offer could ever be effective in any matter involving complex issues. The facts relevant to each of these issues were available to the plaintiff at the time of each offer being made. The available materials did not permit or provide a basis for any reasonably arguable prospect of obtaining a substantial award of damages. The explanations offered in each of the Calderbank letters identified with reasonable precision the obvious flaws in the plaintiff's case, which explanations were supported by discovery and subpoenaed material. The plaintiff's lack of prospects of success were appreciable from the material available to it at the time the offers were received.
4. The amount offered in the third and fourth Calderbank Offers was in excess of what the plaintiff could have received if its claim had been successful.
5. Because the plaintiff's case was sufficiently hopeless, none of the offers should be considered an offer to capitulate, and all four should be considered valid Calderbank offers. The plaintiff has not put any evidence before the court to support its claims that it acted reasonably in not accepting the Calderbank offers including as to how any costs incurred may compare to the amounts offered.

1. The unreasonable rejection of a Calderbank offer is a relevant factor to take into account in determining whether to depart from the ordinary rule as to costs. In Winky Pop Pty Ltd v Mobil Refining Australia Pty Ltd (Winky Pop), Digby J observed, in relation to the justification for a special costs order, that:[17]

Courts and tribunals have long regarded it as most desirable that parties seek to compromise their claims, thereby minimising potential antagonism, uncertainties and risks and avoiding legal costs...

Accordingly, the courts have in part approached the allocation of costs in a way which encourages and provides incentive to parties to appropriately settle their disputes.

1. In Hazeldene's Chicken Farm,[18] the Victorian Court of Appeal held that the rejection of a Calderbank offer is a matter to which the Court should have regard when considering whether to order indemnity costs.[19] The rejection of a Calderbank offer does not automatically warrant the making of a special costs order.[20] The critical question is whether the rejection of the offer was unreasonable in the circumstances.[21] The standard is high, but not so high that it must be "manifestly" or "plainly" unreasonable.[22]
2. There is no objective or exhaustive list of factors to determine whether the rejection of a Calderbank offer was unreasonable. It will always involve matters of judgement and impression.[23]
3. A court should ordinarily have regard to at least the following matters:

(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 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 in the event of the offeree's rejecting it.[24]

4. In VWA v O'Brien (Costs Ruling),[25] His Honour Justice Forrest considered whether the rejection of an offer was unreasonable by reference to the extent of the compromise offered. His Honour referred to Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2),[26] in which the Court of Appeal made the following observations as to an offer which does not represent a genuine compromise:

There is authority to the effect that where the offer does not involve a genuine compromise, but is in fact either an invitation to capitulate or a derisory or nominal offer, it would not be unreasonable for the losing party to have rejected it.[27]

1. In Hobartville Stud Pty Ltd v Union Insurance Co Ltd,[28] His Honour Justice Giles said ''[c]ompromise connotes that a party gives something away''.[29] His Honour observed that a plaintiff is:

... perfectly entitled to discount its claim by only a dollar, but it does not in any real sense give anything away, and I do not think that it can claim to have placed itself in a more favourable position in relation to costs unless it does so.[30]

1. The Court of Appeal in Hazeldene held that it was unnecessary to set out "any general rule" stating that a Calderbank offer must set out why the offeree should accept the compromise, for example, stating that their case has no factual basis.[31] However, the Court expressed approval for the following passage in Oversea-Banking Corporation v Richfield Investments Pty Ltd,[32] in which His Honour Justice Redlich stated as follows:

Whether there is a need for the offeror to descend to specificity as to why the offer should be accepted must depend upon a consideration of all of the circumstances existing at the time of the offer. The extent to which the weakness of a party's position is exposed through the pleadings, affidavits and the various communications between the parties during the course of the litigation may bear upon the significance of the absence of specificity in the informal order.[33]

1. The unreasonableness or otherwise of the rejection of the offer must be assessed at the time, and in the circumstances, in which it was rejected, and not with the benefit of hindsight.[34]
2. As was observed by her Honour Justice Forbes in Di Falco, consideration of the appropriate costs order weigh a number of considerations:

...the policy considerations of private and public costs savings by encouragement of early and realistic assessments of claims, the greater indemnification of plaintiffs put to additional expense by a defendant's refusal of a reasonable offer made and the equally important but competing consideration that potential litigants not be discouraged from bringing their disputes before the court.[35]

1. In my view, assessed objectively at the time of the offer, the plaintiff's failure to accept the third offer was plainly unreasonable.

Stage of proceeding and time allowed to consider offer

1. As revealed by the chronology, at the time the third offer was made, the plaintiff had the necessary evidence available to it, together with a detailed articulation by the defendants,[36] of the deficiencies they contended existed with the plaintiff's claims, in order to make an objective assessment of the merits of the parties' cases and defences and of the offer.
2. The plaintiff had the benefit of the subpoenaed material, the discovered documents, the pleadings, the defendants' written statements of evidence and instructions provided by the plaintiff and would have been in a position to have acquired a good understanding of the strengths and weaknesses of each parties' position.
3. The plaintiff did not contend that the time the third offer was open for, 14 days (until 16 March 2021) was an unreasonably short time for the offer to be considered.

1. I am satisfied that the third offer was a genuine compromise and not an offer to capitulate or to walk away. This factor distinguishes the third offer from the first and second offers which I consider to be offers to capitulate for the reasons given by the plaintiff.
2. The defendants' offer of $20,735.65 plus interest, totalling $24,865.74 was just more than the maximum the plaintiff would have been entitled to had its claims succeeded.
3. I do not accept the plaintiff's contention that where it was pursuing an arguable claim for damages of over $280,000, the third offer should be viewed as an invitation to capitulate. In relation to the plaintiff's claim for the capital value of the rental management contracts lost to MRES, on the plaintiff's own case,[37] there was a real prospect of the court finding that the relevant landlords would likely have left in any event. The third offer addressed the speculative nature of the claim for the loss of a chance to receive commission from the sale of a rental property on the basis that vendors were free to select any agency to sell their property and were under no obligation to engage the plaintiff.
4. In Winky Pop, the defendants' Calderbank offer was far smaller than the plaintiff's claim. Noting the disparity between the offer and the claim, his Honour Justice Digby held that the rejection was unreasonable:

Further, at the time of the offer, the plaintiffs' loss of opportunity damages claim and the costs associated with the injunctive remedy sought by the plaintiffs at the time of the offer, namely the cost of complete decontamination of the plaintiffs' land caused by the leak, were far greater than the small amounts offered by Mobil in the Offer of Compromise and Calderbank offer. The reasons why, notwithstanding these great disparities, the Mobil offer was reasonable was made clear in the Mobil Calderbank offer, which itself included a clear communication that it was predicated on diminution of value being the proper basis for any assessment of the plaintiffs' damages. [38]

1. His Honour's reasoning is apt in the present circumstances.
2. In relation to the plaintiff's submission that although the third letter made a monetary offer, it was still in effect an offer to capitulate given the substantial legal costs it had incurred up to that point, no evidence of the plaintiff's costs was put before the court. In any case, were this submission accepted, no Calderbank offer made after significant costs had been incurred could be effective.

1. In my view, assessed at the time of the third offer (being cautious of the wisdom of hindsight), the risk of failure on the threshold issue of the enforceability of the restraint was clearly identifiable. The standard form restraint, in particular the broadly defined terms together with the relatively settled legal principles on the enforceability of restraints of trade in employment should have alerted the plaintiff to the likely conclusion that the restraint was unenforceable.
2. Whilst findings of fact and credit were made after the evidence and cross examination of witnesses, those matters were not crucial to an objective evaluation of the likelihood of success of the central key issues in dispute. Ultimately, the plaintiff failed to establish its case on the threshold issue. The reasons why the plaintiff was likely to fail were articulated in detail in the third offer[39] and were ultimately supported by the judgment.
3. In respect of the claimed breach of confidential information, having regard to the subpoenaed material, the discovered documents and the pleadings, the risk of failure was in my view clearly identifiable at the time of the third offer. Again, the reasons why the plaintiff was likely to fail were articulated in some detail in the third offer and were ultimately supported by the judgment.
4. The plaintiff's submission that the present proceeding involved complex questions of fact and law, and that in those circumstances, rejecting the offer at the time was not unreasonable, overstates the complexity of the issues. Whilst there were indeed may issues raised for determination, most of the issues were not critical to the determination of the central key issues in dispute, being the enforceability of the restraint and the question whether the landlord contact information was confidential information. The defendants' detailed critique of the plaintiff's case and of the defendants' position, should have provided assistance to the plaintiff in assessing, objectively the weaknesses of its case. As noted above, the defendants' evaluations were supported by and reflected in the judgment.

1. The plaintiff did not contend the offer was unclear.

Whether the offer foreshadowed an application for indemnity costs

1. The offers foreshadowed that if the plaintiff were to obtain a result at trial less favourable than the offer of settlement proposed in the letters, then the defendants would seek costs on the indemnity basis from the date of the offer.

Magistrates' Court Scale of Costs and costs of the application for costs

1. I am not satisfied that I ought to order that the costs of the Magistrates' Court proceeding be calculated on the County Court Scale, on the basis that the plaintiff ought to have commenced the proceeding the County Court of Victoria.[40] I am not persuaded that this submission justifies departure from the usual position that costs in respect of the proceeding's conduct prior to the transfer be calculated on the transferor court's scale.[41]
2. In circumstances where the offer made to resolve the question of costs by consent was less favourable than the costs orders to be made, I am not satisfied I ought to depart from the usual position that costs of the application for costs follow the event on the standard basis.

1. I have had regard to the purpose of special costs orders; being to encourage the timely and realistic assessment of claims and the risks associated with litigating them and been particularly mindful of the comments of His Honour Justice Redlich in Aljade and MKIC v OCBC[42] that special costs orders not discourage litigants from bringing disputes to the courts. In all of the circumstances, in my view orders ought to be made to reflect the following:

(a) the plaintiff pay the defendants' costs of the proceeding (including costs of the proceeding in the Magistrates' Court of Victoria prior to its transfer to the County Court of Victoria and reserved costs): > > > (i) on the standard basis up to 2 March 2021; and > > > > (ii) on the indemnity basis from 3 March 2021,

(b) the plaintiff is to pay the defendants' costs of and incidental to this application on the standard basis.

1. The parties are to prepare a minute of proposed orders to reflect the judgment and the above reasons in respect of costs.

I certify that these 86 paragraphs are a true copy of the ruling of Her Honour Judge Brimer delivered on 4 July 2023.

[1] The terms defined in the judgment are used in this decision.

[2] Affidavit of Nade Petreska dated 24 April 2023 (the Petreska affidavit), [28]-[36].

[3] Exhibit NP 24 to the Petreska affidavit.

[4] The defendants put the plaintiff on notice that if the plaintiff rejected the offer and received a result no

better in Court, the letter would be tendered in support of an application that the plaintiff pay costs on

[5] Exhibit NP 24 to the Petreska affidavit

[6] Exhibit NP 5 to the Petreska affidavit.

[7] Exhibit NP 26 to the Petreska affidavit.

[8] Exhibit NP 27 to the Petreska affidavit.

[9] Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) 13 VR 435 ('Hazeldene's

[10] LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd (No 2) [2002] NSWSC 72 (LMI

[11] Di Falco v Emirates (Ruling No 3 - Costs Ruling) [2019] VSC 732.

[12] LMI Australasia (n 7) [53]-[54].

[15] Hazeldene's Chicken Farm (n 6) [21].

[16] Gagliardi v KP Hicks (No 2) [2018] VCC 1280, [62] (Gagliardi v KP Hicks).

[17] Winky Pop Pty Ltd v Mobil Refining Australia Pty Ltd [2015] VSC 580, [53] (Winky Pop).

[18] Hazeldene's Chicken Farm (n 12).

[25] VWA v O'Brien (Costs Ruling) [2017] VSC 68.

[26] Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398.

[28] Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358.

[31] Hazeldene's Chicken Farm (n 22) [27].

[32] Oversea-Banking Corporation v Richfield Investments Pty Ltd [2004] VSC 351.

[34] Nilumbik Shire Council v Victorian YMCA Community Program Pty Ltd [2016] VSCA 192, [150].

[36] Including the reasons set out in the second offer dated 19 December 2019.

[37] Ms Wilson had long-standing, close connections to the landlords.

[39] As they had already been in the second offer.

[40] Paragraph [27] of the Defendants' submissions.

[41] Courts (Case Transfer) Act 1991 (Vic) s 22.

[42] Aljade and MKIC v OCBC [2004] VSC 351 referred to in Falco at [20].