Walker v Munnecke

1. Both parties addressed the present issue by reference to these factors. That said, the factors are not to be treated as mandatory and exclusive; rather, appropriate weight is to be given to each factor as seems to the Court appropriate in all the circumstances.[3]
2. The defendant addressed each of these factors in her written submissions, setting out the reasons why she contended that the factors militated in favour of a conclusion of unreasonableness on the plaintiffs' part. The plaintiffs contended in their written submissions that there were four reasons why the Court should not conclude that their rejection of the Offer was unreasonable. I will address these reasons in turn below.
3. It is also relevant to note that, as the plaintiffs pointed out in their written submissions, the rejection of a Calderbank offer does not give rise to a presumption or disposition in favour of a special costs order. Instead, the question is whether the rejection of the offer was unreasonable.[4]

1. The first reason advanced by the plaintiffs is that the offer was made "relatively early" in the proceeding, shortly after the defendant filed her defence to the amended statement of claim on 6 November 2023 and "well before any evidence or written submissions were filed". Obviously enough, this reason relates to the factor set out in paragraph 4(a) above.
2. The defendant submits in relation to this factor that the Offer was made at a stage when the proceeding was well advanced. She refers to the proceeding having been on foot for 7 months, pleadings having closed, discovery having been made, documents having been produced by CBA in response to a subpoena issued by the defendant, and mediation having been completed. (I also note in this context that an amended statement of claim was filed by the plaintiffs on 6 October 2023 and a defence thereto was filed on 6 November 2023.) The defendant submits that the plaintiffs were, as at 12 December 2023, in an informed position to evaluate the merits of their case by reference to the complete documentary record.
3. I do not consider that the first reason advanced by the plaintiffs supports their position that their failure to accept the Offer was not unreasonable.
4. The proceeding was commenced on 9 May 2023. However, the dispute between the plaintiffs and the defendant in relation to the return of the deposit had been on foot in a substantial way since at least the end of September 2022. Both parties were legally represented from that time and there was extensive pre-litigation correspondence between their lawyers.
5. As I have recorded above, the defendant relies upon discovery and mediation having occurred by the time the Offer was served. I note in this context that, in JJJP Properties Pty Ltd v Peacock (Costs),[5] Judge Burchell concluded that the rejection of a Calderbank offer was unreasonable on bases including that, relevantly, the offer was made after pleadings had been filed, discovery had been made, and mediation had been completed, notwithstanding that the offer was made on 24 January 2023 and the trial did not commence until 21 November 2023.
6. I also consider it relevant that a summary judgment application brought by the defendant was heard and dismissed by Judicial Registrar Muller on 25 August 2023. Both parties were represented by solicitors and counsel on that occasion. In preparing for the application, it would have been necessary for the parties to acquaint themselves with the principal factual and legal issues in the proceeding, albeit not to the same level of detail as for the trial. For the purposes of that application, written submissions of 15 pages in length were filed by the defendant, traversing many of the matters which ultimately were in issue at the trial. Further, Mrs Walker, who had most of the relevant dealings with CBA and was the plaintiffs' principal witness, affirmed an affidavit on 21 August 2023 for the purpose of defending the summary judgment application. That affidavit was 72 paragraphs long and contained detailed evidence regarding many of the matters relevant to the ultimate determination of the proceeding. Moreover, Mrs Walker's witness statement at the trial was based heavily upon her affidavit and a number of paragraphs of both documents were largely identical.
7. While it is true that witness statements were not filed until 10 and 11 September 2024, very shortly prior to the commencement of the trial on 17 September 2024, only one statement was filed on behalf of the defendant. That statement, of Mr Daniel Broadbent, was less than 2 pages long. As I recorded in the Principal Reasons at [180], Mr Broadbent was a peripheral witness upon whose evidence very little turned. The remaining three statements contained the evidence of the witnesses called by the plaintiffs, two of whom were the plaintiffs themselves. As I have observed above, Mrs Walker's statement was heavily based upon her 21 August 2023 affidavit. This was not a case where the outcome of the proceeding depended to a significant degree, or even to a minor degree, upon evidence of which the plaintiffs could not have been aware until the opposing party's witness statements were filed.
8. As to the plaintiffs' reliance upon the absence of written submissions as at the time of the Offer, I note that written opening submissions were filed by the parties on 13 September 2024, shortly prior to the commencement of the trial on 17 September 2024. That timing is consistent with the usual practice in the Commercial Division of this Court. I do not consider the absence of written submissions at the time of the Offer to be a matter of great moment for present purposes. The defence to amended statement of claim (and indeed the original defence) descended into considerable detail in relation to the defendant's case. Further, as I have observed above, the summary judgment application involved written submissions which traversed many of the matters which ultimately were in issue at the trial. Similarly, many of those matters were the subject of discussion in the Offer itself.
9. Finally, I also consider it relevant that, on 6 December 2023, 6 days prior to the Offer, the plaintiffs had served on the defendant an offer of compromise under Order 26 of the County Court Civil Procedure Rules 2018. By their offer of compromise, the plaintiffs offered to settle the proceeding on the basis that the defendant paid them $194,615.80 inclusive of costs. This suggests that, as at that date, the plaintiffs considered themselves capable of assessing their position regarding prospects and risks in an informed and considered manner.
10. There is a tension between serving an offer so early that it cannot meaningfully be evaluated, and so late that it is unlikely to result in any substantial saving of costs if accepted. In the present case, I consider that the balance was appropriate. Having regard to the aspects of the proceeding to which I have referred above, the plaintiffs should have been in a position to evaluate the Offer meaningfully at the time at which it was served.

1. The second reason relied upon by the plaintiffs is that the time allowed for them to consider the Offer was unreasonably short. This reason relates to the factor set out in paragraph 4(b) above.
2. The plaintiffs note that the Offer was made on Tuesday 12 December 2023 and remained open for acceptance until Wednesday 20 December 2023, being a period of only 8 or 9 days. This was insufficient time for the plaintiffs to consider the Offer or "seek instructions [sic] in relation to" it, particularly given that it was the week prior to the Christmas vacation. The plaintiffs also relied in this context upon the matters referred to in paragraph 8 above as to the stage of the proceeding at which the Offer was made.
3. The defendant submits in relation to this factor simply that the plaintiffs had sufficient time to consider the offer properly.
4. The reasonableness of the time for acceptance of an offer must be considered in light of all the circumstances. Further, the period of time during which the offer should remain open depends on the stage of the proceeding at which it has been made and the duration of the proceeding to the time of the offer.[6] The authorities indicate that the stage of the proceeding is significant principally because the later in the life of the proceeding an offer is made, the more likely it is that the offeree will be able properly to understand and assess the matters in issue and their position.
5. The question of the appropriate time for consideration of an offer was discussed by Judge Woodward in Oliver Hume (Vic) Pty Ltd v Santa Monica (Aust) Pty Ltd (No 2).[7] His Honour made the following observations:[8]

"... while a period of only a few business days to consider an offer will often be a significant factor weighing in favour of the reasonableness of a decision to reject the offer, this is not invariably the case. The courts have recognised that a period as short as a day or even a period measured in hours, might afford a sufficient opportunity to consider some offers.

Further, the period prescribed by the Rules for an Offer of Compromise is 'no more than a guide or a yardstick'. As Calderbank offers are not subject to the formal requirements of the Rules, what constitutes a reasonable period for the offer to be open for acceptance is more flexible. It will vary depending upon the particular circumstances, including the complexity of the proceeding and the extent to which the offeree might reasonably be thought to have understood the claims and evidence and have been able to assess its position in an informed and considered manner." (citations omitted)

1. His Honour concluded[9] that, in the circumstances of that case, including the closeness of the trial, the defendant acted unreasonably in not accepting the plaintiff's Calderbank offer, "despite the relatively brief period of five days (three business days) allowed for [the defendant] to consider the offer". That offer had been made on Wednesday 5 July 2017 and was open for acceptance until 4pm on Monday 10 July, in circumstances where the trial commenced on 12 July 2017.
2. In Gagliardi v KP Hicks (No 2),[10] Judge Marks considered the defendant's submission that it was not unreasonable for it not to have accepted a Calderbank offer which was open for acceptance for 7 days. Her Honour stated in relation to this issue:[11]

"However, I consider the seven day time the offer was open was reasonable in the circumstances.

There are cases where seven days was held to be insufficient; there are others where seven days or less has been held to be sufficient. It depends on the facts.

In M.T. Associates Pty Ltd v Aqua-Max Pty Ltd & Anor (No. 3) [2000] VSC 163 at [121]- [122] Gillard J considered a Calderbank offer open for six days to be reasonable.

This litigation had been on foot by 15 November 1999 for some 21 months since the hearing commenced and some five years since it was instituted...

I have no doubt that experienced counsel and the experienced solicitor acting for the defendants would have no difficulty in assessing what the offer represented and I have no doubt they could have made up their mind about whether they wished to accept within a period of less than six days.

Like the offer in M.T. Associates, the offer here was made close to trial and at a time when the offeree could assess its risks. An offer made closer to trial has been considered more reasonable, as the parties have a better opportunity to make an informed assessment of their prospects of success: Texxcon Pty Ltd v Austexx Corp Pty Ltd (No 2) [2013] VSC 343 at [17].

In Mainteck Services Pty Ltd v Stein Heurtey SA [2013] NSWSC 1165 at [17], seven days was considered reasonable. Sackar J stated at [17]:

...I am mindful that the offer was open for only seven days. It is clear from their letter of 2 July 2010 that in calculating the quantum of the offer, the defendants were conscious of costs they had incurred up to that point. The obvious purpose behind the limitation of seven days was to take into account the daily increasing costs incurred by the defendants. For this reason, the defendants explicitly stated in a covering letter that if after the expiry of seven days the plaintiff wished to settle, the defendants would still be prepared to do so, but only after a new calculation was made to take into account further costs incurred. Further, as the hearing before the referee commenced only about three months after the Calderbank offer, I think the parties would have been aware of their respective evidentiary strengths and weaknesses. The parties have indicated that at the time of the offer on 2 July 2010, their evidence was complete or substantially complete. In my view, the limitation of seven days would therefore not have hindered the plaintiff's ability to assess the offer in light of the evidence.

In contrast, in Jones v Trad (No 3) [2013] NSWCA 463 [47]-[48], seven days was considered too short. Notably, the hearing of the relevant appeal was five months away at the time the offer was made - there was no need for the offer period to be so short.

In some cases, no issue of timing was taken with Calderbank offers open for seven days: for example, see Groves v Matt O'Connor & Associates Pty Ltd (No 2) [2015] NSWSC 817 and Roland Ofria v Robert William Cameron (No 2) [2008] NSWCA 242.

I note that in the particular circumstances of Nominal Defendant v Dighton (No 2) [2012] SASCFC 97 at [11], a Calderbank offer was made by a respondent the day before the appeal, which resulted in the Court giving the respondent costs of the hearing on an indemnity basis.

In the circumstances of the present case, seven days was adequate.

Rather than being an inappropriate tactic 'to exert strategic pressure', because it expired on the day of the agency's adjournment application, I consider the fact it expired that day a reason for the seven days offered. The parties were, at the time of the offer, a month out from trial, all but ready to go, and if the adjournment application were successful costs would continue to increase significantly.

The agency did not ask Rocky for extra time to consider and respond to the offer or say that it required more details about the offer: see Hewitt v Count Financial Ltd [2017] VCC 405 at [22]."

1. As to the latter point made by Judge Marks in this passage, Judge Cosgrave in Hewitt v Count Financial Ltd (No 2) noted[12] that the offer in that case had been left open for 14 days and that "[t]here was no suggestion that [the offeree] required extra time or that he sought more details about the offer from [the offeror]". Similarly, in Elite Protective Personnel Pty Ltd v Salmon, Basten JA expressed the view that "[t]he absence of any request for an extension of time would be relevant in assessing reasonableness".[13]
2. The Offer in the present case was made in December 2023, in circumstances where the proceeding had been commenced in May 2023 and was fixed for trial in September 2024. However, as I indicated earlier, the dispute had been live, and detailed correspondence was being exchanged between the parties' solicitors, from around the end of September 2022. Further, whilst the trial was still some months away as at the time of the Offer, I have explained above why I consider the plaintiffs to have been in a position properly to assess the Offer at the time at which it was received. That explanation is relevant not only to the first reason relied upon by the plaintiffs but also the second reason.
3. I have also referred above to the significance of the plaintiffs serving an offer of compromise on 6 December 2023. The timing of that offer of compromise indicates that, as at the time of receiving the Offer on 12 December 2023, the plaintiffs and their advisors had recently turned their minds to the merits of the parties' cases, for the purpose of formulating their own offer 6 days earlier. In those circumstances, they should have been in a position to respond to the Offer relatively quickly. Further, the Offer came not long after the summary judgment application in August 2023, the pleading of the plaintiffs' case in considerable detail in their amended statement of claim filed on 6 October 2023, and the filing of the defence thereto on 6 November 2023. The Offer did not come out of the blue at a point in time at which the plaintiffs and their advisors might not have recently turned their minds to the proceeding in any substantial way. I also note, having regard to the authorities referred to in paragraph 25 above, that the plaintiffs made no request for additional time to consider the Offer.
4. Accordingly, I do not consider the period for acceptance to have been insufficient in the circumstances for the plaintiffs properly to consider the Offer.

1. The third reason advanced by the plaintiffs is that, when the Offer was made, the plaintiffs had reasonable prospects of success and there was no evidence or law to suggest otherwise. This reason relates to the factor set out in paragraph 4(d) above.
2. The plaintiffs further submitted in relation to this factor that "the Offer made no reference to the findings that led to judgment in the defendant's favour - in particular, that the Court did not need to consider the reasonableness or futility of steps that the Walkers could have taken to obtain approval of the loan".
3. The defendant made extensive submissions in relation to this factor. In summary, they were:

(a) The Offer drew attention to the fact that the contemporaneous documents were incompatible with, or did not support, important parts of the plaintiffs' case, including in respect of a number of points which were dispositive of the proceeding.

(b) Having regard to the lack of support for their case from the contemporaneous documents, the plaintiffs should have appreciated the need for Mr Walker, and in particular Mrs Walker, to be accepted as credible and reliable witnesses. However, by reason of the improper redaction of documents provided to the defendant's solicitor, their credit was already compromised before the trial began and there was a steep impediment to the rehabilitation of their credit.

(c) The plaintiffs made a calculated decision not to call Ms Sculthorpe and Ms Vu as witnesses, despite their central involvement in relevant events. The unexplained absence of Ms Sculthorpe and Ms Vu, and the risk thereof to the plaintiffs' case, was a matter which the plaintiffs should have taken into account at the time of the Offer.

1. I accept the defendant's submissions. As I recorded in the Principal Reasons at [355], the contemporaneous documents militated strongly against acceptance of the plaintiffs' case in relation to Issue 2, which was the issue at the heart of the proceeding. That was a matter which the plaintiffs were in a position to know as at the time of the Offer. Further, having regard to authorities such as those referred to in section E.1 of the Principal Reasons, the plaintiffs should also have known of the likely significance of contemporaneous documents in the Court's process of fact-finding. Further, as at the time of the Offer, it should have been apparent to the plaintiffs that there was a risk that their credit would be compromised by the redaction strategy and also by the inconsistency between the late-emerging 7.53pm Email (and Mr Westell's response thereto) and the evidence given by Mrs Walker in her affidavit.[14]
2. I do not accept the plaintiffs' submission that the Offer made no reference to the findings that led to judgment in the defendant's favour. In particular, paragraphs 16 and 17 of the Offer referred to a number of matters which ultimately formed the basis for the Court's conclusion that Issue 2 should be answered adversely to the plaintiffs.
3. The plaintiffs refer specifically to the absence from the Offer of any reference to the Court not needing to consider the reasonableness or futility of steps that the plaintiffs could have taken to obtain approval of the loan. I understand this to be a reference to the preliminary question in respect of Issue 2, which was addressed in part G of the Principal Reasons. I do not accept that the absence of this matter from the Offer supports the plaintiffs' position. The amended statement of claim pleaded in paragraph 7A that the plaintiffs did everything reasonably required to obtain approval of the Loan. This allegation was repeated in paragraph 10(a) of the reply. It was not pleaded by the plaintiffs that, even if they had not done everything reasonably required, the taking of any further steps would have been futile or there would have been no substantial chance of the Loan being obtained.[15] That is to say, the preliminary question was not raised by the plaintiffs' pleadings. In those circumstances, it is unsurprising that this matter was not referred to in the Offer.

1. The fourth reason advanced by the plaintiffs is that the Offer was unclear in that "it expressed two different dates for acceptance, and contemplated the execution of terms of settlement incorporating further terms." This reason concerns the factor set out in paragraph 4(e) above.
2. The defendant contended that the Offer was expressed in clear terms, and noted that the letter containing the Offer invited clarification if any part of it was unclear.
3. I accept that, as a matter of principle, a party may be found to be acting reasonably in rejecting a Calderbank offer if the offer is unclear or imprecise.[16]
4. The first point raised by the plaintiffs in this context appears to be incorrect. The plaintiffs' submissions did not identify the "two different dates for acceptance". Paragraph 4 of the Offer stated that it would remain open "until 5.00 pm on 20 December 2023". Paragraph 22 of the Offer stated that it would remain open "until 5.00 pm on 20 December 2023". I can discern no inconsistency in the dates specified for acceptance and I therefore reject this first point.
5. As to the second point, I understand the plaintiffs to be relying upon paragraph 5 of the Offer, which stated that, if the Offer was accepted, the defendant was open to more fully documenting the settlement in "mutually acceptable terms". That paragraph concluded by stating: "If your clients wish to execute such a document, please send us a draft".
6. Read as a whole, I do not consider the Offer to be unclear by reason of the presence of paragraph 5. The Offer did not "contemplate" the execution of settlement terms in the sense of requiring that that occur, or even expressing a desire on the part of the defendant that that occur. Rather, the Offer gave the plaintiffs the opportunity, if they so wished, to proffer settlement terms as part of any acceptance. The Offer otherwise made it clear in paragraph 3 that acceptance would result in payment being made within 7 days and the lodgement of consent minutes with the Court for the dismissal of the proceeding. Thus, if the plaintiffs had wished to accept the Offer without proffering proposed settlement terms, it would have been a simple matter for them to have done so.
7. I therefore do not accept that the Offer was unclear.

1. I have addressed above the parties' positions in relation to the factors set out in paragraphs 4(a), 4(b), 4(d), and 4(e). The defendant contended that the factors in paragraphs 4(c) and 4(f) militated in favour of her position, and the plaintiffs did not suggest otherwise. I accept that those factors militate in favour of a conclusion that the plaintiffs' non-acceptance of the Offer was unreasonable.
2. Having regard to the matters which I have discussed above, I am satisfied that it was unreasonable of the plaintiffs not to accept the Offer. Accordingly, I will order that they pay the defendant's costs of the proceeding on the standard basis up to and including 20 December 2023, and thereafter on the indemnity basis.

I certify that these 13 pages are a true copy of the ruling of Judicial Registrar Bennett delivered on 28 April 2025.

[1] Walker v Munnecke [2025] VCC 267.

[3] Mischel v Mischel Holdings Pty Ltd (in liq) (No 2) [2012] VSC 421 at [24]. (An application for leave to appeal was dismissed by the Court of Appeal in Mischel Holdings Pty Ltd (in liq) v Mischel [2013] VSCA 375.)

[4] Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 at [18]-[19].

[5] [2024] VCC 740 at [85(a)].

[6] Mischel v Mischel Holdings Pty Ltd (in liq) (No 2) [2012] VSC 421 at [33].

[7] [2017] VCC 1239.

[8] [2017] VCC 1239 at [7]- [8].

[9] [2017] VCC 1239 at [10].

[10] [2018] VCC 1280.

[11] [2018] VCC 1280 at [33]- [44].

[12] [2017] VCC 405 at [22].

[13] [2007] NSWCA 322 at [149].

[14] See the Principal Reasons at [298]-[299].

[15] Cf the Principal Reasons at [219].

[16] See eg BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd (No 4) [2009] FCA 1448; (2009) 263 ALR 63 at [13].