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IN THE COUNTY COURT OF VICTORIA Revised
Not Restricted
AT MELBOURNE
CRIMINAL DIVISION
DAMAGES – COMPENSATION
GENERAL DIVISION
Case No. CI-07-05011
Krista Harvey Plaintiff
v
Alison Tascone (Trading as My Chemist Health & Beauty Doncaster) First Defendant
Mario Verrocchi Second Defendant
East Yarra Friendly Society Pty Ltd Fourth Defendant
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JUDGE: HIS HONOUR JUDGE MORROW
WHERE HELD: Melbourne
DATE OF HEARING: 12 December 2008
DATE OF RULING: 18 December 2008
CASE MAY BE CITED AS: Harvey v Tascone, Verrocchi & East Yarra Friendly
Society Pty Ltd
MEDIUM NEUTRAL CITATION: [2008] VCC 1612
RULING
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Catchwords:
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APPEARANCES: Counsel Solicitors
For the Plaintiff Mr P Rattray QC with Ellis Palmos & Co.
Mr M Stiffe
For the First Defendant Mr D Curtain QC with Dibbs Abbott Stillman
Ms P Cefai
For the Second and Fourth Mr R Middleton SC Guild Lawyers
Defendants
COUNTY COURT OF VICTORIA !Undefined Bookmark, I
250 William Street, Melbourne
HIS HONOUR:
1 On the 12th December 2008, the jury in the above action found in favour of the
plaintiff and awarded her the sum of $250,000.00 by way of damages for pain
and suffering, such damages to be reduced by sixty per cent due to the
plaintiff’s contributory negligence, and the jury further decided that on the
contribution proceedings between the first defendant and the second and
fourth defendants, that the first defendant’s contribution should be eighty per
cent and the second and fourth defendants, twenty per cent.
2 Mr Middleton, Senior Counsel for the second and fourth defendants, now
submits that the first defendant should pay the second and fourth defendants’
costs from 4.30 pm on the 9th December 2008 pursuant to an offer made by
them to the first defendant in a “Calderbank” letter of the 8th December 2008.
3 As far as I can ascertain, the relevant material in relation to this claim is,
firstly, that on the 11th November 2008, the second and fourth defendants’
solicitors wrote to the first defendants’ solicitors in the following terms:
“I enquire whether your client would be prepared to share in an offer of
compromise for $50,000.00 plus costs plus keep on a 50/50 basis to put
pressure on the plaintiff.”
4 On the 19th November 2008, the plaintiff’s solicitors served an Offer of
Compromise in accordance with Part II of Order 26 of the County Court Rules
on the defendants, offering to compromise the plaintiff’s claim for the sum of
$150,000.00 plus costs, and the offer was stated to be open for acceptance
by the defendants for a period of fourteen days from the date of service of the
offer on the defendants. Mr Middleton has informed me that in fact his client
was not served with the offer until the 25th November 2008 which means, that
as far as the second and fourth defendants were concerned, the offer would
have expired on the 9th December 2008.
5 On the 1st December 2008, the first defendant’s solicitors wrote to the
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VCC:AS Harvey v Tascone, Verrocchi & East Yarra
Friendly Society Pty Ltd
solicitors for the second and fourth defendants and referred to their letter of
the 11th November 2008 and stated:
“It is our position that an offer of compromise would not be appropriate or
valid given the statutory offer and counter offer process pursuant the
provisions of the Accident Compensation Act 1985. We suggest that
you may wish to consider putting a Calderbank offer to the plaintiff in the
terms outlined in your above-mentioned correspondence, namely
$50,000.00 plus retention of compensation paid on a 50/50 basis.
Should your client be amenable to this course of action, we ask that you
contact the writer to discuss further.”
6 On the 8th December 2008, the solicitors for the second and fourth defendants
wrote to the solicitors for the first defendant, and said:
“The second and fourth defendants offer to the first defendant to
contribute 40 per cent towards any sum that the plaintiff obtains by way
of settlement, verdict or judgment in the proceeding (inclusive of
interest), together with 40 per cent of the plaintiff’s party/party costs.
This offer is in satisfaction of the first defendant’s claim for contribution
against the second and fourth defendants and the second and fourth
defendants’ claim for contribution against the first defendant.
This offer is open for acceptance until 4.30 pm on 9 December 2008. In
the event that this offer is not accepted and the defendants achieve a
more favourable result, than that offered herein at trial, I will produce this
letter on the question of costs and claim costs in accordance with the
principles of Calderbank v Calderbank [1976] Fam 93 and applied in the
decision of M T Associates Pty Ltd v Aqua-Max Pty Ltd (No. 3) [2000]
VSC 163.”
7 The trial commenced on Monday, the 8th December 2008.
8 The response from the first defendants came on the 10th December 2008, and
in a letter of that date, the solicitors for the first defendant stated:
“The first defendant offers to the second and fourth defendants to
contribute 50 per cent towards any sum that the plaintiff obtains by way
of settlement, verdict or judgment in the subject proceedings (inclusive
of interest), together with 50 per cent of the plaintiff’s party/party costs.
This offer is in satisfaction of the second and fourth defendants’ claim for
contribution against the first defendant’s claim for contribution against
the second and fourth defendants.
This offer will remain open until 5.00 pm on the 11th December 2008.
In the event that this offer is not accepted, and the defendants achieve a
more favourable result than that offered herein at trial, then the first
defendant will rely on this letter and invite the Court to exercise its
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VCC:AS Harvey v Tascone, Verrocchi & East Yarra
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discretion in accordance with the principles enunciated in Calderbank v
Calderbank [1975] 3 All ER 333 and applied in the decision of M T
Associates Pty Ltd v Aqua-Max Pty Ltd (No. 3) [2000] VSC 163.”
9 Mr Curtain, Senior Counsel for the first defendant, made the following
submissions:
• That the plaintiff’s offer, which had been made on the 19th November
2008 and which had been open for fourteen days, had in fact expired by
the time the second and fourth defendants made their offer to the first
defendant. He said that the second and fourth defendants had plenty of
time from the 19th November to give notice to the first defendant, but they
did not and put forward no reason why they waited until the plaintiff’s
offer had expired before making their offer to the first defendant.
• He further submits that under the provisions of Order 26.10, all offers
should be open for fourteen days, whereas here the first defendant had
only 24 hours to consider the offer made by the second and fourth
defendants.
• Mr Curtain argues that if in fact the first defendant had accepted the
offer, it would not have shortened the case, and the second and fourth
defendants would still have to be represented. He says, further, that the
offer was made too late, in that all the costs had already been incurred
by the plaintiff and the other parties.
• Mr Curtain relied heavily on Henderson’s Case, to which I will refer later.
10 Mr Middleton, in reply, said that if in fact his clients’ offer had been accepted
by the first defendant, they would have been able to go to the plaintiff, with a
united front, to try and resolve the case, and despite the fact that the plaintiff’s
formal offer had expired, there was no reason why a further negotiation could
not have been attempted.
11 The Rules of Court via Order 26.10 attempt to establish a framework for offers
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VCC:AS Harvey v Tascone, Verrocchi & East Yarra
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between defendants in a case such as this.
12 By Sub-Rule (1):
“Any party to the contribution claim may serve on any other party to the
contribution claim an offer to contribute towards a comprise of the claim
made by the plaintiff on the terms specified in the offer.”
13 Sub-Rule (2) provides that a court may take such an offer into account in
determining who should pay the whole of part of the costs of the party who
made the offer and any costs which that party is liable to pay to the plaintiff.
14 In Henderson v Simon Engineering (Aust) Pty Ltd & Ors. [1998] VR 867, Mr
Justice Murphy had to deal with a somewhat similar situation as to this case,
but the offer of one of the defendants in that case purported to be made
pursuant to Order 26.10. The defendant who made the offer in that case was
successful insofar as the jury decided that that defendant should only
contribute thirty per cent whereas he had offered to contribute thirty-five per
cent. An application was made to the Judge by the successful defendant,
based on the offer.
15 His Honour rejected the defendant’s application, inter alia, because the notice
had not been given at an early stage in the proceedings (a matter relied upon
by Mr Curtain). His Honour said at the time that the notices were given, the
other defendants were placed in a difficult position. His Honour went on to
say:
“If the offer made by the SEC was accepted what then was to happen?
The notices did not say - Would counsel for the SEC continue to appear
or would they bow out of the case? If the latter, who if anyone would
appear for the SEC, and if it was intended that counsel for the SEC was
to continue in the case what was to be gained by acceptance of the
offer?”
(See page 872).
16 All of these observations are relied upon by Mr Curtain.
17 The answer to these questions posed by Murphy J., seems to me to be simply
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that the defendants could have presented a united front to the plaintiff, but is
that consideration sufficient for me to exercise my discretion in this case?
18 I note that again at page 872, His Honour Mr Justice Murphy said:
“I am also of the opinion that even if the Notices of Contribution herein
were ineffective as notices under r2610, yet the giving of them would
none the less be a factor to consider as material relevant to the exercise
of my discretion on the issue of costs . . . .”
19 Unlike the case before Murphy J, in this case the first defendant also decided
to join in the exercise of sending a Calderbank letter to the second and fourth
defendants in very similar terms, as can be seen from the letters to which I
have referred above.
20 Observations made by Murphy J in Henderson’s Case and in other cases
such as Lend Lease Retail Products Pty Ltd v Construction Engineering (Aust)
Pty Ltd & Ors. [2000] VSCA 114, a decision of the Court of Appeal, make it
clear that a judge has a wide discretion in respect of orders as to costs, and
as I stated in the Ruling I made in Parsons v Muni Gayfer & Citywide Service
Solutions (10th April 2001), there is a long line of authority including
Calderbank (supra); Cutts v Head & Anor. [1984] 1 All ER 597; Multicon
Engineering Pty Ltd v Federal Airport Corp (1997) 47 NSWLR 631; MGICA
(1992) Ltd v Kenny & Good Pty Ltd & Kenny (1996) 140 ALR 313; and
particularly Azzopardi v Netin [1986] VR 593 and Mutual Community Limited v
Lorden Holdings Pty Ltd (VSC, Unreported, Byrne J, 28 April 1993) which
establish the following principles:
(1) That it has been the policy of the courts for a long time to encourage
parties to settle rather than litigate their cases.
(2) That the trial judge has an overriding discretion on the question of
costs.
(3) That despite the existence of a rules based framework for the making
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of offers between parties to settle their differences rather than litigate
them, the courts will, in an appropriate case, where the justice of a
situation demands it, allow parties to make genuine offers to settle a
matter, even if such offer is outside the framework of the Rules.
21 Here both defendants made offers to one another, no doubt having the
principles to which I have referred to, in mind. Each was making an offer
based on their assessment of the contribution which they thought was fair and
that they should make, and if their judgment was vindicated by the jury on the
contribution proceedings, then they sought that their costs be paid and any
costs that they may have to pay to the plaintiff from the date of their offer,
should be paid by the other defendant.
22 Now the first defendant, having lost its argument for contribution before the
jury, seeks to criticise the “successful” defendants and to object to paying their
costs despite the fact that it was their intention to take advantage of the same
considerations if in fact the jury verdict had been in the first defendant’s
favour. The first defendant had the same time period to consider making an
offer of contribution to the second and fourth defendants and had offered them
no more time, than had been offered to it, when it did in fact make its offer.
The first defendant can now not be heard to complain considering that it
played “the game” by the same rules. In general I do not believe it is
inappropriate to make “Calderbank” offers during a Trial.
23 In my view, if the defendants had been able to present a united front to the
plaintiff then it would have been a substantial “step”, per Murphy J in
Henderson’s Case, at p.872, and although it may be said to be speculative as
to whether the case would have settled, the fact is that serious negotiations
with the plaintiff could not commence until the defendants had settled their
differences.
24 In my view, it is proper to take the second and fourth defendants’ offers to the
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first defendant into account when exercising my discretion in relation to costs,
and in the circumstances, it is appropriate that the second and fourth
defendants’ offer to contribute to the extent of forty per cent should be given
effect to.
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Friendly Society Pty Ltd
