IN THE SUPREME COURT OF VICTORIA	Not Restricted	
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S CI 2017 03566

RICHARD CHARLES D'AGOSTINO 	First Appellant	
		
- and -		
		
ROCKY PAUL D'AGOSTINO	Second Appellant	
		
v		
		
THE GREATER SHEPPARTON CITY COUNCIL	Respondent	

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JUDGE:	MOORE J	
WHERE HELD:	Melbourne	
DATE OF HEARING:	On the papers	
DATE OF JUDGMENT:	12 April 2019	
CASE MAY BE CITED AS:	D'Agostino v The Greater Shepparton City Council (No 2)	
MEDIUM NEUTRAL CITATION:	[2019] VSC 241	

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COSTS — Appellants’ appeal dismissed — Indemnity costs sought by respondent — Calderbank offer — Offers of compromise — Offer refused — Whether offer was unreasonable — Supreme Court (General Civil Procedure) Rules 2015 r 63.28 — Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No. 2) [2005] VSCA 298.

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APPEARANCES:
	Counsel	Solicitors	
For the Appellants	Mr L Watts		
			
For the Respondent	Mr R Appudurai	Russell Kennedy	

HIS HONOUR:

1	On 19 February 2018, the appellants were granted leave to appeal costs orders made by the Victorian Civil and Administrative Tribunal (VCAT) on 8 August 2017. The appellants sought to appeal VCAT’s refusal of their application for costs in a proceeding under s 185AA of the Local Government Act 1989. 
2	In reasons for judgment delivered on 29 March 2019, I dismissed the appellants’ appeal. At the handing down of my reasons, the respondent made an application for costs. Orders were made for the appellants to file and serve submissions as to costs by 5 April 2019. The appellants later informed the Court that they did not wish to make any submissions in respect of the respondent’s application for costs. 
3	The respondent seeks the costs of the appellants’ application on an indemnity basis from 27 November 2017 and otherwise on a standard basis. 
4	The Court has the full power to determine the extent of costs to be paid. Any costs in the proceeding which are to be taxed may be taxed on a standard basis, an indemnity basis or such other basis as the Court may direct.
5	On 27 November 2017, the respondent made a written offer to the appellants setting  out why their appeal was bound to fail. The respondent invited the appellants to withdraw their appeal with no order as to costs and for the parties to bear their own costs of the proceeding to date. The offer was open for acceptance until 13 December 2017 and was explicitly characterised as a Calderbank offer with the consequence that, if it was not accepted, the respondent would seek costs against the appellants on an indemnity basis from the date of the letter.
6	The respondent relied on the principles elucidated in the Court of Appeal’s decision in Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No. 2) (Hazeldene). The critical question in the case of Calderbank letters is whether the rejection of the offer was unreasonable in the circumstances. The Court of Appeal identified the following matters as relevant considerations in assessing unreasonableness:
(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 the 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.
7	The respondent noted in its letter of 27 November 2017 that the original decision maker in VCAT had referred to the extraordinary nature of the appellants’ conduct during the course of the original proceeding which on two occasions was said to have caused disadvantage to the respondent. The letter stated that it was therefore surprising that the appellants had sought to appeal the decision in this Court. The respondent also referred to authorities including House v R for the established proposition that appellate courts will not readily interfere with decisions involving the exercise of a discretion, including as to costs.
8	With respect to the principles set out in Hazeldene, I note the following in relation to the 27 November 2017 letter:
(a)	The letter was cast in clear terms and sent at an early stage in the proceeding, some two months after the proceeding was commenced. The parties would not have incurred substantial costs in the proceeding prior to the date of the letter.
(b)	The time allowed for the appellants to consider the offer was 16 days, which I consider to be reasonable in the circumstances.
(c)	The compromise offered was that the parties bear their own costs of the proceeding to date. That the respondent offered to bear its own costs of the proceeding is significant because, if the appeal were to be refused, it would ordinarily be entitled to a standard basis costs order.
(d)	The respondent set out an assessment of the appellants’ prospects of success based on the principles referred to in the previous paragraph, concluding that this Court was unlikely to interfere with the correctness of Deputy President Dwyer’s discretionary decision. This assessment of the appellants’ prospects of success was wholly vindicated by the judgment on the appeal. In my view the appeal, considered as at the date of the letter, was without merit. 
(e)	The offer explicitly foreshadowed an application for indemnity costs in the event the appellants’ rejected it, and set out the basis on which the respondent would rely in making such an application in the future.
9	In light of the above matters, it was unreasonable for the appellants to refuse the offer conveyed to them by the respondent in their letter of 27 November 2017. The respondent should accordingly be awarded its costs on an indemnity basis from that date.