4
IN THE COUNTY COURT OF VICTORIA
AT Melbourne
COMMERCIAL DIVISION	 Revised
Not Restricted
 Suitable for Publication	
GENERAL LIST	Case No.  CI-19-04011

TWENTY FOUR OUTDOOR AUSTRALIA PTY LTD
(ACN 140 586 554)	Plaintiff / Defendant by Counterclaim	
		
V		
		
J & H WEST NOMINEES PTY LTD
(ACN 005 138 705)	Defendant / Plaintiff by Counterclaim	
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JUDGE:	HER HONOUR JUDGE A RYAN 	
WHERE HELD:	Melbourne	
DATE OF HEARING:	On the papers; submissions received on 18, 24 and 27 November 2020
	
DATE OF RULING:	16 December 2020	
CASE MAY BE CITED AS:	Twenty Four Outdoor Australia Pty Ltd v J & H West Nominees Pty Ltd (No 2)	
MEDIUM NEUTRAL CITATION:	[2020] VCC 1938		

REASONS FOR RULING
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Subject:		PRACTICE AND PROCEDURE – COSTS.	
	
Catchwords: 	Application without leave by the defendant asking the court to revisit and reverse reasons for judgment – whether proper basis for application – form of final orders and costs orders – whether costs should be apportioned – whether indemnity costs order should be made following Calderbank offers.

Legislation Cited:	County Court Civil Procedure Rules 2018, Civil Procedure Act 2010	

Cases Cited:	Twenty Four Outdoor Australia Pty Ltd v J & H West Nominees Pty Ltd [2020] VCC 1676; Fenridge Pty Ltd v Retirement Care Australia (Preston) Pty Ltd & Ors (No 2) [2013] VSC 629; Spotlight Pty Ltd v NCON Australia Ltd [2012] VSCA 232; Australian Super Developments Pty Ltd v David Wellesley Marriner & Ors (No.2) [2015] VSC 315; Di Stasio Pty Ltd v R & K Services Pty Ltd [2018] VSCA 340; Autodesk Inc v Dyason (No. 2) (1993) 176 CLR 300; Just Group Limited v Van Dyke & Ors [2016] VSC 66; Soteriadis v Nilumbik Shire Council [2015] VSC 363; Berrigan Shire Council v Ballerini (No.2) [2006] VSCA 65; Hazeldene Chicken Farms Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; Leichardt Municipal Council v Green [2004] NSWCA 341; Oshlack v Richmond River Council (1998) 193 CLR 72; 

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APPEARANCES:
	Counsel	Solicitors	
For the Plaintiff	Mr R Hay QC with
Mr L Hawas	Tisher Liner F C Law	
			
For the Defendant	Mr D Collins QC with
Mr S Wotherspoon	Aitken Partners	

 
 HER HONOUR:
 
1	I delivered reasons for judgment in this matter on 10 November 2020 in favour of the plaintiff (“the reasons”).
2	After delivery of the reasons, the parties were directed to file submissions on the form of the final orders to be made, including costs, if agreement could not be reached. The defendant filed submissions on 18 November 2020. The plaintiff responded on 24 November 2020 and the defendant replied on 27 November 2020. These reasons address the form of final orders and costs and assume familiarity with the reasons.
3	The issues that arise from the submissions filed are:
(a)	should the Court accede to the defendant’s request to reconsider and reverse the reasons and find instead for the defendant – if not, should the Court nevertheless decline to order specific performance;
(b)	assuming costs follow the event, whether there should be a reduction of the costs payable by the defendant under Rule 63A.15 of the County Court Civil Procedure Rules 2018. In particular, whether the defendant should be ordered to pay only two-thirds of the plaintiff’s costs of the proceeding on a standard basis;
(c)	should the defendant pay the plaintiff’s costs of the proceeding on an indemnity basis from 12 May 2020 onwards following the non- acceptance of the plaintiff’s Calderbank offers.
(a)	Application by the defendant that the Court should reconsider and reverse its reasons 
4	The defendant submits the Court should reconsider and reverse the reasons and find in its favour. This application was contained in the defendant’s submission dated 18 November 2020.
5	In support of the application, the defendant refers to decision of Hargrave J (as his Honour then was) in Fenridge Pty Ltd v Retirement Care Australia (Preston) Pty Ltd & Ors (No 2). The defendant relied upon this decision as authority for the proposition that a court could reconsider a decision when the order or judgment pronounced as a result of the decision has not been authenticated. Hargrave J accepted that it was appropriate to reconsider his reasons to clarify that the plaintiff was not entitled to receive double compensation consequent upon two breaches of contract having been found.
6	There are a number of matters to be noted regarding this application by the defendant. The first is that it was made without leave and no leave has been sought. The second is that the defendant is now attempting to reargue matters which were determined adversely against it at trial. The third is that the defendant is trying to introduce, through the backdoor, fresh arguments not previously raised.
7	Contrary to the defendant’s assertion that the Court made findings without consideration, the Court did consider the parties’ submissions as to whether the demised area referred to in the agreement was sufficiently certain as a matter of construction. The Court accepted the submissions made by the plaintiff on this point and concluded that the demised area was sufficiently defined in the agreement, contrary to submissions made by the defendant. Should the defendant wish to challenge that finding or any other finding, it can do so on appeal.
8	The criticisms made of the reasons seek to introduce several matters which were simply not argued at trial. For example, in paragraph 8 of the defendant’s first submissions, it is said that any redevelopment of the site could be restricted as a result of a lease which could extend for more than 13 years, and then goes on to say:
“For example, if the airspace included an area extending 2 metres to the west of the east facing wall, it would preclude any development within that airspace.”
This matter was not the subject of any submission made at trial or evidence.
9	An attack is made on the finding regarding the commencement date, which was one of the grounds upon which the defendant argued that the agreement for lease was unenforceable. The Court found in favour of the plaintiff on this aspect. At paragraphs 10-14 of the defendant’s submissions, the defendant seeks to reargue these matters in circumstances where an adverse finding has already been made.
10	The other aspect referred to in paragraphs 15-16, is that an order for specific performance should not now be made, contrary to the judgment of the Court. The defendant submits the Court should not order specific performance of the agreement for lease because it could require ongoing supervision by the Court.  In respect of this argument, it should be noted:
(a)	this defence was not pleaded;
(b)	this issue was not raised by the defendant at trial;
(c)	there was an express acknowledgment by junior counsel for the defendant (who appeared at the hearing) both at the pre-trial directions hearing and at trial, that the defendant did not rely upon any discretionary factors which would militate against an order for specific performance being made of the agreement for lease if the Court determined that it was a valid agreement.
11	The defendant is now seeking to introduce a defence which it deliberately chose not to pursue at trial.
12	The plaintiff notes that had this been raised before at trial, where it ought to have been done, the plaintiff may have led evidence at that point and been afforded the opportunity to meet the point properly.
13	This points to the real potential for prejudice which arises in circumstances where the defendant now seeks to agitate matters that were not argued previously.
14	In response to the defendant’s submissions, the plaintiff’s submissions noted the two concessions made by the defendant’s counsel at and before trial. The first was that counsel conceded there was no impediment to the Court ordering specific performance in the event it found that the parties had concluded a binding agreement for lease. Secondly, counsel resisted the Court standing the matter down if it found the parties had concluded an agreement for lease of which it could order specific performance in order to allow the parties to agree the form of lease to be signed.  Counsel for the defendant submitted the Court should make any order for specific performance in its judgment.
15	The trial was conducted and concluded on the grounds of those concessions.  The defendant now seeks to resile from those concessions and place specific performance in issue. It was submitted by the plaintiff that the defendant is now seeking to reagitate unsuccessful arguments and introduce fresh argument. The defendant is asking the Court to reverse its decision that the parties concluded a binding agreement for lease, being the primary issue which the Court was asked to determine.
16	The plaintiff expressed a doubt as to whether this Court as an inferior court had the ability to revise its own decisions. In reply, the defendant submitted the case referred to by the plaintiff did not support the proposition that the County Court could not revisit reasons. This point was not developed in any depth by either party and mentioned only in passing. I am prepared, however, to assume that this Court could revisit its reasons if it were in the interests of justice to do so in an appropriate case.
17	An application to reopen can only be made in a number of limited cases. Where it is sought to reopen a case after reasons have been given, the task is even more difficult and the applicant needs to show exceptional circumstances: Australian Super Developments Pty Ltd v David Wellesley Marriner & Ors (No.2). The issue of revisiting reasons, and seeking to reopen a case, which in effect is what the defendant is now seeking to do, was considered by the Court of Appeal in Di Stasio Pty Ltd v R & K Services Pty Ltd. This case concerned an appeal from a decision of this Court. The trial judge allowed the case to be reopened to permit a party to put into evidence a further invoice which had not been produced previously through inadvertence.
18	The Court of Appeal referred to the distinction between applications to reopen made pre-judgment and those made post-judgment. The Court noted at [59]:
“Where judgment has been delivered, the circumstances must be exceptional before leave to reopen will be granted. This was recognised by the Court of Appeal in Spotlight:
	There are good reasons why the circumstances must be exceptional before a court may allow a case, having been closed and judgment reserved, to be reopened.  The need for finality in litigation is one.  It is no answer to this point to say that the further evidence sought to be adduced by the respondent in this case is confined to the quantum of damages.  Were applications to reopen to be allowed almost as of course, such applications would be regularly made.  That would add enormously to inefficiencies in the administration of justice, even if the reopened hearing was strictly confined. The discipline which ought to attend the conduct of litigation by highly competent litigators would also inevitably decline.
	The very strict rule that, subject to any applicable process of appeal or review, the presentation of their cases by parties to litigation must conclude with the end of the trial, has another important justification.  It is that, very often, the boundaries of the reopened issues would be hard to define and as difficult to protect.  The reopened hearing would then be bedevilled by arguments about whether one party or the other was seeking to take advantage of the reopening to polish parts of its case which were more or less within the scope of the reopened proceeding but not clearly on one side or the other of the prescribed limits.”
19	At paragraph 62, the Court of Appeal referred to statements made by the Mason CJ in Autodesk Inc v Dyason (No. 2). Mason CJ acknowledged that the exceptional step of reopening a case after judgment has been delivered may occur when the court has proceeded on a misapprehension as to the facts or the law that is not attributable to the neglect or default of the party seeking to reopen:
“These examples indicate that the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law. … However, it must be emphasized that the jurisdiction is not to be exercised for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put.  What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to reargue their cases.’” (emphasis added)
20	As the Chief Justice notes, the purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to reargue their cases. The policy reasons for such applications rarely being indulged are, of course, founded in the public interest in the finality of litigation.
21	In my view, the defendant is attempting to reargue its case, which is impermissible. It also seeks to argue matters which, due to deliberate choice on its part and or neglect it did not make at trial – such as the acknowledgment that it did not rely on any discretionary factors to oppose the granting of an order for specific performance. The defendant is clearly not entitled to depart belatedly from the way it conducted its case at trial, including the concessions identified by the plaintiff. Additionally, it is not open to the defendant to introduce fresh arguments by way of the back door after reasons have been delivered. Such a course offends the principle of finality and should not be permitted.
22	I am not persuaded by the defendant’s submissions that this is an appropriate case, or indeed that exceptional circumstances exist, whereby the Court should revisit and reverse its reasons after delivery of judgment.  Accordingly, I decline to do so.
(b)	The defendant seeks an order for reduction of costs payable
23	The defendant seeks an order that, if the Court is not willing to revisit its reasons and reverse its judgment, the Court should discount the costs ordered to be paid to the plaintiff by one-third.
24	Rule 63A.15 of the County Court Civil Procedure Rules 2018 provides:
“Unless the Court otherwise orders, a party who discontinues or withdraws part of a proceeding, counterclaim or claim by third party notice shall pay the costs of the party to whom the discontinuance or withdrawal relates to the time of the discontinuance or withdrawal.”
25	The defendant relies upon this rule in support of its argument that costs should be reduced because the plaintiff withdrew two significant and factually complex claims before trial. It said then that this justifies treating the otherwise successful plaintiff as a party who has failed on those issues.
26	The defendant submits the plaintiff’s claim as originally framed pleaded an estoppel claim and an unconscionability claim. On 12 July 2019, the plaintiff filed an amended statement of claim which included additional representations and assumptions to further support its estoppel and unconscionability claim. A further amended statement of claim was filed on 23 January 2020 which had amendments concerning the nature of the relief sought. On 1 May 2020, the plaintiff’s solicitor sent a proposed second further amended statement of claim which sought to introduce an entirely new cause of action based on the conduct of the defendant’s property agent, Mr Harris of Ryder Commercial. A further document was sent on 8 May 2020 which was a second further amended statement of claim.
27	The defendant notes that by 8 May 2020, the plaintiff had delivered five different versions of pleadings to the defendant.  It said then that significant costs were wasted on 12 May 2020 when the plaintiff obtained leave to file a second further amended statement of claim which abandoned the estoppel claim and the unconscionability claim.  This pleading did not seek to press any claim regarding a further cause of action based on the behaviour of Mr Harris.
28	In these circumstances, the defendant argues that it should have its costs in respect of the two claims that were withdrawn shortly before trial.
29	The other aspect upon which the defendant relies upon for reduction in the costs to be ordered relates to the introduction of a major damages claim. The original statement of claim sought in terms of relief in paragraph C the following:
“Damages for breach of the agreement for lease in addition to specific performance.”
30	The claim in respect of damages in addition to specific performance the defendant contends relates to losses suffered between the commencement of the proceeding and the granting of an order for specific performance. It said that such a claim was traditionally dealt with after the pronouncement of the decree for specific performance. The Court will then hold a hearing into the losses sustained by the successful party in consequence of being kept out of possession of the demised premises while the litigation was on foot.
31	On 23 January 2020, the plaintiff filed a further amended statement of claim. Paragraph C for the prayer for relief was amended to include a claim for damages in lieu of specific performance. It said that this was a truly alternative claim. On 11 February 2020, the plaintiff filed two expert reports supporting the fresh damages claim. The damages claim was complex and the quantum sought to be recovered was very substantial.
32	An application was made by the defendant by way of summons on 20 March seeking the removal of the plaintiff’s expert reports from the Court’s file. An order was also sought that the trial be split between liability and damages. The plaintiff’s solicitors agreed to the latter proposal. They suggested the challenge to the plaintiff’s experts be deferred until after the question of liability and equitable relief had been determined. The summons was held over until 12 May when Judicial Registrar Tran (as her Honour then was) made various orders including the splitting of the trial. The relief sought in the final version of the statement of claim dated 12 May 2020 (CB 1-7) included in paragraph D of the prayer for relief, a claim for damages in lieu of or in addition to specific performance.
33	The defendant argues that the late damages amendment and the concession implicit in its 24 March 2020 communication with the Court has resulted in significant costs being incurred by the defendant which effectively have been thrown away.  It is said it is unjust that the defendant should be ordered to pay the plaintiff’s costs of preparing expert reports in such circumstances.
34	The defendant also notes that Rule 64A.04 of the Rules enables the Court to make a single order for costs fixed in proportion of the successful party’s costs. Rather than dealing with the matter issue by issue, the defendant submits that the appropriate order and one that strikes the right balance between the parties is to order that the defendant pay two-thirds of the plaintiff’s costs.
35	In opposition to this, the plaintiff makes four points about the submissions made by the defendant:
“59.	First, the second further amended statement of claim upon which Twenty Four proceeded at trial is at CB 1-7. That document tracks in colour all the changes from the original statement of claim dated 16 April 2020.  That Twenty Four sent J&H West another proposed amended statement of claim on 8 May 2020 with which it did not proceed is of no moment when it comes to costs.  It does not justify a costs penalty against Twenty Four.  Further, J&H West has not proved that Twenty Four sending it one proposed pleading caused it to incur unnecessary costs justifying a costs penalty.  Serving a proposed amended pleading is not disentitling conduct that the courts have found justifies a costs penalty.
 60.	Second, Twenty Four’s primary amendment to the original statement of claim was the withdrawal of the material facts in support of its estoppel argument – that is, J&H West was estopped from denying that it had agreed to grant Twenty Four a lease on the terms of the 10 August Document. Twenty Four informed J&H West that it would not proceed with its estoppel argument by serving the Proposed Second Further Amended Statement of Claim on 1 May 2020.  Twenty Four’s estoppel argument was not a distinct claim or part of a proceeding within the meaning of order 63A.15 of the Rules.  It was an alternative argument by which Twenty Four sought the relief it has always sought and now succeeded in obtaining.  Again, not proceeding with the estoppel argument is not disentitling conduct and it does not justify a costs penalty.  To the contrary, by not proceeding with the estoppel argument (even though it had merit) Twenty Four facilitated the prompt completion of the trial.  That is consistent with Twenty Four’s overarching obligations under the Civil Procedure Act 2010 and should not be penalised for it.
 61.	Further, as is apparent from Twenty Four’s estoppel argument as originally alleged, it relied on the same chronology of facts set out in the affidavit of George Harris sworn on 6 April 2020, which J&H West tendered at trial.  As the Court found at [19]-[21] of the Judgment, that chronology was also relevant to the matters the Court determined at trial. Twenty Four did not rely on any additional material facts for estoppel.  J&H West did not, for example, prepare an affidavit to meet the estoppel argument that turned out to be wasted.  There is no evidence that Twenty Four’s estoppel argument put J&H West to any unjustified or additional costs justifying imposing a costs penalty on Twenty Four.
 62.	Third, damages in addition to (or in lieu of) specific performance has been a feature of Twenty Four’s case from the outset. Twenty Four did not introduce the claim late. That Twenty Four clarified on 23 January 2020 that it sought damages in lieu of or in addition to specific performance is of no moment when it comes to costs.  In any event, Twenty Four’s solicitor notified J&H West’s solicitor on 12 November 2019 stating that it expected to receive instructions to amend paragraph D of the prayer for relief to clarify that it sought damages in lieu and that it would amend the prayer for relief at the first available opportunity.
 63.	Fourth, Both Twenty Four and J&H West sought and obtained an order that the trial to be bifurcated.  Twenty Four’s damages claim has been held over to a subsequent date and has not been determined.  The court should not reduce proportionally the costs it orders J&H West to pay Twenty Four by reason of the yet to be determined damages claim.  At most, the court should only order that Twenty Four bear its own costs of the expert reports on damages. There are no other relevant costs referable to the damages claim.
 64.	Otherwise, the Court should order J&H West to pay Twenty Four’s costs of the proceeding until 12 May 2020 on a standard basis.  There are no grounds upon which the Court should discount Twenty Four’s costs by one third as J&H West contends. To reduce Twenty Four’s costs by so much does not reflect the complete success it has enjoyed and would be unfair.  The Court should not embark on that course.”
36	In the reply submissions, the defendant took issue with the suggestion that the ordinary rule would only be departed from where the successful party had engaged in disentitling conduct. It noted that the statement referred to by the plaintiff by McHugh J in Oshlack v Richmond River Council at 69 to 70 was a dissenting judgment and the majority took a contrary view. The plurality (Gaudron and Gummow JJ) emphasised the breadth of the Court’s costs discretion and refused to accept that a successful party would be deprived of costs only by disentitling conduct. The defendant disagrees that the estoppel claim was not a distinct claim within r63A.15. It also noted that the plaintiff pressed an unconscionability claim. It said claims of this nature are notoriously fact sensitive and legally complex. It said that the defendant obtained and filed an expert report from a neuropsychologist going to the unconscionability claim. The withdrawal of these claims and the repeated reformulation of the plaintiff’s claims and pleadings justify the cost apportionment sought by the defendant.
37	The application of r63.15 was considered by Sloss J in Just Group Limited v van Dyke & Ors. Her Honour noted the expression in the rule that “unless the Court otherwise orders” appeared frequently throughout Order 63 of the Rules. This expression served to emphasise or confirm the discretionary nature of the decision to be made by the Court by reference to the facts of the particular case. Her Honour also referred with approval to the decision of Derham AsJ in Soteriadis v Nilumbik Shire Council which conveniently summarised the applicable principles. As Her Honour noted at [28]:
“In essence, the cases summarised in Soteriadis and Johnson show that r63.15 does not give rise to a presumption that costs will be ordered against the discontinuing party. Rather (and paraphrasing what their Honours have said) it creates ‘a starting position’ and the burden is on the party who seeks to persuade the court that a different order should be made to prove the relevant facts. All relevant circumstances, not just the fact of discontinuance, should be considered. If there is to be a departure from the starting position the Court should do so in a particularised and principled way and make such order as it thinks just in the particular circumstances of the case. The reasonableness of the conduct of the parties is also a relevant consideration. That is, whether the plaintiff acted reasonably in commencing the proceeding and whether the defendant acted reasonably in defending it. The reasons for discontinuance can also bear upon the exercise of the discretion as to costs.”
38	The starting point is that having withdrawn a claim, the defendant should recover its costs unless the court otherwise orders. The burden is then placed upon the plaintiff to persuade the Court that a different order ought to be made.
39	Although the defendant refers to separate claims of unconscionability and estoppel, when one examines the pleading more closely, the issue of unconscionability is raised as a necessary plank in the estoppel claim. There is no separate cause of action pleaded relating to unconscionability.
40	It is also said that these claims were significant and factually complex claims. I disagree. The estoppel claim depended solely upon written representations said to have been made in the agreement for lease, the long form lease and reliance from the emails passing between the parties. There was no issue raised about the authenticity of these documents nor were any oral representations pleaded. The dealings between the parties, including the emails, were comprehensively dealt with in the affidavits relied upon at trial of Mr Harris and Mr Eden-Smith. It is difficult to imagine what further evidence might have been adduced had the estoppel claim remained. The defendant has provided scant information and no evidence about the nature and extent of the costs it claims are in effect wasted because of the withdrawal of the estoppel claim.
41	There is no evidence of the nature and circumstances in which an expert report from a neuropsychologist was obtained by the defendant and why that could be relevant to any unconscionability claim. It is not stated who the patient was, for example.
42	The other matter is, as the plaintiff points out, is that the decision not to press the estoppel claim facilitated the prompt conclusion of the trial. To that extent, then there has been savings of costs which of course benefits the defendant as well. Under s24 of the Civil Procedure Act, parties are required to use reasonable endeavours to ensure that legal costs and other costs incurred in connection with a proceeding are reasonable and proportionate to the complexity or importance of the issues in dispute and the amount in dispute. I accept the plaintiff’s submission that it should not be penalised for electing not to procced with the estoppel claim and thereby reducing the issues in dispute and shortening the trial. To do otherwise, would be tantamount to punishing the plaintiff for acting responsibly.
43	The other aspect is that the plaintiff has achieved practical success in the proceeding which is a relevant factor to take into account in considering the application of the rule.
44	In all the circumstances, I am not persuaded that there should be a reduction of costs otherwise payable by the defendant by reason of the withdrawal of the estoppel claim by the plaintiff. I am satisfied that the burden of displacing the starting position under r63.15 has been met by the plaintiff.
45	The position is different in my view in respect of the claim regarding the damages. It can be accepted that the plaintiff did change its case by seeking damages in lieu of and not merely in addition to specific performance and that expert reports were filed going to that issue. As has been noted, the liability and damages aspects of the proceeding have been split. It is not yet clear what the nature of the damages will be assuming the plaintiff proceeds with its claim for damages. For that reason, given that the damages aspect has not yet been finalised, I propose that the issue of the costs incurred by the plaintiff in respect of obtaining expert reports should not be paid for by the defendant now but that issue be reserved and determined following the hearing and determination of the second trial on damages. Therefore, I will exclude the costs incurred by the plaintiff in respect of the engagement of its experts’ reports regarding damages from the costs otherwise payable by the defendant.
(c)	Plaintiff’s application for indemnity costs
46	The plaintiff seeks an order that the defendant pay the plaintiff’s costs of the proceeding as follows:
(a)	the plaintiff’s costs of the proceeding on a standard basis up to 12 May 2020; and
(b)	the plaintiff’s costs of the proceeding on an indemnity basis from 12 May 2020.
47	At paragraph 55 of the plaintiff’s submissions, the well-known principles regarding the Court’s discretion in respect of costs are set out. It was submitted the plaintiff enjoyed complete success because the Court found that the 10 August 2016 document constituted a binding agreement for lease.
48	The basis for seeking indemnity costs is based on letters sent by the plaintiff’s solicitors to settle the proceeding dated 12 May 2020, and a second letter dated 13 May 2020. The first letter offered to settle the proceeding on the grounds that the defendant sign the lease attached to the letter which contained only the terms of the 10 August 2016 document – the short form lease, and the proceeding be struck out with no orders as to costs. The offer remained open for acceptance until 19 May 2020. The plaintiff warned the defendant that if it did not accept the offer and if it did not obtain a result at trial that was more favourable than the offer, the plaintiff would seek indemnity costs from the date of the offer.
49	In the second letter dated 13 May 2020, the plaintiff offered to settle the dispute on the grounds that the defendant sign and return the Bourke and Associates Lease (the long form lease). The plaintiff was also willing to pay more rent under the lease increased from $42,800 per annum to $47,800 per annum in the first year, and increasing thereafter according to the terms of the lease. This offer was also open for acceptance until 19 May 2020. The letter again warned the defendant that the plaintiff would rely on the letter on the question of costs.
50	The principles in respect of Calderbank letters are well-settled. In the oft cited case of Hazeldene Chicken Farms Pty Ltd v Victorian WorkCover Authority (No 2), the Court of Appeal stated that the critical question is whether the rejection of the offer was unreasonable in the circumstances. Deciding whether conduct is unreasonable involves matters of judgment and impression. The various matters a court should have regard to include:
(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 (for a Calderbank offer to be effective it must constitute a real element of compromise the claim.  An offer made simply to trigger cost sanctions would usually not be effective);
(d)	the offeree’s prospects of success, assessed 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 indemnity costs in the event of the offeree rejecting it.
51	The plaintiff submits that it made its offers at a relatively advanced stage of the proceeding. By then, the pleadings had settled, discovery had occurred, mediation had been completed, and the defendant had served the affidavit of Mr George Harris setting out the relevant evidence and details.  It was said by then, the defendant knew of the substance and strength of the plaintiff’s case, the strength and weakness of its own defence, and chances of succeeding and resisting the plaintiff’s claim.  It was said that the defendant had enough time to consider the offers. The offers were clear. As was required, there was a warning in respect of the costs consequences of rejecting the offer.
52	The plaintiff submits the defendant should have reasonably concluded that the Court was likely to find the 10 August 2016 document constituted a binding agreement for lease, and that the first two grounds of defence, namely that the document was not immediately binding or contained a limited licence, were unlikely to succeed. Similarly, as to the remaining defences, being the lack of a clear commencement date or that the document did not sufficiently describe the demised area, it was submitted there were little legal grounds upon which the defendant could successfully maintain these defences.
53	The plaintiff argues the offers made were genuine offers to compromise. In particular, the 13 May 2020 letter contained an offer of more generous rent, which was more favourable to the defendant. The first letter offered the defendant an opportunity to escape a costs order against it for the entire proceeding. It was said this was a significant compromise, being a party offering to forego the opportunity to recover its costs. Given all this, the plaintiff argues it was unreasonable of the defendant not to have accepted one of the plaintiff’s offers when they were made.
54	In response, the defendant noted that it was only on 24 November 2020 that the plaintiff abandoned relief based on the execution by the defendant of the August 2018 long form lease. Given the significant differences between the two settlement offers and the plaintiff’s subsequent indecision about them, it was not unreasonable for the defendant to reject both at the time they were made.
55	Both offers were made shortly before trial. Each were clear and contained the necessary warning about indemnity costs being sought if the offer was rejected. In my view, the time in which to accept the offers was reasonable. The remaining issues to consider are whether the offers contained a genuine compromise and should the defendant have appreciated its prospects of success were poor.
56	The first offer in effect was saying the defendant should capitulate because its defence will not succeed. It was proposed that the proceeding be struck out with no order as to costs. The plaintiff says this offer about costs was a significant forbearance on its part as a “walk away” offer does involve a real compromise. The second offer dated 13 May 2020 set out more detail about the respective merits of the parties’ claims. An increase in the rent payable was proffered. There was no mention in the second offer of the plaintiff agreeing to the proceeding being struck out with no order as to costs unlike the first offer. I accept that there was a sufficient element of compromise in that the plaintiff agreed to forego seeking its costs in the first offer and in the second offer, the plaintiff was willing to pay a higher rent than contained in the agreement for lease which was a benefit.
57	As the continuing submissions make clear, this case raised complex questions of law. It was not so obvious or immediately apparent in my view, that the defendant’s defences were bound to fail such that the defendant acted unreasonably by not agreeing with the contentions put forward by the plaintiff about the strength of the plaintiff’s case and the weaknesses in the defendant’s case. The fact that there were alternative offers made on successive days, did to some extent, introduce some ambiguity about what the plaintiff was seeking by way of compromise which makes it more difficult to say it was unreasonable for the defendant to have rejected one or other of the offers made.
58	Having regard to the submissions put, I am not persuaded it was ultimately unreasonable of the defendant not to have accepted either of the offers made, such that an order for indemnity costs should be made in favour of the plaintiff.

Conclusion
59	I will make the following declaration and orders:
(1)	It is declared that the agreement dated 10 August 2016 and executed by the parties constitutes a binding and enforceable agreement for lease;
(2)	The defendant is ordered to specifically perform the agreement for lease by executing a deed of lease in the form of Annexure “A” (being the same form of lease contained at Court Book 637-643) in counterpart and to deliver one part to the plaintiff by 4:00pm on 20 January 2021;
(3)	In default of compliance with Order 2 above, the Registrar of the County Court be appointed the agent of the defendant for the purpose of executing the deed of lease on behalf of the defendant.
(4)	The defendant pay the plaintiff’s costs of the proceeding to date, including any reserved costs, on a standard basis to be taxed in default of agreement with the exception of:
(a) 	the costs incurred by the plaintiff relating to expert reports obtained from Mr Luke Course dated 21 January 2020 and Ms Piera Murone dated 11 February 2020, dealing with the assessment of the plaintiff’s claim for damages;
(b) 	the issue of liability for payment of the costs referred to in paragraph 4(a) is reserved, pending the hearing and determination of the plaintiff’s claim for damages in this proceeding.
(5) 	Reserve liberty to the parties to apply by email to the Commercial Division Registry (commercial.registry@countycourt.vic.gov.au) for further directions relating solely to any orders to be made regarding the hearing of the plaintiff’s claim for damages, upon giving reasonable notice to all other parties.
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Certificate
I certify that these 20 pages are a true copy of the Reasons for Ruling of Her Honour Judge A Ryan delivered on 16 December 2020.
Dated:16 December 2020
Associate to Her Honour Judge A Ryan