IN THE COUNTY COURT OF VICTORIA
AT Melbourne
COMMERCIAL DIVISION	Revised
Not Restricted
Suitable for Publication	
  GENERAL List
Case No. CI-20-00540

Marko Rajic 	First plaintiff	
		
and		
		
Marija Rajic	Second plaintiff	
		
v		
		
Michelle Ascenzo as administrator of the Estate of the late Mark Rajic	Defendant	
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JUDGE:	His Honour Judge Woodward 	
WHERE HELD:	Melbourne	
DATE OF HEARING:	None, on the papers (final reply submission dated 20 April 2022)	
DATE OF RULING:	12 May 2022	
CASE MAY BE CITED AS:	Rajic & Anor v Ascenzo as administrator of the Estate of the late Mark Rajic (No 2)	
MEDIUM NEUTRAL CITATION:	[2022] VCC 623		

RULING ON COSTS
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APPEARANCES:
	Counsel	Solicitors	
For the plaintiffs	G Devries	Tonkin Legal Group	
			
For the defendant	L Wirth	Eales & Mackenzie Melbourne	

HIS HONOUR:
Background to ruling
1	In my reasons for judgment in this matter delivered 3 March 2022, after confirming that there would be judgment for the plaintiffs, I stated that costs should be ordered on the standard basis (in default of agreement), unless there have been any offers of compromise or other matters not presently before me that would support a different order. The parties were invited to agree on the form of orders to give effect to the reasons, including on interest and costs. Failing agreement, they were directed to submit brief written submissions and final orders would be made on the papers.
2	The parties were unable to agree on final orders, primarily because the plaintiffs had sent the defendant a Calderbank offer on 12 October 2020 (“Offer”), which expired at 4.00pm on 20 October 2020 and was not accepted by the defendant by this time. The parties have been unable to agree on the consequences of the Offer. The defendant also seeks a stay of the judgment, which is unopposed if the stay runs from “the date of the Judgment delivered herein”, which I take to mean from 3 March 2022. 
The Offer
3	The terms of the Offer were that the defendant:
(a)	pay the plaintiff $28,600 within 30 days of completion of a deed of settlement;
(b)	pay the plaintiff a further $165,000 within five years of settlement;
(c)	pay the plaintiff interest on the payment of $165,000 at the rate of 2% per annum, by monthly payments of $275; and
(d)	provide security for the payment of $165,000 by way of a second mortgage over her property in South Morang.
4	The Offer was open for acceptance for eight days – until 4.00pm on Tuesday 20 October 2020. The Offer was otherwise in the usual form, except for a mistaken reference to a family law property settlement and an incorrect citation of the decision of Hazeldene 's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 (“Hazeldene”), neither of which is material. At the time the Offer was made, the trial of the proceeding was due to commence on 21 October 2020, but that trial date was later vacated by consent. Once the trial date was vacated, the plaintiffs did not extend the period for acceptance of the Offer. But nor did the defendant seek an extension of the Offer or otherwise respond to it in any form.
Analysis
5	The principles that guide the court in considering whether a party should have indemnity costs based on a Calderbank offer are set out in the decision of Habersberger J in BHP Billiton Olympic Dam Corporation Pty Ltd v Steuler Industriewerke GmbH (No 3) [2012] VSC 414 at [59]–[67] (with reference to Hazeldene) as follows (citations omitted):
“First, the fact that a less favourable result is achieved does not give rise to a presumption of a special costs order. The making of an offer and its rejection are “but two albeit important circumstances” to which the Court will have regard in the exercise of its costs discretion.
Secondly, the competing policy objectives relevant to the exercise of the costs discretion are principally the desirability of promoting settlement and reducing litigation costs as against the undesirability of discouraging potential litigants from bringing their dispute to the courts.
Thirdly, the critical question is whether the rejection of the offer was unreasonable in the circumstances. As the Court of Appeal said in Hazeldene:
‘In our view, these competing considerations can be sufficiently accommodated by applying a test of (un)reasonableness. The critical question is whether the rejection of the offer was unreasonable in the circumstances. We see no justification for a more stringent test such as “manifestly” or “plainly” unreasonable.’
Fourthly, a court considering submissions that the rejection of a Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:
(a)	the stage of the proceeding at which the offer was received;
(b)	the time allowed for 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 indemnity costs in the event of the offeree rejecting it.
Fifthly, as the determination of whether it was unreasonable for the offeree to have rejected the offer is made “as at the time, or within a reasonably short time after, the offer” was made, the Court should not too readily embrace submissions that it was inevitable that the proceedings would fail.  As Hamilton J put it in Grynberg v Muller:
‘These submissions focus the bright light of hindsight.  Hindsight sings a siren song of which Judges must be cautious …’
Sixthly, the onus lies on the offeror to demonstrate the unreasonableness of the offeree’s rejection of the offer.  This means that it is necessary to analyse what was proposed.
Seventhly, there is no general rule that the Calderbank offer must set out with specificity the basis for the offeror’s contention that the offeree should accept the compromise. Whether there is a need to do so depends upon a consideration of all of the circumstances existing at the time of the offer.
Eighthly, it is not necessary for the applicant for an indemnity costs order to establish matters which might be relevant to other, well-recognised, grounds for indemnity costs. Such conduct is not a pre-requisite for a finding that the rejection of the Calderbank offer was unreasonable.
Ninthly, an “all in” offer is permitted in a Calderbank offer.”
6	The plaintiffs’ submissions deal with the reasonableness of the defendant’s rejection of the offer by reference to the factors listed in the fourth of the matters identified by Habersberger J above. I will do likewise, in respect of the first four of those matters. In my view, neither the clarity of the offer nor whether it foreshadowed an application for indemnity costs were sustainable grounds for rejecting the Offer. 
The stage of the proceeding at which the offer was received
7	As the plaintiffs submit, at the time the offer was sent, pleadings and discovery had been completed and the parties had undertaken a mediation (on 30 July 2020) and a Judicial Resolution Conference (on 8 October 2020). The trial was due to commence the day after the offer expired. I am satisfied in those circumstances that the defendant was in a good position to assess the worth of the Offer. The defendant does not suggest otherwise.
The time allowed to consider the offer
8	As the defendant submits, this was somewhat shorter than the more common 14 days, but was obviously geared to the then listed trial date. To my mind, this factor weighs somewhat in favour of a finding that the defendant’s rejection of the Offer was not unreasonable, but only marginally.
The extent of the compromise offered
9	The plaintiffs submit that the compromise offered was “significant”, because it involved a discount (of $26,400) on the total claim and also a “generous” time for the bulk of the payment, at a rate of interest (2% per annum) less than the rate applicable to the original loan.
10	I accept (as the plaintiffs submit) that the Offer was a “genuine and fair attempt to resolve the matter and a real compromise of the claim”. However, from the defendant’s perspective, it still involved her repaying almost all of the amount advanced by the plaintiffs and therefore represented effectively conceding the bulk of their claim. According to her submissions, it would also have necessitated the sale of her home, despite the time to pay. To my mind the compromise offered is at best a neutral factor in weighing the reasonableness of the defendant’s rejection of the Offer.
The defendant’s prospects of success
11	In my view, this is the most difficult of the principles to be applied. I do not agree with the plaintiffs’ submission that the defendant should have viewed her prospects as poor at the time of the Offer. The complete absence of any documentation of the loan meant that the outcome of the case was always going to turn entirely on the evidence of the witnesses at trial. It is only with the benefit of hindsight that the plaintiffs can say with conviction that the weight of that oral evidence favoured their claim. It is notoriously difficult to predict how oral evidence will ultimately be presented and received. There was no certainty that each of the plaintiffs’ and Ms Swanson’s accounts of what transpired would be consistent and plausible, and thus outweigh the defendant’s evidence.
12	In my reasons for judgment I said that I did not have the impression that any of the witnesses were deliberately and knowingly lying, and this included the defendant. While I ultimately concluded that parts of her account were reconstructed, I have little doubt that her account of the events was one that she believed with conviction. Further, the absence of contemporaneous documents and her husband’s death left her (and those advising her) without any real capacity to critically and objectively test her account.
13	Weighing all of these factors in the light of the principles articulated by Habersberger J, I have concluded that the defendant’s rejection of the offer was not unreasonable. I will therefore order costs on the standard basis in default of agreement. As to the cost of the submissions on costs, the defendant has succeeded on that issue. However, the outcome was finely balanced and it was reasonable for the plaintiffs to press the Offer – indeed, I expressly invited them to do so. In my view, there should be no order for costs in relation to the submissions on costs.
Stay
14	On the issue of the stay, because the plaintiffs’ submissions in reply were not sent to my associates directly, the fact that they had been filed was only identified on 10 May 2022. This has meant finalising the question of the costs and stay has taken longer than anticipated. In order to balance the interests of both parties, I therefore propose to order that there be a stay of 45 days from the date of the orders on judgment.
Orders
15	I will therefore order as follows:
(a)	There is judgment for the plaintiffs against the defendant in the sum of $240,900, comprising the principal claim of $220,000, plus interest to and including the month of May 2022 (payable on 19 May 2022) of $20,900.
(b)	The defendant pay the plaintiffs’ costs of and incidental to the proceeding (excluding the costs of and incidental to the parties’ submissions on final orders, including on the question of costs), to be taxed on the standard basis in default of agreement.
(c)	There is otherwise no order as to costs.
(d)	The judgment and orders in orders (a) and (b) above are stayed for 45 days from the date of these orders.
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Certificate
I certify that these 7 pages are a true copy of the ruling of His Honour Judge Woodward delivered on 12 May 2022.
Dated: 12 May 2022

Lyn Nguyen
Associate to His Honour Judge Woodward