Whittle & Anor v Filaria Pty Limited & Ors; Posch v Filaria Pty Limited & Ors; Johnston v Filaria Pty Limited & Ors [2004] ACTSC 131 (17 December 2004)

Last Updated: 31 January 2005

ALISON JANE WHITTLE and ROZILIE PATRICIA MUNDAY v FILARIA PTY LIMITED ACN 056 933 843 and INDEPENDENT GROUP PTY LIMITED ACN 008 659 792 and DAVID SHEARER and MILLIE PHILLIPS [2004] ACTSC 131 

(17 December 2004)

HENRY POSCH v FILARIA PTY LIMITED ACN 056 933 843 and INDEPENDENT GROUP PTY LIMITED ACN 008 659 792 and DAVID SHEARER and MILLIE PHILLIPS [2004] ACTSC 131 (17 December 2004)

IAN DONALDSON JOHNSTON v FILARIA PTY LIMITED ACN 056 933 843 and INDEPENDENT GROUP PTY LIMITED ACN 008 659 792 and GRAHAME O'BRIEN and MILLIE PHILLIPS [2004] ACTSC 131 (17 December 2004)

COSTS - application for indemnity costs - failure to reasonably negotiate resettlement - whether "Calderbank" offer relevant only if clear and capable of acceptance of creating contract - whether conduct so unreasonable as to warrant indemnity costs - costs re application for consolidation.

Evidence Act 1995 (Cth), s 135

Andrews v Barnes (1888) 39 ChD 133

Preston v Preston [1982] 1 ALL ER 41

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397

Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225

Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court of Australia, 3 May 1991)

Ragata Developments Pty Ltd v Westpac Banking Corporation (unreported, Federal Court of Australia, 5 February 1993)

Thors v Weekes (1989) 92 ALR 131

J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (1993) 46 IR 301

Messiter v Hutchinson (1987) 10 NSWLR 525

Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721

EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59

Packer v Meagher [1984] 3 NSWLR 486

Australian Guarantee Corporation Ltd v De Jager [1984] VR 483

Quirk v Bawden [1992] ACTSC 118; (1992) 111 FLR 115

Pearson v Williams (unreported, Supreme Court of Victoria, Common Law Division, 26 February 2002)

Hadid v Lenfest Communications Inc (unreported, Federal Court of Australia, 15 May 2000)

Bates trading as Riot Wetsuits v Omareef Pty Ltd trading as Quicksilver Wetsuits of Australia (unreported, Federal Court of Australia, 28 October 1997

No SC 853 of 1999

No SC 868 of 1999

No SC 980 of 1999

Judge: Crispin J

Supreme Court of the ACT

Date: 17 December 2004

IN THE SUPREME COURT OF THE )

) No. SC 853 of 1999

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: ALISON JANE WHITTLE and

ROZILIE PATRICIA MUNDAY

Plaintiffs

AND: FILARIA PTY LIMITED

ACN 056 933 843

First Defendant

AND: INDEPENDENT GROUP PTY LIMITED

ACN 008 659 792

Second Defendant

AND: DAVID SHEARER

Third Defendant

AND: MILLIE PHILLIPS

Third Party

ORDER

Judge: Crispin J

Date: 17 December 2004

Place: Canberra

THE COURT ORDERS THAT:

1. the third party notice be dismissed with no order as to costs;

2. subject to order 3 hereof, the plaintiffs pay the costs of all defendants, with those costs incurred after 15 May 2003 being assessed on an indemnity basis;

3. the first defendant pay any costs incurred by the plaintiffs as a consequence of the service of the notice of motion seeking an order striking out the plaintiffs' claim.

IN THE SUPREME COURT OF THE )

) No. SC 868 of 1999

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: HENRY POSCH

Plaintiff

AND: FILARIA PTY LIMITED

ACN 056 933 843

First Defendant

AND: INDEPENDENT GROUP PTY LIMITED

ACN 008 659 792

Second Defendant

AND: DAVID SHEARER

Third Defendant

AND: MILLIE PHILLIPS

Third Party

ORDER

Judge: Crispin J

Date: 17 December 2004

Place: Canberra

THE COURT ORDERS THAT:

1. the third party notice be dismissed with no order as to costs;

2. subject to order 3 hereof, the plaintiff pay the costs of all defendants, with those costs incurred after 15 May 2003 being assessed on an indemnity basis;

3. the first defendant pay any costs incurred by the plaintiff as a consequence of the service of the notice of motion seeking an order striking out the plaintiff's claim.

IN THE SUPREME COURT OF THE )

) No. SC 980 of 1999

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: IAN DONALDSON JOHNSTON

Plaintiff

AND: FILARIA PTY LIMITED

ACN 056 933 843

First Defendant

AND: INDEPENDENT GROUP PTY LIMITED

ACN 008 659 792

Second Defendant

AND: GRAHAME O'BRIEN

Third Defendant

AND: MILLIE PHILLIPS

Third Party

ORDER

Judge: Crispin J

Date: 17 December 2004

Place: Canberra

THE COURT ORDERS THAT:

1. the third party notice be dismissed with no order as to costs;

2. subject to order 3 hereof, the plaintiff pay the costs of all defendants, with those costs incurred after 15 May 2003 being assessed on an indemnity basis;

3. the first defendant pay any costs incurred by the plaintiff as a consequence of the service of the notice of motion seeking an order striking out the plaintiff's claim.

1. On 11 June 2004 I ordered that there be judgment for each defendant in each of these cases. I also ordered that the counter claims be dismissed.

2. It has been suggested that a further order is required formally dismissing the third party claim and with the consent of the relevant parties I now make that order.

3. More substantial issues arise in relation to costs. It is common ground that the defendants are generally entitled to costs of the actions brought against them but they maintain that they are entitled to an order providing for the costs which they incurred following offers of settlement in May 2003 to be assessed on an indemnity basis. The second and third defendants were jointly represented and their counsel have made it clear that they seek only a single costs order, albeit one embracing the costs incurred on behalf of either or both of their clients. The plaintiffs not only oppose the making of any order for costs on an indemnity basis but maintain that they are themselves entitled to an order for costs in relation to certain motions prior to the trial of the action, questions of costs in relation to those motions having been previously reserved.

The applications for costs on an indemnity basis

4. The usual order for costs which a successful litigant is entitled to receive is, of course, on a "party and party" basis. A party who seeks an order on a more favourable basis must point to some factor justifying an order of that kind. The most favourable order is one requiring that costs be paid on an indemnity basis. From time to time different tests have been suggested as to when a departure from the usual course of ordering costs on a party and party basis might be justified. In Andrews v Barnes (1888) 39 ChD 133 at 141 the English Court of Appeal said that there was a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require". In Preston v Preston [1982] 1 ALL ER 41 at 58 Brandon LJ expressed the view that there should be some special or unusual feature in the case to justify a departure from the normal practice. This test seems to have been followed by Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397. In Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 at 233 Sheppard J said that most judges have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors warranting a departure from the usual rule. He also referred with approval to the view of French J in Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court of Australia, 3 May 1991) at 8, where his Honour stated that the categories in which the discretion that might be exercised are not closed and noted that Davies J had expressed a similar view in Ragata Developments Pty Ltd v Westpac Banking Corporation (unreported, Federal Court of Australia, 5 February 1993).

5. In the Colgate-Palmolive Company case Sheppard J referred to some of the circumstances which judges have thought would warrant the exercise of the discretion. These circumstances include making knowingly false or irrelevant allegations of fraud (referred to by Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd and Gummow J in Thors v Weekes (1989) 92 ALR 131 at 1520); misconduct causing loss of time to the Court and other parties, (referred to by French J in Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd); the commencement or continuance of proceedings for an ulterior motive (referred to by Davies J in Ragata Developments Pty Ltd v Westpac Banking Corporation), or in wilful disregard of known facts or established law (also referred to by Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd and French J in J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (1993) 46 IR 301); the making of allegations which ought never have been made or undue prolongation of a case by groundless contentions (referred to by Davies J in Ragata Developments Pty Ltd v Westpac Banking Corporation); imprudent refusal of offers of compromise (see, for example Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721); and contempt of court (referred to by Megarry V-C in EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59). In addition, Brandon LJ allowed costs on a "common fund" basis in Preston v Preston because the solicitors for the party against whom costs were sought had caused increased expense by extreme dilatoriness and lack of proper co-operation in the conduct of proceedings. Orders for indemnity costs have also been made because the conduct of the opposing party constituted an abuse of the process of the Court (Packer v Meagher [1984] 3 NSWLR 486 and Australian Guarantee Corporation Ltd v De Jager [1984] VR 483).

6. Whatever may have been the position in earlier years it is now clear that in some circumstances the rejection of a reasonable offer of settlement and a refusal to make a realistic counter offer may be considered so unreasonable as to justify an order that costs be paid on an indemnity basis. In Quirk v Bawden [1992] ACTSC 118; (1992) 111 FLR 115 the Full Court of the Supreme Court of the Australian Capital Territory made it clear that a party would not necessarily be entitled to an order for indemnity costs merely because the judgment was for an amount which exceeded that which he or she had previously offered to accept. There must be a failure to act reasonably and that failure must be sufficiently serious to warrant the costs order sought.

7. The first defendant claims to be entitled to costs on an indemnity basis from 9 May 2003 when an offer of settlement contained in a letter of 2 May 2003 was rejected. That offer was in the following terms:

1 The First Defendant offers to purchase any one or all of Mr Posch's, Ms Whittle's and Ms Munday's, or Mr Johnston's units.

2 The purchase price to be paid by the First Defendant will be the sum of $60,000 pro-rated to the base value of $123,950.

3 The Second Defendant offers to pay to any of Mr Posch, Ms Whittle and Ms Munday, or Mr Johnston, if they accept this offer and sell any unit to the Frst Defendant in acceptance of this offer, the sum of $40,000 in respect of any unit purchased. This sum is a flat sum, and will not be pro-rated for any unit.

4 Each of the Plaintiffs who agree to this offer will discontinue against all parties against whom they have made a claim.

5 All other parties to any of the above proceedings involving a Plaintiff who accepts this offer, will discontinue their claims against all other parties against which they have made claims.

6 Each party will bear its own costs of and incidental to the proceedings, including any claims for contribution and indemnity and third party claims.

7 Each of the Plaintiffs will pay his or her own costs of conveyancing and other costs incurred in any purchase of any unit made as a result of this offer.

8 Each party will release and forever discharge any other party against which it has made any claims in these proceedings from all claims, demands, costs and expenses, howsoever arising out of their allegations against those other parties and the acts, facts, matters and circumstances giving rise to those allegations.

9 Each of the Plaintiffs indemnifies and will keep indemnified the First Defendant, the Second Defendant, the Third Defendant, and the Third Party against any and all liability in respect of all claims and demands brought, made or prosecuted against the indemnified by any person or persons arising out of the allegations and the acts, facts, matters and circumstances giving rise to the allegations. This indemnity includes all costs, damages and expenses which may be incurred by those indemnified defending or settling such claims and demands.

10 Each party agrees to keep the terms of settlement confidential.

11 Each party accepting this offer does so on the basis of no admission of liability by any other party.

12 Each party agrees to enter into a deed of settlement and release in terms equivalent to this offer of settlement and no final agreement will come into effect until such deed of settlement and release is executed by all parties.

This offer of settlement is made to each individual Plaintiff in the three proceedings referred to above and is open to be accepted by each separately. A unanimous acceptance by all of the Plaintiffs in the above three proceedings is not a condition precedent to the offer.

This offer remains open for acceptance for a period of 14 days from the date of this letter. We look forward to your response.

8. The offer was bluntly rejected by letter dated 9 May 2003 which contained neither any counter offer nor any indication of a willingness to negotiate.

9. The second and third defendants claim to be entitled to costs on an indemnity basis from 12 May 2003 when, notwithstanding this rebuff, their solicitors wrote to the plaintiffs' solicitors in the following terms:

Our clients have instructed us to make an offer to each of your clients in the above three proceedings to settle their claims against all parties in these proceedings on the basis that our clients pay your client the sum of $50,000 per unit owned by that client, not pro-rated for higher value units, in full and final settlement of all claims made by your client.

This offer is made on the basis that if any of your clients accept the offer then he or she, or they, must agree to wholly discontinue the proceeding against all parties to the proceeding and release all parties from all claims made in that proceeding. Our clients also offer to pay your client's taxed or agreed costs of the proceeding as against Independent Group Pty Limited and the two individual agents, Mr Shearer and O'Brien. We understand that, in the event that any of your clients accept this offer, Filaria Pty Ltd is prepared to offer to pay that client's taxed or agreed costs as against Filaria Pty Ltd.

In the event that any of your clients accept this offer the intention of our clients is that all claims by and against all parties to that proceeding be finally resolved on the terms set out above, with no further payments, including payments relating to costs, to be made by any party other than those referred to above.

10. The plaintiffs' solicitor replied by letter dated 14 May 2003 rejecting this offer and indicating that the plaintiffs would be prepared to settle their actions on the basis that the units were effectively resold to one or other of the defendants for the original purchase prices plus the sum of $5,000 per unit together with an order for costs of each action on an indemnity basis with an advance payment of $50,000 in respect of each action to be paid at the same time as payment of the purchase prices. This counter offer was conditional upon the defendants agreeing to similarly repurchase units from another 56 claimants for whom the plaintiffs' solicitor acted and pay an extra $5,000 per unit plus further sums said to relate to rental guarantees. It was also conditional upon them agreeing to pay costs of $24,000 for each action save for the "Carlisle" matter where the costs were to be fixed at $160,000. The offer was to remain open until the following day.

11. It may be noted that this offer would not only have required one or more of the defendants to have incurred liabilities vastly exceeding any amounts they could conceivably have been ordered to pay in the three actions in question but also, to agree to pay indemnity costs for those actions and a further sum of $1.48 million for costs of the other actions, none of which had been set down for hearing.

12. On 16 May 2003 the first defendant's solicitors wrote to the plaintiffs' solicitors referring to the letter of 14 May 2003 and subsequent telephone conversations in relation to the plaintiffs' offer to settle the matter. Whilst rejecting the plaintiffs' offer, the first defendant's solicitors indicated that their client was prepared to increase its previous offer for the purchase the plaintiffs' units from $60,000 pro-rated to the purchase price of the units and that it would pay the plaintiffs' costs as assessed or agreed. The letter indicated that this offer had been made on the understanding that the offer previously made by the second defendant of $50,000 per unit plus costs was still open. It also indicated that the offer was conditional upon all 59 unit holders agreeing to settle their outstanding claims.

13. The plaintiffs' solicitors replied by letter of the same date rejecting the offer.

14. The trial of the action commenced on 19 May 2003.

15. On 23 May 2003 the first defendant's solicitors made a further attempt to settle the matters, offering the sum of $60,000 pro-rated to the base unit value of $123,950 together with a further sum of $5,000. The offer of settlement was conditional upon the cross claims being dismissed with no order as to costs, previous costs orders being vacated and agreement by the plaintiffs to release the first defendant from all claims in connection with the redevelopment of the Canberra International Hotel.

16. On 26 May 2003, the plaintiffs' solicitor rejected the offers effectively reiterating their previous offer to have the units repurchased for the initial purchase prices plus $5,000. Again, they insisted that the plaintiffs' costs be paid on an indemnity basis but this time required a down payment of $80,000 per action to be paid at the same time as the payment of the purchase prices "in partial satisfaction of such costs". The offer was also conditional upon similar arrangements being entered into in relation to the other 56 actions and again required payment of legal costs amounting, in all, to $1.48 million in relation to those actions.

17. On behalf of the defendants, it was submitted that this course of events amply justified a conclusion that the plaintiffs had acted so unreasonably as to warrant an order that the subsequent costs of the actions be paid on an indemnity basis.

18. Any issue as to whether a party has acted unreasonably in declining to make or accept an offer of settlement must be considered in the context of the plaintiffs' apparent prospects of establishing liability in their actions and obtaining substantial damages against the defendants. As Higgins J (as he then was) said in Quirk v Bawden at 122:

Most litigation . . . admits of a range of outcomes. Which of those outcomes will, ultimately, be reflected in the final judgment is a matter upon which the parties might reasonably differ. Indemnity costs should not be used to inhibit either party from litigating an issue reasonably in contention between them. However, neither should parties be permitted to persist in an unrealistic assessment of the chance that the issue or issues in dispute will be determined favourably to them when that view is able to be perceived as unrealistic.

19. In the present case the plaintiffs' prospects of obtaining orders for rescission of contracts for sale entered into in 1993 or damages exceeding the net loss in value were tenuous. To take but one example, the plaintiffs faced obvious difficulties in relation to the issue of causation. They maintained that the units had been worth what they paid for them and that they had sustained no losses at the time of purchase or, indeed, for several years thereafter. Whilst they claimed that all of the losses subsequently sustained prior to trial were attributable to tortious conduct or breach of statutory duty on the part of one or more of the defendants, the valuer engaged to give evidence on their behalf explained that the diminution in the value of the units had been attributable to a range of factors which included a failure to maintain the building, the conduct of two hotel businesses effectively competing against each other within the one building and the adverse publicity which that situation had generated. None of those problems were directly attributable to any conduct of any of the defendants in 1993.

20. Mr Crowe SC, who appeared for the plaintiffs, argued that it was also necessary to consider the issue of reasonableness in the context of the information available to the plaintiffs' solicitor and the difficulties that he may have experienced in acquiring a sufficient knowledge of the evidence to enable him to adequately assess the plaintiffs' prospects.

21. The plaintiffs' solicitor, Mr Gillespie-Jones, deposed to the fact that full discovery had been resisted by the first defendant and it had not been until the week commencing 12 May 2003 that he had been able to inspect many documents and advise the plaintiffs in relation to them. A number of other documents had been obtained only by subpoena returnable on 16 May 2003. Furthermore, it was not until 19 May 2003 that he was first warned that the third defendants might wish to challenge some answers to interrogatories. I accept that evidence. However, it was not augmented by any suggestion that these difficulties had prevented Mr Gillespie-Jones from giving adequate advice to his clients concerning the settlement offers that had been made by the defendants or even that it had influenced the nature of the advice given. Nor was there any evidence to the effect that these difficulties had had any influence on the plaintiffs' decisions.

22. Mr Gillespie-Jones also deposed to having formed the opinion that if his clients had accepted the offer contained in the letter of 2 May 2003 the indemnities required by par 9 of that letter would have exposed them to "an unknown expenditure". He added that he was unable to recommend the settlement to any of the plaintiffs "for this reason alone". Mr Crowe argued that this concern was well founded suggesting, by way of example, that since the same brochure had been made available to all purchasers, the plaintiffs could conceivably have been required to indemnify the defendants for any liabilities they incurred by reason of the claims by the other 56 claimants. I do not accept that par 9 would have had such an effect. Considered in the context of the preceding paragraph, it plainly referred to "the allegations and the acts, facts, matters and circumstances giving rise to these allegations" in "these proceedings", that is, in the actions brought by these three plaintiffs. Furthermore, Mr Gillespie-Jones did not claim to have sought clarification of the meaning of par 9 or even indicated that the requirement thereby conveyed created an impediment to acceptance of the offer.

23. Mr Crowe argued that it had not been incumbent upon him to do so. He submitted that a failure to accept a "Calderbank" offer could only provide an adequate basis for an indemnity costs order if the offer had been clear and unambiguous. In support of this contention he relied upon the judgment of Ashley J in Pearson v Williams (unreported Supreme Court of Victoria, Common Law Division 26 February 2002), in which his Honour adverted to the requirement that an offer of compromise made under the rules of the Victorian Supreme Court should be "certain" and of such a character that acceptance would give rise to a binding contract between the parties. His Honour expressed the opinion that there was good reason why those requirements ought to apply in the case of an offer made by a Calderbank letter. His Honour added: "At the very least they must be relevant when the effect of such a letter is being considered".

24. If I may say so with respect, this argument seems to have been predicated upon an unduly narrow conception of the discretion available to a trial judge at the conclusion of a complex case. In Quirk v Bawden, Higgins J (as he then was) said at 120, that the Court should apply an appropriate costs sanction where a party has declined to accept or to make as the case may be, a reasonable offer of settlement. His Honour added, at 122, that a departure from the normal rule might be justified when a party has "unreasonably declined to negotiate settlement". These observations must, of course, be considered in the context of the principles to which I have already referred. However, the Court is not deprived of the discretion to make a more favourable than usual costs order merely because the party against whom the order is sought can point to some deficiency in the manner in which the Calderbank offer has been expressed and hence be entitled to argue that it was not "certain" or that an unqualified acceptance would not have given rise, without more, to a binding contract. Even when it cannot be said that the only reasonable course would have been to have accepted a particular offer, a party may be held to have acted unreasonably if he or she failed to respond reasonably and failed to explore the prospects of settlement before further pursuing a claim in which the prospects of success were uncertain and the costs were likely to be substantial. See, for example, Hadid v Lenfest Communications Inc (unreported, Federal Court of Australia, 15 May 2000) and Bates trading as Riot Wetsuits v Omareef Pty Ltd trading as Quicksilver Wetsuits of Australia (unreported, Federal Court of Australia, 28 October 1997). In my opinion, the decisive issues are whether the other party has "unreasonably declined to negotiate settlement", (to use the phrase employed in Quirk v Bawden), and whether such conduct can fairly be seen as sufficiently serious to warrant the costs order sought.

25. Mr Crowe also argued that the offer contained in the letter dated 12 May 2003 from the second and third defendant's solicitors was insufficiently clear because, unlike the earlier letter, it had not been co-signed by the solicitors for the first defendant and it did not clearly state that the first defendant would agree to the terms proposed. I am again unable to accept this submission. Whilst it is true that the apparent position of the first defendant was introduced by the words, "We understand that . . . ", I can see no reason to doubt that the position of the first defendant was as stated. Mr Gillespie-Jones did not depose to having had any concern that the first defendant might not have been prepared to participate in the foreshadowed settlement as suggested in the letter. Nor did he suggest that he had expressed any concern about this issue to the solicitors for the second and third defendants or that he had sought any clarification about the issue. There was no evidence that any concern about the manner in which the offer had been expressed had influenced the advice that he had given to his clients or that it had played any part in their decisions to reject the offers.

26. Viewed overall, the course of correspondence to which I have referred demonstrates, in my opinion, an unreasonable refusal to negotiate settlement of claims which the plaintiffs legal advisers should have realised were, at best, tenuous.

27. Some attempt was made to rely upon passages in Mr Gillespie-Jones' affidavit of 7 December 2004 alleging certain discussions on 26 May 2003 with Mr Foster SC, who appeared for the second and third defendants. However, both Mr Foster and Mr Walton SC, who appeared for the first defendant, objected to this evidence on the ground of relevance and, in the alternative, sought to have the evidence excluded pursuant to s 135 of the Evidence Act 1995 (Cth). The affidavit had been sworn only on the morning of the hearing and had been served at about 9.50 am. The conversation with Mr Foster had allegedly occurred either with or in the presence of Mr Gunst QC, who had formerly appeared for the plaintiffs, and I was invited to infer from the statements attributed to Mr Foster that Mr Walton had either put forward or agreed to certain propositions. Mr Foster informed me that the allegations were contentious and that if they were to be pursued it would not only be necessary to subpoena Mr Gillespie-Jones' file with a view to ascertaining whether there were any relevant file notes but to consider his own position with a view to determining whether he should stand aside from the proceedings so that another counsel could conduct the cross-examination and call him as a witness.

28. The hearing date for this costs application had been fixed for more than five months and it was in my opinion quite unreasonable for the plaintiffs' solicitor to have expected the defendants' legal representatives to have addressed allegations of that nature with virtually no notice. Furthermore, having read the material in question, I formed the impression that its probative value was insufficient to justify the time and expense that would be wasted by adjourning the proceedings so that the allegations could be ventilated at a full hearing and to outweigh the prejudice that may thereby have been caused to the defendants. Accordingly, I excluded the evidence.

29. Despite Mr Crowe's able endeavours to defend the approach taken by the plaintiffs in these proceedings, I am satisfied that they did behave unreasonably in responding to the offers made by the defendants in May 2003 and in persevering with their actions when reasonable settlements could have been negotiated. I am satisfied that their conduct was so unreasonable as to warrant an order that the costs of all defendants be paid on an indemnity basis from 15 May 2003.

Reserved costs

30. Prior to the trial an issue arose as to whether it would be appropriate to hear all 59 actions together or whether these three should proceed first, leaving the remaining 56 in abeyance. The first defendant filed notices of motion seeking orders for consolidation but the latter course was supported by the plaintiffs and by the second and third defendant. Mr Crowe submitted that it would be appropriate to apply the principle that costs follow the event. On the other hand, as Mr Walton observed, the case did not turn on disputed questions of fact or principle but rather upon the application of judicial discretion in the context of competing considerations.

31. In fact, there were strong factors favouring the course proposed by the first defendant and I found the competing considerations finely balanced. Furthermore, the issue arose by reason of the existence of 56 similar actions and had to be addressed not only in the interests of the parties to the actions with which I am presently concerned but in the interests of all of the parties to all of the actions. In the circumstances, if I had resolved the question of costs immediately after my decision, I would have held that the costs of the motion be costs in the cause. The issue was in fact reserved until after the trial of the actions but not even the benefit of hindsight has revealed any reason for me to depart from this approach. The first defendant successfully defended the claims and I think it is appropriate to order that its costs of the actions include the costs of the motion.

32. As I have mentioned, the second and third defendant took the same approach as the plaintiffs on the issue of consolidation and there is clearly no reason to exclude the costs of the motion from the ambit of the order requesting the plaintiffs to pay their costs of the actions.

33. The only remaining issue concerns the costs of notices of motion seeking to have the claims struck out. A similar motion was made in relation to the claim brought against the defendants by Ms Carlisle and the motions in the three actions with which I am presently concerned were stood over generally pending my decision and later the outcome of an appeal in that case. I understand that when the appeal was dismissed an order was made requiring the defendants to pay Ms Carlisle's costs of the appeal but it seems that no order was made in relation to her costs of the motion. However, that issue cannot be addressed in these actions.

34. It was not suggested in argument that any work was separately undertaken by the plaintiffs' legal representatives in relation to the notices of motion filed in these three actions apart from perusing the documents and placing them on the file but the plaintiffs are entitled to an order for such limited costs as may have been incurred.

I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Crispin.

Associate:

Date: 17 December 2004

Counsel for the plaintiffs: Mr R Crowe SC

Solicitor for the plaintiffs: Gillespie-Jones & Co

Counsel for the first defendant and Mr M Walton SC with Mr DJC Mossop

third party:

Solicitor for the first defendant and Meyer Clapham

third party:

Counsel for the second and third Mr L Foster SC

defendant:

Solicitor for the second and third Sparke Helmore

defendant:

Date of hearing 7 December 2004

Date of judgment 17 December 2004