Aukuso v Tahan

Does the Court have jurisdiction to set aside or vary an order outside the 14 day limit specified in UCPR 36.16(3A)?

1. The primary position as stated by Barwick CJ in Bailey v Marinoff is that, absent a specific statutory provision, an order of a court, once entered, is final and cannot be disturbed by the court that made it. The principle is a manifestation of the emphasis to be placed on finality of litigation.
2. UCPR 36.16(3A) is a specific statutory provision such as envisaged by Barwick CJ. As an exception to the general rule, however, it is circumscribed by two requirements: the filing of a notice of motion, and that that notice of motion be filed within 14 days of the date of entry of the judgment or order. That the intention of the rule makers was to confine the operation of the rule within a strict time limit is apparent from subr (3C) which expressly excludes a general power provided by r 1.12 to extend time limits fixed by the Rules.
3. It not infrequently happens that, in delivering judgment, the court makes costs orders in accordance with UCPR 42.1, which is to the effect that, in the absence of reasons to make a different order, the court should order that "costs follow the event". The UCPR, however, provide a number of exceptions to that rule. It is in the context of costs orders that the interaction of s14 and r 36.16(3A) and (3C) has most frequently arisen.
4. In Jeffery & Katauskas Pty Limited v SST Consulting Pty Ltd; Jeffery & Katauskas Pty Limited v Rickard Constructions Pty Ltd (2009) 239 CLR 75; [2009] HCA 43 the High Court was concerned with UCPR 42.3 (now repealed). Subrule 42.3(1) prohibited the court from making any order for costs against a person who was not a party to the proceedings; an exception was provided for by subr 42.3(2)(c) where the person had committed a contempt of court or an abuse of the process of the court. The High Court invited attention to s 14 of the Civil Procedure Act, but counsel resisted any temptation to invoke that provision. In that context, in what was plainly obiter, the majority (French CJ, Gummow, Hayne and Crennan JJ) the High Court said: "23. …It is no doubt arguable that the reference to 'any requirement of rules of court' in s 14 limits its application to rules imposing some duty on parties and does not extend it to a rule imposing limitations on the power of the court to order costs. The parties did not pursue the matter in these appeals. They fall to be decided on the construction and application of UCPR, r 42.3."
5. In Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19, at the time when judgment was delivered, counsel for one party orally sought and was granted leave to make submissions as to a special order for costs. Written submissions were subsequently filed. No notice of motion seeking such an order was filed within the specified time. This court concluded that the power conferred by s 14 extended to dispensing with the requirement that a notice of motion be filed and held that the making of the oral application for leave to make submissions concerning costs was sufficient to justify such a dispensation, but specifically reserved the question whether the s 14 power extended to dispensation of the 14 day time limit. The court (Ipp, McColl and Basten JJA) said: "11. An alternative course, which would be open in a case such as the present where an oral application has been made within the 14 day period specified by sub-r (3A), would be for the Court to exercise the power conferred by s 14 of the Civil Procedure Act to dispense with a requirement imposed by the rules, if satisfied that it is appropriate to do so in the circumstances of the particular case. Whether such a statutory power could permit dispensation with the requirement as to time, despite the terms of sub-r (3C), need not be determined: it is sufficient that the power is available to dispense with the need for filing a notice of motion in circumstances where a timely oral application has been made."
6. The Court then observed (at [12]) that the exercise of the power under s 14 would be limited to what had been identified in the oral application and could not be extended to other relief.
7. That approach was endorsed by Campbell JA (with whom McColl JA and Sackville AJA agreed) in Roads and Traffic Authority of NSW v Refrigerated Roadways Pty Ltd (No 2) [2009] NSWCA 336. In that case, a notice of motion had been filed within time, so that the express endorsement was obiter. Campbell JA did note that, although s 14 might provide a means by which an oral application made within time might ameliorate the stringency of the 14 day time limit, such amelioration lies entirely in the court's discretion.
8. In Spina v Permanent Custodians Ltd (No 2) [2009] NSWCA 419, orders had been made by consent that permitted an application to be made outside the 14 day time limit. The Court (Young JA, with whom Tobias and Campbell JJA agreed) doubted the validity of the orders, but noted "the possibility" that s 14 might permit dispensation with the rules.
9. In Malouf v Prince (No 2) [2010] NSWCA 51, an application to vary certain orders was made within the 14 day time limit, but subsequently (outside the time limit) an application was made for further and more extensive variation. The Court (McColl and Macfarlan JJA, and Nicholas J) held that the subsequent application could not be entertained because it was made outside the "14 day window" (at [15] and [16]). The Court did not need to determine whether s 14 conferred power to vary the 14 day time limit as the applicant conceded that, even if the power existed, in the circumstances of the case its application would inevitably be rejected for discretionary reasons.
10. In AT v Commissioner of Police, NSW (No 2) [2010] NSWCA 337, an application for variation of costs orders was made well outside the 14 day period. No oral application had been made within time. Basten JA with whom Beazley JA (as she then was) and Macfarlan JA agreed said: "9. Although the possibility of reliance on s 14 was also noted in Spina v Permanent Custodians Ltd (No 2) [2009] NSWCA 419 at [9], the difficulty with such an approach is that the course permitted by s 14 must act differentially, so as to remove the time limit and leave an unlimited power in the Court to vary orders which have been entered. Because r 36.16 itself precludes the operation of r 1.12, which might otherwise allow the Court to extend the time, this would constitute a rewriting of r 36 in a way clearly not envisaged by its terms: cf r 36.16(3C)."
11. Once again, the Court found it unnecessary to determine the extent of the s 14 discretion, considering that, even if the discretion extended to the variation of a costs order, that was not an appropriate case for its exercise.
12. Kable v State of New South Wales (No 2) [2012] NSWCA 361 was a variation on Hancock, and close in its facts to the present case. Although a notice of motion seeking variation of the costs orders was not filed within 14 days of the entry of judgment, notification of a request to be heard on costs was made by letter on the day after delivery of judgment. The Court, relying on s 14, dispensed with the requirement that a notice of motion be filed. However, (adopting a similar approach to that taken in Malouf) the dispensation was limited to the matters raised in the letter. Basten JA said: "15. Nevertheless, for reasons which will appear below, the interests of justice support an order dispensing with the requirements for the filing of a notice of motion in the prescribed form with respect to the costs of the trial. For that purpose, the letter from the Crown Solicitor of 9 August 2012 should be deemed to be appropriate notice of the matter to which it referred. Reference to 'the matter' in the singular is deliberate: the letter referred only to 'order 3(b) made yesterday, relating to the costs of the proceedings to date'. … 17. Given the circumstances referred to above and the further matters addressed below in respect of the costs of the appeal, even if the letter of 9 August could be treated as an application to vary order 5, the dispensing power in that respect should not be exercised in favour of the State."
13. Allsop P said: "3. I am persuaded, however, that in the present circumstances it would be unjust not to permit s 14 of the Civil Procedure Act 2005 to be used to dispense with the filing of a notice of motion where there was adequate notice to the court and to the other side as to the application. But I would not permit the exercise of the power to go beyond the content of the letter in question. That would raise the far more difficult question as to whether s 14 can operate to override the operation of r 36.16(3C) and, if it can, the stringency of any such operation." Campbell and Meagher JJA and McClellan CJ at CL agreed.
14. In Motorcycling Events Group Australia Ltd v Kelly (No 2) [2013] NSWCA 399, consistent with earlier decisions, a timely oral application was found to be a sufficient basis for dispensing with the need for the filing of a notice of motion.
15. The above review of decisions involving s 14 shows that this Court has been prepared to bifurcate the requirements imposed by r 36.16(3A). It has interpreted s 14 as conferring a discretionary power on the Court to dispense with the requirement that a notice of motion seeking variation of a judgment or order be filed within the prescribed time, although it has, as a matter of practice, confined the exercise of the discretion to circumstances in which adequate notice of the intention to seek variation has been given. It has impliedly (and sometimes expressly - see Allsop P in Kable) reserved the question of whether s 14 extends to dispensing with the time limits stated and therefore overrides r 36.16(3C). That approach might be seen to accommodate the interpretation mooted by the High Court in Jeffery & Katauskas: the need for a notice of motion is a "duty" imposed on the parties (which, the High Court suggested, might be a requirement subject to dispensation under s 14); the time limit of 14 days is a limitation on the power of the Court (to which, the High Court suggested, the s 14 power might not extend).
16. The difference, as I understand it, between the approach taken above and that taken by Meagher JA is narrow, but not insignificant. Meagher JA would deny jurisdiction to vary an order unless an application (which may be made informally) to do so is made within the 14 day period. Notice of intention to make such an application is insufficient. His Honour does not construe the letter of 8 June to Ms Tahan's solicitors, nor the email to the Registrar seeking leave to file an application, as an application. On that approach, jurisdiction depends upon whether the party seeking variation adequately formulates an "application" as distinct from giving notice of intention to make an application.
17. On my reading of the authorities discussed above, notice, even if informal, has been held to be sufficient to enliven the s 14 discretion to dispense with the requirement of filing a notice of motion within the 14 day period. The judgments do not always identify with specificity what was put to the court by way of "application" within time. In Hancock it was "leave to make submissions on a special order for costs". In Kable, "a request to be heard on costs" was made well within time. In each case, this Court treated the submission or request as sufficient to found dispensation with the requirement of filing a notice of motion.
18. These decisions are not suggestive of a rigid distinction between an "application" and notice of intention to make an application, a distinction which might, in some cases, prove difficult to make. As the cases show, such issues often emerge at the time, or shortly after, judgment is delivered, and are not always clearly formulated.
19. What remains outstanding is whether s 14 permits dispensation with the time limit. That question will not be resolved by this decision. That is because, within the 14 day period, Mr Aukuso by the email communication to the Registrar, copied to Ms Tahan's solicitors - gave adequate notice in writing of his intention to seek variation of the costs orders. That should be seen as the equivalent of the oral notice given in Hancock, and the letter in Kable.
20. In the above circumstances, to which may be added the fact that the notice of motion was filed only five days later, there can be no prejudice occasioned to Ms Tahan. No attempt was made to demonstrate that there was.
21. I am therefore satisfied that it is appropriate to exercise the discretion conferred by s 14 to dispense with the requirement of r 36.16(3A) that a notice of motion be filed (within the 14 day period), and treat the correspondence as adequate notice. Since that notice was given within 14 days, it is unnecessary to consider the more difficult question of the interaction between s 14 and subrr 36.16(3A) and (3C).
22. The application for variation of the costs order should be determined on its merits.

The offer of compromise

1. The offer of compromise was expressed to be made in accordance with UCPR 20.26. Rule 20.26 makes provision for any party to make, by notice in writing, an offer to compromise any claim in the proceedings, in whole or in part, or on specified terms. It spells out the requirements of an offer of compromise within the meaning of the rule. Subr (4) of r 20.26 provides: "If the offeror makes an offer before the offeree has been given such particulars of the offeror's claim, and copies or originals of such documents available to the offeror, as are necessary to enable the offeree to fully consider the offer, the offeree may, within 14 days of receiving the offer, give notice to the offeror that: (a) the offeree is unable to assess the reasonableness of the offer because of the lack of particulars or documents, and (b) in the event that rule 42.14 applies to the proceedings, the offeree will seek an order of the court under rule 42.14(2)."
2. The consequences of acceptance or non-acceptance of an offer of compromise are stated in UCPR 42.13A to 42.15A. Those rules, on their face, apply to offers made in the Supreme Court. However, by r 51.48, they are adapted to proceedings in this Court.
3. The relevant rules are r 42.15 and r 42.15A. Rule 42.15, as adapted, for the purpose of this Court, provides: "(1) This rule applies if the offer is made by the defendant [Mr Aukuso] but not accepted by the plaintiff [Ms Tahan], and the plaintiff obtains an order or judgment no more favourable to the plaintiff than the terms of the offer. (2) Unless the court orders otherwise: (a) the plaintiff is entitled to an order against the defendant for the plaintiff's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and (b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, assessed on an indemnity basis: (i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and (ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made.
4. Rule 42.15A, as adapted, provides: "(1) This rule applies if the offer is made by the defendant [Mr Aukuso], but not accepted by the plaintiff [Ms Tahan], and the defendant obtains an order or judgment on the claim no less favourable to the defendant than the terms of the offer. (2) Unless the court orders otherwise: (a) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and (b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, assessed on an indemnity basis: (i) if the offer was made before the first day of the trial, as and from the beginning of the day following the day on which the offer was made and (ii) if the offer was made on or after the first day of the trial, as and from 11 am on the day following the day on which the offer was made."
5. Both parties proceeded on the basis that the relevant rule was 42.15.
6. On 28 February 2018 Mr Aukuso's solicitors served on Ms Tahan's solicitors an offer of compromise expressed to be pursuant to r 20.26. The offer was to compromise "the whole of the claim" (ie the appeal) on the following terms: "1. The appeal is allowed. 2. The judgment of Acting Judge Ashford is set aside. 3. In lieu thereof, there be judgment for the Respondent for $350,000. 4. This Offer of Compromise is open for acceptance for a period of 28 days from the date on which this offer is made. 5. This offer of compromise is made in accordance with Rule 20.26 of the Uniform Civil Procedure Rules 2005."
7. There is no evidence that Ms Tahan's solicitors responded to the offer.
8. There was no issue that the offer of compromise complied with the requirements of r 20.26. Mr Aukuso therefore contended that, as he (the defendant) had made an offer of compromise which had not been accepted by Ms Tahan (the plaintiff), and that Ms Tahan obtained a judgment no more favourable to her than the terms of the offer, (the judgment being identical to the offer) he was entitled, under r 42.15(2)(b)(i), to indemnity costs from 1 March 2018 (the day after service of the offer of compromise). (The same result would apply if r 42.15A were the operative rule).
9. On behalf of Ms Tahan it was argued that the court should "order otherwise".
10. The principles upon which the Court should act in determining whether to depart from the prima facie position as stated in r 42.15 have been considered on a number of occasions. In New South Wales Insurance Ministerial Corporation v Reeve (1993) 42 NSWLR 100 (with respect to an earlier, but not relevantly different version of the rule) Gleeson CJ (with whom Clarke and Cripps JJA agreed), said: "It is impossible exhaustively to state the circumstances in which a discretion to contrary effect might be exercised, and it would be imprudent to attempt any such exhaustive statement. However, I do not read Maitland Hospital v Fisher [No 2] [(1992) 27 NSWLR 720] as authority for the proposition that a discretion should be exercised against making an order for indemnity costs in any case in which it was reasonable for the defendant to take the view that it had a good chance of successfully defending the action. The prima facie consequence, which will apply in the ordinary case, is that in the circumstances postulated by the rule an order for indemnity costs will be made." (at 102)
11. In Morgan v Johnson; Green v Lovatt; Gambrill v Cook (1998) 44 NSWLR 578, this Court considered three separate cases in which departure from "the prima facie" rule was under consideration. Again, the relevant rule was an earlier incarnation, but I do not understand the substance to be materially different. Mason P (with whom Sheller JA agreed), distilled five principles from relevant judicial decisions. Those five principles were stated as: "(1) The purpose of the rule is to encourage the proper compromise of litigation in the private interests of individual litigants and the public interest of the prompt and economical disposal of litigation. ... (2) The aim is to oblige the offeree to give serious thought to the risk involved in non-acceptance; … (3) The prima facie consequence of non-acceptance will be that the rule will be enforced against the non-accepting party … this is because, from the time of non-acceptance 'notionally the real cause and occasion of the litigation is the attitude adopted by [the party] which has rejected the compromise …' (4) Lying behind the rule is the common knowledge that 'litigation is inescapably chancy'. For this reason, the ordinary provision is expected to apply in the ordinary case. … The mere fact that it was reasonable for the litigant to take the view that he or she did in rejecting the offer is not enough to displace the rule … (5) The discretion to displace the rule is a judicial one, requiring the private and public purposes of the rule to be borne in mind …" (internal citations omitted)
12. In Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 McColl JA repeated the observation of Gleeson CJ that it is impossible exhaustively to state the circumstances in which the discretion to depart from the prima facie rule might be exercised, and said: "48. …The mere fact that it was reasonable for the litigant to take the view that he or she did in rejecting the offer is not enough to displace the rule … However that does not mean that reasonableness of the rejection is an irrelevant consideration …". (internal citations omitted)
13. In the preceding paragraph, her Honour had adopted (and paraphrased) a view expressed by Hely J in Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) (2004) 212 ALR 281; [2004] FCA 1437, to the effect that the requirement is: "…that the prima facie position should only be departed from for proper reasons which, in general, only arise in an exceptional case."
14. Consideration of Mr Aukuso's proposition that the court should "order otherwise" calls for attention to some matters of history and procedure not previously mentioned.
15. Mr Aukuso's appeal was filed on 16 November 2017. By UCPR 51.24-51.33, he was required to prepare, file and serve a series of appeal books. Relevantly, these included a "Black Book", containing the transcript of oral evidence and submissions in the proceedings at first instance, and a "Blue Book" (or books) containing copies of all documentary exhibits in those proceedings.
16. On 14 February 2018 the Registrar of the Court of Appeal listed the appeal for hearing on 26 April 2018. By letter of the same date, he directed that, unless previously directed otherwise, the parties comply with a timetable which required, inter alia, Mr Aukuso to serve the Black and Blue (and other) books not later than 10 weeks before the date on which the appeal was fixed for hearing - that is by 15 February 2018. There was no evidence of any previous different directions.
17. The Black and Blue books were not served until, at the earliest, 22 March 2018, and, at the latest, 26 March 2018. I say this because, annexed to an affidavit affirmed by a para-legal (Talal Krayem) in the employ of Ms Tahan's solicitors, is a letter of service of 22 March (a Thursday). Mr Krayem stated in his affidavit that the books were not received by the solicitors until 26 March (a Monday). That has never been contradicted.
18. Ms Tahan advanced four bases upon which, she contended, the Court should "order otherwise" than as specified in r 42.15(2)(b).
19. The first and second were that her conduct in failing to accept the offer was reasonable in the circumstances. The particular circumstances to which she pointed was an assertion (made in an application for special leave to the High Court, yet to be heard) that the basis for the decision of this Court was not one put forward by Mr Aukuso, and not one that was argued in this Court. Indeed, a good deal of the submissions was devoted to explaining the alleged error of the approach of this Court. That, in my opinion, is a question not to be decided by this Court. And, as indicated above, the reasonableness of the rejection or non-acceptance of an offer is not determinative. Nevertheless I note in passing that the basis on which the Court found contributory negligence was the subject of extensive discussion at the hearing before it.
20. The fourth basis was that the notice of motion was filed outside the time prescribed by r 36.16(3A). That has been dealt with in the context of jurisdiction, and is not more than peripherally material to whether this Court should depart from the prima facie rules. As mentioned above, the notice of motion was filed only 4 days outside the statutory period, and Ms Tahan had been put on notice within that period.
21. The third basis for opposition, however, is of more merit. It lay in the dilatoriness of Mr Aukuso's solicitors in serving the Black and Blue appeal Books. The offer of compromise expired on 28 March. At the earliest, the books were served on 22 March, but the evidence favours the conclusion that they were in fact served on 26 March. Both the Black and Blue Books contain material that would undoubtedly have been important in the assessment of the prospects of the appeal succeeding.
22. In this respect, UCPR 20.26(4) is relevant. Rule 20.26(4) is confusing, in that, on one view, it appears to be directed only to offers made by a plaintiff: see Raad v VM & KTP Holdings Pty Ltd as Trustee for VM & KTP Nguyen Family Trust (No. 2) [2016] NSWSC 1233 at [26] per Davies J. The import of para (b) is unclear. The subrule, set out above (at 51), makes specific provision for a party in receipt of an offer of compromise before being given adequate notice of such particulars and documents as are necessary to enable full consideration of the offer, to give notice of the inability to assess the reasonableness of the offer. There is no evidence that Ms Tahan's solicitors gave notice in accordance with that subrule.
23. To the extent (if any) that r 20.26(4) applies to an offer made by a defendant, Ms Tahan's failure to give notice is a relevant consideration, adverse to her case, but does not carry the necessary consequence that the late service of relevant material can be put to one side. In my opinion, service of the appeal books, at most six (and probably two) days prior to the expiration of the offer deprived Ms Tahan's legal advisors of any reasonable opportunity to consider the offer in light of all relevant material. This was a case in which a number of witnesses gave conflicting accounts of the circumstances of the accident, and a good deal of documentary material was presented as exhibits. Evaluation of the offer of compromise called for careful analysis of all of that material. It is reasonable to conclude that that analysis could not reasonably have been done in two, or even six days. There is no evidence that Mr Aukuso made any attempt to offer an extension of the time permitted for acceptance of the offer.
24. As a consequence, and taking full account of the principles stated by Mason P in Morgan and particularly the starting point that a litigant who declines to accept an offer of compromise and fails to achieve a better result faces paying the offeror's costs on an indemnity basis, I have come to the view that a proper basis has been shown for departure from the prima facie rule and the notice of motion should be dismissed.
25. I propose the following orders:
26. Notice of motion filed by the appellant on 20 June 2018 dismissed;
27. Appellant to pay the respondent's costs of the Notice of Motion.

Amendments 10 December 2018 - Typographical errors: [72] change "input" to "import", change 42 to [51] DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 December 2018