Boateng v Dharamdas [2019] NSWCA 233 | Case summary

Boateng v Dharamdas [2019] NSWCA 233 | Case summary | Zoe

[4]

headnote [This headnote is not to be read as part of the judgment] On 31 January 2011 the respondent was severely injured by the applicant's motor vehicle when the respondent was walking across a street in Waterloo, Sydney. On 1 September 2015 Sorby DCJ determined his claim for damages against the applicant, finding in favour of the respondent on liability and assessing damages at $1,154,326.24. This was reduced to $692,595.72 as a result of a 40% contributory negligence finding. The applicant appealed against that decision. This Court set it aside and remitted the matter for a new trial on damages. Prior to the new trial before Levy SC DCJ, the applicant served on the respondent an Offer of Compromise offering to pay in settlement $400,000 plus costs (with conditions attached). The respondent did not accept the offer. On 31 August 2018 Levy DCJ made orders reassessing the respondent's damages at $487,512.70. This was reduced to $292,507.62 as a result of the 40% contributory negligence finding. In an oral exchange between Levy DCJ, the applicant's legal representative foreshadowed a costs argument. Levy DCJ ordered that the applicant pay the respondent's costs of the proceeding on the ordinary basis unless a party was able to identify the basis for a different cost order, granting liberty to the parties to apply on seven days' notice if further or other orders were required. There were subsequent communications between the parties and his Honour's Associate concerning the fixing of a date for argument concerning costs. On 13 December 2018 Levy DCJ heard the applicant's application for a varied costs order based on his Offer of Compromise. His Honour delivered an ex tempore judgment on that day, holding that he had no power to vary the order that he made on 31 August 2018 that the applicant pay the respondent's costs of the proceeding. His Honour so concluded because the applicant did not within 14 days of that date file a notice of motion seeking such a variation (r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR")) and his Honour was not satisfied that an order should be made dispensing with the need to file that document (s 14 of the Civil Procedure Act 2005 (NSW)). The applicant seeks leave to appeal against this decision of Levy DCJ. The applicant asserted in the District Court that the effect of r 42.15 of the UCPR, concerned with the cost consequences of offers of compromise, was to entitle him to his costs of the proceedings from the date of the offer on an indemnity basis. The principal issues on the appeal were: 1. Whether the primary judge erred in concluding that he had no power to vary the costs order of 31 October 2018 except by recourse to s 14 of the Civil Procedure Act. 2. Whether the primary judge should have dispensed with the need for a notice of motion to be filed within 14 days of 31 August 2018. 3. Whether the effect of r 42.15 of UCPR was to entitle the applicant to his costs of the proceedings from the date of the offer on an indemnity basis. 4. Whether the Court should grant leave to appeal. The Court (by majority) dismissed the application for leave to appeal. In relation to Question 1: (Per Macfarlan JA, Gleeson JA agreeing): On its proper construction, the order was not conditional. It was therefore an order determining a claim for relief, precluding reliance on r 36.16(3). Thus in the present case the primary judge's power to vary the order could only be derived from r 36.16(3A). The question is whether r 36.16(3A) was properly invoked or, if not, whether the power in s 14 could be relied on: [18]-[23]. (Per White JA, dissenting): The order was not intended to be final. The 14-day time limit, therefore, does not apply; either because r 36.16(3) may be used (because the claim for relief was not determined), or because the Court can vary the order pursuant to its general power to vary non-final orders, preserved by r 36.16(4): [65]-[69]. In re Roper; Taylor v Bland (1890) 45 Ch D 126, Preston Banking Co. v William Allsup & Sons [1895] 1 Ch 141, referred to. In relation to Question 2: (Per Macfarlan JA, Gleeson JA agreeing): The primary judge had the power to make an order under s 14 of the Civil Procedure Act dispensing with the need for the filing of a notice of motion but arguably gave insufficient reasons for not doing so: [22], [25]. Aukuso v Tahan (No 2) [2018] NSWCA 302, referred to. (Per White JA, dissenting): No question arose for determination as to whether s 14 of the Civil Procedure Act could be invoked to dispense with the limitation imposed by r 36.16(3C). Further, the power under s 14 could not be invoked to dispense with the requirement for the filing of a notice of motion; neither the solicitor's oral statement on 31 August 2018 nor the statements made in subsequent email correspondence amounted to notice of an application or something equivalent thereto: [70], [74]-[75]. AT v Commissioner of Police (NSW) (No 2) [2010] NSWCA 337; Kable v State of New South Wales (No 2) [2012] NSWCA 361; Aukuso v Tahan (No 2) [2018] NSWCA 302, referred to. In relation to Question 3: (Per Macfarlan JA, Gleeson JA agreeing): The Court was not put in a position to determine whether the terms of the Offer of Compromise were such that the judgment was "no more favourable" than the offer for the purposes of r 42.15, nor whether an order "otherwise' should be made for the purposes of r 42.15(2): [33]-[34]. The Uniting Church in Australia Property Trust (NSW) v Takacs (No 2) [2008] NSWCA 172; Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391, referred to. (Per White JA, dissenting): On the evidence before the Court, it was impossible to determine whether the judgment was no more favourable to the respondent than the offer. However, if it had been necessary to do so, an order "otherwise" under r 42.15 would have been made because of the uncertainties the respondent faced at the time of service of the offer of compromise as to whether the Medical Assessment Service would agree to a reassessment of the degree of his permanent impairment: [84]-[89], [100]-[105]. In relation to Question 4: (Per Macfarlan JA, Gleeson JA agreeing): Leave to appeal should not be granted as there were no issues of principle or questions of general public importance involved, nor was it reasonably clear that an injustice had occurred: [39]. In the Will of Gilbert (1946) 46 SR (NSW) 318; Ritson v Commissioner of Police, New South Wales Police Force [2019] NSWCA 106, referred to. (Per White JA, dissenting): Leave to appeal should be granted as the issue raised as to the application of rr 36.16(1), (3), (3A), (3C) and (4) of the UCPR is of general importance. Leave should not be refused on the ground that if leave were given, the matter would have to be remitted to the District Court for further hearing, thereby prolonging already lengthy proceedings. Nevertheless, the appeal should be dismissed: [52], [78], [106].

[5]

Judgment

MACFARLAN JA: On 31 January 2011 Mr Martin Dharamdas, the respondent before this Court, was severely injured by the applicant's motor vehicle when the respondent was walking across a street in Waterloo, Sydney. His claim for damages against the applicant was determined by Sorby DCJ on 1 September 2015. His Honour found in favour of the respondent on liability and assessed damages at $1,154,326.24, reduced to $692,595.72 as a result of a 40% contributory negligence finding.
On the applicant's appeal, this Court set aside the judgment and remitted the matter for a new trial on damages ([2016] NSWCA 183).
After a six day hearing, Levy SC DCJ reassessed the respondent's damages at $487,512.70, reduced to $292,507.62 as a result of the 40% contributory negligence finding (31 August 2018, [2017] NSWDC 441). The principal differences between the two damages assessments were that Levy DCJ did not award damages for non-economic loss or future economic loss. The change as to non-economic loss damages occurred because Medical Assessment Service ("MAS") assessments prior to the first trial certified a whole body impairment ("WPI") greater than the 10% benchmark whereas subsequent assessments made prior to the second trial certified WPI at less than 10% (see s 131 of the Motor Accidents Compensation Act 1999 (NSW)).
Prior to the hearing before Levy DCJ, the applicant served on the respondent an Offer of Compromise offering to pay in settlement $400,000 plus costs (although there were other conditions attached). The offer was not accepted.
By his application to this Court, the applicant seeks leave to appeal against a decision of Levy DCJ of 13 December 2018 denying the applicant the opportunity to obtain the benefit of his Offer of Compromise, which, at least if its conditions were disregarded, was for an amount in excess of the judgment that Levy DCJ ordered on 31 August 2018. The applicant asserted in the District Court that the effect of r 42.15 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") was to entitle him to his costs of the proceedings from the date of the offer on an indemnity basis.
In the judgment of 13 December 2018, his Honour however found that he had no power to vary the order he made on 31 August 2018 that the applicant pay the respondent's costs of the proceedings. His Honour concluded that this was so because the applicant did not within 14 days of that date file a notice of motion seeking such an order (see r 36.16 of the UCPR) and his Honour was not satisfied that an order should be made dispensing with the need to file that document. As a result, his Honour did not deal in his judgment with the merits of the applicant's application to vary the costs order.
Another aspect of the applicant's application for leave is an application for leave to appeal against an order of Levy DCJ that the applicant pay the respondent's costs, on an indemnity basis, of an interlocutory hearing on 1 November 2018 that was adjourned at the applicant's request. As no arguable basis for interfering with the primary judge's exercise of his costs discretion was able to be advanced, the application for leave to appeal should, at least in that respect, be rejected.
For the reasons that appear below, I consider that the remaining aspect of the applicant's application should also be rejected and that his Summons for Leave to Appeal should therefore be dismissed with costs.

[6]

THE FACTUAL CIRCUMSTANCES

When Levy DCJ delivered his substantive judgment on 31 August 2018, he said, after referring to the amount of the judgment: "The defendant is to pay the plaintiff's costs of the proceeding on the ordinary basis unless a party is able to identify the basis for a different cost order. The exhibits may be returned and I grant liberty to the parties to apply on seven days' notice if further or other orders are required, and I now publish my reasons."
The following interchange with the applicant's counsel then occurred: "Are there any applications? SMIRNOV: There is, your Honour. I'm instructed to seek a stay of the judgment. HIS HONOUR: I think that it has just been handed to you, but I assume you've got some grounds. SMIRNOV: I'm instructed your Honour, that there is some issue with respect to our client anticipating or considering an appeal and although, I'll have to seek instructions as to any grounds for that appeal, until those instructions are received I'm instructed to seek a stay. HIS HONOUR: I am not really able to entertain an application for a stay without argument. Prima facie the assumption is that the reasons given are presumed to be correct until someone can present an argument to the contrary, so I do not propose to order a stay unless by consent, and I do not see a basis for entertaining it, but of course you have liberty to apply should there be an argument to that effect. … HIS HONOUR: What is the anticipated argument for costs? SMIRNOV: There are a number of offers of compromise throughout the history of the matter and it's had a long history and the different stages of those offers of compromise will cause the cost argument to be quite convoluted. HIS HONOUR: See if you can sort it out between yourselves to start with and if that's not possible you have liberty to apply. Don't forget to take the exhibits" (Transcript pp 1, 2).
His Honour's orders were entered in the District Court's computerised system on that day. They were expressed in the same language that his Honour used when pronouncing the orders in court.
There were subsequent communications between the parties and his Honour's associate concerning the fixing of a date for argument concerning costs. These communications included the following email of 12 September 2018 from the applicant's solicitors to his Honour's associate, copied to the respondent's solicitors: "We refer to the above matter and confirm that judgment was delivered by His Honour Judge Levy in the District Court in Sydney on 31 August 2018. On that occasion, liberty was granted to apply to argue the question of costs. In line with His Honour's availabilities, the parties advise that their respective Counsel are available on 11 October 2018 (all-day) and seek to have the matter listed for Costs Argument accordingly. Please advise whether this date is still appropriate for His Honour. We look forward to your response and confirming of the listing."
His Honour ultimately heard the applicant's application for a varied costs order, based on his Offer of Compromise (and earlier offers which are not presently relevant), on 13 December 2018 and delivered an ex tempore judgment on that day. His Honour concluded that on 31 August 2018 the applicant's solicitor had, by what he said to the Court on that day (see [10] above), "anticipated a proposed application for costs and a proposed application for a stay". His Honour further concluded however that he could not entertain the application in the absence of the applicant having filed a formal notice of motion within 14 days of the judgment being handed down on 31 August 2018, unless he exercised his power under s 14 of the Civil Procedure Act 2005 (NSW) ("CPA") to dispense with the need for the filing of such a document. As to the exercise of discretion under s 14, his Honour said only: "I have not reached the state of satisfaction that it is appropriate to invoke or apply that section to dispense with the requirements of UCPR 36 r 16 on the basis of what was recorded as having been said by the defendant's solicitor at the time the reserved judgment was given."
Rule 36.16 of the UCPR is relevantly in the following terms: 36.16 Further power to set aside or vary judgment or order (1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order. … (3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it: (a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or (b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief. (3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered. … (3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B). (4) Nothing in this rule affects any other power of the court to set aside or vary a judgment or order.
Section 14 of the CPA is a general power permitting the court to "dispense with any requirement of rules of court if satisfied that it is appropriate to do so in the circumstances of the case".

[8]

The need for a notice of motion to be filed

In support of his first contention, the applicant argued that his Honour's order of 31 August 2018 concerning costs was conditional only and not therefore an order determining a claim for relief which would preclude the court setting aside or varying its order under r 36.16(3) of the UCPR.
Although the order is not clearly expressed, I do not accept that on its proper construction it was only conditional. As I read the order, his Honour ordered the applicant to pay the respondent's costs in an unqualified way but granted liberty to the parties to apply to vary the order.
Nor do I consider that, as the applicant argued, the effect of the grant of liberty to apply was to obviate the need for the applicant to file a notice of motion in accordance with r 36.16. Rather, it contemplated the possibility of an application for variation being made in accordance with the UCPR, that is, by notice of motion. At most, it imposed an additional requirement that the party applying give the other party seven days' notice, rather than the minimum period of three days specified in r 18.4 of the UCPR in respect of notices of motion generally. That possible further requirement is not however relevant in the present case as the respondent did not contend that it received insufficient notice of any application made by the applicant.
This approach is supported by Australian Hardboards Ltd v Hudson Investment Group Ltd (2007) 70 NSWLR 201; [2007] NSWCA 104 at [50]-[52] where this Court held that (i) the grant of liberty to apply does not preclude orders being final, (ii) the manner of invoking liberty to apply is by a substantive motion on notice and (iii) liberty to apply cannot be used to alter the substance of an order already made (see also Ross v Lane Cove Council (2014) 86 NSWLR 34; [2014] NSWCA 50 at [70]). Thus, in the present case, the primary judge's power to vary his costs order was derived from r 36.16(3A), assuming that the subrule was properly invoked.
Contrary to the respondent's submission, what the applicant's solicitor said to the District Court on 31 August 2018 (see [10] above) in my view at least amounted to notice to the Court (and the other party) that the applicant intended to make an application for a variation of the primary judge's costs order. That was sufficient to enliven the Court's power to make an order under s 14 of the CPA dispensing with the need to file a written notice of motion. It is unnecessary to rely in this respect on the email of 12 September 2018 (see [12] above) which does not appear to have been relied on before Levy DCJ.
Rule 18.2(1) of the UCPR provides that a person "may not move the court to make any order" unless a written notice of motion has been filed in accordance with the UCPR. It thus distinguishes between the application itself, which is made by moving orally on the motion when the parties are before the court, and the giving of notice of an intent to this. The filing and serving of a written notice of motion is designed to achieve the latter and, if notice of the intended application has been given orally, may be dispensed with by the court. As Simpson AJA indicated (with my concurrence) in Aukuso v Tahan (No 2) [2018] NSWCA 302 at [43] case law supports the exercise of the discretion under s 14 to dispense with the need for a notice of motion to be filed in "circumstances in which adequate notice of the intention to seek variation has been given". As Meagher JA pointed out in that case at [5], Ms Tahan's solicitors did this by notifiying the Court within 14 days of the relevant judgment that a "formal application to vary the costs order was to be made". His Honour however found that this was insufficient in the absence of an actual application but the majority took a different view and made an order under s 14 dispensing with the filing of a formal notice of motion.
I note that, as in Aukuso v Tahan (see [47] and [49]), it is unnecessary in the present case to consider whether s 14 of the CPA permits an order to be made extending the period of 14 days for the filing of a notice of motion under r 36.16(3A). There is no doubt as to this because r 36.16(3C) states expressly that the court may not extend the time limited by subr (3A).

[9]

The exercise of discretion under s 14 of the CPA

Having concluded that the primary judge had power to make an order under s 14 of the CPA dispensing with the need for the filing of a notice of motion, I turn to consider the exercise of that discretion. The primary judge arguably gave insufficient reasons for not exercising that discretion (see [13] above) and it is arguable that his exercise of discretion was thereby vitiated. Significant in this context however is what would or might happen if this Court were to grant leave to appeal on that basis against his Honour's decision not to make a s 14 order. In particular, there is a question as to whether this Court could re-exercise that discretion and, if not, what would or might be the outcome of a proper exercise of the discretion on remitter to the District Court.
To consider these questions, it is necessary to say more about the facts of the present case and the rules relating to Offers of Compromise.
Rule 20.26 of the UCPR provides inter alia that an Offer of Compromise under the rule must identify "the proposed orders for disposal of the claim or part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment" (r 20.26(2)(a)(ii)).
Rule 42.15 of the UCPR concerns the cost consequences of unaccepted Offers of Compromise made by a defendant and is in the following terms: 42.15 Where offer not accepted and judgment no more favourable to plaintiff (1) This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the plaintiff obtains an order or judgment on the claim 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.
For the applicant to obtain the indemnity costs order he seeks, it would thus be necessary for him first to demonstrate that Levy DCJ's substantive judgment of 31 August 2018 was "no more favourable" to the respondent than the terms of his Offer of Compromise and, secondly, to resist any application by the respondent that the Court make an order "otherwise" for the purposes of r 42.15(2).
Consideration of the first issue requires reference to the terms of the applicant's Offer of Compromise.
As noted above, the principal term of the Offer of Compromise was that the respondent have judgment for $400,000 plus costs (as agreed or assessed). If this had been its only provision, the judgment for $292,507.62 plus costs obtained by the respondent would clearly have been, for the purposes of r 42.15, "no more favourable to the [respondent] than the terms of the offer".
The Offer of Compromise however had some 10 additional terms, examples of which are as follows: "2. The defendant's motor vehicle third party insurer is authorised to deduct and/or pay from the judgment sum in paragraph 1 the amount of any advance payments or interim payments made for or on behalf of the plaintiff. 3. The defendant's motor vehicle third party insurer is authorised to deduct and/or pay from the judgment sum in paragraph 1 any amount repayable by the plaintiff in respect of this action where a demand or notice for that amount is served on or in respect of this action where a demand or notice for that amount is served on or given to the defendant or its solicitor or insurer, whether for the worker's compensation, social services, sick leave payments, make-up pay, accident pay, past medical and nursing home expenses, money paid or payable under s45 of the Motor Accidents Act 1998 or s83 of the Motor Compensation Act 1999 or otherwise. 4. Interest will not be recoverable by the plaintiff of that part of the judgment sum covered by any such deduction. 5. The plaintiff agrees to pay out of the judgment sum in paragraph 1 any amount repayable by the plaintiff for workers compensation, social services, sick leave payments, make-up pay, accident pay, past medical or nursing home expenses or otherwise which may not have been deducted by the defendant's insurer under these terms, and/or pay to the parties entitled all outstanding medical, hospital, ambulance and other out-of-pocket expenses. … 9. No interest shall be payable in respect of the judgment herein provided same be paid within 28 days of: (a) the date of judgment; (b) receipt by the defendant's solicitor of a signed authority to receive; (c) receipt by the defendant's solicitor of a sealed copy of these consent orders; (d) receipt by the defendant's solicitor of a notice of charge from Centrelink; (e) receipt by the defendant's solicitor of a notice of settlement signed by or on behalf of the plaintiff for submission to Medicare Australia."
It is at least arguable that these terms of the Offer of Compromise would preclude a court from being satisfied that for the purposes of r 42.15 the judgment was "no more favourable" than the offer. In the absence of the admission of further evidence, or at least analysis based on the existing evidence about the financial impact of various of these provisions, it is difficult to see how the Court could be so satisfied. As this Court has not been put in a position to determine this issue, it would need to be remitted to the District Court for determination.
This Court would also not be in a position to decide whether an order "otherwise" should be made for the purposes of r 42.15(2). The argument before this Court identified, without fully addressing, contentions as to whether the respondent's rejection of the Offer of Compromise was reasonable. The mere fact that the rejection of an Offer of Compromise is reasonable is not enough to displace the rule but the reasonableness of the rejection remains a relevant consideration in the exercise of the court's broad discretion to "order otherwise" (The Uniting Church in Australia Property Trust (NSW) v Takacs (No 2) [2008] NSWCA 172 at [15] and [18], compare [32]-[33]; Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [48], [60] and [61]).
The Offer of Compromise was served on 23 March 2017 and was open for acceptance for a period of 28 days. It followed a letter of 28 February 2017 from the applicant's solicitors to the respondent's solicitors enclosing an application for further medical assessments. The application included ten and a half pages of detailed reasoning in support of it. In particular, it identified new material that was available to the applicant's insurer in the form of video surveillance footage and drew detailed contrasts between what appeared on the footage and statements in various medical reports. The application for further assessments was granted on 5 May 2017 and the assessments themselves were made on 13 June and 31 July 2017. They certified a combined WPI of less than 10%, insufficient to entitle the applicant to damages for non-economic loss. The respondent filed an application for review of both assessments on 18 and 30 August 2017. Both applications for review were subsequently dismissed.
Before this Court, the respondent indicated that on any application based on the Offer of Compromise to vary the order that the applicant pay his costs of the proceedings before Levy DCJ, he would wish to argue that his client's rejection of the Offer of Compromise was reasonable and that the Court should "order otherwise" in accordance with r 42.15(2). His senior counsel said that on 28 February 2017 the applicant "served hours and hours of surveillance footage, a whole new medical case addressing the surveillance footage and further examinations", as well as the application for further medical assessments. He asserted that "[d]uring the currency" of the Offer of Compromise "not only did the respondent not have the opportunity to digest the surveillance material, digest the medical case that had now been served, he hadn't had the opportunity to have his doctors look at the surveillance material, provide their opinions, if necessary, re-examine the respondent and get his take on it and the Medical Assessment Service hadn't even decided whether it was going to permit further medical assessments to take place. That didn't occur until 5 May", by which time the time for acceptance of the Offer of Compromise had passed.
The primary judge did not deal with the merits of the application to vary the costs order of 31 August 2018 and this Court is not in a position to assess the force of these submissions, as it would need a far better appreciation of the details of the litigation than it has in order to do so. The arguments are nevertheless ones that the respondent is entitled to put and the prospect of them succeeding cannot be disregarded.

[10]

Whether leave to appeal should be granted

Taking all these circumstances into account, I have concluded that leave to appeal should not be granted. The starting point is the reluctance of appellate courts to intervene in respect of exercises of discretion at first instance in relation to matters not determining substantive claims of the parties (In the Will of Gilbert (1946) 46 SR (NSW) 318 at 323). Secondly, "[o]rdinarily, leave will only be granted concerning matters involving issues of principle, questions of general public importance or involving an injustice which is reasonably clear, in the sense of being more than merely arguable" (see Ritson v Commissioner of Police, New South Wales Police Force [2019] NSWCA 106 at [37] and the authorities there cited).
The present application does not in my view satisfy these criteria. There are no issues of principle or questions of general public importance involved, nor is it reasonably clear that an injustice has occurred. To obtain a costs order in his favour based on the Offer of Compromise the applicant would have to have it found in his favour that in all the circumstances the alleged inadequacy of the primary judge's reasoning was sufficient to vitiate his exercise of discretion under s 14 of the CPA, and that on a re-exercise of the discretion, orders should be made dispensing with the need for a notice of motion to be filed and varying the subject costs order in the manner that he sought.
For the reasons that I have given, it is no more than arguable that he could achieve this. In particular, whilst r 42.15 of the UCPR creates a rebuttable presumption in favour of the defendant if the judgment obtained is no more favourable than the terms of the Offer of Compromise, it is by no means clear that that pre-condition was satisfied, nor that the court would not order "otherwise" for the purposes of r 42.15(2). Taking into account also the length of time that these proceedings have been on foot (since 2012) and that they would be further prolonged if leave to appeal were granted because a remission to the District Court would be required, the appropriate course is to dismiss the application with costs.
In conclusion I emphasise the following salutary observations of Allsop P in Kable v State of New South Wales (No 2) [2012] NSWCA 361 at [2], made with the concurrence of Campbell and Meagher JJA: "Rules 36.15, 36.16, 36.17 and 36.18 deal with important questions concerning variation of orders of the Court. Rule 36.16 is particularly important. It deals with the fundamentally important question of finality of litigation: see in particular subrules (3A), (3B) and (3C). Parties should not think that they can, at their choice, avoid the operation of the Rules by less formal communication. The Rules take their form because of the regularity and good order promoted by the procedures there set down in respect of such an important topic. Too often practitioners consider that they can say something on the occasion of delivery of judgment or send an email to judge's chambers (the latter sometimes, though not here, without the knowledge of the other side - a serious breach of professional etiquette and possibly a breach of duty to the Court) and thereby hold their client's position, irrespective of the Rules. The profession should understand that this is not the case."
There was in the present case, contrary to these observations, a neglect of the formal yet simple requirements of the UCPR. If the appellant had, as he should have, filed within 14 days of 31 August 2018 a notice of motion seeking variation of Levy DCJ's costs order, his application would have been determined without the unnecessary and expensive procedural distractions referred to in this judgment.
GLEESON JA: I agree with Macfarlan JA.
WHITE JA: On 31 August 2018 orders were made by the primary judge and entered on JusticeLink as follows: "1. The plaintiff's damages are assessed in the amount of $487,512.70; 2. After apportionment by 40 per cent on account of the plaintiff's own contributory negligence, judgment for the plaintiff against the defendant in the sum of $292,507.62; 3. The defendant is to pay the plaintiff's costs of the proceedings on the ordinary basis unless a party is able to identify the basis for a different cost order; 4. The exhibits may be returned; 5. Liberty to apply on 7 days' notice if further or other orders are required."
When judgment was delivered there was an exchange between the solicitor appearing for the defendant and the primary judge, quoted by Macfarlan JA above at [10]. The solicitor did not apply for any different costs order, nor indicate what different costs order would or might be sought. In response to a statement by the solicitor that there had been offers of compromise at different stages of the litigation and the costs argument could be convoluted the judge urged the parties to see if they could resolve costs issues by agreement and said that if that were not possible, there would be liberty to apply.
By notice of motion filed on 1 November 2018 the applicant (defendant in the court below) sought the following order: "1. The defendant pay the plaintiff's costs on the ordinary basis up to 23 March 2017, and the plaintiff pay the defendant's costs on an indemnity basis from 24 March 2017, in accordance with rule 42.15 of the Uniform Civil Procedure Rules."
By an amended notice of motion filed on 11 December 2018 the applicant also sought orders that: "1. The defendant pay the plaintiff's costs on the ordinary basis up to 24 March 2014, and the plaintiff pay the defendant's costs on an indemnity basis from 25 March 2014, in accordance with rule 42.15 of the Uniform Civil Procedure Rules. ... 3. The Court assess the costs in accordance with order 1 above. 4. The Court vacate the order made on 1 November 2018 for the defendant to pay the plaintiff's costs on an indemnity basis of the adjournment of the costs argument. 5. The plaintiff pay the defendant's costs of the adjournment of the costs argument on 1 November 2018."
By a further amended notice of motion filed on 11 December 2018 the applicant sought the following orders: "1. The defendant pay the plaintiff's costs on the ordinary basis up to 24 March 2014, and the plaintiff pay the defendant's costs on an indemnity basis from 25 March 2014, in accordance with rule 42.15 of the Uniform Civil Procedure Rules. 2. In the alternative, the defendant pay the plaintiff's costs on the ordinary basis up to 23 March 2017, and the plaintiff pay the defendant's costs on an indemnity basis from 24 March 2017, in accordance with rule 42.15 of the Uniform Civil Procedure Rules. ... 4. The Court assess the costs in accordance with order 1 and in the alternative 2 above. 5. The Court vacate the order made on 1 November 2018 for the defendant to pay the plaintiff's costs on an indemnity basis of the adjournment of the costs argument. 6. The plaintiff pay the defendant's costs of the adjournment of the costs argument on 1 November 2018."
The application for the Court to "assess" (sic) the costs sought under orders 1 and 2 of the further amended notice of motion was apparently an application that the applicant be awarded costs in a specified gross sum instead of assessed costs (Civil Procedure Act 2005 (NSW), s 98(4)(c)). That claim was not ventilated on appeal.
The claim in paragraphs 5 and 6 of the further amended notice of motion (referred to by Macfarlan JA at [7]) was abandoned on the hearing of the appeal.
The application for leave to appeal and the hearing of the appeal, if leave were granted, were directed to be heard concurrently. Neither party sought to have the matter remitted to the District Court for further hearing on the question of costs. It was incumbent on the parties, if leave to appeal were granted, to place before this Court materials that would be relevant to the exercise of the discretion to award costs.
For the reasons which follow, I would grant leave to appeal but would dismiss the appeal. I would grant leave to appeal because the issue raised as to the application of UCPR r 36.16(1), (3), (3A), (3C) and (4) is of general importance. I would not refuse leave on the ground that if leave were given, the matter would have to be remitted to the District Court for further hearing, further prolonging lengthy proceedings. The materials placed before this Court were inadequate to determine the applicant's claim to indemnity costs from 25 March 2014 or 24 March 2017. Without abandoning the earlier claim, Mr Turnbull SC who appeared for the applicant frankly confessed that he could not make any submissions in support of that claim. Nor were the materials provided to this Court sufficient to justify the making of the order sought by the applicant in paragraph 2 of the amended notice of motion. That does not warrant the remission of the matter to the District Court for further hearing. Rather, it means that the appeal should be dismissed.

[11]

Application of UCPR r 36.16

Rule 36.16 of the Uniform Civil Procedure Rules 2005 (NSW) provides as follows: "36.16 Further power to set aside or vary judgment or order (cf SCR Part 40, rule 9) (1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order. (2) The court may set aside or vary a judgment or order after it has been entered if: (a) it is a default judgment (other than a default judgment given in open court), or (b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or (c) in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order. (3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it: (a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or (b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief. (3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered. (3B) Within 14 days after a judgment or order is entered, the court may of its own motion set aside or vary the judgment or order as if the judgment or order had not been entered. (3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B). (4) Nothing in this rule affects any other power of the court to set aside or vary a judgment or order."
Rule 36.16(3A) was introduced following the change to the procedure for the entering of orders whereby orders will be entered by the court itself on its computerised record. The rule provides a limited opportunity to ameliorate the principle that subject to only limited qualifications an order that finally disposes of proceedings, once entered, cannot be reopened (Bailey v Marinoff (1971) 125 CLR 529 at 530; [1971] HCA 49; Gamser v Nominal Defendant (1977) 136 CLR 145 at 154; [1977] HCA 7; DJL v Central Authority (2000) 201 CLR 226 at 245; [2000] HCA 17; Burrell v R (2008) 238 CLR 218 at 223-224; [2008] HCA 34; D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1; [2005] HCA 12 at 17 [34]; Deputy Commissioner of Taxation v Meredith (No 2) (2008) 75 NSWLR 462; [2008] NSWCA 133 at 466 [15]). In Malouf v Prince (No 2) [2010] NSWCA 51 the Court of Appeal said (at [11]): "[11] The 14-day window afforded by UCPR 36.16(3A) creates an exception to the principle that ordinarily a court has no power to set aside a final judgment after it has been entered: Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd (No 2); Carelli v FS Architects Pty Ltd (No 2) [2008] NSWCA 205 (at [8]) per Campbell JA (McColl JA and Handley AJA agreeing) (Special Leave Refused: FS Architects Pty Ltd v Rockcote Enterprises Pty Ltd; FS Architects Pty Ltd v Carelli [2009] HCASL 52); see also Bennette v Cohen (No 2) [2009] NSWCA 162 per Tobias JA (at [9]) (Ipp and Campbell JJA agreeing); Deputy Cmr of Taxation v Meredith (No 2) [2008] NSWCA 133 (at [6]-[7]) per Basten JA (Ipp JA agreeing)."
Each of sub-rr 36.16(1), (2), (3), (3A) and (3B) confers power on the court to vary or set aside its orders. Subrule (1) confers such a power if the notice of motion is filed before the order is entered. Subrules (3A) and (3B) in substance extend that time by 14 days. That period cannot be further extended (sub-r (3C)). Subrule (2) confers additional powers to vary or set aside an order if it is a default judgment, or was made in the absence of a party. Subrule (3) also confers power to vary or set aside an order. It applies to the varying or setting aside of any order, whether entered or not, except so far as the order determines a claim for relief, or determines any question arising on a claim for relief, or dismisses the proceedings, or dismisses a claim for relief. The words "except so far as" in sub-r (3) are important. They do not mean "unless". It is only so far as an order determines a claim for relief, or a question on such a claim, or dismisses a proceeding, or a claim in a proceeding, that the power to vary the order under sub-r (3) is excluded. The fact that the claim for damages was determined does not mean that sub-r (3) is inapplicable to the claim for costs.
Subrule 36.16(4) preserves any other power of the court to set aside or vary a judgment or order. This includes the power to make supplemental orders for the purpose of dealing with a matter involved in the working out of the order, or modifying its operation to take account of changed circumstances, or enforcing it (Phillips v Walsh (1990) 20 NSWLR 206 at 209-210). This power is not limited to such cases.

[12]

Orders not final

The first question is whether, independently of r 36.16, the District Court had jurisdiction to vary its order that the defendant pay the plaintiff's costs of the proceedings on the ordinary basis. Rule 36.16(4) makes it clear that the rule does not affect any other power the Court has to set aside or vary a judgment or order. Moreover, r 36.16(3) provides that the Court may set aside or vary a judgment or order except so far as it determines a claim for relief. A final costs order is such a determination. A final costs order, once entered, cannot be varied unless a notice of motion is filed within 14 days after the order is entered (Roads and Traffic Authority of NSW v Palmer (No. 2) [2005] NSWCA 140 at [20]-[21]; Deputy Commissioner of Taxation v Meredith (No. 2) at 464-466 [6]-[16]; Bennette v Cohen (No. 2) [2009] NSWCA 162 at [6]-[11]; Coastwide Fabrication & Erection Pty Ltd v Honeysett (No. 2) [2009] NSWCA 291 at [12]-[17]; Roads and Traffic Authority of NSW v Refrigerated Roadways Pty Ltd (No. 2) [2009] NSWCA 336 at [5]-[11]; Malouf v Prince (No. 2) at [7]-[24]; Habib v Nationwide News Pty Ltd (No. 2) [2010] NSWCA 291 at [33]-[39]; AT v Commissioner of Police NSW (No. 2) [2010] NSWCA 337 at [6]-[13]; Griffith v Australian Broadcasting Corporation (No. 2) [2011] NSWCA 145 at [10]-[11], [34]; Kable v State of New South Wales (No. 2) [2012] NSWCA 361 at [9]-[15]; Hagerty v Hills Central Pty Ltd (No 2) [2018] NSWCA 279 [10]-[14]).
The principle of finality of litigation does not apply to a costs order that is not, or is not intended to be, final. That is illustrated by the decisions in In re Roper; Taylor v Bland (1890) 45 Ch D 126 and Preston Banking Co. v William Allsup & Sons [1895] 1 Ch 141.
Both cases concerned how costs of proceedings brought for the execution of trusts should be borne. In both cases, the orders were made "on further consideration". A hearing on further consideration was a hearing in the Chancery Division after inquiries had been made, or accounts had been taken, or trust or estate assets had been sold, following which a final decision could be made upon the subject matter of the proceeding and final orders made (L Field, E Dunn and T Ribton, Daniell's Chancery Practice (6th ed, 1882-1884) Bk 1, c 16 at 785, Bk 2, c 18, at 1154-1166).
In re Roper concerned a suit for administration of a deceased estate in which real and personal estate were left for charitable purposes. Pursuant to a direction in the will the real estate was sold and there were four separate funds in court. The gift of realty for charitable purposes failed. Bacon VC directed taxation of the costs of the action, including charges and expenses properly incurred by the executors as trustees of the deceased estate (at 128). The order directed that the costs when taxed be paid out of the four funds, some of which represented the deceased's personal estate and some the proceeds of sale of real estate.
Subsequently, the Attorney General, representing the charity, contended that the portion of costs attributable to the administration of the real estate ought to be paid out of the proceeds representing the sale of real estate alone. The order contained no provision for the apportionment.
Cotton LJ (with whom Bowen LJ agreed) held that although the order directed from what funds costs should be paid, on its proper construction, it was not intended to be a determination as to how the ultimate burden of the costs so paid should be borne as between the charity and an assignee of the heir at law entitled to the realty. His Lordship said (at 136-137): "... We must look at the order and see whether it was the intention, at the time of directing that certain costs should be paid out of a particular fund, to decide that they were to be ultimately borne by that fund. ... I can then only look upon this order as taking those funds which were most readily available for payment of the costs and legacies, without considering whether they arose from real estate or from personal estate, leaving entirely untouched and not making any declaration upon the question what fund should, as between the parties who were ultimately to be entitled to the different funds, be held liable to the costs. I think it would be wrong in the absence of any declaration of the rights of the parties to hold that by that order the Attorney-General is precluded from claiming anything on behalf of this charity, when there would have been something which he could have claimed if the costs relating to the real estate had been paid, as I think they ought to have been paid, out of the real estate."
Fry LJ dissented because he considered that the order did finally determine how the costs should be borne (at 138). In reaching that conclusion, his Lordship noted (at 138) that: "No liberty to further discuss the incidence of any of these sums was reserved, and therefore we have an order on further consideration which reserves no second further consideration - an order which deals with the costs, and in which no point is reserved. Such an order as that is, in my humble opinion, final with regard to the costs, and I do not think it is competent to any of the litigant parties to come subsequently under the liberty to apply and to ask for an order which shall vary the incidence of the costs."
By contrast, in Preston Banking Co v William Allsup & Sons an order had been made for the sale of the business and assets of the defendant company out of court. The applicant was required to pay money into court as security for the costs and damages. It was ordered that in default of his doing so no order should be made on the application for the appointment of a fit and proper person to conduct the sale out of court, but that the applicant should pay the costs of the application. The applicant defaulted in making the payment into court and applied by summons for an order that the costs directed to be paid by him might be costs in the action. The Court of Appeal unanimously held that the judge had no jurisdiction to set aside or vary the earlier order because it had been perfected and represented the intentions of the judge making the order. In argument, the applicant relied upon In re Roper as to which Lord Halsbury observed that in that case the order was not intended to be final (at 142). Ritchie's Uniform Civil Procedure NSW accurately cites Preston Banking Co v William Allsup & Sons (at [36.16.5]) for the proposition that ordinarily a court has no power to set aside a final costs order that correctly reflects the intended decision and has been formally entered.
I am unable to agree that order 3 made on 31 August 2018 was intended to be a final order that the defendant pay the plaintiff's costs of the proceeding on the ordinary basis. The words that follow, namely "... unless a party is able to identify the basis for a different cost order" show the contrary.
The primary judge granted liberty to the parties to apply for further or other orders. As noted above, the reservation of the liberty to apply was intended to apply at least to the question of what different costs order might be made, if a different order were sought.
Liberty to apply cannot be used to alter the substance of an order already made (Australian Hardboards Ltd v Hudson Investment Group Ltd (2007) 70 NSWLR 201 at 214 [52]; [2007] NSWCA 104). Therefore, if the costs order were intended to be final, a party could not seek a different costs order under the reservation of liberty to apply. A party could seek a variation of the costs order under r 36.16(3A), but no reservation of liberty to apply would be necessary or appropriate for that purpose. In In Re Roper the absence of liberty to apply in relation to costs was a reason for Fry LJ's considering that in that case the costs order made was a final determination of how the costs should be borne (see [63] above). In the present case, the reservation of liberty to apply that was evidently intended to include an application for a different costs order confirms that the order made was not intended to be final, but could be revisited by the parties' exercising the liberty to apply.
The 14-day time limit in r 36.16(3C) does not apply. This is for two related reasons. First, the order of 31 August 2018 did not determine the claim for costs and therefore the Court had power under r 36.16(3) to set aside or vary the costs order. The time limit under r 36.16(3C) does not apply to an application under r 36.16(3).
Mr Hooke SC who appeared with Mr Morgan for the respondent submitted that r 36.16(3) was not engaged because the claim for relief (that is, entitlement to costs) was determined, albeit provisionally. I do not think that this is the correct construction of the rule. A provisional determination is not a determination. But even if it is, r 36.16(4) is applicable because courts have power to vary or set aside a costs order if it appears from the terms of the order, or perhaps from the circumstances in which the order is made (for example, costs orders in relation to certain interlocutory applications) that the order is not intended to be final. This is the second reason why the 14-day time limit does not apply.

[13]

Power to dispense with time requirements

For these reasons no question arises as to whether s 14 of the Civil Procedure Act 2005 (NSW) can be invoked to dispense with the limitation imposed by r 36.16(3C) on the power under rr 36.16(3A) and (3B) to reopen orders that have been entered. In AT v Commissioner of Police (NSW) (No 2) [2010] NSWCA 337 Basten JA (with whose reasons Beazley and Macfarlan JJA 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). 10 Nor is it possible to omit the whole of the rule, because then one would be left with the general law, which does not permit a court, absent statutory authority, to vary orders once they have been entered: DJL v Central Authority [2000] HCA 17; 201 CLR 226 at [38]-[40], referring to Baley v Marinoff [1971] HCA 49; 125 CLR 529 at 530. In Malouf v Prince (No 2) [2010] NSWCA 51 at [20], the court (McColl and Macfarlan JJA, Nicholas J) referred to a statement in Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43 ; 239 CLR 75 at [23] where French CJ, Gummow, Hayne and Crennan JJ stated: 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.'" Of course, this was said in relation to final orders.
Basten JA gave the leading decision in Kable v State of New South Wales (No 2) [2012] NSWCA 361. His Honour did not refer to what he had said in AT v Commissioner of Police (NSW) (No 2), but said (at [15]): "... [T]he interests of justice support an order dispensing with the requirement 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'. The letter sought to raise two issues, namely: (a) 'a significant proportion of the costs incurred by the plaintiff will be attributable to factual inquiries which related solely to causes of action on which the plaintiff failed', and (b) the existence of 'earlier costs orders which have been made …, which presumably are not displaced by the order made yesterday'."
Kable v State of New South Wales (No 2) is authority that the court can enlarge the power under r 36.16(3A) by dispensing with the requirement for the filing of a notice of motion if the application for the order varying or setting aside the order that has been entered has been notified, even informally, within the period of 14 days.
Aukuso v Tahan (No 2) [2018] NSWCA 302 may extend that proposition to the extent that adequate notice in writing of intention to seek a variation of the costs orders may be sufficient (at [46]-[47]). Simpson AJA, with whom Macfarlan JA agreed, also said (at [49]): "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)."
In the present case, neither the solicitor's statement on 31 August nor Moray & Agnew's email of 12 September 2018 could be considered as notice of a particular application or something equivalent thereto. There was no attempt to articulate what order or orders would be sought. The email of 12 September merely sought to have the matter listed for hearing on 11 October 2018 for argument on the question of costs pursuant to the liberty to apply. The later history of the notices of motion suggests that the applicant had not made up his mind what orders he would seek, even as late as 11 December 2018. He initially sought indemnity costs from 24 March 2017. In the next iteration of the notice of motion he sought indemnity costs from 25 March 2014 in substitution for the earlier order sought. By a further amended notice of motion also dated 11 December 2018 he sought that relief in the alternative.
If the costs order of 31 August 2018 had been a final order the primary judge would have been correct to have dismissed the application on the ground he did.
The respondent submitted that the argument before the primary judge on 11 December 2018 had proceeded on the common ground that the costs order of 31 August 2018 was a final order. I do not agree. In oral submissions Mr Turnbull SC who appeared for the applicant said: "The point I seek to make, particularly in relation to 36.16 or 36.16 generally, is that this matter had not concluded; your Honour was not functus; your Honour was still hearing the issue of costs. There'd been no complaint heard from the plaintiff about that on 31 August, nor indeed on 1 November. It wasn't until this matter came before your Honour - I'm not sure what date it was - when Mr Fitzsimmons was here. Was it 1 November? I'm sorry. It wasn't until this matter came before you on 1 November that complaint was then made about it. That was two months after your Honour had handed down a decision but the matter was clearly still live; you were still dealing with the costs argument that you had anticipated and had been flagged to your Honour on 31 August so it would only be if there was a final order that we sought to set aside, change the order for some reason or other, that 36.16 would play a role."
Although this is not an appropriate vehicle for determining the inter-relationship between s 14 of the Civil Procedure Act and r 36.16(3A) and (3C), it nonetheless raises an important issue as to the application of r 36.16 and, in particular, the application of r 36.16(3) and (4). It is often assumed and has sometimes been said that an application under r 36.16 (as distinct from an application under r 36.16(3A) must be brought by notice of motion filed within the 14-day period provided by r 36.16(3A) (e.g. Drummond & Rosen Pty Ltd v Easey & Ors (No. 2) [2009] NSWCA 331 at [49]; Malouf v Prince (No. 2) [2010] NSWCA 51 at [15]; Zepinic v Chateau Constructions (Aust) Ltd (No. 2) [2013] NSWCA 227 at [82]).

[14]

The outcome of the appeal

Although I would give leave to appeal, I would dismiss the appeal. Neither party invited this Court to remit the matter for redetermination before the District Court. It was incumbent upon the applicant to establish that, on the evidence before the primary judge, the primary judge ought to have made at least some of the orders sought in its further amended notice of motion filed on 11 December 2018.
Senior counsel for the applicant said that he did not have instructions to abandon reliance on the claim for indemnity costs from 25 March 2014, but did not seek to advance any submission in support of that claim.
It is not acceptable that parties should make ambit claims that have no real prospect of success. To do so is inconsistent with the requirements of s 56(3) of the Civil Procedure Act that a party to civil proceedings is under a duty to assist the court to further the overriding purpose of the Act and rules of Court in their application to civil proceedings to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Real parties to the proceedings, such as the insurer standing behind the applicant in this case, should be mindful of this requirement.
Macfarlan JA has set out the relevant rules relating to offers of compromise and most of the material terms of the offer of compromise of 23 March 2017. A further relevant term of that offer was: "6. The defendant's liability to pay the judgment sum in paragraph 1 will not arise until 28 days after: (a) judgment is entered; (b) receipt of a copy of the judgment signed or initialled by the registrar and an authority to receive satisfactory to the defendant's insurer. (c) receipt by the defendant or its insurer of a notice of judgment or settlement signed by or on behalf of the plaintiff in line with s23 of the Health and Other Services (Compensation) Act 1995 (Cth); and (d) the defendant or its insurer is notified of the amount repayable (if any) to the Department of Human Services."
The offer of compromise purported to comply with r 20.26(1) and (2)(a)(ii) by purporting to set out proposed orders for disposal of the claim by way of consent orders. But many of the paragraphs of the offer of compromise were not expressed as an order of the court. Thus, para 5 provided that the plaintiff "agrees" to pay various expenses which might not have been "deducted by the defendant's insurer under these terms" (whatever they might be) and that the plaintiff agreed to pay to the parties entitled all outstanding medical, hospital, ambulance and other out of pocket expenses. As framed, that was not a proposed order that the plaintiff pay such sums, but only a proposed recording of an agreement that he would do so. Similarly, the proposed agreement of the parties to keep the terms of the settlement confidential (para 11) would not operate as an order of the court, even if included in consent orders.
Rule 20.26 proceeds on the basis that an offer of compromise must identify the claim or part of the claim to which it relates and the proposed orders for disposal of the claim (r 20.26(2)(a)). For an offer of compromise to be effective it must be possible to identify whether the offer, if accepted, would have been no less favourable to the plaintiff than the orders made.
An offer of compromise is not invalid because it includes terms that could not be the subject of an order of the Court (Timms v Clift [1998] 2 Qd R 100 at 107, 108; Sharp v Maritime Super Pty Ltd [2013] NSWSC 389 at [73]-[74] (per Ward JA). The fact that an order has no direct monetary value does not of itself necessarily make it impossible to engage in the comparison called for by rr 42.14-42.15A between the order made and the terms of the offer. But if the offer of compromise includes non-monetary relief or contains conditions such that it is not possible to determine whether the order or judgment was more or less favourable to the recipient of the offer than the offer, then the offer of compromise, although not invalid, would not be effective. It may be necessary in such a case for the party relying upon the offer of compromise to adduce evidence to establish that the offer, if accepted, would have been more favourable to the offeree than the orders made.
No such evidence was adduced in the present case, or if it was, it was not provided to this Court on the hearing of the appeal.
The applicant's assumption seems to have been that because he offered $400,000 plus costs and judgment was given for $292,572.62 plus costs, that the offer was more favourable than the judgment. But there are other terms of the offer that would need to have been explained before that conclusion could be reached. Thus, it was a term of the offer that the defendant's liability to pay the judgment sum proposed would not arise until 28 days after the last to occur of the matters set out in paragraph 6 of the offer. There was no evidence as to whether the Department of Human Services could be compelled or was practically certain to notify an amount repayable (if any were repayable) under para 6(d). If an amount were repayable to the Department of Human Services, it might be expected that the Department would give the notification provided by cl 6(d) so as to receive whatever was payable to it. But there was no evidence as to whether any amount was so repayable. If not, why should it be assumed that the Department would trouble itself to give a notification that no amount was payable? Prima facie, in the absence of notification under cl 6 the defendant would not be liable to pay the judgment sum.
Paragraph 9(d) of the offer of compromise provided that no interest would be payable in respect of the judgment proposed, provided interest was paid within 28 days of "receipt by the defendant's solicitor of a notice of charge from Centrelink".
There was no evidence about a notice of charge from Centrelink. On the face of the offer, if no notice of charge from Centrelink was ever received by the defendant's solicitor, no interest would be payable on the judgment. There was no evidence as to when payment of the judgment sum could be expected.
These matters make it impossible to assess whether the judgment given was no more favourable to the respondent than the offer of compromise.
If the applicant is otherwise entitled to indemnity costs from 24 March 2017, I consider that a contrary order should be made under r 42.15(2).
When the offer of compromise was made the respondent's position was that he had obtained judgment in the District Court on 1 September 2015 in the amount of $692,595.72. This reflected an assessment of damages before reduction for contributory negligence of $1,154,326.24. Those damages were reduced by 40 per cent to reflect a finding of contributory negligence. On appeal (Boateng v Dharamdas [2016] NSWCA 183) the finding of the defendant's liability and of the plaintiff's contributory negligence were upheld, but the matter was remitted for new trial before the District Court on damages. This Court held that in assessing damages the primary judge (Sorby DCJ) had failed to take into account earlier adverse credit findings concerning the respondent. A new trial on damages was ordered because the assessment of damages was dependent upon the respondent's credibility (at [169]).
On 4 October 2016 directions were made in the District Court for the parties to update medical evidence. The matter was listed for hearing for four days commencing 22 May 2017.
On 28 February 2017 the applicant filed an application with the Medical Assessment Service ("MAS") for further assessment in respect of the respondent's physical and psychiatric injuries.
The application was supported by submissions from the insurer and numerous medical reports and surveillance footage. The insurer submitted that surveillance footage in 2015 (after the first hearing in the District Court) showed that the respondent's credibility was a major issue and that the history he reported to previous MAS assessors and their findings on examination could not be relied upon.
The time for acceptance of the offer of compromise expired on 20 April 2017. At that point the MAS had not decided whether or not to accept the application for reassessment.
On 5 May 2017 MAS determined that the injuries would be referred for reassessment.
The MAS redetermination on 19 July 2017 was that neither the respondent's psychiatric injuries, nor his physical injuries resulted in a permanent impairment of more than ten per cent. He was thereby disentitled to damages for non-economic loss.
This was a contributing factor to the primary judge's reassessment of damages from $692,595.72 (as at 1 September 2015) to $292,572.62 (as at 31 August 2018). This Court was not provided with the reasons for judgment of the primary judge for his assessment of damages. We were informed that no adverse credit finding was made against the respondent that he had simulated his injuries at the first trial.
If, contrary to my view, the offer of compromise enabled a comparison to be made between the value of the offer and the orders ultimately made, it was incumbent upon the applicant on the concurrent hearing of the application for leave to appeal and the appeal if leave were given, where this Court was asked to exercise the discretion available to the primary judge, to provide the materials before the primary judge and to show that they should have led to the primary judge's making the order for indemnity costs that the applicant sought. Not only was this Court not provided with all of the materials that were before the primary judge, but such materials as were provided did not show that the applicant was entitled to the order for indemnity costs that it sought.
Prima facie, the respondent had good reason not to accept the offer of compromise when it was unknown whether the MAS would agree to a reassessment of the plaintiff's degree of permanent impairment. Whether there might be other reasons for not accepting the offer of compromise that might be explained by the primary judge's substantive reasons for judgment is unknown. Those reasons were not before this Court.
The respondent relied on a submission made to the District Court on 12 May 2017 by counsel then appearing for the applicant. After MAS determined that the injuries would be referred for reassessment, the applicant filed a notice of motion seeking to vacate the hearing scheduled to commence on 22 May 2017 in the District Court. That notice of motion was heard by his Honour Judge Letherbarrow on 12 May 2017. The hearing date was vacated and the applicant was ordered to pay the costs of the motion and those thrown away by the vacation of the hearing date.
The respondent consented to the vacation of the hearing date, but sought its costs. The applicant's position was that costs should be costs in the cause. In opposing the respondent's costs application, counsel then appearing for the applicant submitted: "[I]n relation to costs and costs in the cause, if there were a change to non-economic loss, that would be a material change. It would negate the value of any prior refusal to accept an offer of compromise, I would have thought, your Honour, under the law."
The respondent submitted that having made that submission, notwithstanding that the submission was not acceded to, it was not now open to the applicant to submit that there had not been a material change of circumstances such that the offer of 23 March 2017 could be relied upon.
I do not consider that counsel's view as to the application of the law as expressed before Letherbarrow DCJ (which had no effect on his Honour's ultimate ruling) is of any relevance. Contrary to the respondent's submissions, nothing said by Stevenson J in New South Wales Netball Association Ltd v Probuild Construction (Aust) Pty Ltd [2015] NSWSC 1339 touches on this issue. The applicant was not faced with inconsistent courses.
Nonetheless, on the materials provided to this Court, if it were necessary to do so, I would make a contrary order under r 42.15 because of the uncertainties the respondent faced at the time of service of the offer of compromise as to whether the MAS would agree to a reassessment of the degree of his permanent impairment. It may be that that was not the only material question, but the materials provided to this Court do not enable any assessment of alternatives. It would have been open to the respondent to re-serve the offer of compromise after the MAS's decision to accept the reassessment was made, or after the reassessment was made. It did not do so.
For these reasons I would grant leave to appeal but dismiss the appeal.

Boateng v Dharamdas

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