BRYMOUNT PTY. LIMITED t/a WATSON TOYOTA (ACN 003 200 459) v. CUMMINS & ANOR. YOUNG SHIRE COUNCIL v. CUMMINS & ANOR. (NO. 2) [2005] NSWCA 69 - NSWCA 2005 case summary — Zoe

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BRYMOUNT PTY. LIMITED t/a WATSON TOYOTA (ACN 003 200 459) v. CUMMINS & ANOR. YOUNG SHIRE COUNCIL v. CUMMINS & ANOR. (NO. 2) [2005] NSWCA 69

[2005] NSWCA 69

Court of Appeal (NSW)|2005-03-17|Before: Beazley JA, Ipp JA, McColl JA, Coll JA

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At a glance

Source facts

Court

Court of Appeal (NSW)

Decision date

2005-03-17

Before

Beazley JA, Ipp JA, McColl JA, Coll JA

Source

Original judgment source is linked above.

Judgment (38 paragraphs)

[1]

CITATION: BRYMOUNT PTY. LIMITED t/a WATSON TOYOTA (ACN 003 200 459) v. CUMMINS & ANOR. YOUNG SHIRE COUNCIL v. CUMMINS & ANOR. (NO. 2) [2005] NSWCA 69

[2]

JUDGMENT OF: Beazley JA at 1; Ipp JA at 33; McColl JA at 34

[3]

DECISION: Appeal No. 41169/03 (Brymount's appeal) ; 1 That the first respondent pay the appellant's costs up to 27 January 2003 on a party and party basis;; 2 That the first respondent pay the appellant's costs in respect of the trial from 28 January 2003 on an indemnity basis;; 3 That the first respondent pay the appellant's costs in respect of the appeal on a party and party basis; and; 4 That the first respondent have a Certificate under the Suitors Fund Act 1951 (NSW), if so entitled.; 5. That there be no order as to costs in respect of the second respondent.; Appeal No. 41170/03 (Council's appeal) ; 1 That the first respondent pay the appellant's costs up to 17 June 2002 on a party and party basis;; 2. That the first respondent pay the appellant's costs in respect of the trial from 18 June 2002 on an indemnity basis;; 3 That the first respondent pay the appellant's costs in respect of the appeal on a party and party basis; and; 4. That the first respondent have a Certificate under the Suitors Fund Act 1951 (NSW), if so entitled.; 5. That there be no order as to the costs in respect of the second respondent.

[14]

Facts and procedural history 2 Mrs Cummins brought an action in negligence against the Young Shire Council and Brymount Pty Limited in the District Court after she fell in a public laneway which bisected Brymount's business premises. Hungerford ADCJ found that both the Council and Brymount had breached the duty of care each owed to Mrs Cummins. His Honour held that the Council was liable because it had carried out roadworks on the laneway in the past and had undertaken responsibility for the maintenance of the laneway but had failed to maintain it in good order and condition. Brymount was found liable because it conducted business on both sides of the laneway and, therefore, owed a duty to warn persons that the road was in a state of disrepair because both employees and customers frequently traversed the laneway. His Honour awarded Mrs Cummins damages in the sum of $341,161.34. 3 The Council and Brymount successfully appealed to the Court of Appeal ([2004] NSWCA 438, 26 November 2004). Hungerford ADCJ's orders were set aside and verdicts entered for the Council and Brymount. Mrs Cummins was ordered to pay Brymount's costs of the appeal and of the trial but leave was granted to the appellants to make application in respect of the basis upon which costs should be awarded. Both appellants have now made an application for an order that the costs of the trial and the appeal be on an indemnity basis as each had made a Calderbank offer to Mrs Cummins prior to trial. 4 Before dealing with those applications, it should be indicated that in making the Orders for costs, the Court did not make any order relating to the Suitors Fund Act in favour of Mrs Cummins. That was an oversight and the matter having now been drawn to the Court's attention in Mrs Cummins' written submissions, the Court's Orders in each appeal should be amended under the slip rule (see: SCR Pt 20 r.10) so as to include the following Order: "6. The first respondent is to have a certificate under the Suitor's Fund Act (NSW) 1951 if so entitled."

[16]

Status of Calderbank offers 10 There is a clear policy in the Courts to encourage the early settlement of claims. This is reflected in the Rules, both of the Supreme Court and the District Court: see SCR Pt 22; DCR Pt 19A. Under the Rules in each Court, the sanction, if an offer is not accepted and the party to whom the offer is made receives a verdict that is less than the offer, is an award of costs on a more favourable basis than party/party costs (SCR Pt 42 r.22(4); DCR Pt 39 r.25(4). Under the Supreme Court Rules the sanction is automatic unless the Court finds exceptional circumstances, Under the District Court Rules, the Court must find either exceptional circumstances or deem that it would cause substantial injustice to the party who refused the compromise offer. 11 In this case, the appellants did not utilise the procedures provided for under the Rules of Court but rather made the Calderbank offers to which I have referred. Calderbank offers are well recognised means of making offers of settlement where the party making the offer ultimately seeks a costs advantage if the offer is not accepted. However, as such offers do not comply with the Rules of Court for making offers of compromise, the ultimate costs order made is a matter for the court's discretion. 12 As the Court of Appeal identified in Jones v Bradley (No.2) [2003] NSWCA 258 at [6]-[8], there are two competing views as to how the Court exercises its discretion where there has been a Calderbank offer. One view is that a Calderbank offer gives rise to a prima facie presumption that the party who rejects the offer should pay the other party's costs on an indemnity basis should the former receive a less favourable result than the offer of compromise: see Multicon Engineering Pty. Ltd. v. Federal Airports Corporation (1996) 138 ALR 425. 13 The alternative view, and the one endorsed by this Court in Jones v Bradley (No.2), is that the rejection of (what ultimately transpires to be) a more favourable offer is not decisive as to the awarding of costs on an indemnity basis: see SMEC Testing Services Pty Limited v Campbelltown City Council [2000] NSWCA 323 [37]. Rather, the question whether the court will exercise its discretion to award costs on an indemnity basis depends on all the circumstances of the case (MICA (1992) Pty Limited v Kenny & Good Pty Ltd (1996) 70 FCR 236, at 239). 14 In SMEC Testing Services Pty Limited, Giles JA considered that the following factors were relevant to determining whether costs should be awarded on an indemnity basis where a Calderbank offer had been made:

[19]

(c) Whether the letter of compromise explicitly stated that the offer was made in Calderbank terms, the exact conditions of the offer, and whether indemnity costs would be pursued if the offer was rejected. 15 In this case, Brymount's offer was specifically identified as a Calderbank offer and the Council's offer was, in substance, a Calderbank offer, even though that was not stated expressly in the letter (see Noriega v. The Trustee of the Roman Catholic Church (No. 2) [2000] NSWCA 133). In each case, the offer was made significantly prior to trial. The Council's offer was made approximately 18 months prior to the trial before Hungerford ADCJ; Brymount's offer was made a year before the trial. The Council's offer was open for 14 days. This period was less than that provided for in both the Supreme Court and District Court Rules (see SCR Pt.22 r.3; DCR Pt.19A r.4), but Calderbank offers are not subject to the limitations imposed by the Rules. Fourteen days is not a generous period to allow for consideration of an offer, but it is not so short as to be unreasonable. No time limit was imposed in the Brymount offer. 16 The real issue therefore is the reasonableness or otherwise of Mrs Cummins' non-acceptance of the offer. 17 The case against the Council was argued on the basis that the principles in Brodie and Ghantous applied. The trial judge dealt with it on that basis although, on this Court's judgment, his Honour made a number of findings of fact in aid of his conclusion on liability that were considered unsustainable on the evidence. In particular, the Court found that, contrary to the trial judge's conclusion, there was no shadowing in the laneway that obscured its uneven surface. The Court concluded the state of the road was obvious. Mrs Cummins had agreed in cross-examination that had she been looking at the ground in front of her she would have seen its uneven surface. Further, Mrs. Cummins had not been able to prove that the depression in the road in which she had fallen had been caused by the Council. Rather, it was caused by work undertaken by some other public utility. In all the circumstances the Court held that the trial judge had erred in finding the Council had breached its duty of care. 18 In relation to the case against Brymount, the Court concluded that it was not an occupier of the roadway and did not owe Mrs Cummins a duty of care in her use of the roadway. 19 In my opinion, this was not a borderline case but was one which, as against the Council, was governed by the principles in Brodie and Ghantous and as against Brymount, was one where no duty of care was established on the evidence. 20 Although I have already remarked that the time in which to accept the Council's offer was abbreviated when compared to the Rules of Court, it was not unduly short. Both offers were made at a significant time prior to the hearing. Mrs. Cummins could have sought an extension of the Council's offer, or counter-offered in the same or similar terms. In circumstances where she had fair warning of the case that was going to be run against her, and the Council was successful on that basis, it should have its costs of the trial on an indemnity basis. Although this Court decided Brymount's liability on a different basis, that is, that there was no duty of care, it too should have its costs on an indemnity basis. In my opinion, the cases were not borderline and the Calderbank offers were made responsibly at an early stage in the proceedings. As no time was specified in Brymount's offer it presumably would have remained open until it was withdrawn. It was neither accepted nor withdrawn but as the appellant did not respond to the offer, the time for which it was open is of no relevance to the matter under consideration. 21 In my opinion, Mrs Cummins' failure to accept the offers of compromise was unreasonable and the appellants should have the benefit of those offers at least insofar as they relate to the trial from the date on which each was made.