Cairns v Woolworths Ltd t/as Big W & Ors [2006] ACTSC 17

2. The first defendant relies on a Calderbank offer contained in a letter dated 9 September 2002, which read as follows;

On behalf of the first defendant we have been instructed to offer your client as follows:

1. Judgment for the plaintiff in the sum of $55,000;

2. Defendant to pay the plaintiff's costs as agreed or taxed;

3. Usual order as to interest.

This offer shall remain open for 14 days from the date you receive this letter. If the plaintiff recovers less than the amount offered from the first defendant we will make an application for indemnity costs as from the date of this letter.

3. In the event, as I have said, the plaintiff recovered damages against the first defendant of $36,000, an amount less than that offered. Whilst the plaintiff did not respond through her solicitors to the offer within the fourteen day period specified by the solicitors for the first defendant, her solicitors formally rejected the offer by letter of 16 December 2002. The first defendant agrees that the outcome of the action must result in an order that, at the least, it pay the plaintiff's costs as between party and party up to 24 September 2002, but seeks an order that from that date the plaintiff pay the first defendant's costs on a solicitor-and-client basis.

4. By 9 September 2002 the action had been commenced and appearances entered by the first and second defendants and a third party had been joined. The third and fourth defendants, it appears, were not parties by that time. The preliminary steps of the action were at a relatively early stage. Having said that, it is not submitted on behalf of the plaintiff that it was too early in the proceedings for her to have obtained advice as to her prospects of success against the first defendant or as to the likely award of damages.

5. The position was complicated by the fact that the injury in respect of which she claimed and was ultimately awarded damages against the first defendant was to her lower back and the injury in her fall, in respect of which she sued the other defendants, was to the same part of her body. It represented what could be described as an aggravation of the earlier injury, or if not that certainly an injury to the same part of the body. For this reason it can be reasonably argued there were more than the usual difficulties in determining the extent to which the plaintiff's disabilities were due to the negligence of the first defendant and the negligence of the other defendants.

6. As I have said earlier, the purpose of the Court's practice in relation to Calderbank offers is the encouragement of settlement and the minimisation of expense to the parties and to a lesser extent of court time. Mr Stretton of counsel for the first defendant submits with some force that to fail to give effect to the offer which was made in this case would place a party in the position of the first defendant in a situation where there was effectively nothing that party could do to achieve an advantage from what turned out to be a reasonable settlement offer. There is much force in that submission.

7. This is not a case where the plaintiff by accepting the offer would have prejudiced her claim against the remaining defendants, although, as Mr Graves of Senior Counsel for the plaintiff submits, it is a case where she ran the risk of falling between two stools in the event of findings adverse to her claim against the remaining defendants once the action came to trial. It was far from an easy task to determine which of the plaintiff's damages flowed from the negligence of the first defendant and which from her subsequent fall. The complexities are emphasised by the length of the hearing, although I concede that much of that time was taken up with issues related to liability.

8. I am satisfied that some effect should be given to the offer and to the plaintiff's decision not to accept it, so as to reflect some disadvantage to the plaintiff and some advantage to the defendant. Whilst orders have been made in the past in this Court that a party who has rejected a payment into court or a Calderbank offer should pay the other party's costs after the date of rejection or expiry of the offer, generally any such orders have been made on a party-and-party basis rather than on a solicitor-and-client basis. In more recent years the Full Court has expressed the view that the more usual order to be expected, whilst always a matter for the exercise of discretion in the individual case, is one where the plaintiff's entitlement to costs is cut off at the relevant date, after which the parties bear their own costs.

9. One of the reasons for that is that it is generally the case in an action for damages for personal injury that the parties are in vastly different financial situations. The plaintiff is typically an individual who is an ordinary member of the community. The defendant is generally either a substantial corporation or a party who has the benefit of insurance provided by a substantial corporation. This is such a case. This is a case where a penalty order against the plaintiff, as sought by the first defendant, would have the effect of taking away the entirety of her damages of $36,000 against that defendant and probably a great deal more.

10. There is evidence that the plaintiff, who is a married woman living in her own home with her husband in what could be described as relatively modest circumstances, though far from penury, has assets, not including the fruits of this litigation, of the order of $234,000. The plaintiff is better off than many in the community, but contrasted with the financial position of a company such as the first defendant or an insurance company, her circumstances are modest indeed. A penal order would have the capacity to make a very significant difference to her position in life.

11. It seems to me that rather than make an order which is dependent on the date of the Calderbank offer or a reasonable date for acceptance or rejection of the offer contained in it, this is a case where the interests of justice will be better served by fixing an amount by way of penalty upon the plaintiff for her decision to reject what turned out to be a proper and reasonable offer. Having regard to the damages she was awarded of $36,000, it seems to me that a reasonable amount which is fair to both parties, which would achieve that result, would be half of her damages: that is, $18,000.

12. For those reasons the order will be that the first defendant pay the plaintiff's costs of her action against the first defendant as between party and party, such costs to be offset by an amount of $18,000 to take account of the plaintiff's decision to reject the Calderbank offer of 9 September 2002.

13. The order reflects a balance between the relatively modest amount recovered by the plaintiff, $36,000, and the costs of an action which inevitably ran for fourteen days at hearing, necessarily because of the number of parties and the complexity of the issues. For that reason this is a very unusual action in that the costs are, not by reason of anyone's fault, vastly disproportionate to the amount recovered by the plaintiff against the first defendant.

14. The first defendant has failed to achieve the order which it sought. There has been a measure of success on both sides and the fairest outcome is that the plaintiff and the first defendant pay their own costs of the application.

15. Should any issue arise in relation to the scale at which the plaintiff's costs are to be taxed under order 65, I grant liberty to apply to the plaintiff.

I certify that the preceding fifteen (15) numbered paragraphs are

a true copy of the Reasons for Judgment herein of the Master.

Solicitors for the first defendant: Mallesons Stephen Jacques