Helm v Pel-Air Aviation Pty Ltd [2015] NSWSC 566
Casey v Pel-Air Aviation Pty Ltd
Source
Original judgment source is linked above.
Catchwords
Helm v Pel-Air Aviation Pty Ltd [2015] NSWSC 566
Casey v Pel-Air Aviation Pty Ltd
Judgment (4 paragraphs)
[1]
Judgment
Orders were made in favour of Dr Helm on 12 June 2015 for reasons given that day and in a judgment delivered on 15 May (see Casey v Pel-Air Aviation Pty Ltd; Helm v Pel-Air Aviation Pty Ltd [2015] NSWSC 566 and Casey v Pel-Air Aviation Pty Ltd; Helm v Pel-Air Aviation Pty Ltd (No 2) [2015] NSWSC 734)). Dr Helm sought an order for costs assessed on an ordinary basis up to and including 30 January 2015 and indemnity costs thereafter. Pel-Air's case was that there should be no departure from the usual order under the Civil Procedure Act 2005 (NSW) and the Uniform Civil Procedure Rules 2005 (NSW), that it should bear Dr Helm's costs as agreed or assessed.
There is no question as to the Court's power to depart from the usual order. Dr Helm's case was that this discretion would be exercised in his favour, given the offer of compromise he made on 16 December 2014. His solicitor then advised:
"We are instructed to make an offer of compromise in full settlement of the Plaintiff's claim, in the sum of $750,000 plus costs as agreed or assessed and inclusive of workers compensation payback.
This offer of compromise is made in accordance with the Uniform Civil Procedure Rules 2005 rule 20.26 and is open for acceptance until 4:00pm on Friday 30 January 2015.
We look forward to hearing from you."
Pel-Air's case was that this offer did not comply with Rule 20.26 which now provides:
"20.26 Making of offer
(1) In any proceedings, any party may, by notice in writing, make an offer to any other party to compromise any claim in the proceedings, either in whole or in part, on specified terms.
(2) An offer under this rule:
(a) must identify:
(i) the claim or part of the claim to which it relates, and
(ii) 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, and
(b) if the offer relates only to part of a claim in the proceedings, must include a statement:
(i) in the case of an offer by the plaintiff, as to whether the balance of the proceedings is to be abandoned or pursued, or
(ii) in the case of an offer by a defendant, as to whether the balance of the proceedings will be defended or conceded, and
(c) must not include an amount for costs and must not be expressed to be inclusive of costs, and
(d) must bear a statement to the effect that the offer is made in accordance with these rules, and
(e) if the offeror has made or been ordered to make an interim payment to the offeree, must state whether or not the offer is in addition to that interim payment, and
(f) must specify the period of time within which the offer is open for acceptance.
(3) An offer under this rule may propose:
(a) a judgment in favour of the defendant:
(i) with no order as to costs, or
(ii) despite subrule (2) (c), with a term of the offer that the defendant will pay to the plaintiff a specified sum in respect of the plaintiff's costs, or
(b) that the costs as agreed or assessed up to the time the offer was made will be paid by the offeror, or
(c) that the costs as agreed or assessed on the ordinary basis or on the indemnity basis will be met out of a specified estate, notional estate or fund identified in the offer.
(4) 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).
(5) The closing date for acceptance of an offer:
(a) in the case of an offer made two months or more before the date set down for commencement of the trial - is to be no less than 28 days after the date on which the offer is made, and
(b) in any other case - is to be such date as is reasonable in the circumstances.
(6), (7) (Repealed)
(8) Unless the notice of offer otherwise provides, an offer providing for the payment of money, or the doing of any other act, is taken to provide for the payment of that money, or the doing of that act, within 28 days after acceptance of the offer.
(9) An offer is taken to have been made without prejudice, unless the notice of offer otherwise provides.
(10) A party may make more than one offer in relation to the same claim.
(11) Unless the court orders otherwise, an offer may not be withdrawn during the period of acceptance for the offer.
(12) A notice of offer that purports to exclude, modify or restrict the operation of rule 42.14 or 42.15 is of no effect for the purposes of this Division."
The problem with the offer was submitted by Pel-Air to be that it did not specify the proposed orders for disposal of the proceedings, necessary so that Rule 20.27(3) can be given effect. It provides:
"20.27 Acceptance of offer
(1) A party may accept an offer by serving written notice of acceptance on the offeror at any time during the period of acceptance for the offer.
(2) An offer may be accepted even if a further offer is made during the period of acceptance for the first offer.
(3) If an offer is accepted in accordance with this rule, any party to the compromise may apply for judgment to be entered accordingly."
In the circumstances, it was argued, Dr Helm's offer was invalid and could not be relied on, even as a Calderbank offer (see Calderbank v Calderbank [1975] 3 WLR 586), as had been concluded in Whitney v Dream Developments Pty Ltd [2013] NSWCA 188; (2013) 84 NSWLR 311. There Bathurst CJ concluded that an offer which had been made on the basis of judgment for the Plaintiff against the First Defendant in a sum specified, with the first defendant to pay the plaintiff's costs as agreed or assessed, did not comply with Rule 20.26. He observed:
"24 Two matters may be noted. First, r 20.26(2) goes further as a matter of language than simply excluding offers expressed to be inclusive of costs. The use of the phrase "exclusive of costs" suggests that what is intended is that a compliant offer will not deal with costs at all.
25 The reason for this is that the cost consequences are dealt with in the relevant subrules of r 42 to which I have referred above. Importantly, these rules not only deal with the cost consequences of non-acceptance of an offer but also the cost consequences when an offer is accepted. Although r 42.13A(2) provides for an order for costs in favour of the plaintiff after the time the offer is accepted, the court has power to make a contrary order. An offer providing for payment of costs removes that residual discretion. It is thus inconsistent with the scheme for the making of offers of compromise laid down by the rules at the relevant time. Whilst it would not be of significance in all cases, there are instances where a plaintiff or defendant may wish to argue that the costs order which generally follows acceptance of an offer, is not the appropriate order. An offer containing a term that the offeree pay the costs of the offeror takes away that right which was part of the scheme of the rules at the time."
Dr Helm's offer was not made inclusive of costs. Whitney was concerned with an earlier form of Rule 20.26 (see Whitney at [22]). Then it relevantly provided:
"(1) In any proceedings, any party may, by notice in writing, make an offer to any other party to compromise any claim in the proceedings, either in whole or in part, on specified terms.
(2) An offer must be exclusive of costs, except where it states that it is a verdict for the defendant and that the parties are to bear their own costs.
(3) A notice of offer:
(a) must bear a statement to the effect that the offer is made in accordance with these rules, and
(b) if the offeror has made or been ordered to make an interim payment to the offeree, must state whether or not the offer is in addition to the payment so made or ordered.
(4) Despite subrule (1), a plaintiff may not make an offer unless the defendant has been given such particulars of the plaintiff's claim, and copies or originals of such documents available to the plaintiff, as are necessary to enable the defendant to fully consider the offer.
(5) If a plaintiff makes an offer, no order may be made in favour of the defendant on the ground that the plaintiff has not supplied particulars or documents, or has not supplied sufficient particulars or documents, unless:
(a) the defendant has informed the plaintiff in writing of that ground within 14 days after receiving the offer, or
(b) the court orders otherwise.
(6) An offer may be expressed to be limited as to the time it is open for acceptance.
(7) The following provisions apply if an offer is limited as to the time it is open for acceptance:
(a) the closing date for acceptance of the offer must not be less than 28 days after the date on which the offer is made, in the case of an offer made 2 months or more before the date set down for commencement of the trial,
(b) the offer must be left open for such time as is reasonable in the circumstances, in the case of an offer made less than 2 months before the date set down for commencement of the trial.
(8) Unless the notice of offer otherwise provides, an offer providing for the payment of money, or the doing of any other act, is taken to provide for the payment of that money, or the doing of that act, within 28 days after acceptance of the offer.
(9) An offer is taken to have been made without prejudice, unless the notice of offer otherwise provides.
(10) A party may make more than one offer in relation to the same claim.
(11) Unless the court orders otherwise, an offer may not be withdrawn during the period of acceptance for the offer.
(12) A notice of offer that purports to exclude, modify or restrict the operation of rule 42.14 or 42.15 is of no effect for the purposes of this Division."
The current form of Rule 20.26 does not require an offer of compromise to be "exclusive of costs" as Rule 20.26(2) formerly provided. It now requires that the offer be made on "on specified terms" (Rule 20.26(1)). In the case of an offer as to disposal of the claim, the offer must specify the proposed orders for disposal of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment (Rule 20.26(2)). Rule 20.26(3) expressly contemplates that such an offer may deal with costs.
Despite the submission advanced for Dr Helm, that the words of the offer made on his behalf, were words "uniformly used in a judgment" and could be used in a judgement disposing of the claim, the proposed orders for disposal of his claim were not specified in the offer made, as the Rule now requires. Accordingly, Rule 20.26 does not apply to the offer.
Contrary to the case advanced for Pel-Air, however, that does not mean that the offer cannot be relied on to support the costs order which Dr Helm seeks. Barrett JA in Whitney did not consider that an offer which did not comply with Rule 20.26 could not be relied on as a Calderbank offer, as Pel-Air submitted. What his Honour said was:
"57 An offer is of the Calderbank type only if the maker of it is shown to intend that the fact of its non-acceptance may be deployed as a basis for seeking a special costs order in the event of that party's ultimate success in the action. Everything therefore depends on the message conveyed by the offer itself and any covering letter or other attendant circumstance.
58 The possibility that an ineffective or deficient offer purportedly made in accordance with the rules might take effect as a Calderbank offer has been recognised in several cases. It is sufficient to refer to Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194 in which Ipp JA (with the concurrence of Mason P and McColl JA) said (at [27]):
"Calderbank offers are simply offers that do not comply with the relevant rules of court relating to the making of offers of compromise: Jones v Bradley (No 2) [[2003] NSWCA 58] (at [5]). Whether an offer, intended to be an offer under the Uniform Civil Procedure Rules but which is ineffective because it does not comply with those Rules, operates as a Calderbank offer, depends upon the intention of the offeror as revealed by the terms of the offer. The offer may disclose an intention that it should take effect only if it complies with the Uniform Civil Procedure Rules. On the other hand, it may disclose a general intent to make an offer, irrespective of whether it takes effect under the Uniform Civil Procedure Rules or no."" (emphasis added)
59 As this passage makes clear, the crucial matter is the manifested intention of the offeror. …"
In Whitney, the plaintiff had not indicated, either expressly or by implication, that, if the offer did not take effect under the Rules, the right to rely on it on the question of costs was reserved. Barrett JA considered that to be an essential ingredient of a Calderbank offer. Bathurst CJ agreed observing:
"43 That is not to say that the conduct of the parties during litigation, including the making of open offers, may not in certain circumstances be relevant to the appropriate manner in which a court's discretion as to costs should be exercised. However, an offer made expressly pursuant to r 20.26 will not of itself take effect as a Calderbank offer unless there is something in it or in the surrounding circumstances to indicate that it is proposed to be relied upon on the question of costs, irrespective of its effectiveness as an offer under r 20.26.
44 In the present case neither the correspondence nor the surrounding circumstances provide any such indication. It follows that the offer cannot take effect as a Calderbank offer."
Old v McInnes and Hodgkinson [2011] NSWCA 410 was a case where a failed offer under the Rules was not accepted to have been an offer made on a Calderbank basis. Beazley JA discussed other authorities in which it has been observed that the settlement of matters must be encouraged by the Court, for reasons both of public policy and private interests. That, of course, is consistent with the overriding purpose specified by s 56 of the Act, which the Court is obliged to seek to give effect whenever it exercises any power given to it by the Act or the Rules, namely, the just, quick and cheap resolution of the real issues in the proceedings. As her Honour discussed sensible offers of settlement must be encouraged, consistent with this obligation, as an incentive to bringing litigation to an end, as soon as possible and discourage unreasonable behaviour by litigants, as discussed in Leichhardt Municipal Council v Green [2004] NSWCA 341 at [14]).
In Old, Beazley JA took the view that "the fact that a failed Rules offer of compromise is not strictly conformable with the usual Calderbank offer, does not preclude the court from considering whether it should exercise its discretion as to costs so as to make some other order than costs follow the event, in accordance with UCPR, r 42.1" (at [34]). Her Honour also concluded "that, in circumstances where the offer of compromise was technically deficient, but nonetheless would have achieved the same result for Mr Old had it been accepted, as would have been achieved under the UCPR, the Court should act pragmatically and justly as between the parties" (at [36]).
Meagher JA (Giles JA agreeing) reached a different conclusion on the facts, which included that while the offer had been made "without prejudice save as to costs" it made no statement that it was to operate as a Calderbank offer (see at [117] - [118]).
The circumstances are similar in this case, in that the offer was made without prejudice save as to the costs, but did not expressly indicate that it was also to operate as a Calderbank offer. They, however, are not the only matters relevant to a determination of what lies here in issue, namely, whether justice demands that there should it be a departure from the usual costs order, in all of the circumstances of this case.
In my view, in this case, given the parties to these proceedings, the nature of Dr Helm's claim, the time that the offer was made and the limited compass of what was in issue, as discussed in the May judgment, it would be to inject an air of unreality into these proceedings, to conclude that the settlement offer which Dr Helm made in December 2014 was not intended by him or understood by Pel-Air to be proposing a settlement on terms which Dr Helm intended to rely on, if his offer was not accepted and he succeeded in achieving a more favourable outcome.
The offer did not technically comply with the requirements of the new Rule 20.26, because as it was drafted by Dr Helm's solicitors, it did not specify the orders which would have to be made to effect the settlement on the terms proposed. It thus does not attract the consequences which rejection of such an offer would result in, under the Rules. The settlement offered was, however, not only clear, it offered a real compromise, accompanied by a reasonable period for acceptance. In its terms the offer was capable of acceptance and admissible under s 131 of the Evidence Act 1995 (NSW), on a costs application.
It was not submitted by Pel-Air that its rejection of the offer had been reasonable. Its only point was that the offer was technically invalid as an offer under Rule 20.26. That depended on the proper construction of the offer and the new provisions of the Rule, matters about which reasonable minds might differ, but there was no suggestion that this was raised with Dr Helm by Pel-Air, or that the offer was otherwise responded to, as his letter invited.
Given what was really lying in issue between the parties, when the offer was made, that was hardly a reasonable response, particularly having in mind the obligations imposed on the parties by s 56 of the Act.
In all of the circumstances rejection of that offer was unreasonable. In the result, justice demands a departure from the usual costs order, on the terms sought by Dr Helm.
[2]
Other matters
Dr Helm also sought orders permitting him to proceed to assess his costs forthwith and to stay enforcement of the costs order, pending determination of Pel-Air's appeal, conditional on it paying 70% of the costs assessed or agreed.
Those orders were not opposed, consistently with the stay agreed as to damages, dealt with in the June judgment. Accordingly, I am satisfied that these orders should be made.
[3]
Order
For these reasons, I order that:
Pel-Air to pay Dr Helm's costs:
(a) assessed on the ordinary basis up to and including 30 January 2015.
(b) assessed on an indemnity basis thereafter.
Dr Helm has leave to proceed to have his costs assessed forthwith, if not agreed.
Enforcement of the costs order is otherwise stayed pending determination of Pel-Air's appeal, conditional upon Pel-Air paying to Dr Helm's solicitor 70% of the costs agreed or assessed, within 21 days of final assessment or agreement.
[4]
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Decision last updated: 01 July 2015