Colak v Ghalloub

The effect of the offer of compromise

1. The offer of compromise is for $750 more than the amount which was assessed by way of damages in the alternative to the finding on liability. The defendant concedes that, in accordance with r 42.15A UCPR, the defendant is entitled to an order against the plaintiff for his costs in respect to the claim assessed on an ordinary basis up to the day following the day after which the offer was made, namely 26 January 2017, and on an indemnity basis thereafter.

The defendant's application under ss 60 and 98 Civil Procedure Act 2005 (NSW) and r 42.35 Uniform Civil Procedure Rules 2005 (NSW)

1. Sections 60 and 98 Civil Procedure Act 2005 (NSW) provide: "60 Proportionality of costs In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute. 98 Courts powers as to costs (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. (2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court. (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount. (5) The powers of the court under this section apply in relation to a married woman, whether as party, tutor, relator or otherwise, and this section has effect in addition to, and despite anything in, the Married Persons (Equality of Status) Act 1996 . (6) In this section, "costs" include: (a) the costs of the administration of any estate or trust, and (b) in the case of an appeal to the court, the costs of the proceedings giving rise to the appeal, and (c) in the case of proceedings transferred or removed into the court, the costs of the proceedings before they were transferred or removed."
2. Rule 42.35 Uniform Civil Procedure Rules 2005 (NSW) provides: "42.35 Costs order not to be made in proceedings in District Court unless Court satisfied proceedings in appropriate court (1) This rule applies if: (a) in proceedings in the District Court, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $40,000, and (b) the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants. (2) An order for costs may be made, but will not ordinarily be made, unless the District Court is satisfied the commencement and continuation of the proceedings in the District Court, rather than the Local Court, was warranted."
3. Mr Renshaw submits that the amount awarded is little more than nominal damages, which once were called a "mere peg on which to hang costs" (State of New South Wales v Stevens (2012) 82 NSWLR 106 at [22], citing Beaumont v Greathead (1846) 2 CB 494 at 499). While nominal damages are no longer so regarded (as McColl JA goes on to note), that is because principles set out in s 60 identify issues of proportionality in that the sum recovered should bear relation to the costs claimed as incurred by the successful party. It is now more readily accepted that an award of nominal damages should not entitle a plaintiff to costs, because they are vindicatory but not compensatory (per McColl JA at [26]).
4. In the present case, the proceedings took five days of hearing time. Admittedly, this was not entirely the fault of the parties; the proceedings had to be adjourned on 10 February 2017 because of a court lockdown for security reasons. However, the plaintiff's application to reopen the case to lead further evidence did add significantly to the time allocated for the hearing.
5. Mr Turnbull SC submits that the amount the court would have awarded is not the relevant issue for the purpose of r 42.35 UCPR, in that if the plaintiff (as is the case here) seeks an amount in excess of $40,000, that is a sufficient rationale to commence the proceedings in this court.
6. That is not, however, how r 42.35 UCPR is framed. The emphasis in the rule is upon the result, not the amount sought. It would defeat the purpose of the rule if a party could simply claim more than $40,000 and thereby escape the consequences of commencing in a higher court than is necessary.
7. Mr Turnbull SC also submitted that this court routinely hears nearly all motor vehicle accidents and that the commencement of proceedings for damages for motor vehicle accident in this court should be regarded as a right for any person suffering an injury requiring the assessment of damages under the Motor Accidents Compensation Act 1999 (NSW).
8. There are many proceedings commenced in this court for damages which result in very small awards but where the complexity of the facts warrants the bringing of the proceedings in this court. This includes applications for approvals of settlements for persons who are under a disability. The real issue is the complexity of the case, rather than the fact that it is a motor vehicle accident requiring consideration under the relevant legislation.
9. There were no aspects of these proceedings which raised any issue of difficulty. It was a straightforward account of evidence on both sides, which included evidence in the form of a statement from the defendant, who was deceased. If conducted efficiently in the Local Court, the case would have taken little more than a day, and would have been ideally suited to its jurisdiction by reason of the narrowness of the issues and the simplicity of the evidentiary issues.
10. Accordingly, as an alternative finding, I am not satisfied that this was a case which it was proper to bring in the District Court and in those circumstances, had the plaintiff been successful on liability, I would not have awarded costs.

Orders 1. The plaintiff is to pay the defendant's costs on the ordinary basis up until 25 January 2017 and thereafter on an indemnity basis.

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