CONNOR v HATGIS

Trial costs. The written submissions agree that the proper order for the costs of the trial is that the respondent (defendant at the trial) pay the appellant's (defendant's) costs of the trial on a party and party basis.

Appeal costs. In the respondent's written submissions it is conceded that prima facie the order sought by the appellant for costs of the appeal is proper. That order would be that the respondent pay the appellant's costs until and including 13 January 1995 on a party and party basis and thereafter on an indemnity basis.

The respondent however then argues that there are special circumstances taking the case out of what has become the ordinary, prima facie position.

After considering the respondent's submission we have come to the conclusion that there is no sufficient reason in this case for departing from the ordinary position.

We therefore favour the orders that the respondent pay the appellant's costs of the appeal on a party and party basis until and including 13 January 1995 and thereafter on an indemnity basis.

Since writing the above we have read Powell JA's reasons for coming to a different conclusion. There is no difference between us on the underlying facts. The difference lies in our opinion that in the circumstances of the present case the purpose of SCR Pt52 R17 is best served by not ordering otherwise than as it prima facie contemplates.

The fact that the judgment ultimately recovered is "only by majority" is, with respect, irrelevant. It is the judgment of the court which ultimately disposes of the rights of the parties against which their cost entitlements are to be measured. It will often be the case that the indemnity cost rule will apply to offers close to the sum eventually recovered. The policy behind the rule is to ensure that parties give full and realistic consideration to offers to compromise litigation. Had the respondent's offer, made in August 1993, been accepted by the appellant a great deal of public and private cost would have been obviated, as events have demonstrated. To refuse the application of the prima facie rule would be to undermine the achievement of the objects of the rule and to send an undesirable signal as to the way in which the rule should be administered.

Powell JA Although I agree with the other members of the Court that the appropriate order be made as to the costs of the trial is that the Respondent pay the Appellant's costs on a party and party basis I do not agree with the Order proposed by their Honours as to the costs of the appeal; on the contrary I consider that this is a case in which, notwithstanding the offer of compromise made by the Appellant on 13th January 1995, the Court should "otherwise order" (SCR 1970 Pt52 R17) and make an Order providing for the Respondent to pay the Appellant's costs of the appeal only on a party and party basis.

10.8.93 Respondent offers to compromise Appellant's claim for $190,000.00 plus costs

20.6.94 Verdict (Studdert J) in favour of Appellant for $141,009.58.

8.7.94 Studdert J orders Respondent to pay Appellant's costs on a party and party basis to 10.8.93 and orders Appellant to pay Respondent's costs on a party and party basis thereafter.

13.1.95 Appellant offers to compromise her claim for $25,000.00 more than verdict (ie $166,009.58) plus party and party costs, plus the waiver by the Respondent of the costs awarded in its favour.

5.9.95 Court of Appeal (by majority) upholds appeal and substitutes a verdict of $194,009.58.

The nett result of this is, on the one hand, that the Appellant received (but only by majority) a verdict only $4,000.00 more than the amount offered by way of compromise over 2 years ago, and over 10 months prior to trial, and, on the other, that there have been incurred the costs of both parties of a 2 day trial at Grafton and of an appeal which, had the Respondent's offer of compromise been accepted, need not have been incurred. These facts lead me to conclude, first, that the Respondent has dislodged what would otherwise have been the Appellant's right to the Order for the costs of the appeal which she has sought, and, second, that the alternative Order which I have proposed is appropriate.

Appellant: B F Murray QC/G W McGrath Respondent: R C Tonner

Appellant: Pollack Greening and Hampshire Respondent: S Mills. Solicitor for GIO Australia Ltd