On 5 August 2015 this Court made the following orders (see Dowedeit v Nominal Defendant [2015] NSWDC 182):
1. Judgment in favour of the plaintiff in the sum of $174,550.
2. Defendant to pay the plaintiff's costs.
3. Stay order (2) for two weeks and until further order of the Court if further submissions on costs are received within that time.
The plaintiff, Ronald Dowedeit, has made further submissions and has thereby availed himself of the stay in order (3). He seeks to rely on an offer of compromise on an application for indemnity costs. In the event that Mr Dowedeit's argument is successful, he would become entitled to indemnity costs from the day following the date of the offer, namely 17 June 2015 (see r 42.14(2)(b) of the Uniform Civil Procedure Rules 2005 ("UCPR").
The offer proposes as one of its terms that there be judgment for the plaintiff for the sum of $150,000. It is not in contest that the judgment ordered by this Court on 5 August 2015 is no less favourable than that sum and thus, "[u]nless the court orders otherwise" Mr Dowedeit is entitled to an indemnity costs order from the date identified.
The Nominal Defendant raises two arguments against the indemnity costs order. First, that it was not open for a reasonable time; and secondly, that Mr Dowedeit relied on and succeeded on the blameless accident provisions which were first raised at the time of the service of the offer of compromise and were not part of the pleaded case until the first day of the hearing, Monday, 22 June 2015 when there was a grant of leave to amend the pleadings. This was three days after the time when the offer of compromise was no longer open for acceptance.
As to the first point of whether the offer was open for a reasonable time, r 20.26(5) provides:
"(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."
The offer was made on 16 June 2015 at 4.38pm. It was open for acceptance for a little short of three days until 4pm on Friday, 19 June 2015, the last business day before the trial date on the following Monday.
It seems to me that the offer was open for a reasonable time, and the closing date was reasonable. The policy and consequences of provisions such as r 20.26 is to encourage parties to explore settlement of the proceedings even if the hearing date is imminent. So an offer of compromise can be made shortly before a trial, such as on the Tuesday, six days before the hearing is to start as occurred here. It is both reasonable and practicable to provide for acceptance prior to the commencement of the trial such as by 4pm on the last business day before the trial date.
In my view, three days was a sufficient period. The proximity of the offer to the trial date means that it was made at a time when the parties should have been well aware of the strengths and weaknesses of their respective cases and they would need less time to assess offers.
The rules provide that ordinarily, if an offer is accepted, the plaintiff would be entitled to an order for costs "up to the time when the offer was made" (see r 42.13A(2)). This indicates that costs incurred during the period the offer was open would not ordinarily be recoverable if the offer was accepted. Thus, if this particular offer was accepted on the Friday, costs incurred on the Wednesday, the Thursday and the Friday would not fall within the terms of r 42.13A. As a matter of fairness, a party should be able to make an offer of compromise open for a limited period shortly prior to the time of commencement of the hearing, given that it would be expected that costs would be incurred in the days immediately prior to the hearing which would likely be unrecoverable if the offer was accepted. This fortifies me in my view that the closing date of the offer was reasonable.
Mr Dowedeit raised two other matters in favour of the reasonableness of the offer. First, in the covering letter to the offer of compromise the following passage appears, "If you require further time to consider the offer please let us know." This elicited no response from the Nominal Defendant. In Elite Protective Personnel Pty Ltd and Anor v Salmon [2007] NSWCA 322 at [149], Basten JA stated that an absence of a request for further time or clarification is relevant to the construction or reasonableness of the time of an offer (see also County Securities Pty Limited v Challenger Group Holdings Pty Limited (No 2) [2008] NSWCA 273 at [1], [2], [35]). There was no evidence to indicate that the Nominal Defendant sought or required any further time or had difficulties in dealing with the offer. To the contrary, and this is the second point, the Nominal Defendant made its own offer of compromise requiring acceptance before the commencement of the trial. This indicates that the Nominal Defendant regarded the time before trial as sufficient to make an offer and that it was reasonable to require an acceptance before the trial.
For all those reasons and especially given the imminence of the trial date, I conclude that the offer was open for a reasonable time.
The second basis of the Nominal Defendant's resistance to the application is that Mr Dowedeit succeeded under the blameless accident provisions and those provisions were not a part of the statement of claim at the time of the offer of compromise.
The blameless accident provisions were first raised by Mr Dowedeit on 16 June 2015, when he served a proposed amended statement of claim with the offer of compromise. Leave was granted to Mr Dowedeit to file that amended statement of claim on the first day of the hearing, Monday, 22 June 2015. The Nominal Defendant conceded that it did not press any opposition to the filing of that amended statement of claim, no prejudice was asserted, and no order about costs thrown away was made at the time. Given the restraints on disclosure on an offer of compromise (see UCPR, r 20.30), prejudice arising from the existence of the offer may have been difficult to establish at the time. Nevertheless, the late amendment did operate to prejudice the Nominal Defendant by enlivening a valid cause of action that increased the value of the expired offer of compromise.
In the judgment of 5 August 2015, the blameless accident provisions were the basis for the successful claim by Mr Dowedeit. This was the primary cause of action advanced. The residue of the claim based on negligence was unsuccessful. There was little, if any, evidence to support a negligence case. As Mr Dowedeit carried the burden of establishing an entitlement to damages, the absence of any real evidence on negligence in his favour when that was the only pleaded case at the time of the offer of compromise points against the value of his claim at that time.
Mr Dowedeit readily conceded that it was his oversight in not making a claim under the blameless accident provisions in the original statement of claim. In my view, the circumstance that Mr Dowedeit has failed on the negligence case, the circumstance that the negligence case was the only case available on the pleadings until the first day of trial and the related circumstance that at the time of the expiry of the offer of compromise a case based on the blameless accident provisions had only been foreshadowed but was still subject to the uncertainty of whether the Court would grant leave, are all are matters that bear upon whether an indemnity costs order should be granted.
In addition, it might be supposed that in dealing with a negligence case the Nominal Defendant incurred costs on an issue on which it was ultimately successful. In the absence of an offer of compromise, the fact that a party has lost on one issue but succeeded on another might be a reason why a limited costs order should be made or that there should be some proportion of costs which the successful party does not recover. I do not need to deal with that matter here because no application is made for a reduction in the costs order already made by the Court. However, it seems to me that the same considerations apply: failure on a substantial issue in the case which consumed some time and attention is a relevant matter in determining the appropriate costs order.
Both the loss by Mr Dowedeit on the negligence case and the circumstance that it was the only case available to Mr Dowedeit until the first day of the trial (which was after the offer of compromise had expired) persuade me that notwithstanding the offer of compromise, no order for indemnity costs should be made.
In my view, these matters amount to special circumstances (if that is necessary) so as to enliven the discretion not to apply the ordinary rule in r 42.14(2)(b) of the UCPR.
As is apparent, there is some tension between the usual entitlement of Mr Dowedeit to indemnity costs under the rules and the usual rule that the defendant should not be prejudiced by the plaintiff's late amendment. I think the interests of justice are best served by maintaining the previous costs order I have already made.
I refuse Mr Dowedeit's application and confirm order (2) made on 5 August 2015.
[2]
APPLICATION FOR A STAY
The second matter before me is an application by the Nominal Defendant to stay the judgment of 5 August 2015. The application is made under s 156 of the District Court Act 1973 which provides for the Court to stay proceedings on terms. Circumstances of when a court might stay proceedings pending an appeal are considered in Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685. The applicant for a stay bears the onus of establishing that there is a proper basis for a stay and the filing of an appeal alone does not discharge that onus.
Section 128 of the District Court Act 1973 provides:
"128 Stay of proceedings on appeal to Supreme Court
(1) This section applies if, after judgment in an action, the Court orders that proceedings be stayed during the period within which an appeal may be brought.
(2) If during that period:
(a) an appeal is brought in respect of proceedings that have been stayed, and
(b) security is given to the satisfaction of the registrar for the amount of the judgment debt (if any) payable by the appellant, including an amount assessed by the registrar in respect of any costs forming part of the judgment debt,
the stay of proceedings is to continue until the appeal is disposed of or until the Court or the Supreme Court otherwise orders.
(3) An appeal does not operate to stay proceedings in any other way.
(4) This section does not affect the operation of section 156 (1)."
A stay under s 156 of the District Court Act 1973 embraces stays in circumstances other than stays pending an appeal, although the discretion under that provision would presumably extend to that circumstance. On the one hand, s 128(2) seems to contemplate that if the Court ordered a stay that there is a requirement for security in order for the stay to continue after the filing of the appeal. On the other hand, because s 156 is not affected by s 128, the Court retains a power to grant a stay pending an appeal on terms, including a stay on terms other than the provision of security.
The Nominal Defendant in this case seeks that a stay be granted unconditionally, although I infer that the Nominal Defendant would not object to the stay being granted on terms that an appeal is filed within a limited time and that the appeal be prosecuted with all reasonable expedition.
Mr Dowedeit, on the other hand, seeks that half of the judgment sum be paid pending disposition of the appeal.
Bearing in mind that:
1. the plaintiff is prima facie entitled to the fruits of his victory;
2. the judgment reveals at [43] that "the decision is something close to the line" and thus, any appeal might not be unexpected and might have a reasonable basis; and
3. the circumstance that liability appears to lie at the heart of any appeal and, thus, were the Nominal Defendant to be successful on any appeal it is likely that any moneys paid would have to be repaid,
I am prepared to grant a stay of proceedings in accordance with s 156 on terms, bearing in mind the terms that might commonly apply in respect of a stay of proceedings on appeal as considered by s 128.
The terms of the stay I propose are that I grant a stay of proceedings on condition:
1. that within 28 days the defendant pays the judgment sum, including any post-judgment interest, to the plaintiff's solicitor on the plaintiff's solicitor's undertaking:
1. to hold all but $50,000 of that sum in an interest bearing deposit until disposal of any appeal filed by 5pm on 5 November 2015, or if no appeal is filed by that date, until 5pm on 5 November 2015; and
2. to forthwith repay that sum deposited, including any interest, to the defendant's solicitor in the event that the Court of Appeal gives judgment for the defendant,
and
1. that any appeal by the defendant be prosecuted with all reasonable expedition.
[3]
COSTS
In respect of today, the Nominal Defendant has successfully resisted an application for indemnity costs.
On the other hand, the Nominal Defendant has not obtained an unconditional stay as it sought: the effect of my orders is that either the Nominal Defendant pays the judgment sum to Mr Dowedeit's solicitor, subject to his undertaking, or the Nominal Defendant is without the benefit of a stay. That indicates that Mr Dowedeit has had more success in relation to the stay than the Nominal Defendant even if Mr Dowedeit sought access to a larger sum in the event a stay was granted.
In those circumstances, I am not minded to grant the Nominal Defendant the costs of today. The alternative proffered by the Nominal Defendant, which seems (unsurprisingly) to be accepted by Mr Dowedeit, is that the costs of today be costs of the proceedings. Whilst such an order may be unnecessary, for clarity I will make the order that the costs of the application of today be part of the costs of the proceedings.
[4]
ORDERS
Accordingly, the orders of the Court are:
1. Refuse the plaintiff's application and confirm order (2) made on 5 August 2015.
2. Grant a stay on the following conditions:
1. That within 28 days the defendant pay the judgment sum including any post-judgment interest to the plaintiff's solicitor on the plaintiff's solicitor's undertaking:
1. (i) To hold all but $50,000 of that sum in an interest bearing deposit until disposal of an appeal filed by 5pm on 5 November 2015, or if no appeal is filed by that date, until 5pm on 5 November 2015.
2. (ii) To forthwith repay that sum deposited including any interest to the defendant's solicitor in the event that the Court of Appeal gives judgment for the defendant.
1. Any appeal by the defendant be prosecuted with all reasonable expedition.
1. The costs of the applications of today be the costs of the proceedings.
[5]
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Decision last updated: 16 August 2016