14 But Ettingshausen does not establish that the Court of Appeal is bound to apply provisions such as Pt 39A r25(6) of the District Court Rules to the costs of the appeal itself. The leading case is Fotheringham v Fotheringham (No 2) (1999) 46 NSWLR 194. It establishes that the rejection of an offer of compromise made at first instance is a relevant factor to consider on the question of costs in an appeal; but the Court of Appeal retains a discretion as to costs. That discretion is guided by Pt 52A r11 of the Supreme Court Rules which provides:
If the Court makes any order as to costs, the Court shall, subject to this Part, order that costs follow the event, except where it appears to the Court that some other order should be made as to the whole or any part of the costs.
15 In the present case the pre-trial offer of compromise is relevant, but so too is the absence of any renewal or variation of that offer during the pendency of the proceedings in this Court. " (emphasis added)
12 In the earlier decision of the Court in South Sydney Council v. Morris (No. 3) [2001] NSWCA 200, Heydon JA, which whom Meagher and Fitzgerald JJA agreed, stated that the favourable consequences of making an offer of compromise under the DCR (see Pt 19A and Pt 39A r.25(4)), do not apply in terms to the costs of the appeal and that in this Court costs are in the Court's discretion pursuant to s. 76(1)(a) of the Supreme Court Act 1970 (NSW). Under s.76(1)(c), the Court may order that costs be assessed on an indemnity basis.
13 The same principles apply in respect of an offer of compromise made by a defendant, so that the respondent's offer of compromise does not, for the purposes of the appeal, have the same effect as at first instance. Accordingly, an order for indemnity costs of an appeal was only made by the Court in the exercise of its inherent jurisdiction.
14 In Morris, Heydon JA pointed out that there was no relevant delinquency on the part of the unsuccessful appellant party: see Oshlack v. Richmond River Council (1998) 193 CLR 72 at 89, and that the only other relevant possibility for the exercise of the court's inherent jurisdiction to order indemnity costs rested upon the failure to better a pre-trial offer either made either before or during the trial, or on the appeal. His Honour considered that although the trial judge's award in favour of the respondent/plaintiff was much greater than the offer of compromise she had made under the DCR, there were aspects of the trial judge's reasoning that were not unreasonable for the appellant/defendant to test. In that circumstance, the Court dismissed the respondent/plaintiff's application for indemnity costs in relation to the appeal.
15 In this case, the respondent (who was the defendant at first instance) made an offer of compromise in accordance with the DCR. The consequence, provided for in Pt 39A r.25(6) of the DCR in that circumstance, and subject to the Court making some different order "in an exceptional case and for the avoidance of substantial injustice", is that the defendant was entitled to an order for costs of the trial from the date of the offer assessed on a party/party basis. That is not the issue. What is in issue is the costs of the appeal.
16 The respondent did not make any subsequent offer of compromise and thus relies upon the offer made at trial. On the principles which we have discussed, that offer is only one factor relevant to the Court's exercise of its discretion under s.76 of the Supreme Court Act. As the Court pointed out in Moore v. Woodforth (No. 2) at [15], it is also relevant that there is no renewal or variation of the offer of compromise during the pendency of the appeal.
17 In this case, there is the further circumstance that the appellant was successful, in a substantial amount, in respect of the awards for economic loss. In Moore v. Woodforth (No. 2), the Court commented at [16] that the defendant's generous pre-trial offer of settlement was not renewed and that the appeal had be fought on the basis that the verdict at trial was the starting point of the issues that were joined thereafter. A like comment can be made in respect of this case. In Moore v. Woodforth (No. 2) the Court also pointed out at [16] that the appellant had established error "in a not insubstantial matter and was therefore successful in the appeal". The same position applies here.
18 In the circumstances, we do not consider that the respondent has established a basis for the Court to exercise its discretion so as to order the appellant to pay its costs of the appeal on an indemnity basis.
19 The question does arise, however, as to whether the appellant should have all of his costs, given that he was not successful on all issues. The issues upon which the appellant was unsuccessful, namely, contributory negligence and non-economic loss were themselves substantial issues. However, the evidence that the Court was required to consider in relation to non-economic loss also needed to be considered in relation to economic loss, as it was necessary for the Court to understand the extent of the appellant's injury and on-going disabilities to determine whether the trial judge made any appealable error in respect of either award. Accordingly, we would not deprive the appellant of the costs referable to the preparation and argument in respect of that aspect of non-economic loss.
20 The issue of contributory negligence stands in a different category. It was the only issue raised on liability and required the Court to examine in some detail the system of work and the precise manner in which the injury occurred. As the appellant was unsuccessful on that issue, we consider that he should be deprived of a portion of the costs of the appeal. An assessment of such proportion is always somewhat arbitrary. However, in the Court's opinion, a fair assessment is that the contributory negligence issue accounted for about 20% of the time taken to argue the appeal and we consider that the same percentage would be a reasonable assessment of the preparation time required for that aspect of the argument. If the 20% was applied fully, it would mean that the respondent should pay 80% of the appellant's costs and the appellant should pay 20% of the respondent's costs (or alternatively the respondent should pay 60% of the appellant's costs, assuming approximate equality of costs). However, where the appeal was concluded within a day, 20% of the costs does not necessarily readily translate into 20% of the costs of the appeal. Accordingly, we have reached the conclusion that the appropriate order for costs of the appeal in this matter is that the respondent pay 80% of the appellant's costs of the appeal, assessed on a party-party basis. The respondent should have a certificate under the Suitors Fund Act 1951 (NSW), if so entitled.
21 The parties are directed to bring in Short Minutes of Order in accordance with these reasons and those of the Court given on 10 December 2004.
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