Farmer v Broadspectrum

Relevant Factual Background

1. The plaintiff claimed damages for personal injury arising out of a fall down a flight of stairs at a staff accommodation block at a Regional Processing Centre at Nauru. The Centre was managed for the Commonwealth of Australia by the first defendant, Broadspectrum (Australia) Pty Ltd ("Broadspectrum").
2. At the time of his fall, the plaintiff was employed by the second defendant, Wilson Security Pty Ltd ("Wilson Security"), as a Safety and Security Consultant.
3. When proceedings were first commenced by the plaintiff on 5 June 2018, the only defendant nominated was Broadspectrum.
4. On 26 March 2021, Broadspectrum filed a Cross-claim against Wilson Security seeking contribution or indemnity against it with respect to any judgment obtained by the plaintiff.
5. On 22 June 2022, pursuant to leave granted by the Court, the plaintiff filed an Amended Statement of Claim so as to join Wilson Security as the second defendant, thereby claiming directly against his employer.
6. Broadspectrum filed its Defence to the Amended Statement of Claim on 15 August 2022, and Wilson Security did so on 4 October 2022.

The First Offer of Compromise

1. On 14 April 2022, which was about two weeks after an unsuccessful mediation, and prior to the plaintiff joining Wilson Security as second defendant, the plaintiff served an Offer of Compromise ("the First Offer") on Broadspectrum. Its operative terms were as follows: "The plaintiff offers to compromise the plaintiff's claim on the following terms: 1. [Broadspectrum] to pay the plaintiff the sum of $700,000 plus costs. 2. The plaintiff's costs are to be paid clear of any previous costs orders made. 3. The above offer is clear of any payments made by Fullerton Health Pty Ltd."
2. The offer was expressed to be made in accordance with r 20.26 of the Uniform Civil Procedure Rules 2005 ("the UCPR") and was expressed to remain open for a period of 28 days.
3. Broadspectrum did not accept that First Offer.

The Second Offer of Compromise

1. The plaintiff made a second Offer of Compromise ("the Second Offer") separately to each defendant on 28 September 2022. The terms of this Second Offer were identical to those of the First Offer (which I have set out above) except that the sum which the plaintiff agreed to accept was $900,000. A minor change to the wording saw the deletion of the words "plus costs" at the end of Term 1.
2. Because a separate Offer was made to each of Broadspectrum and Wilson Security, the Offers were individually addressed to them. Acceptance by one defendant was not dependent upon acceptance by the other defendant. There was no difference in the substance of this Offer as between the defendants. I will deal with the terms of this Second Offer without differentiating between the defendants.
3. Again, the Second Offer was expressed to be made pursuant to r 20.26 of the UCPR but it was only open for acceptance for the period of 7 days.
4. At that time, the proceedings were listed for hearing to commence on 10 October 2022. They in fact commenced on 11 October 2022. The Second Offer expired at 5pm on 4 October 2022.
5. The Second Offer was not accepted by either of Broadspectrum or Wilson Security and, accordingly, it lapsed prior to the start of the hearing of the proceedings.

Evidence on the Motion

1. In addition to the two Offers of Compromise, the plaintiff put before the Court a number of matters upon which he relied to support his submissions, and to which it will be necessary to come, about the terms of each of the two Offers.
2. Insofar as the Offers referred to costs, the evidence filed by the plaintiff informed the Court that there was only one prior costs order which was made on 20 November 2020. The plaintiff was ordered to pay the costs of the first defendant which were thrown away by vacation of the first trial date.
3. The evidence relied upon by the plaintiff did not suggest that that costs order had, at any time, been quantified either by agreement or else through a costs assessment process, nor did the evidence suggest that there had been any identified sum claimed by Broadspectrum in respect of those costs.
4. I note that the costs order was made prior to Wilson Security being joined to the proceedings either as a cross-defendant or as the second defendant. There is no evidence which suggested that Wilson Security knew about that costs order, nor that it had any knowledge or belief about what the amount involved was.
5. The evidence also addressed the identity of, and the role of Fullerton Health Pty Ltd. The plaintiff put before the Court three letters upon which he sought to rely to deal with any suggestion that there was any confusion about the terms of the Offers of Compromise, insofar as they dealt with Fullerton Health.
6. The first of those letters was sent by the solicitors for Fullerton Health (Carter Newell) dated 17 October 2019, to the solicitors for the plaintiff ("the CN letter").
7. Insofar as is relevant, the CN letter contained the following: "We act on behalf of Fullerton Health Corporate Services. As you know, our client manages Wilson Group Securities Accident and Sickness Policy (Accident Policy) and Business Travel Police (Travel Policy) (together, Policies) on behalf of certain Underwriters at Lloyds (Underwriters). … 2. … our client maintains that Underwriters are entitled to be subrogated to your client's rights in relation to the incident the subject of the above proceeding, insofar as Underwriters have indemnified your client the sum of $131,801.13 in weekly benefits and medical expenses under the Policies. 3. Further, our client intends to recover these amounts from your client, from any proceeds realised from the proceeding. 4. The basis of our client's stated entitlement is set out adequately and in some detail in our client's 2 September letter, which we do not intend repeating here. We do however intend responding to what we understand to be the basis on which your client disputes the existence of Underwriter's subrogated entitlement which we respectfully consider misconceived."
8. Later in that rather lengthy letter, Carter Newell identified that the plaintiff had been indemnified by the Underwriters in the following respects: 1. "under the Accident Policy pursuant to Covered Event 45: Temporary Total Disability as a result of bodily injury in respect of weekly income benefits of $55,785.73; 2. under the Travel Policy pursuant to section 2: Medical and Additional Expenses, in respect of medical expenses of $75,026.50."
9. The total of these two amounts is $130,812.23. There is a difference of $988.90 between this total and the sum set out in paragraph two of the CN letter, extracts of which appear in [27] above. There is no explanation in the evidence for these differing amounts.
10. Further in the CN letter, when addressing the asserted obligations of the plaintiff, Carter Newell said: "19. It is a fundamental principle of insurance law than an insured party cannot recover more than the full amount of its loss. It is that principle to which the doctrine of subrogation is directed, to prevent your client from making a double recovery, once from an insurer (Underwriters) and once from a tortfeasor (Broadspectrum (Australia) Pty Ltd) responsible for causing the loss."
11. The CN letter also called upon the plaintiff to act in accordance with the Policies by ensuring that the heads of damage which he claimed included damages in respect of past medical expenses and economic loss, at least by reference to the total of the sums paid by Fullerton Health.
12. The other two letters provided to the Court relating to Fullerton Health were both dated 18 November 2020. They were addressed only to the solicitors for Broadspectrum and were sent by the solicitors for the plaintiff.
13. The first letter asked that the Court Book include the CN letter. It attached an updated Court Book Index. The letter also included this statement: "Should settlement discussions continue, then we believe it appropriate to approach Carter Newell in an endeavour to negotiate a reduced amount for their charge."
14. The second letter enclosed copies of correspondence between the solicitors for the plaintiff and Fullerton Health from August and September 2019 (which apparently preceded the CN letter). This included the letter from Fullerton Health of 2 September 2019 which has been referred to in the CN letter.
15. The second letter also included a 'Policy Document' and a letter from Wilson Security dated 29 August 2019 and repeated the breakup of expenses which had been provided in the CN letter.
16. I note that whilst this Court has been provided with the three letters referred to, none of the attachments or enclosures have been provided as part of the evidence on this Motion. This means that the Court does not have the same documents as the parties had, including the "Policy Document". It is not clear whether the document referred to both of the Policies described in the letter quoted at [27] above. Nor does the Court have the explanation in the Fullerton Health letter of 2 September 2019 which presumably explains Fullerton Health's position on its entitlement to recover monies and from whom.
17. Neither Broadspectrum nor Wilson Security sought to put any evidence before the Court on this Motion.

Relevant Rule

1. Division 4 of Part 20 of the UCPR contains the provisions relevant to the making an Offer of Compromise.
2. In order to fully understand the submissions to which I will shortly come, it is appropriate to set out here the terms of the relevant rules.
3. Rule 20.26 is as follows: "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 … (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) … (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. … (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…"
4. The other rules contained in Division 4 of Part 20 of the UCPR are not relevant to the present proceedings.
5. Part 42 of the UCPR deals with costs. Division 3 provides for the costs consequences where an Offer of Compromise has been made but not accepted.
6. Rule 42.13 provides that Division 3 of Part 42 applies to proceedings in respect of which an Offer of Compromise is made under r 20.26. The effect of this rule is that if the Offer of Compromise does not comply with r 20.26, then r 42.14 of the UCPR has no application or effect.
7. The rule relevant in the circumstances here is r 42.14. It is in the following form: "42.14 Where offer not accepted and judgment no less favourable to plaintiff (1) This rule applies if the offer is made by the plaintiff, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim no less favourable to the plaintiff than the terms of the offer. (2) Unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff's costs in respect of the claim - (a) assessed on the ordinary basis up to the time from which those costs are to be assessed on an indemnity basis under paragraph (b), and (b) assessed on an indemnity basis - … (i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and (ii) …"

Submissions for the Plaintiff

1. The plaintiff submitted that by the time the First Offer was made, the pleadings against Broadspectrum had closed, that Wilson Security had been joined to the proceedings as a cross-defendant, that Wilson Security had been provided with particulars and had filed a Defence to the Cross-claim. This was incorrect so far as Wilson Security was concerned.
2. The plaintiff submitted that the First Offer complied with r 20.26 and that it represented a genuine compromise of the proceedings having regard to the particulars that had been provided and the medical evidence which had been served.
3. With respect to the Second Offer, the plaintiff submitted that by the time it was served, both Broadspectrum and Wilson Security were joined as defendants, had filed Defences and were well seized of all of the issues.
4. The plaintiff submitted that, even though the Second Offer, which was served on 28 September 2022, was open for acceptance for a further six days, it had complied with r 20.26 and that Broadspectrum and Wilson Security had ample time to consider their position and respond to the notice, considering that the trial was listed to commence on 10 October 2022.
5. The plaintiff noted that neither defendant made any request for particulars or copies of documents of the kind contemplated by r 20.26(4) at any time after either of the Offers was served.
6. The plaintiff submitted that the Court should infer that both Broadspectrum and Wilson Security were fully aware of all of the issues presented in the case, including those relating to liability and damages when the Offers were served.
7. Accordingly, the plaintiff submitted that as he had obtained a verdict which was no less favourable than both of the Offers, he was entitled, in accordance with r 42.14(2) of the UCPR, to the orders sought in the Notice of Motion.

Submissions for Broadspectrum

1. In respect of both Offers, Broadspectrum submitted that they did not comply with r 20.26 of the UCPR because "… the amount of the money judgment proposed was uncertain and could not be ascertained by the first defendant". The basis for that submission was addressed to two of the terms of the Offer.
2. The first term was that the Offer was clear of any payments made by Fullerton Health ("the Fullerton Health term"). The second term was with respect to costs, namely "the plaintiff's costs to be paid clear of any previous costs orders made" which was also said to be vague and imprecise ("the Costs term").
3. Accordingly, it was submitted that neither of the Offers complied with r 20.26.
4. Broadspectrum submitted that the Fullerton Health term could not be regarded as being sufficiently clear and precise for a complying offer because it did not specify the amount of the payments made by Fullerton Health, nor did it make clear or precise what the words used in the term actually meant.
5. Broadspectrum submitted that it was unclear from the Fullerton Health term whether the plaintiff, in addition to the monetary payment set out in the Offers, required Broadspectrum to make a repayment to Fullerton Health of the total sums outstanding (whatever that total might be), or else, the plaintiff required Broadspectrum to indemnify him in respect of any liability he may have to repay Fullerton Health in circumstances where the basis for any such obligation of repayment was not apparent.
6. Broadspectrum also submitted that it had not received from the plaintiff the particulars of any amount to be repaid to Fullerton Health, and the basis of any such obligation to make that payment.
7. With respect to the costs term, Broadspectrum submitted that the meaning of the expression "paid clear of any previous costs orders made" was uncertain, and that the value of any previous costs orders had not been quantified.
8. In addition to the lack of clarity and precision leading to non-compliance with r 20.26, Broadspectrum also submitted that, having regard to the uncertainties identified above, the period of seven days for which the Second Offer was said to be open was not a reasonable period.
9. Finally, Broadspectrum submitted that if the Court were to be satisfied that either or both of the Offers were compliant with r 20.26, the Court nevertheless retained a discretion to "otherwise order" derived from r 42.14(2), and that it should do so.
10. In that respect, in addition to other matters, Broadspectrum submitted that, at the time the Second Offer was served, the fact that the Offers were separate meant that neither defendant could accept the Offer on terms that would conclude their involvement with a full and final release from liability. That was because of the existence of the Cross-claim between Broadspectrum and Wilson Security and because the suit was against each of the defendants separately.
11. As well, Broadspectrum submitted that it had ultimately succeeded in the claim with respect to a discrete legal issue in the proceedings, namely, the effect of the law of Nauru on the assessment of damages and, in particular, its effect on the recoverability of damages for gratuitous domestic assistance. Broadspectrum pointed to the fact that this was a significant and measurable part of plaintiff's claim, which would justify the Court exercising its discretion to "otherwise order".
12. No separate submissions were received from Wilson Security.

Plaintiff's Submissions in Reply

1. The plaintiff's submissions in reply, in addition to including an affidavit providing the email correspondence to which earlier reference has been made, and in particular the CN letter of 17 October 2019, submitted that Broadspectrum did know the amount of all payments made by Fullerton Health, and that it knew of the plaintiff's obligation to repay those monies to Fullerton Health as was clearly stated in the CN letter.
2. With respect to the phrasing of the Fullerton Health term, the plaintiff submitted that the Offers had the clear effect of excluding the total sum of $131,801.13 (being the total sum owing to Fullerton Health as set out in the CN letter) from the amount of the monetary offer. To the extent that Broadspectrum argued that it had not received the basis of any obligation which it had to make such a payment, or any obligation at all for those monies to be repaid, the plaintiff's solicitors pointed to the correspondence which I have earlier summarised.
3. Insofar as Broadspectrum sought to argue that the costs term was unclear, with the consequence that neither Offer conformed with r 20.26, the plaintiff submitted that the words were clear and precise and that what the costs term meant was that the Costs offer was "exclusive" of the previous costs order. The plaintiff submitted that as there was only one previous costs order which involved Broadspectrum, it was in a position to know and understand the value of that previous costs order.
4. Insofar as Broadspectrum submitted that seven days was not a reasonable period, the plaintiff pointed out that the matter had been previously listed for a hearing which had been adjourned, and that a previous offer on similar (although not identical) terms had been made and, further, that having regard to the date at which the Second Offer was made, it was in very close proximity to the date fixed for hearing, which meant that Broadspectrum was capable of responding to it quickly.

Discernment

1. I observe that the plaintiff's submissions seeking the indemnity costs orders are based entirely upon the fact that the plaintiff served both Offers of Compromise, each of which complied with r 20.26 of the UCPR and neither of which were accepted, and that the result he obtained was more favourable than either of the Offers, with the consequence that pursuant to r 42.4, he was entitled to indemnity costs.
2. The plaintiff makes no submission that such orders operated as Calderbank offers: see Calderbank v Calderbank [1975] 3 WLR 586.
3. No doubt this approach was adopted because it reflected the authority of Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311; [2013] NSWCA 188, where at [43], Bathurst CJ (with whom Beazley P, McColl, Barrett and Emmert JJA agreed) said: "[43] … 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."
4. There is nothing in the material put before me by way of correspondence or surrounding circumstances which would provide any indication at all that the either of the Offers could, if found to be non-compliant with r 20.26, take effect as a Calderbank offer.
5. It is necessary therefore to determine whether each of the First and Second Offers were valid in the sense that they complied with r 20.26.
6. Because the making of an Offer of Compromise under r 20.26 activates the provisions in Division 3 of Part 42 of the UCPR, there is a need for the Offer to strictly comply with r 20.26 - that is because the ordinary rules are that costs are paid on a party/party basis unless some other order ought be made. The effect of the costs rules is that once the r 20.26 regime is invoked, a party has a right to costs on a different basis depending upon the fulfilment of the relevant conditions, unless the Court otherwise orders.
7. Neither of the Offers included any amount for costs and were not expressed to be "inclusive of costs". To that extent, the Offers did not contradict the provisions of r 20.26(2)(c).
8. However, the costs term which required the payment of costs to be made "clear of any previous costs orders" was, in my view, quite unclear.
9. There are a number of reasons why I have come to that conclusion. First, the term did not specifically identify the costs order which had been previously made. There is no reason to think that Wilson Security would have known of the existence of any previous costs order because it was not a party when that previous costs order was made. Accordingly, insofar as Wilson Security is concerned, the term was completely opaque.
10. Secondly, it is not at all clear what was meant by the wording of the costs term. Did it mean that the plaintiff's costs of the proceeding generally to which he would be entitled if an offer complied with r 20.26 was made, and the order apparently in favour of Broadspectrum, were to be regarded as having mutuality of character such that a set-off was to occur between the two costs amounts when ascertained with any surplus of costs owing to the plaintiff to be paid to him. Or, alternatively, did it mean that the plaintiff's costs of the proceedings were to be paid in full, leaving the previous costs order to be collected and enforced by Broadspectrum if it chose so to do. Or, perhaps a third interpretation is that, in effect, what the plaintiff was seeking by the costs term was that the earlier costs order would be vacated so as to become non-existent, and for the plaintiff to be entitled to his costs of the whole proceedings in full including for such costs as had been incurred for work done for him which he would not otherwise be entitled to because of the adverse costs order.
11. Each of these possibilities is open on the wording of the costs term. The Offers did not with any precision, describe what it was that the plaintiff was seeking with respect to costs. In that respect, in my view, the Offers did not comply with r 20.26.
12. Insofar as the Fullerton Health term was concerned, assuming that each of Broadspectrum and Wilson Security, at the time each Offer was made, were aware of the sums which had been paid by Fullerton Health (something which has not been proved by the evidence) the term in both Offers is still vague and imprecise. Again, there are a number of reasons why I have come to that conclusion.
13. First, the figures contained in the CN letter could only have been current as at the date of that letter. There is no material before me to indicate that at the time either of the Offers had been made, either of Broadspectrum or Wilson Security were aware that that figure remained current, or else had perhaps increased because the plaintiff had received further treatment and the sum for medical expenses had increased. The evidence on this Motion does not, therefore, enable a conclusion that as at the date of either of the Offers, Broadspectrum and Wilson Security respectively knew precisely what that sum was. As well, such figures as were available in the correspondence did not reconcile.
14. Secondly, the way in which the term was expressed does not make clear what is expected of each of Broadspectrum and Wilson Security. One possibility is that the Broadspectrum and Wilson Security are expected to exclude the Fullerton Health payments from the sum to be paid to the plaintiff under the Offers, but to undertake an obligation to repay Fullerton Health those monies themselves. The second possibility is that the Offers do not include the Fullerton Health payments but that the plaintiff would deal with any obligation to repay Fullerton Health, having put himself in a position where he could negotiate with Fullerton Health on the basis that his settlement did not include any of the payments made by Fullerton Health. The third possibility is that Broadspectrum and Wilson Security, by accepting either of the Offers, would carry a risk that Fullerton Health may make a demand upon them to pay by way of reimbursement the payments made by Fullerton Health to the plaintiff.
15. As well, the Fullerton Health term simply do not deal with any of those possibilities and for that reason is unclear and imprecise. As the Court cannot determine what any obligation was, I conclude that the Fullerton Health term was unclear.
16. The material before this Court on this Motion does not enable a determination to be made as to whether or not the plaintiff, or the employer, Wilson Security, or a tortfeasor such as Broadspectrum, had any obligation to repay Fullerton Health, and whether Fullerton Health itself had any entitlement to a refund and, if so, in what circumstances.
17. For that additional reason it cannot be said that with respect to the Fullerton Health term, either of the Offers complied with r 20.26.
18. On a more fundamental level, neither of the Offers identified "… the proposed orders for the disposal of the claim …" as required by r 20.26(a)(ii) of the UCPR. This was a claim for damages at common law arising out of a personal injury. Assuming the plaintiff obtained an award of damages, the appropriate order is for a judgment to be entered for the plaintiff in the sum determined against the defendant held liable. If, as discussed earlier, when a costs order had been made, but the plaintiff's offer was that he not have to pay the costs which had been ordered, then a further order of the Court was required to vacate the first costs order. That is because the first costs order stands until set aside or vacated. The costs term did not suggest any costs order, but rather related to the money amount which was sought.
19. The words used in each of the two Offers read as though they are an informal offer from the one party to another of the kind ordinarily seen in without prejudice correspondence in circumstances where the parties will, if the offer is accepted, prepare and agree upon the actual Terms of Settlement and consent orders which the Court is asked to make. An Offer of Compromise requires the formality of identification of the proposed orders (r 20.26(a)(ii) of the UCPR) because once an offer is accepted "… any party to the compromise may apply for judgment to be entered accordingly": see r 20.27(3) of the UCPR. Such application does not require notice to be given to the other party, nor does it require the other party's consent. For this reason, at least, clarity of expression and formality of the orders offered, are essential. Neither of the First or Second Offer had either the necessary clarity or essential formality, required for compliance with r 20.26 of the UCPR.
20. Since neither the First or Second Offers complied with r 20.26 of the UCPR, and that was the only basis upon which the plaintiff sought an order different from that made at the conclusion of the judgment, in my view it is sufficient simply to dismiss the Motion.

Orders

1. I make the following order: 1. Notice of Motion filed by the plaintiff on 7 November 2023 is dismissed. 2. Order the plaintiff to pay the defendants' costs of the Motion.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 February 2024