On 27 October 2020, I delivered my primary judgment in this matter ordering:
1. There will be a verdict and judgment in favour of the Plaintiff in an amount to be calculated.
2. I defer entry of final orders to enable the parties to confer, check my calculations and advise of any outstanding figures, with a view to presenting proposed consent orders that accord with this judgment and any agreement as to costs within 14 days.
3. Parties have liberty to lodge with my Associate in Chambers any agreed Consent Orders.
4. In the event of any disagreement, the parties are to:
1. Approach my Associate with a view to relist the matter for further argument as to proposed final orders within 14 days.
2. Submit to my Associate within the period referred to in (4)(a) above their proposed orders, and any documents and written submissions proposed to be relied upon. [1]
Having been informed of the inability of the parties to agree, pursuant to order (4), Chamber Orders were made by consent on 10 November 2020 for the further progress of the matter. In accordance with the timetable set, the Defendant submitted proposed final orders on 17 November 2020 and the Plaintiff on 20 November 2020. The matter was listed for oral argument on 27 November 2020.
Both parties accept that although the Court should enter a final verdict and judgment for the Plaintiff in the sum of $617,568.89, the Defendant should be effectively credited the sum of $26,292.48 for past payments of workers' compensation benefits and medical expenses.
An area of disagreement arises in respect of costs.
The Plaintiff has sought payment of his costs as agreed or assessed on a party/party basis until 15 May 2020 and on an indemnity basis thereafter. The Defendant has proposed an order that it pay all costs as agreed or assessed on a party/party basis.
It is not in issue that the Plaintiff's solicitors served an offer of compromise (the Offer) on the Defendant's solicitor in accordance with Uniform Civil Procedure Rules 2005 (NSW) (UCPR) 20.26 on 15 May 2020. That Offer proposed compromise of the entire proceedings on terms that relevantly stated:
1. Judgment and verdict for the Plaintiff in the sum of $600,000 plus costs.
2. This offer of compromise is open for acceptance for 14 days from the date of this offer.
Ganassin v Ulan Coal Mines Limited [2020] NSWDC 840 | Case summary | Zoe
The Defendant did not respond to the offer.
The Plaintiff contends that the judgment it received was $17,568.89 in excess of the amount of its offer, or in percentage terms, approximately 3%. As such it contends that UCPR 42.14 applies and he is entitled to the costs order he proposes.
The Defendant argued that it's proposed costs order should follow as:-
1. UCPR 42.14 was not engaged as the Plaintiff did not obtain a judgment no less favourable that the Offer once the statutory deductions are taken into account
2. The Plaintiff's offer was not a genuine compromise
3. The time allowed for the acceptance of the Offer was not reasonable
4. The Plaintiff's case was evolving during the life of the Offer and the Defendant did not act unreasonably in rejecting the offer.
I will consider each argument in turn.
[2]
Was the Judgment No Less Favourable?
The Offer clearly proposed verdict and judgment in the sum earlier stated together with costs. During oral submissions, Senior Counsel for the Defendant, reflecting on the Plaintiff's submissions, abandoned the argument raised in written submissions that the judgment was not no less favourable within the terms of UCPR 42.14(1). Accordingly this matter needs to be considered no further.
[3]
Was there a Genuine Compromise?
The Defendant contended that there was no compromise of the necessary kind reflected in the Plaintiff's offer. It argued that leaving aside the issue of primary liability, the other issues that would have reduced the Plaintiff's liability were decided adversely to the Defendant, specifically, contributory negligence, the contention that the Plaintiff would have been unlikely to continue in its employ and the need for a greater discount for vicissitudes. It pointed out the Offer did not significantly exceed the full value of the case as determined by the Court and a grant of indemnity costs must depend on an implied finding that the Offer concerned did indeed reflect such a level of compromise.
The Plaintiff argued that the Offer was reasonable in the context of strong case on liability and compelling evidence of a substantial psychiatric injury and consequential loss.
The Plaintiff drew attention to its schedule of damages which came to $951,731.24 and claimed the full jurisdictional limit of the District Court of $750,000.
Moreover the Plaintiff pointed out that the sum of $17,568.89 to which the Plaintiff is entitled in excess of the Offer is not a trivial sum for a Plaintiff who was unemployed at the time. It was submitted that the means of the offeror is a relevant matter to take into account in deciding whether a compromise is a real one. [2]
In The Uniting Church v Takacs (No 2) [3] Basten JA referred to the differential approach to the degree of compromise offered by a kitchen maid and a large corporation or it's insurer, holding that there was no authority which expressly supports that approach. Although his Honour was in dissent in the ultimate disposition of the case, I accept that this accurately states the approach to be taken on this issue and would put aside the Plaintiff's circumstances in determining whether the Offer was a genuine offer of compromise.
Nor do I consider the genuineness of the proposed compromise to be determined on the basis of the own Plaintiff's assessment of the case as set out in its schedule of damages. Rather the genuineness of the Offer has to be assessed against the final judgment bearing in mind that the rule operates where the Plaintiff obtains a judgment no less favourable to it than the terms of the offer.
The relevant principles in determining whether an offer is a genuine offer of compromise were discussed by Santow JA in Leichhardt Municipal Council v Green. [4] In that case his Honour stated:
There is no rule to the effect that an optimistic offer is not a genuine offer. Whether or not it was reasonable to reject an offer is a question that may figure in the discretionary balance, but it is not a question which affects the genuineness or otherwise of the offer.
In Maitland Hospital v Fisher (No 2) [5] the Court considered the amount of the deficit in that case being 2.5% of the judgment sum as real not trivial or contemptuous. The Court went on to state at 724:
In such circumstances, the offer of compromise was one which realistically assessed the chances of success in the appeal. It offered an inducement (admittedly small) to the appellant against the risks which are inherent in any litigation. Events have borne out the justification of the actual offer made and the wisdom of making it. It is important to stress however, that a 2.5% compromise is not to be taken as having general precedential significance.
The Offer in the present case was made just short of four weeks from the commencement of the trial. Considerable costs would no doubt have been saved had the Offer been accepted.
In the context of my own impression of the Plaintiff's case I consider that the difference between the Offer and the judgment amount was neither trivial nor contemptuous. It was small relative to the judgment amount and may be viewed as optimistic, however, I am satisfied that it did involve a genuine compromise and accordingly falls within UCPR 42.14.
[4]
Was the Time for Acceptance Reasonable?
Although the Defendant in argument raised that the time for the acceptance of the Offer did not meet the requirements of UCPR 20.26(5)(b) it did not seek to address the issue in accordance within the principles outlined in Kohee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2). [6]
At the time that the Offer was served on the Defendant, the matter was at an advanced stage of preparation and the Offer expired shortly before the trial. Both parties may reasonably be expected to have a clear perception of their positions, so that the reasonableness of the offer may be assessed in circumstances of an incentive to respond. It was not suggested that obtaining instructions in the circumstances involved a significant distraction. Whilst there was an informal settlement conference date set, it was cancelled and not rescheduled. There is no evidence to indicate the reason this occurred. Although I was advised it post-dated the events of 15 May 2020, being the date of the Offer, it was not suggested it was by reason of those events. In the circumstances I am satisfied that the time for acceptance was reasonable.
[5]
Should the Court Otherwise Order?
The Defendant further argued that the Court should decline to make the order in the exercise of its discretion.
It submitted that the nature of the case was important in resolving the present costs dispute, as it was virtually exclusively a psychological/psychiatric case, where the symptoms were subjective. It submitted that such cases are notoriously hard to evaluate and productive of wide variety of awards of damages. It argued that the Court should not take the view that the Defendant acted unreasonably in not accepting a substantial offer in a case of this type.
Relevant to this submission, and as a separate consideration, the Defendant submitted that the chronology of events, involving late service of medical evidence and an associated Proposed Amended Statement of Claim went against the Plaintiff's application for indemnity costs. The Defendant made reference to the following "essential chronology":-
12 May 2020: by email, the Plaintiff informed the Defendant that it would shortly serve an Amended Particulars of Damage and that a refresher or updated qualified medico-legal report was coming from Dr Allnutt
15 May 2020: the Offer of Compromise was served. Both the proposed Amended Statement of Claim and a report of a respiratory physician qualified on a medico-legal basis, Dr David Bryant dated 27 July 2018, were served.
The parties had agreed to an informal settlement conference on 29 May 2020, but post the events of 15 May 2020, the Defendant sought vacation of the ISC to which the Plaintiff agreed
27 May 2020: the Plaintiff served by email a further report of Dr Allnutt dated 26 May 2020 to which the Defendant objected
3 June 2020: the Defendant served an unsealed Amended Defence in response to the Plaintiff's proposed Amended Statement of Claim.
3 June 2020: the Plaintiff was examined by Dr Johnson, respiratory physician, on behalf of the Defendant.
5 June 2020: the Plaintiff's solicitor served by email the following:
○ Sealed Amended Statement of Particulars
○ Schedule of Damages
○ Statement of Issues in Dispute
The Defendant also received a report from Dr Johnson which it regarded as in need of supplementation because of the surrounding evidence.
10 June 2020: The hearing began in Wollongong
The Defendant submitted that in light of the above sequence of events, the Plaintiff's case, and thus the Defendant's in reply, was in a state of evolution during the life of the Offer of Compromise, and that it was not unrealistic or unreasonable for the Defendant not to accept it.
In response, the Plaintiff argued that the Defendant's submission appears to invoke a principle that if it was not unreasonable for the Defendant to reject the offer and defend the proceedings, then UCPR 42.14 should not be applied. The Plaintiff submitted that such a principle has been rejected. [7] It argued that the offer was a sensible and reasonable attempt to resolve the proceedings prior to a lengthy hearing in a running list in the June 2020 sittings at Wollongong.
The Plaintiff also pointed to UCPR 20.26(4), which relevantly provides:-
…
(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).
It submitted that the Defendant did not utilise this rule, nor did it respond to the Offer, in circumstances where the exchange of evidence was at an advanced stage and the claim was capable of assessment by the Defendant.
While the Plaintiff did not dispute the events contained in the Defendant's chronology, it submitted that none of the events described therein were relevant to the consideration of whether UCPR 42.14 should be applied and the Court should "otherwise order". It argued that the developments referred to did not alter in any fundamental manner, the Plaintiff's claim against the Defendant in terms of breach of duty or damages made prior to the service of the offer. The Plaintiff submitted that while the Offer was served with a Proposed Amended Statement of Claim, the amendments merely brought the particulars of negligence into line with the expert liability reports already available to the Defendant, in particular, the Defendant's own liability report and the ICAM report.
On the issue of quantum, the Plaintiff argued that at the time the Offer was made the Plaintiff had served experts reports from treating doctors, Dr Stephen Allnutt, the liability report from Total Risk Solutions and an economic loss report from Vincent's Chartered Accountants. At that point, the Defendant had served reports from Dr John Roberts, two reports from Dr Wendy Roberts, a report from Mr Sebastian Vass, a report from Forensic Accounting and a liability report from Dr Hebblewhite. In regards to the report of Dr Bryant, respiratory physician, the Plaintiff's accepted that it was served on 15 May 2020, but that it did not materially change the Plaintiff's case. The Plaintiff further submitted that it provided the Defendant with an updated UCPR 15.12 Particulars, a schedule of damages and a statement of issues in dispute on 5 June 2020 in the ordinary course of assisting the Court and in preparation for hearing in accordance with the Court's standard orders.
[6]
ORDERS
Accordingly I would order:-
1. Verdict and judgment for the Plaintiff in the sum of $617,468.89;
2. The Defendant, in partial satisfaction of the judgment sum, to have credit for the sum of $26,283.48 (for workers' compensation weekly benefits and medical expenses);
3. The Defendant is to pay the Plaintiff's costs as agreed or assessed being party/party costs until 15 May 2020 and indemnity costs thereafter.
[7]
Endnotes
See Ganassin v Ulan Coal Mines [2020] NSWDC 652.
See Manly Council v Byrne and Anor (No 2) [2004] NSWCA 227 at [19].
[2008] NSWCA 172 at [28]
[2004] NSWCA 341 (Bryson and Stein JJA agreeing)
(1992) 27 NSWLR 721.
[2008] NSWCA 85 at [18]-[20]
The Nominal Defendant v Cordin [2019] NSWCA 85; (2019) 88 MVR 410 at [160]-[164] (Simpson JA with Leeming JA agreeing), citing NSW Insurance Ministerial Corporation v Reeve (1993) 42 NSWLR 100 at [102].
[2014] NSWCA 391.
[2020] NSWCA 42.
(1999) 76 SASR 28
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Decision last updated: 11 February 2021
The Plaintiff argued that the offer was capable of acceptance up until 29 May 2020, which was nine days prior to the commencement of the Court's June sittings in Wollongong. It submitted that this offer was provided in an effort to try and minimise his costs and minimise the imposition of the matter upon the Court in circumstances where it could be compromised by the parties between themselves.
The Plaintiff submitted that the Defendant's failure to accept the Offer led to the Plaintiff being required to go to considerable expense in preparing for hearing and ultimately running the hearing in the Court for seven days. Further, the rejection also led to a substantial increase in expenses, with the medical experts needing to engage in conclaves, before also being required to give evidence before the Court.
It submitted that the Defendant did not adduce any evidence on this application to the effect that it was unable to assess the merits of the Offer or was in some way disadvantaged when considering the Offer. It submitted that it could be inferred from the Defendant's failure to utilise UCPR 20.26(4) that it fully understood the Plaintiff's case during the period the offer was open for acceptance.
In Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2), [8] McColl JA (with whom Gleeson JA and Sackville AJA agreed) considered the words "otherwise order" in UCPR 42.15A(2) and held that the prima facie position should only be departed from for proper reasons which, in general, should only arise in an exceptional case. At [48] her Honour stated:-
[48] It is impossible exhaustively to state the circumstances in which the court's discretion to "order otherwise" might be exercised: New South Wales Insurance Ministerial Corporation v Reeve (at 102). The mere fact that it was reasonable for the litigant to take the view that he or she did in rejecting the offer is not enough to displace the rule: Morgan v Johnson (at 582). However that does not mean that reasonableness of the rejection is an irrelevant consideration: see Seven Network Ltd v News Ltd (at [64]-[67]); Uniting Church in Australia Property Trust (NSW) t/as Northaven Retirement Village v Takacs (No 2) [2008] NSWCA 172 (at [15]) per Hodgson JA (McColl JA agreeing); cf Basten JA (at [32]-[33]).
In Martinez as trustee for Martinez HWL Practice Trust as representative of the partners trading as HWL Ebsworth Lawyers v Griffiths as trustee for the Griffiths HWL Practice Trust (No 2), [9] the Court (comprising of Bell ACJ, Meagher JA, Barrett AJA) commented]:-
[11] As this Court observed in Croghan v Blacktown City Council [2019] NSWCA 248 at [12]-[13] (Meagher JA, McCallum JA and Simpson AJA agreeing):
[12] In ordinary litigation, where the presumption that costs follow the event applies, a significant consideration in determining that an order "otherwise" is justified is whether in the circumstances the offeree acted reasonably in rejecting the offer, although it is recognised that it may not be sufficient to justify such an order that the offeree reasonably believed at the time that it was justified in rejecting the offer: see New South Wales Insurance Ministerial Corporation v Reeve (1993) 42 NSWLR 100 at 102; The Uniting Church in Australia Property Trust (NSW) v Takacs (No 2) [2008] NSWCA 172 at [15], [18], [31]; Leach v Nominal Defendant (QBE Insurance (Australia) Limited) (No 2) [2014] NSWCA 391 at [48]; Aukuso v Tahan (No 2) [2018] NSWCA 302 at [60] - [62].
…
[13] In Fairall v Hobbs (No 2) [2017] NSWCA 133, where it was accepted that the presumption in r 42.15 might be displaced "by demonstrating that the rejection of the offer was reasonable", the Court described the matters relevant to such an assessment as including:
…where the full parameters of the dispute are still uncertain at the time of the offer: Equity 8 Pty Limited v Shaw Stockbroking Limited [2007] NSWSC 503 at [42]; or where the offeror's case changes after the offer: South Eastern Sydney Area Health Service v King [2006] NSWCA 2 at [85]; or where all relevant evidence has not been served before the offer: Vale v Eggins (No.2) [2007] NSWCA 12 at [22].
In Shaw v Jarldorn [10] the Full Court of the Supreme Court of South Australia considered the term "otherwise orders" in the context of that Court's rule. Doyle CJ stated:-
"[8] ….. Difficulty experienced by the defendant in assessing the plaintiff's offer is simply a usual aspect of litigation. That is not to say that earlier events will always be irrelevant. Something might have happened which means that when the offer is made the defendant could not be expected to make a proper assessment of the offer. Like Perry J, I incline to the view that only something such as a breach of the rules, affecting disclosure of information, would be relevant on this basis. Ordinarily the Court will assess things as at the time of the offer without regard to what has happened earlier. Likewise, events that occur after the offer is made will be of limited weight, unless they demonstrate that the amount of the judgment that the plaintiff ultimately recovers was materially affected by subsequent events that the defendant could not reasonably have anticipated. And, in that context, I emphasise that both the defendant and the plaintiff will be assumed to anticipate the ordinary risks and vicissitudes of litigation. In deciding not to accept an offer a defendant makes the judgment that it will run the risk of the plaintiff equalling or bettering the offer, in the hope that the plaintiff will recover less than the amount of the offer. A defendant who makes that choice cannot reasonably complain if, as a result of the ordinary risks and vicissitudes of litigation, the defendant's judgment is proven to be unsound."
Perry J stated:-
"[38] But the fact that the defendant is caught by surprise by some development at the trial, standing alone, would not ordinarily be sufficient, as it is symptomatic of litigation that the course taken by a trial will often be unpredictable. It will only be in an extreme case that such considerations would avail a defendant. It is not necessary or appropriate, in the context of argument as to the application of the rule, for the Court to embark on a nice comparison between the material discovered before trial, and the evidence as it emerged at the hearing. In considering their response to an offer, defendants must allow for the fact that the course of evidence may turn significantly and unexpectedly against them at the trial. That is an ordinary hazard of litigation which no properly advised defendant should fail to allow for."
It is unnecessary to determine whether the discretion to "otherwise order" should be discharged within the parameters of Shaw v Jarldorn. In my view, the relevant principles to be followed by this Court are the authorities that I have cited at [36]-[37].
The evidence of Dr Bryant and the updated report of Dr Allnutt were admitted at the trial without objection. Neither, in my view, affected the parameters of the hearing. The Defendant did not seek to rely on the evidence it had of Dr Johnson. In my view, the Defendant has not established that either the contents of the Plaintiff's additional reports nor the other matters referred to in its submissions changed the parameters of the litigation such that it established a proper reason for the Court to otherwise order.