Greentree v Blacktown City Council

Chronology RELEVANT TO COSTS Date Event 24 September 2019 Date of incident causing injury to the plaintiff. 9 April 2020 Statement of Claim filed. 9 June 2020 Defence filed. 5 May 2021 Informal settlement conference convened between the parties. The plaintiff's opening offer was $230,874.44 plus costs. This was later expressed as being an offer of $295,000 inclusive of costs, inferentially indicating that the plaintiff's costs and disbursements were approximately $65,000. The defendant's final offer of settlement was in the sum of $85,000, inclusive of costs. 5 May 2021 at 1:09pm An offer pursuant to Calderbank v Calderbank [1975] All ER 333 ('Calderbank') served by defendant on plaintiff in the sum of $85,000, inclusive of costs. 6 May 2021 at 2:17pm Offer served by plaintiff to accept a reduction in damages by 10%. 6 May 2021 at 2:20pm Offer of compromise served by the plaintiff in the sum of $101,000, together with a Calderbank letter in the same amount. 6 May 2021 at 4:43pm Defendant rejects plaintiff's 2 offers of compromise. Defendant reinstated its offer of $85,000 inclusive of costs by way of Calderbank letter and expressed the offer remained open until 5pm the following day, Friday 7 May 2021. In that letter the defendant solicitor stated "we advise that to date the defendant has incurred legal costs and disbursements of approximately $35,000 and we anticipate those costs will quickly increase as we further prepare for hearing, including counsel's fees in respect of same". 6 May 2021 at 4:44pm The solicitor for the plaintiff replied to the solicitor for the defendant by email stating "the defendant's offer is rejected". 11, 12 and 13 May 2021 Hearing dates. The solicitor for the plaintiff sent a Calderbank letter to the solicitor for the defendant offering to settle the case in the sum of $85,000 inclusive of costs (being the offer previously made by the defendant). The plaintiff's offer was open until 12:00pm that day. 12 May 2021 at 8:40am In the same email sent at 8:40am the plaintiff sent an offer of compromise in the sum of $65,000 (plus costs). Again, this offer was expressed to be open for acceptance until 12:00pm that day. Neither offer was accepted. 16 July 2021 Date of judgment. 10 August 2021 Defendant's solicitor wrote to plaintiff's solicitor seeking consent to the orders now sought by way of notice of motion. 12 August 2021 Email from plaintiff's solicitor to defendant's solicitor indicating that they are instructed to oppose the defendant's application to vary the costs order on the basis that the offer was open for "an unreasonable (sic) short period of time". 12 August 2021 Motion filed by defendant seeking to vary costs order. 12 August 2021 Affidavit of Jennifer Dawes in support of defendant's application (Exhibit A). 23 August 2021 Further affidavit of Jennifer Dawes (Exhibit B). 23 August 2021 Defendant's submissions in relation to costs (MFI 1). 30 August 2021 Affidavit of David Kim Thach Le in opposition to the order sought by the defendant (Exhibit 1). 30 August 2021 Plaintiff's submissions in opposition of the orders sought by the defendant (MFI 2).

The order for costs originally made was based upon the usual rule that costs follow the event (Rule 42.1 Uniform Civil Procedure Rules 2005 (NSW) ('UCPR')). The plaintiff does not dispute that she ought to pay the defendant's costs. The dispute is limited to the basis upon which they are to be assessed. As to that matter, the Court has a discretion to award costs on the ordinary basis or on an indemnity basis (s 98(1)(c) Civil Procedure Act 2006 (NSW) ('CPA')).
As the offer upon which the defendant relies was not made pursuant to the Court rules as an offer of compromise, it bears the onus of establishing that the plaintiff's rejection of the Calderbank offer was unreasonable (Miwa Pty Ltd v Siantan Properties Ptd Ltd (No. 2) [2011] NSWCA 344 at [16] per Basten JA).
More recently, the principles applicable to whether or not the Court's discretion should be exercised were summarised by Ward CJ in Eq in Jainti Pty Ltd v Fraser Panorama Pty Ltd (No. 2) [2021] NSWSC 965 at [62] - [64], where her Honour said: [62] As to the consideration of Calderbank offers, the factors relevant to take into consideration are again well-known (and were summarised in Favotto Family Restaurants Pty Ltd v Chief Commissioner of State Revenue (No 2) [2020] NSWSC 519 at [20]-[30]). [63] Relevantly, while the rejection of a Calderbank offer, in circumstances where it transpires that the final result in the proceeding is less favourable to the offeree, enlivens the discretion to award indemnity costs, it does not create a prima facie right to such an order (see Chief Commissioner of State Revenue v Platinum Investments Management Ltd (No 2) [2011] NSWCA 197 at [9]). [64] In summary, the factors to which regard will be taken when considering whether the rejection or non-acceptance of the offer was unreasonable include: the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; the offeree's prospects of success assessed as at the date of the offer; the clarity with which the terms of the offer were expressed; and whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it (see Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398 at [8] …
In the present case, the defendant made the same offer twice, as the chronology above indicates. Following the informal settlement conference on Wednesday 5 May 2021, an email was sent at 1:09pm offering to settle the claim in the sum of $85,000 inclusive of costs. The email confirmed that the offer was made pursuant to the principles in Calderbank. The email was headed 'Without prejudice save as to costs'. There was no express statement by which the defendant foreshadowed an application for indemnity costs in the event that the offer was rejected. The offer was also not limited by time for acceptance.
The next day on Thursday 6 May 2021 at 4:43pm, the solicitor for the defendant rejected the plaintiff's offers of compromise dated 6 May 2021. The email then stated: We are instructed to re-state - the Defendant's offer of $85,000 inclusive of costs which is open for acceptance until 5:00pm on Friday 7 May 2021, at which time it will be withdrawn. The Defendant's offer is submitted pursuant to the principles of Calderbank v Calderbank [1975] All ER 333. Should your client fail to accept this offer and should she fail to equal or do better than the terms of this offer at hearing, we put you on notice we will tender this correspondence in support of an application for indemnity costs. We advise that to date the Defendant has incurred legal costs and disbursements of approximately $35,000, and we anticipate those costs will increase as we further prepare for Hearing, including counsel's fees in respect of same.
The fact that the offers were expressed to be inclusive of costs does not mean that the offeror cannot rely upon them. So much was made clear by Beazley JA (as her Excellency then was) in Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322 at [5]: I do not agree that an offer which is inclusive of costs cannot ever be the basis upon which the court exercises its discretion to award indemnity costs. The award of indemnity costs involves the exercise of a discretion. The application of an overarching 'rule' or 'principle' that only offers exclusive of costs could ground a favourable exercise of the court's discretion would operate as a fetter on that discretion and would introduce a rigidity to the making of so called Calderbank offers which has no basis in principle.
In the present circumstances, a difficulty which may arise in respect of an inclusive offer does not as the plaintiff wholly failed in the action. On any view, the offer was more favourable than the result.
Having regard to the factors to which Ward CJ in Eq referred in Jainti, the offer made by the defendant was made following an informal settlement conference which was convened on the Wednesday before the hearing was due to commence the following Tuesday. In order for the defendant to obtain the maximum benefit of the offer, the period during which it remained open was, necessarily, short. That, however, does not defeat the defendant's application.
For the purposes of determining this application, I do not intend to act on the offer made on Wednesday 5 May 2021 at 1:09pm, as that offer failed to foreshadow this application. The relevant offer was made the following day on Thursday 6 May 2021 at 4:43pm, and was expressed to remain open for just over 24 hours to 5:00pm on Friday 7 May 2021. The question is whether that was a reasonable time for the offer to remain open. Relevant to that question are the following considerations: 1. the parties had engaged in an informal settlement conference on Wednesday 5 May 2021, the previous day; 2. the defendant made the offer of $85,000 inclusive of costs at the informal settlement conference; 3. by way of email on the same day as the settlement conference at 1:09pm, the offer was communicated again; 4. the hearing date was scheduled to commence on Tuesday 11 May 2021; and 5. as the solicitor for the defendant noted in the email of 6 May 2021 at 4:43pm "costs will quickly increase as we further prepare for hearing, including counsel's fees in respect of same".
I find that the time allowed for the offeree to consider the offer first made at an informal settlement conference on Wednesday 5 May 2021 and formalised in a Calderbank offer on Thursday 6 May at 4:43pm, and thereafter allowing 24 hours, was a reasonable time period for the plaintiff to give proper consideration to the offer and obtain advice in respect of same. This is further indicated by the fact that the offer made at 4:43pm was rejected at 4:44pm. Plainly, the solicitor for the plaintiff had instructions upon advice to reject the offer out of hand. If the time allowed in the Calderbank offer was insufficient then one would expect that the plaintiff's solicitor would have asked for an extension of time or, at least, would have utilised the remaining 24 hours during which the offer was open for acceptance to further consider the plaintiff's position.
I further find that the offer represented a substantial compromise on the defendant's position and that the plaintiff acted unreasonably in rejecting it.
Further, I find that the plaintiff's prospects of success, assessed as at the date of the offer, could only have been considered fair to reasonable. Further, if the plaintiff's legal representatives were aware of the evidence to be given by the plaintiff as to where she fell upon the footpath as one would expect they would have been, so close to the hearing, then the plaintiff's prospects would best be assessed as poor.
I find that the clarity with which the terms of the offer were expressed are satisfactory and, further, the offer informed the plaintiff of the defendant's current position in respect of its legal costs and disbursements, a matter not required by law but which would have further informed the plaintiff about the effect of an adverse costs order.
Finally, I find that the solicitor for the defendant made clear that the Calderbank offer would be relied upon "in support of an application for indemnity costs".
Turning to the plaintiff's submissions as to why the discretion ought not be exercised as requested by the defendant, counsel for the plaintiff submitted that "it was not unreasonable to reject the offer in the circumstances" (Plaintiff's submissions ('PS') [10]).
The basis upon which this submission is advanced is that the time for acceptance was unreasonable. In answer to the fact that the plaintiff did not utilise the time available to consider the offer by rejecting it 1 minute after it was made, counsel for the plaintiff submitted (PS [12]): The subsequent offer was swiftly rejected. That speed can be understood because of the length of time remaining to the hearing and the other matters that needed to be addressed in that time period. Had the offer been open for acceptance for a period of 7 days, the plaintiff submits it would have been accepted as was seen in the offer made by the plaintiff on 12 May 2021.
With respect to counsel for the plaintiff, I reject that submission. Had the offer been expressed to remain open for 7 days from the time it was made, then it would have expired after the hearing had been concluded. On no basis can such a period be considered warranted or reasonable.
As for the submission that the offer was not accepted because of "the other matters that needed to be addressed in that time period" (PS [12]), I can only assume that is a reference to the ordinary preparation that takes place in the days leading to a hearing. I do not accept that this would limit the legal representatives for the plaintiff in giving proper and thoughtful consideration to the offer. The fact that it was declined within 1 minute of being made is an outright rejection, presumably based on instructions which were presumably based on advice. As I have already observed, the plaintiff's legal representatives did not ask for the offer to remain open for any longer period..
It was then submitted on behalf of the plaintiff that the decision in relation to liability was "ultimately made based on a nuanced analysis of the plaintiff's evidence and causation concerning the defect itself" (PS [14). I reject the submission that it was a nuanced analysis that led to the decision on liability. It was an analysis of the plaintiff's own evidence which was accepted.
Counsel for the plaintiff referred to the fact that he submitted that "the channel of pavers should be viewed as a whole" as being a concept upon which there is no authority, and a question which could have been decided either way (PS [14]), is also rejected. As was made clear to the plaintiff in the original judgment at [15]: To be clear, I reject the submission that the pavement "as a whole should be considered and applied in determining the risk of harm". To do so would offend the fundamental principles of relevance and causation.
Neither the question of relevance nor causation are novel concepts in respect of which there is no authority.
Counsel for the plaintiff then submitted that "it is relevant that had the plaintiff succeeded on liability she would have obtained a result that would have been substantially better than that was offered" (PS [17]). It was then submitted that the notional assessment of damages in the judgment of $76,164.54 ought to have been added to costs, calculated in accordance with Schedule 1 of the Legal Profession Uniform Law Application Act 2014 (NSW), which would have been in the order of $31,000, resulting in a judgment inclusive of costs of approximately $106,500. It is by this approach that it was submitted by counsel for the plaintiff that "the offer was not as much as her case was worth".
I also reject that submission. Ultimately, the plaintiff's case was worthless due to a fundamental defect in the evidence adduced on liability. In any event, the offeror relies upon the Calderbank offer as representing a reasonable compromise on the plaintiff's claim. I agree that the offer, as made, was a reasonable compromise on the plaintiff's claim for damages.
At PS [19] counsel for the plaintiff sets out 6 reasons why the discretion ought not be exercised. All of those submissions, save for 1, have been dealt with above. The remaining submission is that the discretion ought not be exercised "against a person genuinely injured (albeit non-compensable) who has limited financial resources and is a pensioner". Whilst I have enormous sympathy for Mrs Greentree and the outcome she has suffered in this case, I do not consider her financial position to be a reason to disentitle the defendant to rely upon an otherwise effective Calderbank offer.
Accordingly, I make an order for indemnity costs in respect of the Calderbank offer made by the defendant on 6 May 2021 at 4:43pm.

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