Herne Investments (NSW) Pty Limited v Don Watson Proprietary Limited

Judgment

1. WARD JA: I agree with Sackville AJA.
2. SACKVILLE AJA: This appeal arises out of a motor vehicle accident which occurred at about 8:00 pm on 27 June 2012 on the Pacific Highway at Woodburn. Two vehicles were involved. The first was a prime mover and attached trailer owned by the appellant (Herne), driven by Mr Brogden. The second was a prime mover and B-double trailer combination owned by the first respondent (Watson) and driven by the second respondent (Mr Rhodes) (together the Defendants). I refer to the vehicles, respectively, as Herne's vehicle and Watson's vehicle.
3. Watson's vehicle was travelling south on the Pacific Highway in a single lane behind Herne's vehicle as both approached the commencement of an overtaking lane. Herne's vehicle moved into the left lane (slow lane) while Watson's vehicle moved into the lane on the right (overtaking lane). The slow lane in due course came to an end and vehicles in that lane were required to merge into the overtaking lane which continued on as a single lane.
4. The accident occurred when Mr Brogden failed to move into the overtaking lane before the slow lane terminated. As a consequence, Herne's vehicle collided with a guard-rail in place near the point at which the slow lane merged with the overtaking lane. The collision caused Herne's vehicle to overturn.
5. Herne claimed damages from the Defendants for damage to Herne's vehicle and consequential losses. In a statement of claim filed on 2 April 2014, Herne quantified its damages at $179,414.04. In a further amended statement of claim filed on 30 March 2015, Herne increased its claim to $215,477.97. The amendment was attributable to an increase in the claim for loss of income from $39,841.07 to $75,905.00. Pursuant to an order of a Judicial Registrar on 27 March 2015, the matter proceeded in the District Court by way of a separate determination on liability alone.
6. In a judgment delivered the day after the hearing concluded, the primary Judge (Hatzistergos DCJ) found in favour of the Defendants. His Honour was not satisfied that a reasonable person in the position of Mr Rhodes would have taken the precautions that Herne claimed should have been taken. Specifically his Honour was not satisfied that Mr Rhodes should have decelerated to enable Herne's vehicle to move in a timely fashion from the slow lane to the overtaking lane (which continued as the south-bound lane of the Pacific Highway). Accordingly, his Honour entered a verdict and judgment for the Defendants. [1]
7. In a separate judgment delivered the next day, the primary Judge ordered Herne to pay the costs of the Defendants on an indemnity basis from 23 July 2014. [2] His Honour did so because Herne had not accepted an offer of compromise made by the Defendants on 22 July 2014, after the statement of claim had been filed but before the filing of the amended statement of claim. The Defendants proposed that the matter should be resolved on the basis that judgment would be entered for Herne in the sum of $20,000.00 and that the Defendants would pay Herne's costs of the proceedings on a party and party basis.
8. Herne's notice of appeal contains four grounds, as follows: "1. His Honour erred in failing to give adequate weight to the video footage contained on the DVD which became exhibit A insofar as that footage established the relative speed of the vehicles involved in the accident. 2. His Honour erred in not finding that a reasonable person in [Mr Rhodes'] position would have taken precautions of slowing down and allowing [Herne's] vehicle to merge in front of his vehicle in circumstances where it would have been foreseeable to [Mr Rhodes] that by not doing so it was likely to cause a collision. 3. His Honour erred in finding that the collision was solely caused as a consequence of the negligence on the part of [Herne]. 4. His Honour erred in finding that [Herne] was not justified in accepting the [Defendants'] Offer of Compromise served on 22 July 2014 and in ordering [Herne] to pay the [Defendants'] costs as from that date on an indemnity basis."
9. The Defendants filed a notice of cross-appeal. In the event that the appeal is allowed, the Defendants contend that the primary Judge erred in failing to address the issue of contributory negligence. It will be necessary to deal with the cross-appeal only if the appeal is allowed.

Background Facts

1. Herne's vehicle consisted of a Western Star prime mover and an attached trailer. The total length of the prime mover and trailer was 19 metres. The cabin section of the prime mover was about four metres in length.
2. Watson's vehicle comprised a Kenworth prime mover with a B-double trailer combination. The total length was 26 metres, some seven metres longer than Herne's vehicle. The cabin section of Watson's prime mover was approximately 2.3 metres long. On the day in question, Watson's vehicle was carrying a load of 31 pallets weighing about 23 tonnes.
3. The speed limit in the area was 100 kph. Each vehicle was fitted with a speed governing device that prevented it travelling at more than about 100 kph. At the time the accident occurred, it was very dark and rain was falling.
4. The primary Judge adopted the following description by one of the expert witnesses, Ms Gaffney, of the Pacific Highway in the area of the accident: "Just south of the intersection with Rileys Hill Road, an overtaking lane commences for southbound traffic. The overtaking lane continues adjacent to the main travel lane for a distance of approximately [1,130] metres and terminates near the driveway of the property number 9870. [3] The overtaking lane is separated by the main southbound lane by a broken, painted, white line. The commencement of the overtaking lane is signalled by signage which reads, 'Overtaking lane 300 metres ahead'. Determination of the left lane is then signalled by signage which reads, 'Left lane ends 300 metres' and 'Left lane ends merge right.' Immediately before the left lane terminates, there are lane markings indicating that the left lane must merge and the signage which reads, 'Form one lane.' The left lane [tapers] to an end whilst there remains a broken line separating the right, southbound lane."
5. The two experts who gave evidence agreed that the overtaking lane was 920 metres long, excluding the tapers at either end. The taper at the commencement of the overtaking lane was about 50 metres long, while the taper towards the end of the slow lane was about 160 metres in length. These distances, when added together, produce the distance of 1,130 metres adopted by the primary Judge as the length of the overtaking lane.
6. The primary Judge's description of the Pacific Highway in the area of the accident refers to two signs indicating that the slow lane is coming to an end. The distance between the "left lane ends 500 m" sign and the "left lane ends merge right" sign was about 283 metres. There was a further distance of approximately 220 metres between the "left lane ends merge right" sign and the commencement of the taper which marked the end of the slow lane.
7. It was common ground both at the trial and on the appeal that at the date of the accident r 148 of the Road Rules 2008 (NSW) applied to vehicles moving from one marked lane of traffic to another. Road Rule 148(1) provided as follows: 148 Giving way when moving from one marked lane or line of traffic to another marked lane or line of traffic (1) A driver who is moving from one marked lane (whether or not the lane is ending) to another marked lane must give way to any vehicle travelling in the same direction as the driver in the marked lane to which the driver is moving. Maximum penalty: 20 penalty units. Note 1: Marked lane and multi-lane road are defined in the Dictionary. Note 2: For this rule, give way means the driver must slow down and, if necessary, stop to avoid a collision-see the definition in the Dictionary. Examples: In these examples, vehicle B must give way to vehicle A.
8. Mr Moses SC, who appeared with Mr Parker and Ms Gall for Herne accepted that Road Rule 148(1) required Herne's vehicle to give way to Watson's vehicle, had the former attempted to merge from the slow lane into the overtaking lane. Mr Moses also accepted that he could not point to any Road Rule that Mr Rhodes had contravened by failing to give way to Herne's vehicle.

Legislation

1. As can be seen from the notice of appeal, the principal issue on appeal was whether the primary Judge should have found that Mr Rhodes, the driver of Watson's vehicle, breached the duty of care he owed to Herne as the owner of Herne's vehicle. As the primary Judge recognised, this issue requires consideration of the relevant provisions of the Civil Liability Act 2002 (NSW) (CL Act), as follows: "5B General Principles (1) A person is not negligent in failing to take precautions against a risk of harm unless: (a) the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and (b) the risk was not insignificant, and (c) in the circumstances, a reasonable person in the person's position would have taken those precautions. (2) In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things): (a) the probability that the harm would occur if care were not taken, (b) the likely seriousness of the harm, (c) the burden of taking precautions to avoid the risk of harm, (d) the social utility of the activity that creates the risk of harm. 5C Other principles In proceedings relating to liability for negligence: (a) the burden of taking precautions to avoid a risk of harm includes the burden of taking precautions to avoid similar risks of harm for which the person may be responsible, and (b) the fact that a risk of harm could have been avoided by doing something in a different way does not of itself give rise to or affect liability for the way in which the thing was done …"

Primary Judgment

1. The District Court hearing took place on 25 and 26 May 2015. The evidence was heard on the first day and counsel made brief submissions on the second day. The primary Judge delivered judgment on the following day, 27 May 2015.
2. The primary Judge first summarised the evidence given by Mr Brogden, the driver of Herne's vehicle, and Mr Rhodes, the driver of Watson's vehicle. Mr Brogden claimed that Watson's vehicle moved into the overtaking lane to avoid the spray from his own vehicle in the slow lane. He also said that Watson's vehicle was not trying to pass him and that both were travelling at much the same speed, which he estimated to be about 85 to 90 kph. Mr Brogden denied that by the time he passed the 500 metres sign, Watson's vehicle had drawn alongside the prime mover of the Herne vehicle.
3. Mr Brogden could not remember whether he indicated that he intended to move Herne's vehicle to the right as he approached the end of the slow lane. Nor could he remember when he applied the brakes to Herne's vehicle. He maintained, however, that when he realised that Watson's vehicle was not going to slow or stop, he had insufficient time to avoid colliding with the guard-rail.
4. Mr Rhodes said that he was following Herne's vehicle until he reached the commencement of the overtaking lane. He immediately indicated that he was moving into that lane and did so steadily. According to Mr Rhodes, he proceeded along the overtaking lane at the speed limit of 100 kph. Mr Rhodes was "adamant" that he had passed Herne's vehicle by the time he reached the 500 metres sign. He also stated that by the time the slow lane ended his truck and trailer were "well and truly in front" of Herne's vehicle.
5. The primary Judge recorded that he had been taken to a DVD that had been taken from a camera in a third vehicle that had been travelling behind the Watson vehicle as the latter entered the overtaking lane. His Honour did not set out what he observed from his viewing of the footage, but he noted that the DVD had been seen by both experts whose reports were admitted into evidence.
6. His Honour analysed at some length the evidence of Mr Feenan, a "traffic accident reconstructionist", whose reports were tendered on behalf of Herne. Mr Feenan had expressed the opinion that on the assumption that Watson's vehicle was travelling at 100 kph and Herne's vehicle at 95 kph, the former would have required 1,088 metres to overtake the latter. Mr Feenan interpreted the DVD footage as showing that Watson's vehicle was still attempting to catch up to the rear of Herne's vehicle's semi-trailer when both reached the 500 metres sign. He concluded that because (as he assumed) the two vehicles were apparently travelling at close to the same speed, Watson's vehicle could not have completed the overtaking in the one kilometre available from the point the overtaking lane commenced. In Mr Feenan's view, Mr Rhodes should have aborted the attempt to overtake Herne's vehicle, thus permitting the latter to move safely to the right before the slow lane ended.
7. The primary Judge noted that although Mr Feenan interpreted the DVD footage as indicating that Watson's vehicle was still behind Herne's vehicle at the 500 metres sign, he was unable to estimate the distance between the two vehicles. Moreover, Mr Feenan acknowledged that since Watson's vehicle was seven metres longer than Herne's vehicle, the fact that the rear of Watson's vehicle was behind the rear of Herne's vehicle at the 500 metres sign did not necessarily mean that the cabin of Herne's vehicle was ahead of the cabin of Watson's vehicle.
8. His Honour considered that Mr Feenan's comments about the dangers of overtaking were general in character and did not detract from Road Rule 148, which required drivers in the terminating lane to give way to a vehicle in the right lane. His Honour therefore could not accept Mr Feenan's contention that a driver who enters a continuing lane is obliged to yield to a driver in the adjoining, terminating lane. The instructions to merge were of more significance to the driver in the terminating lane than to a driver in the continuing lane.
9. The primary Judge was satisfied that Mr Rhodes intended to proceed into the overtaking lane from its commencement and that, contrary to Mr Brogden's evidence, Mr Rhodes did not do so to avoid the spray from Herne's vehicle. His Honour did not accept that Mr Rhodes had entered into the overtaking lane for any purpose other than overtaking Herne's vehicle. Nor did his Honour accept that Mr Brogden believed that Mr Rhodes merely intended to avoid the spray from Herne's vehicle.
10. The primary Judge continued as follows: "… I am satisfied on the evidence that [Mr Rhodes] intended to overtake [Herne's vehicle] and gain ground during the course of his journey. At no stage did [Mr Brogden] indicate that he wished to enter into the right-hand lane even when the left lane was terminating and the brakes were not applied until just before the end of that section of the roadway in the left lane. In my view, it is clear from the depiction of the roadway, it was incumbent for [Mr Brogden] to give way and enter the right-hand lane, if safe to do so. … I am, … satisfied that it would have been obvious to a person in [Mr Brogden's] position as to the manoeuvre which was being undertaken by [Mr Rhodes]."
11. In his Honour's view, Mr Feenan's suggestion that Mr Rhodes should have assessed his closing speed at the 500 metres sign to determine whether he could complete the overtaking manoeuvre misstated the issue. The "left lane ends merge right" sign indicated to Mr Brogden that he had to merge Herne's vehicle into the overtaking lane when safe to do so and, if necessary, decelerate and indicate that he intended to move the vehicle to the right.
12. The primary Judge acknowledged that the fact that particular conduct is prohibited by the Road Rules is not determinative of what reasonable care requires for the purposes of s 5B of the CL Act. He was satisfied that the relevant risk of harm was that Herne's vehicle would veer off the roadway and sustain damage. He also found that the risk was not insignificant and was foreseeable. [4]
13. However, his Honour was not satisfied that a reasonable person in Mr Rhode's position would have taken the precaution of slowing down and allowing Herne's vehicle to enter the (continuing) overtaking lane. In reaching this conclusion, his Honour took into account the short distance available to both drivers from the "left lane ends merge right" sign, the greater ability of Herne's vehicle to slow down and the fact that Watson's vehicle required 120 metres to brake compared to 100 metres for Herne's vehicle.
14. His Honour concluded as follows: "On the evidence, I am satisfied that [Herne's] vehicle was driving slower than [Watson's] vehicle, although perhaps not as slow as Mr Brogden's evidence suggests. In the circumstances, the burden of taking precautions was, in my view, higher for [Mr Rhodes], and I am satisfied that in acting as he did, [Mr Brogden] failed to have regard for his own safety and the safety of his vehicle."

Submissions

1. Herne's written submissions did not comply with the requirement to identify the findings of fact it was challenging. [5] In his oral submissions, Mr Moses said that Herne was challenging the primary Judge's finding that Herne's vehicle was travelling more slowly than Watson's vehicle. Mr Moses also said that if the primary Judge intended to find that the cabin of Watson's vehicle was ahead of the cabin of Herne's vehicle at the 500 metres sign, that finding was challenged.
2. Mr Moses emphasised, by reference to the observations of Basten JA in Nominal Defendant v Smith, [6] that the issue on an appeal to this Court is not whether a finding was open to the primary Judge. Rather, in accordance with the principles stated in Warren v Coombes, [7] when it comes to drawing inferences from established facts the duty of the appellate court is to decide the matter for itself, giving due weight to the reasons of the primary Judge.
3. Mr Moses invited this Court to find that a reasonable person in Mr Rhodes' position would have taken precautions to avoid the relevant risk, namely that Herne's vehicle would veer off the roadway and sustain damage. [8] Mr Moses submitted that Mr Brogden either should not have attempted to overtake Herne's vehicle in the first place or, alternatively, should have slowed down at about the 500 metres sign when he realised (or should have realised) that he would not be able to overtake Herne's vehicle before the slow lane terminated. Mr Moses supported these submissions by addressing each of the grounds of appeal in turn.
4. Before turning to the grounds of appeal, it should be noted that the primary Judge did not specifically consider whether Mr Rhodes breached the duty of care he owed to Herne simply by entering the overtaking lane and attempting to overtake Herne's vehicle as it travelled in the slow lane. The reason his Honour did not address the argument appears to be that no such submission was made at the trial. Nonetheless, Mr Deakin QC, who appeared with Mr Davis for the Defendants, did not object to Mr Moses relying on the argument in this Court.

Ground 1

1. Mr Moses submitted that the primary Judge did no more than note that he was asked to view the DVD footage taken from the trailing vehicle, which was behind both Herne's and Watson's vehicles. Mr Moses contended that a careful review of the footage shows that the finding that Herne's vehicle was travelling more slowly than Watson's vehicle cannot stand. Mr Moses therefore submitted that his Honour should have found that both vehicles were travelling at about 95 to 100 kph and that no part of Watson's vehicle had moved ahead of Herne's vehicle by the time they reached the 500 metres sign. It followed, so Mr Moses argued, that Mr Rhodes had insufficient time to complete the overtaking manoeuvre safely and should have slowed down to allow Herne's vehicle to enter the overtaking lane before the slow lane ended. Mr Moses further submitted that as both vehicles were travelling at about the same speed, his Honour should have found (or at least this Court should find) that Mr Rhodes breached his duty of care simply by attempting to pass Herne's vehicle.
2. In response to Mr Moses' invitation, members of the Court viewed the DVD footage. The following summary, taken from Herne's chronology, accurately records the timing of key events: 8:03.05 pm Watson's vehicle merges into the single right lane. The trailing vehicle is travelling at 98 kph. 8:03.19 The trailing vehicle is travelling at 100 kph. 8:04.49 Watson's vehicle moves into the overtaking lane. The trailing vehicle is travelling at 100 kph. 8:05.14 Herne's vehicle's brake lights are illuminated for the first time. 8:05.24 Herne's vehicle's lights are illuminated again. The trailing vehicle is travelling at 98 kph. 8:05.29 Herne's vehicle goes off the road and rolls over. The trailing vehicle is travelling at 96 kph. 8:05.32 The trailing vehicle passes the overturned vehicle and is travelling at 91 kph.

1. Before assessing the significance of the DVD footage, it is convenient to refer to the lay evidence concerning the speed and location of each of the two vehicles. The starting point is Mr Rhodes' evidence that his vehicle was travelling at about 100 kph while in the overtaking lane. There was no real dispute at the trial or on appeal that this estimate was accurate.
2. As the primary Judge recorded, Mr Rhodes was adamant that Watson's vehicle was travelling faster than Herne's vehicle and that Watson's vehicle was about a cab length in front of Herne's vehicle at the 500 metres sign. While his Honour did not state expressly that he accepted Mr Rhodes' evidence, he cast no doubt on it and a fair reading of the judgment as a whole suggests that he accepted the evidence. In particular, his Honour made a point of referring to the significance of the seven metre difference in the length of the two vehicles in determining the relative positions of the front and rear of each vehicle. The differential explains how the cabin of Watson's vehicle could have been ahead of the cabin of Herne's vehicle, yet at the same time the rear of Watson's vehicle could have been behind the rear of Herne's vehicle.
3. Mr Brogden's evidence was not particularly helpful on these issues. He frankly admitted that his recollection of events was "a bit unclear" and that he could not recall when he applied his brakes. He estimated that his speed was 85 to 90 kph, but this estimate was almost certainly incorrect and indeed was not adopted by Mr Feenan in his report. Given that Watson's vehicle was travelling uniformly at about 100 kph, had Herne's vehicle been travelling at the speed estimated by Mr Brogden, Watson's vehicle would have been much further ahead at the 500 metres sign than even Mr Rhodes' evidence suggested.
4. The authorities warn that care must be taken in relying on photographic evidence, bearing in mind that photographs are not always easy to interpret for forensic purposes. [9] Most of these warnings have been given in relation to photographs taken after the relevant events have occurred. Photographs taken or videos filmed contemporaneously with the relevant events may provide cogent evidence that enables a court to resolve disputed factual issues. The probative value of the contemporaneous evidence of this kind will, however, depend on the nature and quality of the photograph or video evidence and the issues which need to be resolved.
5. The difficulty in the present case became apparent when members of the Court viewed the footage taken from the trailing vehicle. The video equipment was presumably in a fixed position, operating from a vehicle travelling at about 100 kph. The night was dark and it was raining. The trailing vehicle, of course, was behind the other two vehicles and was travelling in the same direction. The most vivid images in the footage are of the rear lights of the two vehicles (and of the brake lights of Herne's vehicle at two points) as they proceed along parallel southbound lanes of the Pacific Highway. The fact that one vehicle was seven metres longer than the other is not apparent from the footage.
6. Mr Moses invited the members of the Court to draw their own conclusions from the footage. On this basis, it is fair to say that the overall impression is that all three vehicles are travelling at roughly similar speeds throughout. But the viewer cannot discern with any degree of precision whether Watson's vehicle was (or was not) gaining ground on Herne's vehicle. Nor can the viewer determine, assuming Watson's vehicle was in fact gaining ground, the speed at which each vehicle was travelling.
7. It was not possible to determine with any assurance from the footage shown in court whether any part of Watson's vehicle was behind the rear of Herne's vehicle as both approached the 500 metres sign. However, the footage is consistent with some part of Watson's vehicle being behind the rear of Herne's vehicle at that point, an interpretation Ms Gaffney accepted. But assuming that if some portion of Watson's vehicle was behind Herne's vehicle at this point, it is impossible to tell how far it protruded to the rear. If the rear of Watson's vehicle was less than 5 metres behind the rear of Herne's vehicle, their respective positions at the 500 metres sign would have been much as Mr Rhodes described.
8. Mr Feenan expressed the view, based on the DVD footage, that at the 500 metres sign the Watson vehicle was still trying to catch up to the rear of the Herne vehicle. In his cross-examination, Mr Feenan acknowledged that there were inherent flaws in attempting to reach a definitive view about the position of each vehicle simply by looking at the video, not least because the view has only a two-dimensional perspective. He agreed that the positioning of the camera could lead to a parallax error, thereby affecting estimates of distance. He also accepted that the process was complicated because rain on the windscreen of the trailing vehicle affected the clarity of the footage.
9. Mr Feenan explained that his opinion was based largely on being able to see a gap between the two vehicles at a point where the road curved slightly. He was pressed on the reliability of that assessment. Significantly for present purposes, Mr Feenan accepted that even if he was correct in thinking that the rear of Watson's vehicle was behind the rear of Herne's vehicle, he was unable to say how far behind it was at the 500 metres sign. In substance, therefore, his evidence is consistent with that of Mr Rhodes.
10. Herne's written submissions contended that the evidence of Ms Gaffney, an accident reconstruction expert called by the Defendants, supported a finding that both vehicles were travelling at about 100 kph. It is true that Ms Gaffney said that on the basis of her viewing of the DVD she thought that both vehicles were travelling at about 100 kph. But she emphasised the word "about" and pointed out that even a small difference of a few kilometres per hour would allow the faster vehicle to close in and pass the slower vehicle.
11. In my opinion, the DVD footage does not provide a sound basis for doubting the accuracy of Mr Rhodes' evidence as to the respective positions of the two vehicles at the 500 metres sign. As I understood Mr Moses' submissions, he did not contend that there was any other basis on which Mr Rhodes' evidence should not have been accepted by the primary Judge.
12. Mr Feenan provided calculations as to the distances required for Watson's vehicle to overtake Herne's vehicle. These calculations suggest that between the time Watson's vehicle entered the overtaking lane and began the overtaking manoeuvre and the time it reached the 500 metres sign, it must have gained at least 31 metres on Herne's vehicle. This estimate comprises the sum of the following distances:

• 19 metres - the length of Herne's vehicle;
• approximately 2 metres - the length of Watson's vehicle's cabin (the distance Watson's vehicle was ahead of Herne's vehicle at the 500 metres sign); and
• 10 metres - Mr Feenan's estimate of the "safety clearance" between the two vehicles at the outset of the overtaking manoeuvre.

1. If it is correct that Watson's vehicle advanced by at least 31 metres relative to Herne's vehicle over a distance of no more than about 470 metres beginning from commencement of the overtaking lane, it must have been travelling on average at least 6 or 7 kph faster than Herne's vehicle over that distance.
2. Mr Rhodes' evidence was that by the time he approached the end of the slow lane (while travelling in the adjoining lane), Watson's vehicle was well ahead of Herne's vehicle. Given that Watson's vehicle was ahead at the 500 metres sign, there is no reason to doubt Mr Rhodes' evidence. There is nothing to suggest that Mr Rhodes decelerated between the two points. On the contrary, the video footage suggests that Mr Brogden applied the brakes on two occasions, the first time some 15 seconds before Herne's vehicle collided with the guardrail.
3. For these reasons, it was not merely open to the primary Judge to find that Herne's vehicle was driving more slowly than Watson's vehicle throughout the time Watson's vehicle was in the overtaking lane. The finding was affirmatively supported by the evidence and, in my opinion, was correct.

Ground 2

1. Mr Moses submitted that the primary Judge should have found that a reasonable person in Mr Rhodes' position would have taken precautions to avoid the risk that Herne's vehicle would be damaged by veering off the road before the end of the slow lane. The precautions he identified were avoiding the overtaking manoeuvre altogether or, alternatively, slowing down after reaching the 500 metres sign to allow Herne's vehicle to move right into the overtaking lane.
2. Both Herne's written submissions and Mr Moses' oral submissions largely proceeded on the basis that no part of Watson's vehicle had overtaken Herne's vehicle by the time both reached the 500 metres sign. The submissions also seemed to assume that either the vehicles were travelling at the same speed or that any difference was insufficient to enable Watson's vehicle to catch up with Herne's vehicle in the manner described by Mr Rhodes. As has been seen, I do not accept that the evidence established that either of these assumptions is correct.
3. Nonetheless, I understood Mr Moses to press the submission that his Honour should have found that Mr Rhodes breached his duty of care, even if the challenge to his Honour's factual findings failed. To assess this submission, it is necessary to set out the relevant findings of primary fact. These include the following:

• Mr Rhodes moved Watson's vehicle into the overtaking lane intending to pass Herne's vehicle, which had moved to the slow lane.
• Watson's vehicle travelled at about the speed limit of 100 kph until it reached the 500 metres sign.
• At that point, the cabin of Watson's vehicle was slightly ahead of the front of Herne's vehicle, indicating that Watson's vehicle had been travelling faster than Herne's vehicle.
• Watson's vehicle continued to travel slightly faster than Herne's vehicle until each approached the point at which the slow lane ended.
• Mr Brogden applied the brakes to Herne's vehicle about 15 seconds before the accident.
• There was no evidence that at any stage Mr Brogden signalled his intention to move from the slow lane to the overtaking lane.
• When Watson's vehicle reached the end of the overtaking lane it was further ahead of Herne's vehicle than it had been at the 500 metres sign.

1. It is also necessary to bear in mind that, had Mr Brogden attempted to move from the slow lane to the overtaking lane, Road Rule 148 required him to give way to Watson's vehicle. As Road Rule 148 makes clear, this required Mr Brogden to slow down and, if necessary, to stop in order to avoid a collision. Furthermore, Mr Moses did not suggest that Mr Rhodes had contravened any of the Road Rules as he moved into and travelled along the overtaking lane.
2. It is true, as Mr Moses submitted, that the determination of what reasonable care requires is not resolved simply by inquiring whether particular conduct is prohibited by the Road Rules. [10] But compliance or non-compliance with Road Rules is a factor to be taken into account in considering whether the parties involved in an accident have failed to take reasonable precautions to avoid a risk of harm.
3. As I have noted, the primary Judge found that Herne had not established that a reasonable person in Mr Rhodes' position would have slowed down in order to allow Herne's vehicle to move from the slow lane to the overtaking lane. In my view, the challenge to that finding, having regard to the primary facts, cannot succeed. Not only was Mr Brogden obliged to give way to Watson's vehicle, but that vehicle was ahead of Herne's vehicle at all times from the 500 metres sign. Moreover, Mr Brogden gave no indication at any stage that he intended to move to the right (and indeed never did so). Why Mr Brogden was unable or unwilling to slow down sufficiently to avoid colliding with the guard-rail was not explained in the evidence. Whatever the explanation, the primary Judge was correct to find that the accident could not be attributed to any failure by Mr Rhodes to exercise reasonable care as he approached the end of the overtaking lane.
4. The submission that Mr Rhodes should not have attempted to overtake in the first place smacks of hindsight reasoning. It is true that if Mr Rhodes had not attempted the manoeuvre, the accident may well not have happened. But that is not the test. Mr Rhodes was in fact driving at a speed greater than the speed at which Herne's vehicle was travelling. Watson's vehicle did in fact pass Herne's vehicle, even though it probably had not completely cleared Herne's vehicle at the point the slow lane ended. Mr Rhodes did not breach any Road Rule and had no reason to expect that Mr Brogden would do anything other than take the sensible course of giving way when merging and slowing down to avoid a collision, either with Watson's vehicle or the guardrail. Herne's alternative submission cannot be accepted.

Ground 3

1. It follows from what has been said that there is no foundation for a finding that the Defendants should be found to be partially responsible for the damage to Herne's vehicle. There is no occasion, therefore, to apportion responsibility between Herne and the Defendants.

Ground 4: Indemnity Costs

1. The Defendants relied on the offer of compromise served on 22 July 2014 to support their application for indemnity costs as from the day following service of the offer. There was no dispute before his Honour that the offer complied with UCPR r 20.26 and that Herne's failure to accept the offer therefore attracted r 42.15A. That provision is as follows: "(1) This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim no less favourable to the defendant than the terms of the offer. (2) Unless the court orders otherwise: (a) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and (b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, 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 …"
2. The Defendants' offer of compromise proposed that judgment be entered for Herne in the sum of $20,000. At the time the offer was made, Herne's statement of claim sought damages of approximately $180,000. The offer therefore represented about 11 per cent of the amount claimed.
3. No submission was made to the primary Judge that the offer was not a genuine offer of compromise. [11] However, Herne submitted to the primary Judge that his Honour should otherwise order, as permitted by r 42.15A(2), on the ground that it was not unreasonable for Herne to decline the offer. Counsel then appearing for Herne submitted that the primary Judge should take into account that the offer was for a small amount, was made before the Defendants had served their expert's report and was made at a time when Mr Rhodes had been charged with negligent driving.
4. The primary Judge referred to Leach v Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2), [12] where McColl JA pointed out that the party which did not accept the offer of compromise bears the onus of persuading the Court that indemnity costs should not be ordered. [13] Her Honour also said that "the mere fact that it was reasonable for the litigant to [reject] the offer is not enough to displace the rule", although that did not mean that the reasonableness of the offer was an irrelevant consideration. [14]
5. The primary Judge rejected Herne's contentions for these reasons: "Considering all of the issues, in particular in terms of the decision that I gave yesterday, it seems to me that the circumstances of this case were reasonably clear on the basis of the geometry of the road, the road fixtures and the conduct of the parties. Whilst there was certainly some dispute in relation to what particular drivers should or should not have done on the occasion in question, I do not believe that the grounds advanced by [Herne] for resisting the order should be acceded to."
6. In this Court, Mr Moses did not submit that the primary Judge had misstated the relevant principles. He also acknowledged that in deciding not to otherwise order pursuant to r 42.15A(2), his Honour was making a decision that involved "matters of judgment and impression". [15] Mr Moses therefore accepted that Herne could succeed in its challenge to the indemnity costs order only if it could show that his Honour made an error of a kind that would cause the exercise of a discretionary power to miscarry.
7. Mr Moses identified the relevant error as being a failure to take into account the timing and circumstances of the offer. Specifically he submitted that the primary Judge failed to take into account that when the offer was made Mr Rhodes had been charged with negligent driving and the Defendants had not served Ms Gaffney's expert report.
8. Both these matters were put to the primary Judge. His Honour expressly referred to both in his brief ex tempore judgment, but clearly decided that neither consideration warranted making any order other than that Herne should pay costs on an indemnity basis as from the day following service of the offer of compromise. I therefore do not consider that any error has been established that warrants this Court's intervention.
9. I should add that it is far from obvious why the fact that Mr Rhodes had been charged with negligent driving should have had any bearing on the question of the reasonableness of Herne's rejection of the Defendants' offer of compromise. Had Mr Rhodes been convicted of an offence, evidence of his conviction may have been admissible to prove the existence of a fact in issue. [16] But there was no evidence that Mr Rhodes had been convicted of the offence with which he had been charged or indeed as to the precise nature of the charge.

Orders

1. The appeal should be dismissed. Herne should pay the Defendants' costs of the appeal. There is no need to deal with the Defendants' cross-appeal. Accordingly, it should be dismissed. The parties should bear their own costs of the cross-appeal.
2. GARLING J: I agree with Sackville AJA.

Endnotes

1. Herne Investments (NSW) Pty Ltd v Don Watson Pty Ltd (District Court (NSW), 27 May 2015, unrep) (Primary Judgment). In the Primary Judgment, his Honour stated that judgment would be entered for "the defendant". This appears to have been a slip as there were two Defendants, both represented by the same counsel.
2. Herne Investments (NSW) Pty Ltd v Don Watson Pty Ltd (District Court (NSW), 28 May 2015, unrep) (Costs Judgment).
3. The primary Judge mistakenly substituted 430 metres for the figure of 1,130 metres given by Ms Gaffney.
4. CL Act, s 5B(1)(a), (b).
5. Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 51.36(2).
6. [2015] NSWCA 339 at [7] (Leeming JA agreeing).
7. [1979] HCA 9; 142 CLR 531 at 552 (Gibbs ACJ, Jacobs and Murphy JJ).
8. CL Act, s 5B(1)(c).
9. See Port Macquarie Hastings Council v Mooney [2014] NSWCA 156; 201 LGERA 314 at [47] (Sackville AJA, Emmett JA and Simpson J agreeing), and authorities cited there.
10. Verryt v Schoupp [2015] NSWCA 128; 70 MVR 484 at [4] (Meagher JA, Gleeson JA and Sackville AJA agreeing); Penrith v East Realisations Pty Ltd (in liq) [2013] NSWCA 64; 63 MVR 180 at [53]-[54] (Tobias AJA, McColl and Meagher JJA agreeing).
11. See Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [25]-[28] per curiam.
12. [2014] NSWCA 391; 18 ANZ Insurance Cases 62-049.
13. [2014] NSWCA 391; 18 ANZ Insurance Cases 62-049 at [29] (Gleeson JA and Sackville AJA agreeing).
14. [2014] NSWCA 391; 18 ANZ Insurance Cases 62-049 at [48].
15. Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; 13 VR 435 at [24] per curiam.
16. Evidence Act 1995 (NSW), s 92(2). 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: 13 April 2016