McCALLUM J: On 12 April 2019, the summons in these proceedings was dismissed with costs: Insurance Australia Ltd t/a NRMA Insurance v Yu [2019] NSWSC 400. When the judgment was published, the first defendant, Ms Yu, foreshadowed an application for assessment of part of her costs on an indemnity basis.
On 3 May 2019, I heard that application and made the order sought by Ms Yu, as follows:
1. That the plaintiff pay the first defendant's costs on the ordinary basis up to and including 1 February 2018 and on an indemnity basis after 1 February 2018.
These are my reasons for making that order.
The proceedings sought judicial review of a decision of the Claims Assessment and Resolution Service (CARS) assessing the damages claimed by Ms Yu. The assessor certified his assessment of damages in the sum of $133,482.02. After a deduction for medical expenses the net award was $125,670.75. Ms Yu's costs were assessed in the sum of $23,023.30 giving rise to a total liability of $148,694.05.
The proceedings for judicial review were commenced by summons filed on 31 October 2017. The summons sought orders quashing the assessor's certificate and remitting the proceedings for assessment by a different assessor. The summons also sought an order that Ms Yu pay the insurer's costs of the proceedings in this Court.
In December 2017, Ms Yu provided written submissions to the insurer setting out substantially the same arguments as those ultimately accepted in the primary judgment.
On 1 February 2018 Ms Yu sent the insurer two separate letters offering to settle the proceedings. One enclosed an offer of compromise under the Uniform Civil Procedure Rules 2005 (NSW). The offer of compromise was in the following terms:
"(1) The plaintiff makes an offer of compromise in the sum of $110,000.
(2) This offer is made pursuant to r 20.26 of the Uniform Civil Procedure Rules 2015 [sic] (NSW).
(3) This offer is open for acceptance by 1 March 2018 at 4.00pm."
The second was expressed as a Calderbank offer as follows:
"We are instructed to communicate an offer of settlement in the sum of $110,000 plus costs as agreed or assessed.
This offer is made in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333.
This offer will also remain open for acceptance by 1 March 2018 at 4.00 pm.
We will rely on this letter and seek an order that the plaintiff (Insurance Australia Ltd t/as NRMA Insurance) pays the first defendant's (Yuchen Yu) costs on an indemnity basis from the date of this letter in case the first defendant achieves a better result than the present offer of compromise or Calderbank offer."
At the hearing of the application this morning, counsel for Ms Yu accepted that the offer of compromise did not comply with the requirements of r 20.26 of the Rules and so did not engage the benefit of r 42.15. That is because the offer did not identify the "the proposed orders for disposal of the claim" (the relevant claim being the insurer's application for judicial review of the assessor's certificate). The insurer relied in this context on the decision of Campbell J in AAI Limited v Josipovic (No 2) [2013] NSWSC 1577. That decision contains a helpful and thorough analysis of the complexity of applying the rules concerning offers of compromise to applications for judicial review. His Honour held in that case that an offer to compromise such an application for a monetary sum, which might otherwise have engaged the benefit of the rules, failed for want of compliance with the requirement to identify the proposed orders for disposal of the claim: at [28] to [35].
In Josipovic, the claimant had not framed any offer, in the alternative, to operate as a Calderbank offer. As noted on behalf of Ms Yu, the principles concerning such offers do not impose the same strictures as the rules concerning offers of compromise. Conversely, a Calderbank offer does not enliven an entitlement to indemnity costs in the nature of that which arises in respect of an offer of compromise.
The principles concerning Calderbank offers were summarised by Basten JA in Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344. As his Honour noted at [8], the approach frequently adopted has been to ask two questions, namely whether:
1. there was a genuine offer of compromise; and
2. it was unreasonable for the offeree not to accept it.
In Josipovic, Campbell J (in considering the offer of compromise served in that case) expressed the view that, although proceedings for judicial review are concerned with the legality of the decision under review, the "basal dispute" concerns the amount of damages payable. But for the failure in that case to comply with the rules concerning offers of compromise, his Honour would have considered his order dismissing the insurer's claim for orders in the nature of prerogative relief to be no less favourable to the claimant than the terms of an offer under which she agreed to settle the action for a monetary sum which appears to have been about 85% of the amount the insurer was bound to pay in accordance with the certificate issued in that case under s 94(4) of the Motor Accidents Compensation Act 1999 (NSW).
I respectfully agree with his Honour's remarks at [23] and [25]-[27] as to the appropriateness, in this context, of looking beyond the narrow scope of the relief sought in proceedings for judicial review of an administrative decision. That may in some circumstances be a difficult exercise but it is one the Court is able and on one view obliged to undertake in fulfilment of the requirements of Part 6 of the Civil Procedure Act 2005 (NSW).
In her written submissions, Ms Yu addressed this issue by reference to the degree of compromise reflected in the discount implicit in the Calderbank offer as a percentage of the particular heads of damage challenged in the insurer's grounds for review in the primary proceedings. I do not think that is a helpful comparison. As submitted on behalf of the insurer at the primary hearing, if the assessment in respect of any individual head of damage had been established to entail jurisdictional error or legal error on the face of the record, that would have vitiated the whole decision, not simply the component of damages the subject of the argument.
However, in my view, the offer plainly reflected a measure of compromise. Ms Yu offered settlement in the sum of $110,000 against the insurer's statutory obligation to pay a total of $148,694.05. The insurer submitted at the hearing this morning that it was not clear on the face of the Calderbank offer whether the sum of $100,000 was intended to be inclusive of the amount of costs assessed by CARS ($23,023.30) or in addition to those costs. In my view, the language of the offer is tolerably clear in indicating that Ms Yu would accept the sum of $110,000 in discharge of the whole of the insurer's obligation under the certificate including costs. However, even if that is wrong and the insurer was left uncertain as to the import of the offer, they had only to ask.
Mr Wilson, who appeared for the insurer on the present application, submitted that an application for judicial review is an "all or nothing" claim. On a strict juridical analysis of the relief sought, that is right. However, for the reasons explained by Campbell J in Josipovic, in my view it is appropriate to have regard to broader considerations in the present context.
A further measure of compromise exists in the fact that the offer plainly contemplated releasing the insurer from its statutory obligation to pay the amount stated on the face of the certificate without putting it to the expense of prosecuting the claim in this Court to obtain that relief. It also offered certainty in respect of the inevitable further assessment if the application were successful and the matter were remitted to CARS. It must be borne in mind that one possible outcome of a further assessment would be certification of an amount higher than that assessed by the assessor in the decision under review. All of those uncertainties were sought to be resolved by the Calderbank offer in a way that reflected compromise of Ms Yu's entitlements.
As to whether the constructive refusal of the offer (by failure to accept it or respond to it within the time allowed) was unreasonable, I approach this issue on the assumption already indicated that the offer was intended to be inclusive as to costs. In my view it was unreasonable not to accept that offer having regard to my assessment of the amounts involved and the strength of the arguments on which Ms Yu succeeded. If (contrary to my view) the terms of the offer were unclear, it was unreasonable not to seek clarification, having regard to the insurer's obligations under part 6 of the Civil Liability Act and also to the objects of the Motor Accidents Compensation Act and the insurer's obligations under that Act (considered by Campbell J in Josipovic at [25]).
The offer expressly identified Ms Yu's intention to rely on it for that purpose.
For those reasons, I considered that Ms Yu was entitled to have her costs from the date of that offer on an indemnity basis.
[2]
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Decision last updated: 24 May 2019