(1990) 170 CLR 534
Larsen v Grace Worldwide (Aust) Pty Limited (No 2) [2015] NSWSC 1224
Oshlack v Richmond River Council [1998] HCA 11
(1998) 193 CLR 72
Waters v PC Henderson (Aust) Pty Ltd [1994] NSWCA 338
Source
Original judgment source is linked above.
Catchwords
(1990) 170 CLR 534
Larsen v Grace Worldwide (Aust) Pty Limited (No 2) [2015] NSWSC 1224
Oshlack v Richmond River Council [1998] HCA 11(1998) 193 CLR 72
Waters v PC Henderson (Aust) Pty Ltd [1994] NSWCA 338
Judgment (3 paragraphs)
[1]
Judgment
Judgment was given in this matter on 28 August 2015 (see Larsen v Grace Worldwide (Aust) Pty Limited (No 2) [2015] NSWSC 1224). The parties were not agreed as to the resulting orders to be made, including as to costs.
In the August judgment, I concluded at [260] that while the bulk of Mr and Mrs Larsen's claims failed, there had to be judgment in their favour. They had sought damages for personal injury, for damage to their possessions which Grace Removals had transported to Germany for them, as well as for other consequential loss and damage which they claimed been caused by the deliberate contamination of a piece of furniture with a toxic substance. The only claim on which they succeeded was for damage to some few goods which they established had been damaged in transit.
The orders proposed by the defendant were:
"1. Judgment for the First and Second Plaintiffs in the amount of $5,500, plus interest of $4,930.47 totalling $10,430.47.
2. The Defendant to pay the First and Second Plaintiffs' costs incurred in pleading and preparing evidence in respect of the claim for damage by the mishandling of their goods by the Defendant.
3. The Plaintiffs to pay the Defendant's costs of the proceedings (save for their costs in respect of the mishandling of goods claim) on an ordinary basis up to 20 April 2015.
4. The Plaintiffs to pay the Defendant's costs of the proceedings [on] an indemnity basis from 21 April 2015."
By letter of 14 October, Mr and Mrs Larsen advised that they concurred with orders 1 and 2, but not orders 3 and 4.
Under s 98 of the Civil Procedure Act 2005 (NSW) the Court has wide power to determine the appropriate order as to costs. The usual order is that costs follow the event. The purpose of the exercise of the power is compensatory, not punitive (see Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 at 566-7and Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 97).
Grace addressed the question of costs by reference to the various issues on which it succeeded and the one issue on which Mr and Mrs Larsen succeeded, as to damage to goods in transit.
Ordinarily, there is no apportionment between issues on which a successful party succeeds and those on which it fails, but that rule can operate unfairly and may not be appropriate in a case where, for example, the successful party failed on the dominant issue, or on clearly separable matters (see Waters v PC Henderson (Aust) Pty Ltd [1994] NSWCA 338; (1994) 254 ALR 328), or on issues unreasonably pursued (see Oshlack at 122). Where costs are to be apportioned, an impressionistic discretionary evaluation is involved (see James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296).
As discussed in Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121], the question of costs has to be resolved by reference to considerations of fairness:
"In my opinion, underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs. Costs follow the event generally because, if a plaintiff wins, the incurring of costs was the defendant's responsibility because the plaintiff was caused to incur costs by the defendant's failure otherwise to accord to the plaintiff that to which the plaintiff was entitled; while if a defendant wins, the defendant was caused to incur costs in resisting a claim for something to which the plaintiff was not entitled: cf Ohn v Walton (1995) 36 NSWLR 77 at 79 per Gleeson CJ. Departures from the general rule that costs follow the event are broadly based on a similar approach."
In some cases, a successful plaintiff will not be entitled to a costs order, even in respect of issues on which he or she succeeded. In my view, this is such a case. Here Grace succeeded on the dominant issues in the proceedings. The only order made in favour of Mr and Mrs Larsen was in respect of goods damaged in transit. There was no issue between the parties that Grace was liable for that damage. The major part of Mr and Mrs Larsen's claim as to what goods had so been damaged, also failed.
Grace also relied on a Calderbank offer made on 16 April 2015, for $650,000 plus costs, after cross-claims against its broker and insurer were settled and the insurer, CGU took over conduct of the proceedings, to seek an indemnity costs order in its favour. It was rejected on 20 April. That offer raises questions as to whether it was a genuine offer and whether it was unreasonable for Mr and Mrs Larsen not to have accepted it (see Gretton at [41] - [46]). The onus lies on Grace in that regard.
Grace relied on the affidavit of Ms Morshead, a solicitor, who was present at a meeting on 20 April when the offer was rejected. There she recounted a conversation between Mr Potter of counsel and Mr Larsen, who advised that the offer had not been received earlier by he and Mrs Larsen, but that it would not be accepted.
Mr and Mrs Larsen relied on an affidavit of Mr Larsen sworn on 5 November, by which various evidence and submissions were advanced, without objection.
There it was said that at the meeting on 20 April they had said that they had not seen the 16 April letter, but did not wish to accept the offer, but wanted to proceed with the hearing. They were then not provided with a copy of the letter, but after the second day of the hearing, Grace's counsel, Mr Cavanagh SC, provided them with a letter confirming an offer and they were asked to consider it overnight, it being open until the following morning. They decided not to accept that offer.
Mr Larsen explained the reasons for this to include that the offer made no provisions for the cost of cleaning up and decontaminating their property in Germany; that their complaints could have been resolved years ago, if Grace had investigated their complaints and agreed to participate in a jointly funded, independent investigation, as they had suggested; that instead, time was wasted while Grace referred their claim to insurers; further, Grace was aware that in 2012, German authorities had deemed the property to be contaminated and by its offer had showed contempt for those authorities.
Mr Larsen also said that whether the buildings have to be destroyed is the subject of ongoing investigation and that the offer was dwarfed by factors described in the "Kraenkel quotation" and depended on factors identified in the Konstanz Department of Waste Law correspondence.
He also said that Mrs Larsen's health was deteriorating. She required intensive specialist care, her prognosis not being good and that he also required treatment, which was not financially possible.
Mr and Mrs Larsen also complained that they had only been given access to the defendant's court books one full day prior to the hearing, with the result that they needed to check 1,600 pages and that they were thereby disadvantaged, including by material not being there included, which had led to confusion.
Mr Larsen also said that they expected to succeed on their vicarious liability case and that Grace had been dishonest about circumstances in which their goods had been repacked. They believed that the evidence would establish that Grace had facilitated storage and handling at its Tamworth depot, where their goods were vandalised and poisoned. They were also confident that they would succeed in establishing the intentional tort their case relied on and that their two 2012 toxicological reports established the link between their exposure to PAH contamination and their medical conditions. They also disagreed, for reasons explained, with the conduct of the hearing and the conclusions reached in the August judgment.
In the result, Mr and Mrs Larsen submitted that the $650,000 they were offered was not a reasonable offer and it would have been irresponsible for them to accept it, that requiring them to ignore the views of German authorities as to the public health threat to residents at Stahringen which Grace had caused. Further, they were confident of success because they:
"presented evidence of a serious crime that has very likely contravened Australian anti-terrorism legislation as well as punishable European laws. However the eight day trial was allowed to focus on a workplace injury claim by Mrs Larsen relating back to an industrial accident that began in 1977. Both Plaintiffs had filed and served evidence about their pre-existing medical histories as shown in their expert reports, etc. So reviewing Mrs Larsen's case, was an unnecessary exercise that wasted time and deflected attention away from the very serious charges against the Defendant."
This submission as to criminal offending may help explain why Mr and Mrs Larsen did not accept the offer which they received, although that was not the case which they pursued in these proceedings.
Mr and Mrs Larsen here pursued damages for damaged and contaminated goods exceeding 300,000 Euro and as finally pressed, a claim in excess of 20 million Euro, their claim being that German authorities would require them to demolish buildings on their property and to decontaminate the land. They comprehensively failed to make out their case, apart from a relatively small award of damages in respect of damage to goods in transit. It is accordingly just, I am satisfied, that the Court exercise its discretion to reflect the real outcome of the proceedings, by making a costs order in favour of Grace. The reality is that Mr and Mrs Larsen succeeded only in achieving an order which reflected what Grace had offered to settle on, during negotiations before the proceedings commenced.
As to the claim for indemnity costs, there can, in my view, be no question that the offer made in the 16 April letter was a genuine one. It is relevant that the letter analysed Mr and Mrs Larsen's claims, and advised as to their potential weaknesses, given:
"(a) Mrs Larsen's previous litigation and payment of compensation for Multiple Chemical Sensitivity Syndrome indicates this condition existed prior to the time of the damage. No allowance has been made for this existing condition in either your evidence, or the amount of the claim;
(b) You have not put forward evidence to establish a connection between the injuries and the damage, and in some cases, there is no recognised connection between the exposure and the injuries claimed;
(c) In order to discharge your evidentiary burden, you will require expert evidence which connects the damage and the injury to each item of your claim rather than to give a general assessment of the damage and the injuries; and
(d) The evidence you have served for the trial does not provide an independent expert opinion on the claims for injuries, but rather, repeats your own observations as to the symptoms you have experienced."
Given all that lay in issue in the proceedings and Mr and Mrs Larsen's comprehensive failure to make out the cases which they pressed at trial, given the deficiencies of the case advanced, had they had time to consider it, its rejection would have been quite unreasonable.
It is, however, also relevant to consider that this offer was only made shortly before the commencement of the trial on 21 April, at a time when they were not only unrepresented, but in ill health. While Mrs Larsen attended the 20 April meeting, she did not attend the commencement of the hearing, because she was unwell. That is relevant to the question of whether there was, in truth, a reasonable opportunity given to consider the offer.
In its terms, the offer made on 16 April was open for acceptance until close of business on the first day of the trial 21 April. On 20 April, Mr Larsen said that that they had not received the offer. Without being given a copy, or taking the opportunity to consider its terms, they rejected the offer. Grace contended that if truly they had not seen the offer, it would be logical for Mr Larsen to have asked for a copy. It would also, however, have been logical for Grace to provide another copy, to make certain that its terms had not only been seen, but also appreciated by both Mr and Mrs Larsen.
That in their submissions on costs Mr and Mrs Larsen now explain why they did not accept the offer, by reference particularly to what they considered to be an inadequate amount, given all that they claimed by way of compensation, does not necessarily lead to the conclusion that in truth, when Mr Larsen rejected the offer on 20 April they had both had a reasonable opportunity to consider the offer made only 4 days before by email. Notwithstanding that on their own account, they received a further offer on the second day of the trial, which they also rejected, that does not alter the problems with the offer of 16 April on which Grace's case on costs rest.
Given the timing, the need to travel to Sydney for the hearing and other problems experienced by Mr and Mrs Larsen during these proceedings in accessing their emails where they live at Black Mountain, that they had not received the emailed offer before the 20 April meeting, did not seem implausible.
It does seem entirely likely that even if they had been given a reasonable opportunity to consider what was offered in the 16 April letter, they would have rejected the offer. Nevertheless, the possibility that an opportunity to understand the basis on which their case was resisted, given what was explained in that letter, might have led to some alteration in their path cannot be ignored.
This is not a case like Davis v Swift (No 2) [2015] NSWCA 137, where it was concluded that an offer having been made 12 working days before trial, to a party legally represented in the proceedings, provided a reasonable time to consider the offer. Mr and Mrs Larsen had been legally advised at various earlier points in the proceedings, but they were not when the offer was made. The circumstances in which this offer was made, particularly given Mrs Larsen's health in reality gave them no reasonable opportunity to consider the 16 April offer, let alone to seek advice.
In the circumstances I consider that justice does not permit an indemnity costs order to be made against Mr and Mrs Larsen, but that they must bear the ordinary costs of the proceedings, given their failure to make out the cases which they pressed, other than in respect of the relatively small sum on which they succeeded. That, in reality, reflected only the basis on which Grace had always been prepared to settle with them.
[2]
Orders
For those reasons I make the following orders:
1. Judgment for the First and Second Plaintiffs in the amount of $5,500, plus interest of $4,930.47 totalling $10,430.47.
2. The Plaintiffs to pay the Defendant's costs of the proceedings, as agreed or assessed.
[3]
Amendments
18 November 2015 - typographical errors in paragraphs [2], [12], [17] and [21]
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Decision last updated: 18 November 2015