Consideration
14 The following statements of principle provide some guidance as to how UCPR r42.15A should be applied.
"19 There are some distinctions between the two procedures in their attendant costs consequences. A key difference is that where an offer of compromise has been made under the Rules, a prima facie entitlement arises in the relevant party to have costs awarded in accordance with the appropriate Rule. This entitlement, though subject to the Court's discretion to prevent substantial injustice in exceptional cases, will rarely be interfered with …". (Santow JA - Leichhardt Municipal Council v Green [2004] NSWCA 341 at [19])
"83 Part 52 rule 22 provides that, where a plaintiff who has made an offer of compromise in accordance with Part 22 (Division I) which is not accepted by the defendant, and where the plaintiff obtains a judgment no less favourable than the terms of the offer, then, unless the Court otherwise orders, the plaintiff will be entitled to an order against the defendant for costs on an indemnity basis in relation to his costs incurred from the day after the offer was made. The onus is on the defendant to persuade the Court that indemnity costs should not be ordered. He must demonstrate the basis on which an order should be made denying the plaintiff's entitlement to indemnity costs. He must establish that he had given serious thought to the risk involved in non-acceptance of the offer, and that he had assessed the plaintiff's case properly and in the context of the rule and the achievement of its purpose - to encourage the proper compromise of litigation, in the private interests of the litigants and in the public interest of the prompt and economical disposal of litigation. Generally, exceptional circumstances are required to justify such an order denying the plaintiff's entitlement. See, generally, Fowdl v Fowdl , Court of Appeal, 4 November 1993, unreported, per Kirby P at 12; Hillier v Sheather (1995) 36 NSWLR 414 at 422-423; Morgan v Johnson (1998) 44 NSWLR 578 at 581-582.
84 Although the Court may take into account the particular features of a case and the difficulty of putting an accurate estimate on its value in advance of the litigation, those considerations do not provide a basis by themselves for denying the party making the offer an order for indemnity costs: Hillier v Sheather (at 423). In Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721 at 725, it was said that a miscalculation in a case with large imponderables, where the course taken by the party to whom the offer was made may have been perfectly reasonable, would provide a basis for denying an order, but the subsequent decision in Hillier v Sheather suggests that, whilst "large" imponderables may be a relevant factor in the particular case in denying an order for indemnity costs, in the general case a party's reasonable belief as to his own chances of success does not alone provide a basis for denying an order for indemnity costs." (Hunt AJA - South Eastern Sydney Area Health Service v King [2006] NSWCA 2 at [83] - [84])
15 Those statements of principle applied to the equivalent rules of the UCPR:
"15. A court will only deviate from the general rule provided for by r42.14 of the UCPR and make a different order if it finds that there are exceptional circumstances for doing so. Hunt AJA in South Eastern Sydney Area Health Service v King [2006] NSWCA 2 considered the authorities in relation to Pt 52A r 22 of the Supreme Court Rules (which is relevantly in the same terms as UCPR r42.14) …" ( Beazley JA - Macquarie Radio Network Pty Ltd v Arthur Dent (No 2) [2007] NSWCA 339).
16 Contrary to the plaintiffs' submissions concerning the nature of the case, as of 13 March 2008 the plaintiffs should have appreciated that they had difficulties in succeeding in their claims. It is true that they had the benefit of an apparent breach of duty on the part of the second defendant, but the opinions in the experts' reports then available did not establish a causal link between that apparent breach of duty and the deceased's death. On the contrary they indicated that there was no such causal relationship.
17 It is always difficult to evaluate the genuineness of a "walk away" offer. As the second defendant submitted, there was a real benefit for the plaintiffs contained in the offer, i.e. they would if the offer were accepted have no liability for the second defendant's costs. As of 13 March 2008 those costs would already have been substantial. I have concluded that in the circumstances of this case the second defendant's Offer of Compromise of 13 March 2008 was genuine.
18 I accept that an acceptance of the Offer of Compromise would have required the approval of the Court in respect of some of the plaintiffs. I accept that such an approval would have been difficult and would have required the judge performing that task to have carefully reviewed, not only the experts' reports, but also a quantity of medical literature.
19 That, however, is a task often performed by judges of this Court particularly in medical negligence matters arising from birth defects. The complexities in this matter would have made that task difficult but it would certainly have been well within the capability of the judges of this Court.
20 I appreciate that medical negligence matters are often very difficult to assess. Each side may feel very strongly about the prospects of success. This is not a reason of itself, however, why Offers of Compromise, regardless of which side is relying upon them should not be effective when the offeror achieves a result which is as good as or more favourable than that set out in the offer. What it means is that in such matters Offers of Compromise have to be very carefully evaluated and the evidence closely reviewed before a decision is made to accept or reject.
21 In this matter I am not satisfied that the plaintiffs have established exceptional circumstances such as would displace the operation of the rule. Accordingly the second defendant is entitled to have his costs paid on an indemnity basis from 14 March 2008.