Menz v Wagga Wagga Show Society Inc

Submissions of the plaintiff

1. Counsel for the plaintiff submitted that when the first offer was made, there was no expert evidence filed by the defendant and that accordingly, the plaintiff had not been able to properly consider her position in relation to the offer. It was further submitted that the second and third offers had been made in circumstances where the plaintiff was similarly unable to give proper consideration to the offers in each case, and that it was not unreasonable for the plaintiff to take the course that she did.
2. Counsel submitted, in particular, that at the time the first offer was made, the pleadings had just closed, and no expert liability evidence had been served. Counsel further submitted that between 29 March 2016 and 7 March 2018, a period of almost 2 years within which the second offer was made, the defendant had consistently represented to the plaintiff, and to the Court, that it was proposing to serve expert evidence as to liability, and had repeatedly failed to do so in accordance with orders which had been made based on those representations. It was submitted that in all of these circumstances, and in the absence of any expert liability evidence having been served by the defendant, the plaintiff was entitled to (and did) assume that such evidence could not be obtained and would not be served.

Submissions of the defendant

1. Counsel for the defendant submitted that each of the offers made represented a genuine compromise. He pointed out, in particular, that the second and third offers were substantial and submitted that there was nothing preventing the plaintiff from giving them her full consideration. It was further submitted that even if there was an expectation on the part of the plaintiff that the defendant would serve expert evidence, that was not a proper basis on which to reverse the presumptive entitlement to a special costs order.

Consideration

1. Rule 20.26 of the Rules facilitates the making of an offer of compromise. It has not been suggested that any of the offers failed to comply with the provisions of that rule. What is in issue is whether the Court should exercise its discretion pursuant to r 42.14 which is in the following terms: 42.14 Where offer not accepted and judgment no less favourable to plaintiff (1) This rule applies if the offer is made by the plaintiff, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim no less favourable to the plaintiff than the terms of the offer. (2) Unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff's costs in respect of the claim: (a) assessed on the ordinary basis up to the time from which those costs are to be assessed on an indemnity basis under paragraph (b), and (b) 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, and (ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made.
2. The principles which govern the exercise of that discretion were set out by Mason P in Morgan v Johnson and may be summarised as follows : [4] (1) The purpose of the rule is to encourage the proper compromise of litigation, in the private interests of individual litigants and the public interest of the prompt and economical disposal of litigation. (2) The aim is to oblige the offeree to give serious thought to the risk involved in non-acceptance. (3) The prima facie consequence of non-acceptance will be that the rule will be enforced against the non-accepting party. This is because from the time of non-acceptance "notionally the real cause and occasion of the litigation is the attitude adopted by [the party] which has rejected the compromise". (4) Lying behind the rule is the common knowledge that "litigation is inescapably chancy". For this reason, the ordinary provisions are expected to apply in the ordinary case. The mere fact that it was reasonable for the litigants to take the view that he or she did in rejecting the offer is not enough to displace the rule. (5) The discretion to displace the rule is a judicial one, requiring the private and public purposes of the rule to be borne in mind. Reasons must be given for "otherwise ordering".
3. The essence of the submission advanced on behalf of the plaintiff was that in the absence of the expected service of expert evidence by the defendant, the plaintiff was not in a proper position to properly consider any of the offers. In considering that submission, the following matters are relevant.
4. Firstly, at the time that the first offer was made the defendant saw fit to draw to the plaintiff's attention, in some detail, what it saw as the issues, an what it regarded as the shortcomings in the plaintiff's case. The plaintiff could not possibly have been under any misapprehension as to the fact that liability was in serious issue, and that the defendant sought to rely on a number of provisions of the Civil Liability Act 2002 (NSW) in its defence.
5. Secondly, even absent such correspondence, the fact that those matters were very much in issue must have been evident to the plaintiff from the pleadings.
6. Thirdly, whilst I accept that there had been indications by the defendant that expert evidence would be served, the fact that such evidence was not served for a long period did not preclude the plaintiff from giving proper consideration to the offers. As I have already noted, the fact that liability was very much in issue must have been evident to the plaintiff from the pleadings.
7. In all of these circumstances, there was nothing preventing the plaintiff from giving proper consideration to each of the offers at the time they were made. It follows that there is no basis on which to exercise the discretion to reverse the defendant's prima facie entitlement to the orders sought.
8. For those reasons I make the following orders: 1. The order made on 20 May 2019 requiring the plaintiff to pay the defendant's costs as agreed or assessed is vacated. 2. The plaintiff is to pay the defendant's costs on the ordinary basis to 29 March 2016, and on an indemnity basis from 30 March 2016 onwards.

Endnotes

1. Menz v Wagga Wagga show Society Inc (No 3) [2019] NSWSC 541.
2. Commencing at [4].
3. Menz v Wagga Wagga Show Society Inc [2018] NSWSC 1326.
4. (1998) 44 NSWLR 578 at 581-582 (citations omitted).

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