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[2008] NSWCA 15
Court of Appeal (NSW)
2008-03-13
Mason P, Beazley JA, Campbell JA
Original judgment source is linked above.
CITATION: Monie v Commonwealth of Australia (No.2) [2008] NSWCA 15 This decision has been amended. Please see the end of the judgment for a list of the amendments.
JUDGMENT OF: Mason P at 1; Beazley JA at 2; Campbell JA at 34
CATCHWORDS: COSTS - costs of application for extension of limitation period - costs of trial and retrial - costs of appeal - whether costs of first trial should be dealt with in same way as costs of second trial - whether successful party should be deprived of costs relating to issue on which successful party lost- whether issue dominant or separable - effect on costs of appeal of Calderbank offer made at time of trial but not renewed for appeal - effect on order for costs of trial of Calderbank offer made by three plaintiffs jointly to settle for $X to be paid to them jointly, when on appeal two plaintiffs recover more than $X and a new trial is ordered concerning the third plaintiff
Civil Procedure Act 2005 LEGISLATION CITED: Limitation Act 1969 Suitors Fund Act 1951
Baresic v Slingshot Holdings Pty Ltd (No 2) [2005] NSWCA 160 Brymount Pty Ltd t/a Watson Toyota v Cummins (No 2) [2005] NSWCA 69 Calderbank v Calderbank [1975] 3 All ER 333; 3 WLR 586 Commonwealth v Lewis [2007] NSWCA 127 Computer Machinery Co Ltd v Drescher [1983] 1 WLR 1379; [1983] 3 All ER 153 Cutts v Head [1984] Ch 290; [1984] 1 All ER 597 Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322 Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 Estate of Virgona v De Lautour (No 2) [2007] NSWCA 323 Ettingshausen v Australian Consolidated Press Ltd (1995) 38 NSWLR 404 Fotheringham v Fotheringham (No 2) [1999] NSWCA 21; (1999) 46 NSWLR 194 Gorman v Wills [1906] HCA 84; (1906) 4 CLR 764 Herning v GWS Machinery Pty Ltd [No. 2] [2005] NSWCA 375 His Eminence Metropolitan Petar, Diocesan Bishop of The Macedonian Orthodox Church of Australia and New Zealand v The Macedonian Orthodox Community Church St Petka Incorporated (No 2) [2007] NSWCA 142 Holt v Wynter [2000] NSWCA 143; (2000) 49 NSWLR 128 CASES CITED: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 Leichhardt Municipal Council v Green [2004] NSWCA 341 Monie v Commonwealth of Australia [2000] NSWSC 448 Monie v Commonwealth of Australia [2003] NSWSC 1141 Monie v Commonwealth of Australia [2005] NSWCA 25; (2005) 63 NSWLR 729 Monie v Commonwealth of Australia [2007] NSWCA 230 Morgan v John Fairfax & Sons Limited (1988) 13 NSWLR 208 Morton v Palmer (1882) 9 QBD 89 Nominal Defendant (NSW) v Hall [2001] NSWCA 376; (2001) 34 MVR 553 Peter John Monie v Commonwealth of Australia [2006] NSWSC 505 South Eastern Sydney Area Health Service v King [2006] NSWCA 2 Stuart Pty Ltd v Condor Commercial Insulation Pty Ltd (No 2) [2006] NSWCA 379 Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194 Uren v Australian Consolidated Press Limited [1965] NSWR 371 Waters v P C Henderson (Australia) Pty Ltd (NSW Court of Appeal, 6 July 1994, unreported) Young Shire Council v Cummins (No 2) [2005] NSWCA 69
Peter John Monie - First Appellant PARTIES: Jennifer Monie - Second Appellant Samuel Monie - Third Appellant Commonwealth of Australia - Respondent
COUNSEL: D F Rofe QC; A J Tudehope - Appellants R S McIlwaine SC; B J Skinner - Respondent
SOLICITORS: SK & Associates, Armidale - Appellants Australian Government Solicitor, Sydney - Respondent
LOWER COURT JURISDICTION: Supreme Court - Common Law Division
LOWER COURT MEDIUM NEUTRAL CITATION: Peter John Monie & Others v Commonwealth of Australia [2006] NSWSC 505
IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40375/06 SC 20043/01
MASON P BEAZLEY JA CAMPBELL JA
13 MARCH 2008 PETER MONIE & ORS v COMMONWEALTH OF AUSTRALIA (No 2)
Note: The principal judgment in this case was delivered on 3 September 2007: Monie v Commonwealth of Australia [2007] NSWCA 230. This judgment concerns the costs of the litigation to date.
The appellants commenced civil proceedings against the respondent after the expiration of the relevant limitation period, pursuant to a grant of leave by the Court. The Court ordered that the costs of the application for extension of time be costs in the cause.
There have been two trials of the proceedings, the first in 2002 ("the first trial") and, following an appeal from the resultant decision in 2005 ("the 2005 appeal"), the second in 2006 ("the second trial"). On the first day of the second trial, the appellants made an offer to the respondent ("the Calderbank offer") to settle all their claims for a single sum of money paid to all three appellants. The respondent rejected the Calderbank offer.
In the 2005 appeal, the Court ordered, inter alia, that the costs of the first trial be reserved for the trial judge in the second trial. At the second trial, Barr J made no orders as to the costs of the first trial, or as to the costs of the application for extension of time. However, his Honour ordered the appellants pay the costs of the second trial on an indemnity basis, as they had fared worse than an offer made to them by the respondent in an earlier Calderbank letter.
An appeal against the judgment of Barr J was heard in 2007 ("the 2007 appeal"). The judgment on the principal aspects of that appeal is cited above. The appellants were successful on all but one of the aspects of the appeal. The appeal resulted in verdicts for two of the appellants in a total amount greater than the amount of the Calderbank offer, and an order for a new trial on damages for the third appellant.
In the 2007 appeal, the appellants appealed against, inter alia, the order of Barr J as to the costs of the second trial. The respondent cross-appealed against the failure of Barr J to make an order concerning the costs of the application for extension of time, but not against the original order that the costs of the application be costs in the cause.
The appellants also claimed indemnity costs accruing from shortly after the rejection by the respondent of the Calderbank offer to date, on the basis that the appellants collectively had fared better as a result of the principal decision in the 2007 appeal (see above) than the basis upon they had offered to settle. The Calderbank offer had expired by the time the appeal was instituted and was not renewed for the purpose of the appeal.
HELD (per Campbell JA, Mason P and Beazley JA agreeing):
As to costs of the application for extension of time: a. The effect of the order that the costs of the application for extension of time be costs in the cause is that the costs of the interlocutory proceedings correspond with the final order for costs in the action. His Eminence Metropolitan Petar, Diocesan Bishop of The Macedonian Orthodox Church of Australia and New Zealand v The Macedonian Orthodox Community Church St Petka Incorporated (No 2) [2007] NSWCA 142, cited. b. In circumstances in which the respondent does not appeal against the order for costs in respect of the application for extension of time, there is no occasion to consider the application to the facts of the case of guidelines for exercise of the Court's discretion concerning costs of such an application. Holt v Wynter [2000] NSWCA 143; (2000) 49 NSWLR 128 and Commonwealth v Lewis [2007] NSWCA 127, not applied.
As to the costs of the 2007 appeal, the failure of the appellants to succeed on one aspect of an otherwise successful appeal ought not affect the order for costs on the appeal. The appellants should have all their costs of the appeal.
As to the costs of the first trial: a. Whilst it is a frequently observed practice that when a new trial is ordered, the costs of the first trial are ordered to follow the event in the new trial, this does not detract from the obligation of the Court to exercise its discretion concerning costs in each case by reference to the facts. Morton v Palmer (1882) 9 QBD 89; Gorman v Wills [1906] HCA 84; (1906) 4 CLR 764; Uren v Australian Consolidated Press Ltd [1965] NSWR 371; Nominal Defendant (NSW) v Hall [2001] NSWCA 376; (2001) 34 MVR 553, cited. b. This was not an occasion for departing from the common practice in which the costs of the first trial are dealt with in the same way as the costs of the second trial. Morgan v John Fairfax & Sons Limited (1988) 13 NSWLR 208, distinguished.
As to the costs of the second trial: a. The usual circumstance in which a court will deprive the successful party of the costs relating to an issue on which the successful party lost, is when that issue is clearly dominant or separable. Waters v PC Henderson (Australia) Pty Ltd (NSW Court of Appeal, 6 July 1994, unreported); James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296; Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373, applied. b. In the present case, the claim in respect of which the appellants were unsuccessful was an important one, but neither dominant nor separable. In those circumstances, the appellants should not be deprived of any part of their costs of the trial.
As to the claim for indemnity costs: a. Where multiple claimants make a single offer of compromise, a failure to distinguish between the claimants in an offer of compromise is not a reason in itself for refusing an order for indemnity costs. The offer of joint settlement did not deprive the Commonwealth of the ability to properly assess the claims; each of the plaintiffs' claims had been fully particularised and had been the subject of a first hearing. b. The fact that one of the three claims remains undetermined is not sufficient, of itself, to refuse the application for indemnity costs of the second trial. The Commonwealth's liability was confined to a single set of circumstances, and there were no matters of principle or policy that overlay the litigation or its settlement. c. It was unreasonable not to accept the offer of compromise, as the combined value of the claim was in excess of the offer. Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375, applied d. The failure to renew the offer prior to the 2007 appeal made it inappropriate to order indemnity costs of that appeal.
MASON P BEAZLEY JA CAMPBELL JA
13 MARCH 2008 PETER MONIE & Ors v COMMONWEALTH OF AUSTRALIA (No 2) Judgment 1 MASON P: I agree with Beazley JA. 2 BEAZLEY JA: I have had the advantage of reading in draft the judgment of Campbell JA and agree with his reasons and proposed orders, except in relation to indemnity costs, in respect of which I wish to consider the matter separately. 3 The claim for indemnity costs made in this matter was based on an offer of compromise contained in a Calderbank offer (see Calderbank v Calderbank [1975] 3 All ER 333; 3 WLR 586), made on 31 January 2006, the first day of the second trial. The terms of the offer are set out in full in the judgment of Campbell JA at [68]. In essence, it was an offer that there be a verdict for the appellants (who were the plaintiffs in the trial) in the sum of $250,000 plus costs. 4 The appellants' offer of compromise was not renewed, nor was any fresh offer made prior to the appeal. In those circumstances, in accordance with authority in this Court, I would not make an order for indemnity costs of the appeal: see Brymount Pty Limited t/a Watson Toyota v Cummins; Young Shire Council v Cummins (No 2) [2005] NSWCA 69; Baresic v Slingshot Holdings Pty Ltd (No 2) [2005] NSWCA 160; Stuart Pty Ltd v Condor Commercial Insulation Pty Ltd (No 2) [2006] NSWCA 379; and Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194. What follows, therefore, is a consideration of whether there should be an order for indemnity costs of the second trial. 5 The application for indemnity costs raises a novel problem for the Court's consideration. The appellants each had individual claims against the Commonwealth arising out of the one incident, namely the shooting of the first appellant Peter Monie. The other two parties, Jennifer Monie (Peter's wife) and Samuel Monie (Peter's adult son) brought claims for psychiatric injury arising out of the shooting of Peter. 6 The Monies brought their claims in a single proceeding against the Commonwealth, alleging that the Commonwealth was negligent in failing to inform them that the person referred to their pastoral company by the Commonwealth Employment Services' "Jobstart" scheme had a criminal record involving crimes of violence. It was that person who shot Peter Monie within three months of being employed by the company as a farm hand on their property, which is located in a remote part of northern New South Wales. 7 The claim made in the Further Amended Statement of Claim was, relevantly, in terms that the "plaintiffs claim damages". The individual bases for the damages claimed by each of Peter, Jennifer and Samuel Monie were separately particularised in the pleadings and later in the Pt 33 r 8A Statement. 8 The decision by the appellants to prosecute their claims in the one proceeding was an appropriate engagement of the procedures of the Court. It is likely, in any event, that had separate proceedings been instituted, they would have been heard together. There was, as I have explained, a commonality in the claims in that each cause of action arose out of the same incident. However, the fact that there was one set of proceedings, or that the proceedings would, most likely, have been heard together, did not have the effect of collapsing the claims into a single cause of action. Each appellant had her/his own cause of action which had to be established independently each of the other. This is relevant when a defendant to such claims is considering the question of settlement. 9 An offer to compromise involves an assessment, both by the offeror and the offeree, of the prospects of success of the claim, together with an assessment of the damages that may be awarded. So far as an offeree is concerned, that party must have available sufficient material to enable that assessment to be made. Thus, it is usual for all medical reports to have to be served on the opposing party at the time an offer is made. 10 In this case, there were three separate claims. The essential question on negligence was, as I have indicated, the same in each claim. The questions of causation and quantum of damage differed in each and therefore required separate consideration in the case of each appellant. Notwithstanding the disparate nature of their claims, the appellants made a combined offer of settlement. At a practical level, this was not surprising. The claims had proceeded together as one proceeding since their institution in 2001. 11 The Commonwealth has submitted, however, that the appellant's failure to distinguish between the three appellants in the offer of compromise was a reason in itself for refusing an order for indemnity costs. I do not agree that this is necessarily the case. The award of indemnity costs based upon a Calderbank offer involves the exercise of a discretion. 12 In Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322, it had been argued that an offer to settle a matter in terms that was inclusive of costs could never be the basis upon which the court exercised its discretion to award indemnity costs. That submission was rejected on the basis that it would fetter the court's wide discretion in considering whether to grant indemnity costs pursuant to an offer of settlement made in a Calderbank offer. Basten JA extensively reviewed the authorities dealing with Calderbank offers and observed that the Court of Appeal had rejected a line of first instance authority that an offer of compromise inclusive of costs could not be a proper Calderbank offer. In doing so, his Honour pointed out, at [135], that the courts have "regularly acknowledged a degree of flexibility in assessing Calderbank offers", being a flexibility which is not available when the offers are made under the rules of court governing offers of compromise. His Honour further pointed out that such "flexibility is likely to promote the overriding purpose of the Civil Procedure Act 2005 (NSW), as defined in s 56". 13 The offer of compromise in the present case was not made in terms inclusive of costs. However, the relevance of the principles discussed in Elite v Salmon to this case is that there is no set formula in which an offer must be framed. The question is whether the offer is made in terms that enable the offeree to give proper consideration to it. 14 Before proceeding further and having regard to the history of this litigation, as recorded in the judgment of Campbell JA and the reference in Elite v Salmon to s 56, it is appropriate to set out the relevant provisions of that section: "56(1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
(2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule …" (Emphasis added)
It is also appropriate to reiterate the policy and principles underlying offers of compromise and the reason such offers are relevant to the exercise of the discretion as to the costs order that ought to be made. 15 In Cutts v Head [1984] Ch 290; [1984] 1 All ER 597, Fox LJ, in recognising that the principles stated by Lord Cairns in Calderbank v Calderbank applied in cases other than matrimonial cases, stated at 315: "If a party is exposed to a risk as to costs if a reasonable offer is refused, he is more rather than less likely to accept the terms and put an end to the litigation. On the other hand, if he can refuse reasonable offers with no additional risk as to costs, it is more rather than less likely to encourage mere stubborn resistance." 16 In Computer Machinery Co Ltd v Drescher [1983] 1 WLR 1379; [1983] 3 All ER 153, Megarry VC stated at 1383: "Whether an offer is made 'without prejudice' or 'without prejudice save as to costs,' the courts ought to enforce the terms on which the offer is made so as to encourage compromises and shorten litigation. The latter form of offer has the added advantage of preventing the offer from being inadmissible on costs, thereby assisting the court towards justice in making the order as to costs."
This statement was endorsed by Oliver J in Cutts v Head at 311. 17 The underlying public policy and private interest in encouraging the compromise of claims by awarding indemnity costs has long been recognised. In Leichhardt Municipal Council v Green [2004] NSWCA 341, Santow JA, after referring to Cutts v Head and Computer Machinery Co Ltd v Drescher, stated at [14]: "It can be seen from these cases that the practice of Calderbank letters is allowed because it is thought to facilitate the public policy objective of providing an incentive for the disputants to end their litigation as soon as possible. Furthermore, however, it can be seen as also influenced by the related public policy of discouraging wasteful and unreasonable behaviour by litigants." 18 In South Eastern Sydney Area Health Service v King [2006] NSWCA 2 (a case dealing with an offer of compromise under the rules of court), Hunt AJA (Mason P and McColl JA agreeing) stated, at [83], the purpose of the rules of court as being: "… 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."
See also Macquarie Radio Network Pty Ltd v Arthur Dent (No 2) [2007] NSWCA 339 per Beazley JA at [15] (Mason P and Basten JA agreeing). 19 The same policy and purpose underlie offers of compromise made in the form of Calderbank offers: Elite v Salmon. 20 In the present case, the effect of the offer was to propose to the Commonwealth, in circumstances where three claims were being prosecuted together, that they had a combined worth of $250,000. The offer of compromise in those terms was also a statement to the Commonwealth that the Commonwealth did not have to concern itself with how the appellants viewed their individual claims, or how the appellants would distribute the moneys amongst themselves. The offer was made by the appellants' solicitor who was the agent for each of the appellants, so the Court must infer that the offer was made on the joint instructions of all three appellants. Each is an adult and none has a physical or mental disability that requires the Court to protect his or her interests. 21 An offer made in such terms was therefore an offer for the joint settlement of the matter. It was stating in essence: 'we, the appellants, consider that howsoever our claims are looked at, in combination, they are worth $250,000'. A proposal in such terms did not deprive the Commonwealth of the ability to properly assess the claims. Each of the appellants had made a claim for general damages and each had made a claim for economic loss. Those claims had not only been fully particularised, they had been the subject of a first hearing, in which the parties had given evidence and been cross-examined, and medical evidence had been adduced. In addition, there had been the earlier application for extension of time for an appeal, in which the essence of the claim had to be demonstrated. 22 The Commonwealth was therefore in a position to be able to properly assess the value of each claim, and determine whether their combined value was likely to reach or exceed $250,000. In that regard the assessment involved neither more nor less than an addition of the value of the three claims. By that I do not mean to say that the case was a simple one. As the judgment of this Court on the second appeal reveals, the claims involved matters of both legal and factual complexity: see Monie v Commonwealth of Australia [2007] NSWCA 230. But that is a matter which invites compromise rather than the contrary. The point I seek to make, however, is that when determining whether the three claims were worth $250,000 or more, it was an easy enough process to look at the claims individually and then combine their worth. 23 As it turns out, the combined value of two of the claims, that of Peter Monie and Jennifer Monie, as determined by this Court on the second appeal, exceeded the offer that was made. However, the unfortunate position has occurred whereby the claim of Samuel Monie remains to be determined because of this Court's order that there be a retrial. The reason for the retrial of Samuel Monie's claim is to be found at [224]-[228] of this Court's judgment on the second appeal. I have used the expression, "unfortunate", because the order for retrial means that this one incident has lead to a sixth, and the possibility of a seventh, proceeding if there is an appeal from the future determination of Samuel Monie's claim. If Samuel Monie is not able to prove that he suffered damage caused by the Commonwealth's negligence, he will not be entitled to a verdict. 24 The question for present purposes is whether the fact that Samuel Monie's claim remains undetermined is sufficient, of itself, to refuse the application for indemnity costs. In my opinion, it is not. I would make an order for indemnity costs, for reasons I explain below. However, I put that to one side for the moment, and return to the question whether the fact that there is presently no verdict in favour of Samuel Monie is sufficient to refuse the application for indemnity costs. 25 One possible response to the present application for indemnity costs is that it be stood over, pending the disposition of Samuel Monie's proceedings. If Samuel Monie is successful and obtains a verdict, the appellants, in total, will have achieved a result better than the offer. If their application for indemnity costs was being considered at that time, then the appellants as a group would, in all probability, be entitled to indemnity costs of the proceedings. However, Samuel Monie may not succeed on the retrial, in which case, there will be a verdict for the Commonwealth. Those considerations effectively expose the question whether there should be an order for indemnity costs now. 26 The formalisation of the acceptance of an offer in the terms it was made in this case would have required the entry of a verdict for the appellants on each claim. Does it matter that there is presently a possible result in these proceedings that Samuel Monie may not receive a verdict? In my opinion, that question should be answered in the negative. It would be reasonable to infer that the Monies would not be concerned about the procedural formalities, such as the entry of verdicts. The important consideration for them would have been the dollar value of their claim. 27 Would the entry of verdicts for the Monies have had any significance for the Commonwealth, should they have accepted the claim? Put another way, was there some reason, beyond the facts or circumstances of this case, that would cause the Commonwealth to resist the entry of verdicts in favour of the Monies, so that factor alone would have been a reasonable basis not to accept the offer of compromise? For myself, I can see none. This is not a case where there are other claimants in the wings. Rather, it is a case where three members of one family were injured in the one incident. The factual circumstances upon which liability was based was not a usual one, so that the Commonwealth's defence of the claim cannot be criticised. However, there were no important matters of principle or policy that overlay the litigation or its settlement. There was no reason therefore, as a matter of principle or policy, that the Commonwealth would be concerned that a 'verdict' not be recorded against it on each claim. 28 Accordingly, I am of the opinion that the fact that the offer failed to distinguish between the three appellants does not disentitle them from relying upon it for the purposes of seeking an order for indemnity costs. The recognition of such an offer as a 'valid' Calderbank offer is consistent with the flexibility that attends the making of such offers. 29 Further, as I have explained above, there is both a private interest and a public policy in the encouragement of settlements. One of the reasons these proceedings have not been finalised and are now to be the subject of at least a sixth judicial determination, is because the Commonwealth did not accede to an offer which has been exceeded by the Court's determination of damages in respect of two of the appellants. 30 It was unreasonable not to accept the offer of compromise because, as the judgment in the appeal demonstrates, the combined value of the claim is in excess of the offer, in an amount that is not de minimis. In addition, the proceedings were complex and lengthy and there was always the prospect of an appeal. Both the statutory directive in s 56 of the Civil Procedure Act and the juridical basis of the policy of the Court in encouraging settlements called out for a reasonable approach to the settlement of the claim, notwithstanding that the appellants sought to settle all of the claims at the one time. The offer of compromise was a "genuine offer of compromise", that was made in circumstances where, in my opinion, it was "unreasonable for [the Commonwealth] not to accept": see Herning v GWS Machinery Pty Ltd [No. 2] [2005] NSWCA 375 at [4]. In my opinion, the two appellants, Peter Monie and Jennifer Monie, should have an order for indemnity costs. 31 That then leaves the question whether Sam Monie should also be entitled to an order for indemnity costs of the second trial. As yet, there is no verdict in his matter. As I have explained, it remains to be determined whether he is entitled to an award of damages. However, the need for any further proceedings on his claim would not have arisen, had the Commonwealth accepted the offer of compromise. Looking at the matter globally, regardless of whether Sam Monie receives an award of damages, the total award of damages already ordered for Peter Monie and Jennifer Monie is such that the offer of compromise for the three appellants was less than the award of damages for two of them. It must follow, in my opinion, that it was unreasonable for the Commonwealth not to accept the offer of compromise so as to finally dispose of the proceedings in their entirety. That would have obviated the need for the lengthy second trial to continue, and eliminated any subsequent appeal, or possibility of a retrial and further appeal. The public purpose in doing so speaks for itself. 32 There is another factor which convinces me that there should be an order for indemnity costs. The offer of compromise included a claim for costs. Those costs were identified in the offer as extending to the first proceedings and the application for an extension of time. The Commonwealth has resisted the payment of those costs. They have been unsuccessful in doing so. Their resistance to those costs claims involved the parties in additional expense and the Court's time has been taken up in dealing with the application. The parties are, of course, entitled to utilise the Court's procedures to prosecute or defend claims. Nonetheless, as I have already explained, there are statutory and caselaw constraints within which that entitlement operates. A failure to recognise those constraints by not accepting an offer of compromise may have costs consequences. In this case, the offer of compromise was reasonable, not only in terms of the proposed judgment sum, but also in respect of costs. 33 Accordingly, the orders I propose are:
Course of the Litigation 35 The shooting that gave rise to the litigation occurred on 15 June 1993. Proceedings were not begun within the limitation period. An application for extension of time pursuant to s 60C(2) Limitation Act 1969 was filed on 17 September 1999. Master Malpass (as he then was) granted that application on 26 May 2000: Monie v Commonwealth of Australia [2000] NSWSC 448. The order made by the learned Master was (at [27]): "I order that the limitation period for such causes of action be extended for a period of 28 days from today. The costs of the Summons are to be costs in such proceedings commenced consequential upon that extension." 36 The proceedings were begun in accordance with that leave. There have been two trials of the proceedings. 37 The first trial was held before Dowd J in 2002. His Honour gave judgment on 4 December 2003, dismissing all claims of the plaintiffs: Monie v Commonwealth of Australia [2003] NSWSC 1141. 38 The plaintiffs appealed against that decision to the Court of Appeal. The decision of the Court of Appeal (Monie v Commonwealth of Australia [2005] NSWCA 25; (2005) 63 NSWLR 729) resulted in the following orders (at [71], 750): "1. The judgment in favour of the defendant is set aside. 2. A new trial is ordered on all issues. 3. The costs of the first trial are reserved for the trial judge in the new trial. 4. The defendant is to pay the plaintiffs' costs of the appeal." 39 The second trial was heard by Barr J in 2006. It also resulted in a verdict and judgment for the defendant: Peter John Monie v Commonwealth of Australia [2006] NSWSC 505. 40 Barr J noted at [172] that the cost of the summons for the order extending time were to be costs in the ensuing proceedings. He decided it was appropriate to make no order as to the costs of the first trial, (at [173]-[175]). He ordered that the plaintiffs should pay the costs of the retrial on an indemnity basis, because the plaintiffs fared worse than an offer made to them in a Calderbank letter. The orders this Court has made in this appeal on 3 September 2007 set aside the order for costs made on 13 June 2006 concerning the costs of the retrial.
Costs of the Application for Extension of Time 41 The Commonwealth submits that either the plaintiffs should pay its costs of the application for extension of time, or there should be no orders as to costs. 42 The Monies submit that there has been no appeal against Master Malpass's decision concerning costs of the extension application, and hence that the costs of the extension application should not be separately considered. Rather, the Monies submit, the effect of the order that the costs of the extension application be costs in the cause is that the costs of that application will be determined automatically by whatever order the Court makes concerning the costs of the balance of the proceedings. 43 The Monies are right in saying that there is no appeal against the costs order of Master Malpass. While the Commonwealth has cross-appealed against the failure of Barr J to make an order concerning the costs of the extension application, it has not appealed against the costs order of Master Malpass. 44 The order of Master Malpass did not reserve the costs of the extension application to the trial judge. The only costs that the Court of Appeal, in the 2005 appeal, reserved to the trial judge were the costs of the first trial. In His Eminence Metropolitan Petar, Diocesan Bishop of The Macedonian Orthodox Church of Australia and New Zealand v The Macedonian Orthodox Community Church St Petka Incorporated (No 2) [2007] NSWCA 142 at [18] the Court of Appeal (Beazley, Giles and Hodgson JJA) said at [18]: "An order that the costs be 'costs in the cause' or 'costs in the proceedings' (the terms are interchangeable) means that the costs of the interlocutory proceedings correspond with the final order for costs in the action. Thus if, in the final proceedings, the plaintiff is successful and an order for costs of the final hearing is made in the plaintiff's favour, the plaintiff gets the costs of the interlocutory proceedings as part of the costs of the action against the defendant, regardless of who was successful on the interlocutory application: see J T Stratford Ltd v Lindley [1969] 1 WLR 1547 at 1553 per Lord Denning MR."
See, to similar effect, Dal Pont, Law of Costs, (2003) LexisNexis Butterworths, par [14.21]. 45 Although the Commonwealth referred to guidelines for exercise of the Court's discretion concerning costs upon an application for an extension of time, as stated by this Court in Holt v Wynter [2000] NSWCA 143; (2000) 49 NSWLR 128 at [121], 147-148 and Commonwealth v Lewis [2007] NSWCA 127 at [94] there is no occasion to consider the application to the facts of the present case of those guidelines when there is no appeal against the costs order of Master Malpass.
Costs of the 2007 Appeal 46 At the second trial the Monies had made a claim for significant economic loss, alleged to arise because the shooting prevented the carrying on and development of a cattle stud that they were in the process of developing. The trial judge was not satisfied that the causal link had been established, and so did not award the significant damages for economic loss that Peter and Jennifer Monie were claiming. The amount of $20,000 that he awarded for their economic loss was quite small by comparison with their claim on this head. 47 Peter and Jennifer Monie appealed against the disallowance of the claim for economic loss arising from the alleged effect on the stud business, but this aspect of the appeal did not succeed. 48 I do not accept the Commonwealth's submission that Peter and Jennifer Monie's failure in this respect ought affect the order for costs on the appeal. In substance, the Monies were the successful parties on the appeal. They should have all their costs of the appeal.
Costs of the First Trial 49 The Monies submit that the decision of the Court of Appeal in the 2005 appeal indicates that the Monies should have succeeded in the first trial and received their costs of that trial. 50 I do not accept that submission. It is inconsistent with the actual order made by the Court (that there be a new trial), and with the basis on which the Monies presented the appeal (where the only order sought was an application for a new trial on all issues - 2005 appeal judgment at [35], 740). The conclusion that Hunt AJA reached, by reference to some examples relating to the Monies' case on liability, was (at [49], 744-745): "… no confidence can be placed on the judge's findings of fact or rulings of law in relation to at least the two principal ways in which the plaintiff's case on liability was put." 51 In the course of discussing one example, Hunt AJA said (at [53], 745): "… I refrain from commenting on the effect of those documents on the existence of a duty of care to the plaintiffs beyond saying that they were clearly arguably relevant to that issue." 52 In the 2005 appeal judgment at [70], 750 Hunt AJA said: "Where a new trial is ordered, the costs of the first trial are often ordered to follow the event in the new trial. Such a consequence may be unfair in the present case, as the need for a new trial was not the fault of either party. Section 6A of the Suitors' Fund Act 1951 authorises the payment of the costs of proceedings rendered abortive by the death or protracted illness of a trial judge, but the statute does not expressly provide for the situation where the proceedings are rendered abortive by the failure of the trial judge to give an adequate judgment. Section 6C of the Act authorises the payment of a limited sum of costs where not otherwise authorised by the Act but where payment would, in the opinion of the Director-General of the Attorney General's Department, be within the spirit and intendment of (inter alia) s 6A. However, there has been no examination of this issue in the appeal. In my opinion, the costs of the first trial should be reserved for the trial judge in the new trial." 53 The evident purpose of Hunt AJA in making these remarks was to note the possibility of the Director-General of the Attorney General's Department authorising a payment under section 6C of the Suitors Fund Act 1951 to cover the costs of the first trial, and to not affect the discretion of the Director-General in the way that would occur if the Director-General's consideration of whether to authorise a payment under section 6C occurred in a context where there was already an order on foot that the costs of the first trial follow the event of the new trial. 54 Hunt AJA was, with respect, quite correct in observing that when a new trial is ordered, the costs of the first trial are often ordered to follow the event in the new trial, see eg, Morton v Palmer (1882) 9 QBD 89 at 92; Gorman v Wills [1906] HCA 84; (1906) 4 CLR 764 at 780 per Griffith CJ (apparently speaking for the whole Court); Uren v Australian Consolidated Press Limited [1965] NSWR 371 at 377, 397, 408; Nominal Defendant (NSW) v Hall [2001] NSWCA 376; (2001) 34 MVR 553 at [30], 558. That there is this frequently observed practice does not, of course, detract from the obligation of the Court to exercise its discretion concerning costs in each case individually, and by reference to the facts of that case. 55 One circumstance where the usual practice concerning the costs of a first trial is departed from, is if the cause of the first trial miscarrying lies in misconduct relating to the litigation of one of the parties. In that event, the Court may decide it is appropriate for the party who has engaged in the misconduct to bear some or all of the costs of the first trial. 56 One rationale for the usual rule is explained in Dal Pont, Law of Costs, par [20.24]: "If a trial proves abortive for a reason beyond the control of the parties and not due to their fault, the courts generally view this as an accident of litigation of which litigants run the risk until the litigation is decided. In other words, a risk that litigants assume in pursuing litigation is that a trial may be aborted, and usually the fairest way of dealing with the costs of the aborted trial where there is no issue of fault or responsibility is to cast upon the ultimate loser the liability to meet the costs of the aborted trial." 57 In some circumstances, there can be a departure from the usual rule concerning the costs of the first trial when there has been conduct by one party that caused the trial to miscarry, even though that conduct involves making a submission that the trial judge mistakenly accepts, rather than misconduct. For example, in Morgan v John Fairfax & Sons Limited (1988) 13 NSWLR 208 counsel for the defendant in a defamation action succeeded in a submission that the jury should be discharged, after a lengthy trial, by reason of remarks made by counsel for the plaintiff in closing address. The plaintiff appealed successfully. Even though the Court of Appeal held that the remarks of counsel for the plaintiff did not require the judge to discharge the jury, and hence a new trial was necessary, the costs of the first trial were ordered to be the appellant's costs in the action. 58 In Morgan, the trial judge had ordered the plaintiff to pay the costs of the first trial. The respondent sought orders that the appellant furnish security of $50,000 for the costs of the aborted first trial, and that the proceedings be stayed until that security was provided. As Kirby P said at 216-7: "The respondent knew that, if the application [to discharge the jury] succeeded, it would put the appellant at such a great disadvantage in the pursuit of his claim for defamation as possibly effectively to terminate that claim when the respondent had a costs order in its favour. The motion which the respondent subsequently brought for security for $50,000 costs and a stay pending lodgment of such security, evidenced the way in which orders for the discharge of a jury and for costs can sometimes result in such serious financial inhibition on the further prosecution of a claim as effectively to bring the claim to an end." 59 Similarly, an order that the costs of the first trial be costs in the second trial would have had a tendency to inhibit the appellant in proceeding with any second trial. By contrast, an order that the costs of the first trial be the plaintiff's costs in the second trial, permits the plaintiff to recover its costs of the first trial if it succeeds in the second trial, but does not put the plaintiff at risk of having to bear the costs of two trials if the plaintiff fails in the second trial. 60 Sensible as the approach to costs exemplified in Morgan often is when an appellate court is ordering a new trial, in the present case the discretion concerning costs comes to be exercised at a time when there has been a second trial. Thus, risk that a costs order might inhibit a second trial is not a factor that has any bearing upon the facts of the present case. 61 Counsel for the Monies submitted that a principle like that in Morgan should result in the plaintiffs receiving the costs of the first trial, because the Commonwealth made submissions that were accepted by Dowd J, but that this Court has now held ought not be accepted. I do not accept that every occasion when counsel makes a submission that a trial judge accepts, but a Court of Appeal subsequently does not accept and where a new trial is ordered, is one where the need for a new trial arises from conduct of the party who made the submissions of a type that warrants that party bearing either the costs of the first trial or its own costs of the first trial, depending on what happens in the second trial. If that were so, the common practice of appellate courts ordering a new trial, and that the costs of the first trial be costs in the second trial, would not exist. In Morgan, submitting that the jury should be discharged was conduct that deliberately aimed at aborting the first trial. For counsel for one party to merely make submissions, that a trial judge accepts, does not involve engaging in conduct of that kind. 62 In all the circumstances of this case, where the issues raised at the second trial were not markedly different from the issues raised at the first trial, and indeed where some of the evidence from the first trial was admitted as evidence at the second trial (in particular the evidence of Peter Monie) I see no reason for departing from the common practice in which the costs of the first trial are dealt with in the same way as the costs of the second trial.
Costs of the Second Trial 63 The Commonwealth submits that at both trials a considerable amount of time and effort was involved in the claim of Peter and Jennifer Monie for large damages for economic loss, an issue on which they ultimately failed. 64 The usual circumstance in which a court will deprive the successful party of the costs relating to an issue on which the successful party lost, is when that issue is clearly dominant or separable. In Waters v P C Henderson (Australia) Pty Ltd (NSW Court of Appeal, 6 July 1994, unreported) Mahoney JA said, at 4-5: "In my opinion the principles in this regard are properly stated in the Supreme Court Act and Rules. S76 of the Supreme Court Act provides that the Court has a discretion with full power to determine by whom and to what extent costs are to be paid. In the Rules, Pt52 r11 provides that: "If the Court makes any order as to costs, the Court shall, subject to this Part, order that the costs follow the event, except where it appears to the Court that some other order should be made as to the whole or any part of the costs." In the notes to the Rules, Pt52.11.2, the following appears: "Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed." 65 That principle has frequently been approved in this Court: eg James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [32]; Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [6]. 66 In the present case, the claim for significant economic loss was an important one, but not a dominant one. Nor do I regard it as a separable issue. Essentially what has happened is that Peter and Jennifer Monie have succeeded in a claim that they suffered economic loss in consequence of the negligence of the Commonwealth, but have not made out as large a quantum of economic loss as they had claimed at the trial. In those circumstances, I see no reason to deprive them of any part of their costs of the trial. 67 No submission was made that the costs of any one plaintiff or appellant should be treated differently to the costs of any other plaintiff or appellant. Nor was a submission made that any part of the costs to date should not be decided now, or that any part of the costs order ought be made dependent on some future event (like the outcome of Sam's third trial, if it ever occurs).
Indemnity Costs? 68 On 31 January 2006 the solicitors for the plaintiffs sent a letter in the following terms: "I confirm the offer of the plaintiffs made today as follows:- 1. Verdict for the Plaintiffs in the sum of $250,000 plus costs to be agreed or assessed. 2. Such costs to include the costs of the retrial, the first trial and the extension application which Master Malpass as he then was, ordered should be costs in the trial. This offer is made pursuant to the principles of Calderbank v Calderbank and is open to acceptance up to and until 10:00 am on Monday 6th February 2006." 69 31 January 2006 was the first day of the second trial. The hearing of the second trial occurred in three tranches, the first of which did not finish until 16 February 2006. 70 In consequence of the decision of this Court in the second appeal, Peter Monie has recovered a judgment for $238,750 plus interest, and Jennifer Monie has recovered a judgment for $50,000 plus interest. While the total of those judgments, even before the addition of interest, exceeds $250,000 there is one respect in which the Monies collectively have not fared better than the basis on which they offered to settle. It is that their Calderbank letter proceeded on a basis that there be a verdict for all three plaintiffs, yet, at least so far, Sam Monie has not recovered a verdict in his favour. Even more time and money of the parties and the courts may need to be expended to determine Sam's claim, and it might yet be the case that the success that the plaintiffs collectively have had to this point is marred if Sam fails in his case and is ordered to pay costs of the third trial. Those are sufficient reasons for the Calderbank letter not resulting in an order for indemnity costs. 71 So far as the costs of the appeal are concerned, there is an additional reason why no order for indemnity costs should be made. It is that the Calderbank offer in question was made at the outset of the second trial, had expired by the time the appeal was instituted, and was not renewed for the purpose of the appeal. An offer of compromise made under court rules at first instance can be a relevant factor to consider on the question of costs on appeal, even if that offer has no statutory effect under the rules on the costs of an appeal: Ettingshausen v Australian Consolidated Press Ltd (1995) 38 NSWLR 404 at 410 per Gleeson CJ and Priestley JA; Fotheringham v Fotheringham (No 2) [1999] NSWCA 21; (1999) 46 NSWLR 194 at [33], 205 per Stein JA. There is no reason of principle why any different situation should apply concerning a Calderbank offer made at first instance. Such an offer operates as one factor able to be taken into account in exercise of the court's discretion: Estate of Virgona v De Lautour (No 2) [2007] NSWCA 323 at [10]. However, the failure to renew for the purpose of an appeal a Calderbank offer that had been made for the purpose of trial is well recognised as a factor that tends against an award of indemnity costs for the appeal: Brymount Pty Ltd t/a Watson Toyota v Cummins (No 2) [2005] NSWCA 69 at [29]-[30]; Baresic v Slingshot Holdings Pty Ltd (No 2) [2005] NSWCA 160 at [21]; Stuart Pty Ltd v Condor Commercial Insulation Pty Ltd (No 2) [2006] NSWCA 379 at [10]-[17]. One factor that particularly tends to disincline an appeal court from making an order for costs of an appeal because of a Calderbank offer made for trial is if (as happened here) the Calderbank offer was not still open for acceptance when the appeal was instituted or before significant costs had been incurred in the appeal: Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194 at [8] to [9]. 72 It is unnecessary to consider the Commonwealth's submission that the failure of the Calderbank offer to distinguish between the three plaintiffs provides in itself a reason why an indemnity costs order should not be made.
13/03/2008 - Headnote added - Paragraph(s) Note applicable
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Monie
Commonwealth of Australia
(1995) 38 NSWLR 404
(1999) 46 NSWLR 194
(1906) 4 CLR 764
(2000) 49 NSWLR 128
(2005) 63 NSWLR 729
(1988) 13 NSWLR 208
(2001) 34 MVR 553