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: