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[2011] TASSC 35
Supreme Court of Tasmania
2011-03-28
Porter J
Original judgment source is linked above.
CITATION: Partridge v Hobart City Council (No 2) [2011] TASSC 35
HEARING DATE: 22 December 2010; 27, 28 January 2011
Procedure - Costs - Departing from the general rule - Conduct of parties - Offer of compromise - Validity of offer - Plaintiff's offer conceding a proportion expressed as a percentage of the claim - Offer conditional on judgment being entered in plaintiff's favour for damages to be assessed on that basis - Offer capable of acceptance.
Henderson v Simon Engineering (Australia) Pty Ltd [1988] VicRp 77; [1988] VR 867; Coombes v Roads and Traffic Authority (No 2) [2007] NSWCA 70. applied.
Procedure - Costs - Departing from the general rule - Conduct of parties - Offer of compromise - Validity of offer - Plaintiff's offer conceding a proportion expressed as a percentage of the claim - Judgment in monetary terms - Whether judgment no less favourable to the plaintiff than the terms of the offer - Substance of result to be considered not the form of the order by which effect is given to the result.
Supreme Court Rules 2000 (Tas), rr280(4)(c) and 289(1).
Pettiford v Whicker [2005] NSWCA 370, followed.
Procedure - Costs - Departing from the general rule - Conduct of parties - Offer of compromise - Validity of offer - Plaintiff's offer conceding a proportion expressed as a percentage of the claim - Defendant's offer to settle claim for specific sum of money - Consequences of non-acceptance of each offer prescribed by rules - Effect of the two offers on costs discretion - Effect to be given to each rule as far as practicable - Orders made in accordance with presumptive entitlements to achieve a fair result.
Procedure - Costs - Departing from the general rule - Conduct of parties - Offer of compromise - Modifications to presumptive orders under Rules of Court - Circumstances in which rules not applied to their full effect - Timing of offer - Difference between judgment sum and offer of compromise.
Simonovski v Bendigo Bank Ltd (No 2) [2003] VSC 139; Vale v Eggins (No 2) [2007] NSWCA 12; Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721, considered.
Judgment Number: [2011] TASSC 35
MOIRA KATHLEEN PARTRIDGE v HOBART CITY COUNCIL,
MICHAEL TREZISE t/as TREZISE LAWYERS, PETER BEHRAKIS,
VICTORIA ANN BEHRAKIS, DENNIS BEHRAKIS, MARIA BEHRAKIS
1 On 17 December 2010 I delivered judgment in this action for damages in negligence. I held that each of the defendants was negligent, held that the plaintiff was guilty of contributory negligence to the extent of 20 per cent and assessed damages in the sum of $295,350: [2010] TASSC 62. Questions of costs have arisen which are not easily resolved.
2 The trial of the action commenced on 24 November 2009. By a notice dated 20 May 2009 (served on 21 May 2009) the defendants jointly offered to compromise the plaintiff's claim by the payment to her of $300,000, together with party and party costs to be taxed or agreed. This offer of compromise was made by virtue of the Supreme Court Rules 2000 ("SCR"), r280(3)(a), and as contemplated by r290(b)(i)[1]. Obviously, it was not accepted.
3 On 20 August 2009, the plaintiff served on each defendant an offer of compromise as provided for in SCR, r280(4)(c)[2]. The plaintiff offered to compromise her claim in the action by agreeing to concede an apportionment of liability for her own contributory negligence at 30 per cent, with judgment being entered against the defendants for damages to be assessed subject to that reduction. This offer was also not accepted.
4 When judgment was handed down, after I had announced my findings and published my reasons, I paused for what the recording shows is about 14 seconds. I then said "Anything else?" and paused for a further period of about five seconds. I then said, "If there is nothing else, I will adjourn then". After the Court attendant had requested that all persons stand, as is customary, counsel for the plaintiff said "Your Honour, before you - I do make application for costs, but that will need to be reserved. Thank you." I noted the application for costs and said that it would be reserved. I went on to say that I would grant liberty to apply in relation to my calculations but that otherwise judgment should be entered as pronounced.
5 Although wrongly expressed as a reservation of costs, the practical effect was to adjourn to a date to be fixed the plaintiff's application for costs. As a result of a request for an appointment by one of the defendants "pursuant to the order ... granting liberty to apply on the issue of costs", I listed the matter again on 22 December 2010, at which time the existence of the offers of compromise was revealed and the defendants made application for their costs after the date of service of their offer. The plaintiff took the position that the defendants were too late with their application. I adjourned all applications for costs to 27 January 2011 when evidence was taken and the applications fully argued. (At this point, I would note that the three defendants[3] were separately represented at the costs hearing, as they were on 17 and 22 December 2010.) Apart from the issue of the lateness of the defendants' application, there were arguments about the validity of both offers of compromise, but more fundamentally, about the entitlements of each party under subrules 289(1) and 289(2) arising from the non-acceptance of those offers.
6 It is convenient to set out SCR, r289, before going further. This rule governs the consequences following the non-acceptance of offers of compromise made under the rules. It provides as follows:
"289 Costs in relation to failure to accept offer
(1) Unless the Court or a judge otherwise orders, a plaintiff is entitled to an order for costs against the defendant taxed on a solicitor-client basis if -
(a) the plaintiff has made an offer of compromise in accordance with this Part; and
(b) the defendant has not accepted the offer at the time of the judgment; and
(c) the judgment is no less favourable to the plaintiff than the terms of the offer.
(2) Unless the Court or a judge otherwise orders, a plaintiff is entitled to an order for costs against the defendant, up to and including the day on which an offer of compromise was served, on a party and party basis and the defendant is entitled to an order for costs against the plaintiff in respect of the claim after service of the offer on a party and party basis if -
(a) the defendant has made the offer in accordance with this Part; and
(b) the plaintiff has not accepted the offer at the time of the judgment; and
(c) the judgment is no more favourable to the plaintiff than the terms of the offer."
7 The plaintiff says that the defendants' application amounts to a re-opening of the issue of costs and should not be permitted. To the extent that they may seek to rely on the "slip rule", it is not available to them. Next, if the defendants' application is entertained, both offers of compromise (subject to the question of the validity of the defendants' notice), would need to be taken into account. As to this, three alternative approaches are put.
(a) The "underlying rationale" for the application of the relevant rules relates to the question of imposition and transfer of risk. The risk borne by the plaintiff as a result of the defendants' offer was displaced by her subsequent offer, meaning that the ultimate risk lay with the defendants. The plaintiff secured more than she would have had her offer of 30 per cent reduction for contributory negligence been accepted. On that basis, she should be entitled to her costs on a solicitor-client basis, save for the period between the two offers.
(b) The parties' entitlements under subrules 289(1) and 289(2) are conceptually difficult to reconcile. The entitlements being "in direct competition", the rules provide no answer and, at least, the starting point for consideration is that costs follow the event.
(c) The rules should be applied together reconciling them as best can be done in order "to reflect a fair attribution of responsibility for the costs". A summary of the basic proposal is that the plaintiff have the costs up until the time of the defendants' offer; the defendants have their costs up until the plaintiff's offer, and there be separate and differential awards for the costs thereafter based on the issues of liability and quantum, or alternatively that there be a proportional assessment and one order for the defendants to pay a percentage of the whole of the plaintiff's costs.
9 Finally, the plaintiff says that if all of that is rejected, and I take the view that the plaintiff alone is at risk, then the discretion to otherwise order is invoked. A number of relevant factors are identified which are said to activate that discretion. Part of that argument (although one not strongly pressed) is that the defendant's offer is invalid in that it did not comply with the rules. Additionally, in considering the plaintiff's possible obligations, the question is posed of whether it is reasonable to allow the costs of the defendants' separate representation at the trial.
10 The defendants say that no aspect of costs had been resolved at the time they made their applications and they were entitled to do so after the day on which judgment was delivered, there being no requirement to make such applications at the time of delivery. Costs are the subject of ancillary orders which are commonly made at any time after judgment is delivered. As to the offers, the defendants say that the plaintiff's offer was not a valid one within the meaning of the rules; at best it should be treated as a Calderbank offer. Further, (as I understand the submissions), r289(2) should prevail in the circumstances as a matter of principle; and in any event, an order should be made in accordance with the subrule because the conditions for its operation had been fulfilled and there is no reason to order otherwise. (As to that aspect, they say that such a discretion should be exercised only in exceptional circumstances which have not been made out.) It is further submitted, somewhat contrary to the previous one, that the plaintiff should not receive the benefit of any order at all under r289(1).
11 It can be seen that the following are the matters which require determination on the basis of the submissions which the parties have put.
12 As is perhaps evident from the facts earlier set out, no formal order had been taken out at the time of the defendants' application, and no determination made on the plaintiff's application for costs. An explanation for the failure to make application on 17 December 2010 was provided by Mr Jackson who appeared when judgment was delivered, and had appeared for the third defendants throughout the trial. Different counsel appeared on 17 December than those who had appeared for the first and second defendants during the trial.
13 Mr Jackson said "I left the court [on 17 December] under the impression that costs had been reserved, not simply [the plaintiff's] application, and that was why no application was formally made. But informing that position was your Honour had just announced that judgment would be given for... an amount less than the formal offer of compromise that was made. There was another offer of compromise in this case, which may or may not complicate the issue and that is what was exercising my mind, as to whether there was any basis for an application for costs or not."
14 In dealing with this issue I note at the outset that the defendants do not rely on the "slip rule": SCR r435. As they make no application for the correction of "any clerical mistake or omission in a judgment or order", there is no need for me to consider the application of the rule.
15 The plaintiff submits that on the authority of Autodesk Inc v Dyason [No 2] [1993] HCA 6; (1993) 176 CLR 300, the court has jurisdiction to recall a judgment and to re-open a hearing, at least prior to the formal entry of the judgment, but it is a power which should be exercised sparingly, having regard to the importance of the finality of the litigation. As I understand it, the plaintiff submits that the defendants could not make an application for costs on 22 December 2010 because the opportunity to do so had been foreclosed by the fact that judgment had been pronounced and an order made in relation to the plaintiff's application, although there had been no determination of it. The plaintiff relies on Aktas v Westpac Banking Corporation Ltd (No 2) [2010] HCA 47; (2010) 85 ALJR 302. In my view, the reliance on Aktas is misconceived and the submission is untenable.
16 In Aktas, the High Court delivered judgment and made orders which included orders as to costs. A little over a month later, one of the parties filed a summons seeking a variation of the costs orders. The formal orders had not been taken out. The majority took the view that the power to recall the orders should not be exercised because the party seeking the indulgence had had ample opportunity during the course of the hearing to outline its position on costs. The particular distinguishing feature of Aktas is that although not authenticated, final orders for costs had been made.
17 In this case, all that had occurred was the making of the plaintiff's application and the deferral of the hearing of it. No substantive orders as to costs had been made. In any event, the point at which reconsideration is closed off for all intents and purposes, and which marks the end of litigation, is the formal recording of the Court's orders: Burrell v R [2008] HCA 34 at [20]. It might have been expected that the defendants would, at the time judgment was handed down, make any application they were entitled to make. The failure to make an application or otherwise mention costs remains unexplained, at least as far as the first and second defendants is concerned. However, as costs are ancillary matters, I am unable to see any principle precluding an application being made some five days later when no further step in the action had been taken in the interim.
18 Particularly in the absence of any argument to this effect, I should be slow to hold that the defendants, by their silence, abandoned any claim for costs (the notion of which was referred to in Johnston v Cameron [2002] FCAFC 301 at [23]). Moreover, on the hearing of the plaintiff's application, the defendants would no doubt be entitled to raise the provisions of r289(2) as an answer to the plaintiff's pursuit of costs in the period following the service of the defendants' offer of compromise. The defendants should be permitted to pursue their applications.
19 The relevant part of the plaintiff's offer is in the following terms:
"4 The Plaintiff offers to compromise her claim in this action by agreeing to conceded an apportionment of liability for her own contributory negligence at thirty per cent (30%) and, accordingly, that judgment be entered for the Plaintiff against the Defendants for damages to be assessed and that those damages as assessed be reduced by thirty per cent (30%) for contributory negligence."
20 I have already noted r280(4)(c) which enables a plaintiff to make an offer of compromise by conceding a proportion, expressed as a percentage, of the plaintiff's claim. The defendants argue that the inclusion of the condition that judgment be entered for the plaintiff against them, made the offer non-compliant with, or took it outside the parameters of, the rule. The reason advanced is that by the terms of the offer, the defendants are not given the option of accepting the proposed reduction whilst leaving open the issue of their own negligence. That is to say, the option of agreeing that if they are held to be negligent, the plaintiff was contributorily negligent to the extent of 30 per cent and damages being reduced accordingly.
21 Relevant to this argument is r282, which provides as follows:
"282 Acceptance of offer of proportion of unliquidated sum
Unless the Court or a judge otherwise orders, if a claim is for an unliquidated sum, a party accepting an offer of compromise in the form of an offer to accept or concede a proportion of the claim is entitled to enter interlocutory judgment for the agreed proportion of damages to be assessed."
23 These submissions should be rejected. In the first place, r280(1) enables a party to make to another party an offer of compromise "of a claim of that other party or a claim made against that other party" (emphasis added). Ignoring for the moment the terms of subrules 280(3) and (4), there are no restrictions imposed in subrule (1) on the terms of an offer of compromise provided it is "of a claim". In Henderson v Simon Engineering (Australia) Pty Ltd [1988] VicRp 77; [1988] VR 867, the rule under consideration provided that where there were contribution or indemnity proceedings between defendants, any party to the contribution claim may serve on any other party to that claim, an offer to contribute towards a compromise of the claim made by the plaintiff. One of three defendants served on the others an offer to contribute "35 percent of any verdict or settlement obtained by the plaintiff".
"It has been submitted ... that r2602(1) clearly contemplates that an offer of compromise must specify a precise sum of money. I do not agree with this submission. If liability is an issue which the plaintiff must prove and contributory negligence has been raised, the proportions are most relevant. ...
If the issue of negligence and contributory negligence were issues, taking up a good deal of time (as in an industrial accident they so often are) it appears to me that r2602(1) provides a vehicle by which a defendant or a plaintiff may protect himself as to costs, for example, by offering to pay or to accept (as the case may be) a stated percentage of any damages that the tribunal may find that the plaintiff is entitled to receive and that should the offeree refuse such an offer and be found more responsible by the tribunal, the offeror should be entitled to use an offer to compromise on this issue, served on the other party, on the issue of costs concerning that issue.
Should the opposite party accept such an offer then the matter would proceed as an assessment and the plaintiff would receive as a judgment only the agreed percentage of the damages assessed by the tribunal. This procedure is commonplace in practice."
25 Henderson's case was applied in Davies v Fay [1995] 1 Qd R 509. A rule of Court provided that "a party may serve on any other party an offer to settle any one or more of the claims in a cause or matter on the terms specified in the offer to settle". Mackenzie J held that a claim that the plaintiff was guilty of contributory negligence was a claim in the cause, and an offer by the plaintiff to settle the issue of liability by admitting five per cent contributory negligence was accordingly valid[4].
26 In Coombes v Roads and Traffic Authority (No 2) [2007] NSWCA 70, it was held that a plaintiff's offer to compromise the claim against three defendants by way of a judgment in the plaintiff's favour with damages to be reduced by 25 per cent of contributory negligence, was an offer capable of acceptance. At [63] Beazley JA (with whom Ipp and Basten JJA agreed) pointed out that the order which would have resulted was not unusual in the sense that it was not uncommon to have liability, including contributory negligence, determined separately. The offer fell within the general terms of the rule permitting the compromise of a claim. See also Herbert v Tamworth City Council (No 4) [2004] NSWSC 394 and Vale v Eggins (No 2) [2007] NSWCA 12.
27 The wording of subrules 280(1), (3) and (4), makes them permissive in their operation. Rule 280 does not mandate the particular terms of offers which can be made. Provided an offer is an offer of compromise "of a claim" as described in subrule (1), the offer will be valid if it is otherwise compliant. Secondly, I do not see anything arising from r282 which supports the defendants' argument. I cannot see any reason that an offer which did not leave open the option to agree a percentage of contributory negligence, but leaves open the question of a defendant's liability, would, by virtue of that fact, be invalid. Rule 282 contemplates the type of offer which was made in this case. That seems to have been the approach adopted by Murphy J in the passage from Henderson which I have set out above. His Honour said that the acceptance of an offer to pay or accept a stated percentage of any damages, meant that the matter would proceed as an assessment.
28 No doubt parties can agree that in the event that a defendant is held liable, the damages to which a plaintiff would then become entitled are to be reduced by a particular percentage. However, it might be thought that in a proposal that a plaintiff accept a reduction of damages for contributory negligence, it is ordinarily implicit that liability on the part of the defendant is accepted. If a defendant is not held to be liable, of course no question of contributory negligence arises.
29 I hold that the plaintiff's offer of compromise was a valid offer within the terms of the rules and one capable of acceptance.
30 It is convenient to now deal with this submission. The defendants' offer was dated 20 May 2009, but it is common ground that it was not served until 21 May 2009. It was in terms of an offer in the sum of $300,000 being a compromise of all causes of action asserted by the plaintiff pleaded against the first, second and third named defendants in the action, together with party and party costs to be taxed or agreed. The offer then continued:
31 The argument is that r280(7) imposes an obligation that an offer be open for acceptance for a minimum of 14 days from the date of service. It is submitted that the terms of the offer were such that the offer was expressed to be open for 14 days from its date rather than the date of service. Rule 280(7) provides as follows:
"(7) An offer of compromise is open for any period, not less than 14 days after the service of the offer, specified in the offer."
32 The question is whether as a matter of construction of the rules, there is imposed an obligation to specifically state in an offer, that it is open for a period from the date of service, and that the stated period must be one of 14 days or more. If r280(7) is read in isolation, there is some attraction to the proposition that the offer must stipulate a period which is at least "not less than 14 days after service of the offer". But r280(7) has to be read in the light of r283(1)(a), which provides as follows:
(1) A party to whom an offer of compromise is made may accept the offer by serving notice of acceptance in writing on the party who made the offer before whichever is the earlier of the following:
(a) the expiration of any period specified in the offer or, if no period is specified, the expiration of 14 days after service of the offer;
33 Rule 283(1)(a) plainly contemplates an offer in which no period for its acceptance is specified. If that be the case, the offeree has 14 days after service in which to accept it. Having regard to that subrule, it would be very difficult to construe r280(7) as requiring specification that the offer is open for a period not less than at least 14 days after service. The rules are a little unsatisfactory in this regard, but it seems to me that reading rr280(7) and 283(1)(a) together, the result is that:
34 Accordingly, the defendants' failure to include the words "after service of the offer" in the notice of offer, does not make the offer an invalid one within the meaning of the Rules.
35 This discussion should be concluded by noting that in any event in this case, within the period of 14 days after service, the plaintiff sought and was granted an extension of the period within which to consider the offer, to 28 days.
The application of the provisions of SCR r289(1) and (2)
36 The issue which needs to be resolved is that of the proper approach in the circumstances of the two offers. To do that, it is necessary to determine the intended operation of the subrules where both apply in the one case.
37 It seems to be accepted that provisions such as r289(1) and (2), in prescribing costs consequences for unaccepted offers of compromise contain a "presumptive entitlement" to costs where the conditions for their operation are met, which presumption remains "unless the Court otherwise orders". See MGICA (1992) Ltd v Kenny & Good Pty Ltd (No 4) (1996) 70 FCR 236 at 240, Clark v State of Tasmania [1999] TASSC 111; (1999) 9 Tas R 54 at 59 [16], New South Wales Insurance Ministerial Corporation v Reeve (1993) 42 NSWLR 100, per Gleeson CJ at 102.
38 In Clark v State of Tasmania (No 2) (above), Underwood J set out a passage from the judgment of the New South Wales Court of Appeal in Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721 at 724. (That passage referred to the New South Wales equivalent of r289(1) which provided for costs on an indemnity basis, whereas r289(1) provides for costs on a solicitor-client basis.) Underwood J, at 57 [10], referred to the passage as explanatory of "the general philosophy behind offers of compromise rules ...". The passage is as follows:
"The obvious purpose of providing Pt 52, r 17 is to facilitate the proper compromise of litigation. This has been attempted by the twin measures of a 'carrot' and 'stick'. Relevantly, the 'carrot' is the promise of indemnity costs to a plaintiff in the event that the defendant is found unreasonably to have refused an offer of compromise. The 'stick' is the threat of the penalty of the imposition of an indemnity costs order against a defendant in such circumstances. It is the obvious intention of the rule to oblige a defendant, which has received an offer of compromise, to give serious thought to the risk which it may run of losing the proceedings and then being ordered to pay costs on an indemnity basis.
1 To encourage the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise by defendants which amount to a realistic assessment of the plaintiff's real claim which can be placed before its opponent without risk that its 'bottom line' will be revealed to the court;
2 To save the public costs which are necessarily incurred in litigation which events demonstrate to have been unnecessary, having regard to an earlier (and, as found, reasonable) offer of compromise made by a plaintiff to a defendant; and
3 To indemnify the plaintiff who has made the offer of compromise, later found to have been reasonable, against the costs thereafter incurred. This is deemed appropriate because, from the time of the rejection or deemed rejection of the compromise offer, notionally the real cause and occasion of the litigation is the attitude adopted by the defendant which has rejected the compromise. In such circumstances, that party should ordinarily bear the costs of litigation."
39 After setting out that passage, Underwood J continued at 58 - 60:
"11 This expression of philosophy was approved in Freemantle's Pastoral Pty Ltd v Hyett & Ors [1999] VSC 188; Grbavac v Hart [1996] VSC 37; [1997] 1 VR 154 at 164; Sands & McDougall (Wholesale) Pty Ltd (in liq) & Anor v Commissioner of Taxation [1999] VSCA 36. In Whitehead v Maas [1991] SASC 3011; (1991) 56 SASR 362, King CJ referred to the South Australian offer of compromise rule (O41) at 367 as 'penal' and said:
'Any order for the payment of the costs of the whole action must be penal to some degree. The purpose is to encourage plaintiffs to make offers and to deter defendants from non-acceptance of offers which are commensurate with the defendant's just liability'.
19 The intention is plain. Rule 11(1) is penal in effect. It is designed to encourage the proper settlement of litigation. In the event of the conditions prescribed by the rule being established, there is a presumptive entitlement to an order that the defendant pay the plaintiff's costs of the whole action taxed on a solicitor-client basis. To otherwise construe the rule would do violence to its language."
40 I turn to the nature of the circumstances in which a court might properly "otherwise order". By virtue of the wording of the provisions, the discretion is a wide one and is unfettered. References to a need to establish "compelling" or "exceptional" circumstances are apt to mislead. In Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) [2004] FCA 1437; (2004) 212 ALR 281 at [17], Hely J said that a reference to compelling and exceptional circumstances does no more than suggest that the position provided for in the rules should only be departed from for proper reasons which in general would only arise in an exceptional case. As Doyle CJ said in Shaw v Jarldorn (1999) 76 SASR 28 at 29 [4]:
"... it will be proper for the court to order otherwise, only if, in the exercise of that wide discretion, there is good reason to order if the rule is not to have its usual effect. In considering whether there is good reason to so order, it is necessary to bear in mind the mAnnr in which the rule operates, and the context in which it operates."
41 In short, "the ordinary provision is expected to apply in the ordinary case": Wainright v Fuller [1999] NSWSC 1019 per Hidden J at [6]. Lastly, and authoritatively as to this point, the New South Wales Court of Appeal (Spigelman CJ, Beazley and McColl JJA) more recently said in Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [15]:
"The relevant provisions of these rules do not specify that exceptional circumstances or the avoidance of substantial injustice must be established before the court will make a different order to the prima facie order for which the rules provide and, in our opinion, the rule should not be so construed. Rather, the discretion is one that has to be exercised having regard to all the circumstances of the case."
42 The plaintiff's first proposition is that proper notions of the imposition and transfer of risk mean that the ultimate risk lay with the defendants. Implicit in that submission is the proposition that the plaintiff's offer had the effect of completely negating the effect of the defendants' offer. To put it another way, the defendants' offer ceased to have any operative costs effect once the plaintiff's offer was made.
43 I am not able to see anything in the rules, or the statements of authority as to their operation, which would support the submission. On the contrary, there is much to suggest that it cannot be correct. If, as often happens, a plaintiff makes an offer of a monetary sum to settle a claim, and a defendant also makes a monetary offer, then both would have operative effect. It would serve to defeat the purpose of the rules were it to be otherwise. In my view, the making of a later offer cannot remove the risk imposed by the first offer on the party making the later offer. If necessary, some support for this proposition may be found in Hillier v Sheather (1995) 36 NSWLR 44, in which it was held (by Kirby P and Cole JA) that successive offers made by a defendant each had operative effect, so that the rule was to be applied to all more favourable offers of settlement in terms of fixing the date of exposure to risk, and hence the date on which the defendants' entitlement to costs arose.
44 I also reject the plaintiff's submission that the existence of the two offers means that the rules have no operation in terms of the consequences of non-acceptance. The plaintiff was at risk under subrule 289(2) after her non-acceptance of the defendants' offer. The defendants were at risk under subrule(1) after their non-acceptance of the plaintiff's offer. I am not at all persuaded by the argument that having regard to the outcome, the defendants' entitlement and the plaintiff's entitlement are in such direct competition to the extent that subrules 289(1) and (2) are not capable of being applied at the same time. There is no conceptual conflict which renders inoperable the scheme provided for by the rules. The fact that there may be some practical difficulty in achieving reconciliation and a just overall outcome, does not mean that the rules have no operation.
The combined application of subrules 289(1) and (2)?
45 I have just alluded to the situation which was created by the making and non-acceptance of each offer. If the plaintiff had accepted the defendants' offer it would have put an end to the action. She remained on risk to that extent. Later, the defendants rejected an offer which, if accepted, would have resolved the question of liability and left only an assessment of damages. The trial would have been shortened and costs saved. They remained on risk to that extent. If the defendants' offer is ignored, the plaintiff, on the basis of the offer she made, would be entitled to her costs of the whole action on a solicitor-client basis. If the plaintiff's offer is ignored, the defendants would have to pay the plaintiff's costs on a party and party basis up until 21 May 2009, and would be entitled to their costs on a party and party basis thereafter.
46 The defendants' submission as to the operation of the two subrules, and how reconciliation is to be achieved, is essentially that subrule (1) has no operation because the plaintiff's offer has no effect; the defendants' offer accordingly prevails, with subrule (2) being applied, at least presumptively. This is because the defendants' offer was one to which if accepted, would have disposed of the action. The plaintiff's offer was one which related to an issue. Rule 289 does not distinguish between offers in monetary terms, and offers to concede a proportion of the claim. It follows, it is said, that it is the judgment to which regard must be had. As in this case, it is a sum of money, the plaintiff cannot show that the judgment is no less favourable to her than the terms of her offer. Putting it in its context, the plaintiff's stance as reflected in her offer, in effect amounted to an assertion that she would do better than a judgment of $300,000, even accepting a 30 per cent reduction for contributory negligence. The ultimate event must be considered, and viewed on that basis the plaintiff was worse off.
47 No authority was cited for the proposition that it cannot be shown within the meaning of subrule 289(1), that the judgment was no less favourable to the plaintiff than the terms of the offer, because the judgment was in a dollar amount, whereas the offer was not; it was one to resolve an issue. It is appropriate to first consider this particular aspect, as it is central to the submission.
48 The proper question is whether r289(1) has application, where an offer to concede a proportion expressed as a percentage of the plaintiff's claim, has been made under r280(4)(c), and the judgment after trial is in monetary terms. In my view the answer is plainly in the affirmative. The defendants' submission must be based on the proposition that when determining whether the conditions set out in subrules 289(1)(c) and (2)(c) are met, there is a simple comparison between the terms of the formal order and the terms of the offer. However, the scope of the terms of offers which may be made, would immediately suggest that the matter cannot be as simple as that. There may need to be a process adopted in order to determine whether the result is no less, or no more favourable: Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141 at [18] - [20].
49 More pertinently, in the same Court, in Pettiford v Whicker [2005] NSWCA 370, Bryson JA; (Handley and Ipp JJA agreeing), said at [15] that "... in considering whether the ultimate result has been no less favourable to the plaintiff than the terms of the Offer of Compromise the Court should look to the substance of that result, rather than to the form of the order by which effect was given that result." [Emphasis added.] To me, with respect, that approach is plainly correct, and the statement of principle should be followed.
50 In this case, the substance of the result as reflected in the judgment sum, is no less favourable to the plaintiff than the terms of the offer, because on the basis of the offer to concede 30 per cent for contributory negligence, the judgment sum would have been approximately $254,476. This approach seems to have been adopted in Davies v Fay (above) and Vale v Eggins (No 2) (above), in both of which damages had been agreed leaving liability to be determined, but so that the final judgment was in monetary terms. In each case it is implicit that the court proceeded on the basis that an offer in respect of contributory negligence could be compared with the ultimate judgment sum to determine whether it was no less favourable (Davies v Fay) or no more favourable (Vale v Eggins (No 2)).
51 As to the "ultimate event" point, Mr Jackson for the third defendants relied on the comments of Woodward J in Westsub Discounts Pty Ltd v Idaps Australia Ltd (No 2) (1990) 94 ALR 310 citing a passage from the fourth edition of Halsbury's Laws of England, vol 37 par293, which deals with the costs discretion after a payment into court. In that case the applicant succeeded on a claim whilst the respondent was successful on a cross-claim, with judgment being entered for the applicant for a certain amount after a set-off was made. Consideration had to be given to a payment into court made by the respondent and which was greater than the judgment sum. His Honour said that the position in Australia was correctly stated in the paragraph from Halsbury's. This included the statement that "the modern practice is to look at the position of the parties at the end of the day to determine whether the amount paid in is more or less than the total of the plaintiff's claim, and therefore not to make any special order with regard to the costs on the issue of liability after the date of payment."
52 The rules which governed the situation in Westsub Discounts did not prescribe any costs consequences of non-acceptance of a payment in which was not bettered. At 319 Woodward J pointed out that the applicant had established only a few of its claims and lost the cross-claim, and that the respondent's payment into court "amounted to a statement that it expected to win on some issues and lose on others and, on balance to finish owing no more than [the amount of the payment in]."
53 I do not find anything in that judgment which is of benefit in deciding the point in this case. It is clear from the whole of the passage from Halsbury's which Woodward J set out at 318, and his Honour's remarks, that the issue being considered was the approach to costs where there had been a payment in, based on the overall result as distinct from success or otherwise on particular issues. Further, there are no close parallels between that case and the present one. The present case is not a simple one in which the plaintiff won on liability but failed to better an offer of compromise, thus not faring as well as had been expected on damages. I am simply unable to see any justification for not recognizing and giving effect to the plaintiff's unaccepted offer. On that basis, the reality is that at the time the trial started, both the plaintiff and the defendants were exposed to risk. That the plaintiff's risk may have been a greater one than that carried by the defendants, is of no consequence.
54 As to the broader submission of the defendants, I am unable to see any justification for not giving effect to the plaintiff's unaccepted offer. After her failure to accept the offer, the plaintiff was at risk of paying the defendants' costs thereafter if the judgment was no more favourable to her than the terms of the offer. That risk was offset to an extent by an offer to resolve the question of liability. After the defendants' failure to accept that offer, they were, by virtue of r289(1), at risk if the judgment was no less favourable to the plaintiff. It is true that if the plaintiff had accepted the defendants' offer, the action was at an end; that is, but for the rejection the action would not have continued. However, the rules do not operate in accordance with strict notions of causation, nor are they intended to provide complete indemnity or compensation. Were that to be the case, r289(1) would provide for a plaintiff's costs on an indemnity basis, and not a solicitor-client basis, whilst r289(2) would provide for a defendant's costs to be also taxed on an indemnity basis, and not on a party and party basis[5].
55 There is much to be said for the proposition that where both subrules are engaged, effect should be given to each as far as it can be in the circumstances of the case. My view is that each of the subrules should be applied as far as practicable, and orders fashioned around the presumptive entitlements so as to achieve a fair result in all of the circumstances. As I said earlier, the fact that there may be some practical difficulties in carrying out this exercise, does not cast doubt on the correctness of the approach. That approach requires "ordering otherwise" in relation to one subrule, so as to permit the operation of the other. The question is to what extent modification should be made to the presumptive entitlements created by each subrule.
56 In broad conceptual terms, combining the optimum operation of each subrule as far as practicable and without regard to other considerations, produces the following result:
57 This formulation takes into account that both sides were on risk as to the issues to which the offers made related. The plaintiff submits that if I reject this sort of approach, and hold that r289(1) has no operation and that the plaintiff alone is at risk, then I should make an order otherwise than as provided for in r289(2), and not require the plaintiff to pay the defendants' costs after the date of the offer. In light of the conclusions I have thus far reached, I do not need to consider the issue, (except of course to the extent that the above formulation requires some modification to the plaintiff's obligations under subrule (2)). However, the defendants' position (this time advanced by Mr Read for the first defendant) seems to be that if I take the view that there are two valid offers, and that each subrule has operation, the facts of the case are such that I should still award costs in accordance with r289(2), but only in accordance with that provision. (Mr Barclay, for the second defendant, said that he adopted what Mr Jackson had said, and what he expected Mr Read to say. Mr Barclay submitted that r289(2) should apply and that I should not otherwise order.)
58 Mr Read put that there should not be a different order as to the defendants' offer, but that there should be a different one in respect of the plaintiff's offer. That of course, would involve not "otherwise ordering" under r289(2) to provide relief to the plaintiff from paying the defendants' costs after 21 May 2009, as well as "otherwise ordering" in relation to r289(1). As to r289(1), the defendants seek a significant modification of the plaintiff's presumptive entitlement.
59 Taken literally, the submission is unclear, in that counsel put that there should not be a different order to that provided for in subrule (2). Strictly speaking, this would include an order in the plaintiff's favour on a party and party basis up until the defendants' offer was served. At the same time, counsel submitted that not only should there be no order for costs on a solicitor-client basis under subrule (1), but that the plaintiff "ought not get her costs" in the sense that her "entitlement to costs should evaporate". That would also relate to the period before the defendants' offer was served. In the circumstances, I will assume that the submission relates to the question of solicitor-client costs before the defendants' offer was served, and any costs at all in the period afterwards. Not surprisingly perhaps, the defendants' submissions focus on the plaintiff's rejection of their offer and on other conduct of the plaintiff, but not on their rejection of the plaintiff's offer. As was acknowledged however, the principal judgment speaks for itself as to that.
60 In the event that I am wrong about the subrules operating to create concurrent risk and that there should adjustment of the presumptive entitlements accordingly, I will consider the question of whether I should otherwise order in relation to the plaintiff's obligations under subrule (2) without any reference to how subrule (1) might be applied. It also follows that I need to consider whether I should otherwise order in respect of subrule (1) so as to deprive the plaintiff of her entitlements. Of course, many of the issues are common to both exercises. As Mr Read dealt with the defendants' offer and subrule (2), first it is convenient to do likewise, although before addressing specific issues I will set out some general observations and refer to the evidence received for the purposes of this hearing.
Modifications to the presumptive orders under subrules 289(1) & (2)?
61 The weight of the presumptive entitlement is emphasised in a number of cases. As I earlier noted, it may be displaced where the circumstances take the case outside of the ordinary, and provide proper reason. Next, it seems to be accepted that notwithstanding that subrules 289(1) and (2) do not refer to "reasonable" offers of compromise, nor to an "unreasonable" failure to accept[6], an underlying consideration, or at least a relevant factor, is whether the offeree acted reasonably in rejecting the offer: Shaw v Jarldorn (above) per Perry J at 34; The Uniting Church v Takacs (No 2) [2008] NSWCA 172 per Hodgson JA (McColl JA agreeing) at [13]. The obligation to establish reasonableness of rejection is on the offeree, but even in that event, it may still be appropriate to apply the rule: Marlow v Walsh [2009] TASSC 40 per Blow J at [10].
62 The inquiry into reasonableness of rejection focuses on the time at which the offer was made, and the assessment is made prospectively from that time, and is not done on the basis of hindsight: Regency Media Pty Ltd v AAV Australia Pty Ltd (above) at [33]. However, the matter needs to be considered in the context of the issues at trial. Complexity arising from, for instance, several causes of action, multiple issues or alternative contentions must be taken into account: Seven Network Ltd v News Ltd [2007] FCA 1489; (2007) 244 ALR 374 at 389 [67]. In Wainwright v Fuller (above) Hidden J at [6] said:
"Litigation is inescapably chancy. The purpose of the rule is to put a premium on realistic assessment of cases. It is not to demand perfect foresight which is denied even to the judges. That is why a discretion is retained, under the rule, for the Court to order otherwise than as the rule provides."
63 For the purpose of these determinations, the plaintiff called evidence from Mr Manning, a solicitor employed in the firm engaged by her. Mr Manning had carriage of the file at the time of this hearing, but not at the time of the trial. Documents were exhibited to his affidavit and further contents of the file were tendered in his cross-examination. In his principal affidavit, Mr Manning deposed that by letter dated 16 September 2009, the solicitors for the first defendant "appeared to have served" on the plaintiff's solicitors a number of medical reports, surveillance reports and video surveillance. The medical reports were from a Dr Smith, bearing various dates between 2004 and 2007. The video material was from July 2004, June 2006, and November 2006, with the surveillance reports bearing dates in August 2004 and July and November 2006. Mr Manning was not cross-examined about this, a point to which I will return.
64 The documents which are in evidence include an opinion from counsel (not the counsel at trial) dated 2 April 2009, an opinion from Mr Hobbs dated 8 June 2009, a letter of advice from Mr Hobbs dated 25 June 2009, and a letter from the plaintiff's solicitor to the plaintiff dated 7 October 2009, detailing advice given by Mr Hobbs in a conference on 30 September 2009. Counsel's advice of 2 April 2009 was to the effect that there was a significant risk that the Court would find the plaintiff contributorily negligent, and that if so, the range was likely to be 20 to 30 per cent; the assessment of damages would be determined by the Court's assessment of the plaintiff's credit, and that if the Court concluded that the plaintiff was manufacturing and exaggerating her difficulties, damages, - particularly given a finding of contributory negligence - probably would not exceed "around $20,000".
65 Mr Hobbs' advice of 8 June 2009 recommended that a number of further investigations be made, both as to liability and to quantum. He emphasised the risks of litigation in this case, "particularly where there are assertions made by the Defendants, supported by expert medical comment and opinion, suggesting exaggeration and embellishment of the claim". He pointed out that were adverse findings to be made, and damages entitlement was assessed at less than the offer of compromise, it would be likely the plaintiff would be ordered to pay the defendants' costs from the date of service of the offer. He said "In this context the risks of litigation are a major consideration." [Original emphasis]. His view was that contributory negligence would be found "at or about 30 per cent" and that the likely quantum of damages, subject to the issue of credibility, was in the range of $696,766 to $700,266, taking into account the reduction for contributory negligence.
66 The notes of the conference set out in the letter of 7 October 2009 show that Mr Hobbs said that he considered there was a significant risk that the plaintiff would not achieve an award of more than $300,000 for damages on the basis of issues concerning the plaintiff's credibility, and to a lesser extent, that of her husband. Counsel for the first defendant suggested that this had some significance, but given that this advice was given outside the period for consideration of the offer, it seems to be irrelevant.
67 For the plaintiff, reference was also made in argument to a number of aspects of the evidence which emerged at trial, and which impacted on the plaintiff's credibility in a significant way. First, there was the evidence consisting of cards and letters to the plaintiff's accountant, KPMG, the existence on whose file was first revealed some 10 days after the trial had commenced. In these cards and letters, the plaintiff described carrying out activities of a nature inconsistent with her claims. When re-called to give evidence she said that she had no recollection of the correspondence until it was shown to her. I dealt with this evidence and the subsequent course of events which included a lengthy adjournment, at pars[37] - [48] of the principal reasons: [2010] TASSC 62. Paragraph [47] refers to the calling of Messrs McInerney and Kesby, who were called in response to the KPMG correspondence evidence, after the trial had been adjourned for that purpose. Parts of their evidence proved to be unhelpful. Bank records of the plaintiff and her husband were subpoenaed by the third defendants during the course of the trial, and were tendered as part of their case. I was asked to, and did, draw adverse inferences from this material. The nature of all of this evidence and the impact on the plaintiff's case is dealt with at pars[49] - [57] of the principal judgment.
68 Additionally, the plaintiff's application for teacher re-registration in November 2007 was tendered as part of the first defendant's case. The subpoena for the file of the Education Department was issued on 22 December 2009 and returned on 28 January 2010; I made an order for inspection on 1 February 2010. That document is dealt with at pars[58] - [63] of the principal judgment. It also had an adverse impact of some significance.
69 The surveillance DVD's assumed some significance in the trial. In addition to the 2004 and 2006 material, DVD's of September 2009 surveillance were tendered. Ultimately the plaintiff's solicitors asked their medical experts to comment on the material, and led evidence about it. Much cross-examination of the plaintiff's medical experts related to it. A determination of its significance had to be made in light of the other material which emerged during the course of the trial. The material and its impact is dealt with in pars[230] - [233] and [269] - [270] of the principal reasons. The material played a role in the adverse findings in relation to the level of disability claimed to be suffered.
Timing of the offer and changes in circumstances/nature of case
70 The time at which the offer was made and any change in circumstances or in the nature of the case may be relevant factors: see generally Dal Pont, Law of Costs, 2nd ed (2009), at pars[13.22] - [13.23]. The closer an offer is to the date of trial, the less inclined the court may be to otherwise order. This assumes that the stage reached means that a more informed assessment may be made. Similarly, it may be a relevant factor if there has been a material change in the nature of the case presented, or faced, by a party. The dates of note in this case are as follows. The certificate of readiness was signed on 8 May 2009, with the defendants' offer being made on 21 May. On 9 June 2009, the action was set down for hearing on 21 September 2009, which date was changed on 14 August to 19 October 2009. The plaintiff's offer was made on 20 August. The final trial date on 24 November 2009 was set on 13 October. This means that the trial was listed during the period the plaintiff had to consider the offer, but it was put off after that period. It must be accepted that the plaintiff had twice the period permitted by the rules in which to consider the offer.
71 The issue is what is said to be the late disclosure by the defendants of relevant material. The focus of the plaintiff's submissions was on the surveillance material, rather than Dr Smith's reports. (Despite the fact that Mr Manning was not cross-examined on this point, it seems clear from counsel's advice of April 2009 that at least some of Dr Smith's reports had been provided to the plaintiff's solicitors.) Counsel for the plaintiff conceded that an investigator's report, so described, dated 30 August 2004 had been discovered under cover of a claim of privilege. It is common ground that the certificate of readiness contained the defendants' representations that discovery had been completed. It seems to be accepted that the material was in the possession of at least the first defendant at that time. Although there could have been a claim of privilege made in respect of the material, the obligation was to make discovery and to make such a claim at the time.
72 The plaintiff did not have the 2004 and 2006 material in the period for which she was considering the offer. The defendants make the point that the material merely records and relates the plaintiff's own activities, and as such those activities and the physical movements involved, were not outside her knowledge. That is true to an extent, but it is the possession by the defendants of the record of the plaintiff's activities, and the potential use of that record at trial, which is the relevant factor. The assessment of risk was carried out without knowledge of the full nature and scope of the attacks on credibility and the level of disability.
73 In Simonovski v Bendigo Bank Ltd (No 2) [2003] VSC 139 at [18] Ashley J said:
"In my opinion it is important that, when an offer is made, and during the period when it remains open for consideration, the offeree then has in its possession all the material from the opposing party to which it is entitled, whether by operation of the Rules or by order of the Court. An offeree should not be obliged to consider an offer whilst ignorant of required detail of the offeror's case. In the present case the defendant was relevantly in default when its offer was made; and it continued in default throughout the period that the offer remained open. Moreover, the default was not trivial; rather, the contrary."
See also Vale v Eggins (No 2) (above) per Beazley JA at [9] - [11], [13] - [15].
74 At the same time, the concept of the "risks of litigation" must be given some meaningful content. In Shaw v Jarldorn (above) Perry J at [34] emphasised that the ordinary hazards of litigation include the fact that the course of evidence may turn significantly and unexpectedly against a party. See also the comments of Bryson JA in dissent in Vale v Eggins (No 2) (above) at [29].
75 The surveillance material must be put alongside the other material which emerged during trial and to which I have made reference. The surveillance material, taken alongside the KPMG documents and the other evidence which emerged, made an assessment of credibility a completely different exercise than in May 2009. My impression of the trial was that at the end, the case which the plaintiff faced on credibility and as to damages, was of a much different complexion than at the start, let alone as it stood in May 2009.
76 In the present case, the plaintiff's claim as particularised was for an amount well in excess of three times the judgment sum. Some 27 heads of damage were particularised, although I dealt with them as 17, of which six failed completely with many others being significantly reduced. In terms of the offer, this called for detailed consideration by the plaintiff of broad underlying issues and of particular issues relevant to each claim. The difference between the judgment sum and the defendants' offer of compromise is only 1.55 per cent. The parties seemed to agree that the disparity between an offer of compromise and the judgment amount may be relevant to the question of unreasonable rejection. The differences between them lay in the weight to be attributed to the factor. The plaintiff accepted that of itself disparity would be insufficient to prompt the exercise of the discretion to order otherwise, but was a factor to be taken into account. Whilst counsel for the third defendants seemed to accept this proposition, saying that the closeness of the amounts was neither determinative nor persuasive in the absence of other factors, counsel for the second defendant, relying on Connor v Hatgis (No 2) NSWCA, 7 December 1995, unreported, submits that closeness to the offer does not matter.
77 There is no authority of which I am aware to the effect that in no case might disparity alone be a sufficient ground. Circumstances can be imagined in which the claim is large, the offer is substantial, and the disparity miniscule in the context. But I need not decide the point. A characterisation of the difference between offer and judgment sum as being "real" on the one hand, and "trivial or contemptuous" on the other, was adopted in Maitland Hospital v Fisher (No 2) (above). This might suggest a particular evaluative approach, but I would observe that it was made in the context of whether the offer was a genuine offer of compromise, and not so much to the question of weight in the evaluation of whether the operation of the rule was displaced. See The Uniting Church v Takacs per Basten JA at [22] - [27].
78 There is some force in the submission made by Mr Read that if recognition is to be given to small disparities and the discretion to "otherwise order" is exercised on that basis, then defendants would have to add a premium to what is considered to be a realistic offer. The import of the submission is supported by authority: see for instance Macquarie Radio Network Pty Ltd v Dent (No 2) [2007] NSWCA 339. However, I regard it as proper to take into account the small disparity in this case, in the context of the nature and extent of the claims made, as of some weight, but in no way determinative: Vale v Eggins (No 2) (above) at [12].
The plaintiff's offer as to contributory negligence
79 Whilst making the point that the defendants' offer put the plaintiff at risk for the whole period after its non-acceptance, Mr Read accepted that the plaintiff's offer of compromise was a factor which should be taken into account in assessing whether to otherwise order under r289(2). If I am wrong about the validity of the plaintiff's offer, or about the operation of the rules, and it is only r289(2) which is being considered, then it seems clear that the plaintiff's offer is to be regarded as a Calderbank offer and some regard is to be had to it: Shulte-Hordlehoff v Patons Brake Replacement Pty Ltd [1965] VicRp 49; [1965] VR 369; Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194. The existence of such an offer would trigger a wide discretion as to the consequences of non-acceptance. I do not understand that the defendants argue against any of this as a matter of principle. The argument is one of weight to be afforded to the making of the offer and its terms.
Matters relevant to the discretion to otherwise order under r289(1)
80 The matters which Mr Read submitted should activate the discretion to otherwise order under subrule (1) and to deny the plaintiff her entitlement to costs under that provision can be summarised as follows:
81 Some reference to further facts is required in order to have a full understanding of some of these submissions. As to the question of the plaintiff maintaining her claim on the basis of an unreasonable set of particulars, the defendants rely on a note of a conversation between the plaintiff's solicitor, Ms Schokman, and the plaintiff, on 8 September 2009. That note records that the plaintiff "has now had a good look at Peter Hamer's notes." (Mr Hamer was a psychologist who gave evidence at the trial and whose notes formed the basis of a prolonged attack on the plaintiff's credibility in the course of her cross-examination: see pars[23] - [36] of the principal judgment.) The next lines in the notes read, "She says she doesn't want to make any concessions in relation to the particulars of claim. She said that Peter Hamer has made some mistakes in the facts of his report." The first sentence upon which the defendants rely is ambiguous. On one view it relates to the claim which was made in relation to attendances on Mr Hamer as they related to the consequences of the injuries suffered in the accident. In any event, I do not think it reasonable to attribute any great weight to this note in the absence of further explanation.
82 The second factual matter relates to the KPMG material and delays during the trial. It was asserted that the defendants had for some time been requesting tax documentation relating to the plaintiff and her business. No detail of this was given. Mr Manning was not cross-examined about it, and the only evidence comes from the Court file and the trial events. On 15 October 2009 the plaintiff's solicitors issued a subpoena to Mr Wallace of KPMG (who ultimately gave evidence) along with tax returns and other documents for the plaintiff and her business from 1996 onwards. That subpoena was returnable on 24 November but was not complied with until, it seems, 9 December 2009, although the documents were not formally before the court until the following day. The cards and letters were found in the file when inspected by the parties.
83 First, as to r289(2), assuming that there is a need to consider providing relief to the plaintiff, (that is, ignoring what might arise from her offer and the operation of r289(1)), I would take the view that a combination of a number of factors take this case outside the concept of the ordinary one, and would justify ordering otherwise than in accordance with subrule (2). In Nutrientwater Pty Ltd v Baco Pty Ltd (No 2) [2010] FCA 304, Kenny J said at [34] that whilst a not unreasonable rejection of an offer is not a sufficient reason to displace the presumption, and the failure to provide sufficient information to permit the rejecting party to assess its prospects is not sufficient of itself to displace the presumption, these "factors, may however, form part of the total circumstances that satisfy the court that it is appropriate in the particular case to depart from the prima facie position otherwise established by the rule".
84 Secondly, dealing with the defendants' submissions as to r289(1), (on the assumption which I have set out in par[59] above), I take the view that none of the matters referred to, alone or taken together, operate to completely displace the plaintiff's entitlements to costs under r289(1). They should not operate to remove all consequences of the defendants' failure to accept the plaintiff's offer. Such factors may however, impact on the extent of the entitlements. I am conscious that, as previously noted, r289(1) does not discriminate between the forms of offer which may be made under 280(4), but the broad discretion to modify the subrule's operation for good reason, enables the terms of the offer to be taken into account in its context.
85 I think that there is merit in the submission as to the limited nature of the plaintiff's offer, and its effect in context. The offer was made in the face of an unaccepted monetary offer which, if accepted, would have disposed of the entire action. Of itself, that may be accommodated by a division of costs along issue lines. In addition though, the offer to the defendants to concede liability did not in strict terms involve any element of compromise, so in a practical sense the offer was really only one as to contributory negligence. The overall position was that the plaintiff risked doing better than the monetary sum offered, even on the basis of her proposal as to liability and contributory negligence. In considering the plaintiff's ostensible entitlements, it is fair and reasonable to take into account the limited nature of her offer when put alongside that of the defendants. I do not think that r289(1) should be given its full effect in those circumstances. As to the KPMG material, If the tax documents had been supplied by KPMG to the plaintiff's solicitors before trial, it is likely that they would have been sent as such, with the damaging material remaining on the file. On the other hand, there may be some merit in the suggestion that the material ought to have been found, one way or another, at an earlier time. I must confess to having difficulty in seeing the significance of all of this to the issues which I have to resolve, and on the facts before me it is very difficult to attribute blame to any relevant extent.
86 I am satisfied that it is fair to make an allowance to the plaintiff for costs on a solicitor-client basis but only up until up until the time of the defendants' offer. There is no good reason to order otherwise. It is also fair to make an allowance for costs in the plaintiff's favour after her offer was made, but not for the interim period. There is a need to limit those costs to the issue upon which the defendants were at risk. But moreover, in the context of the argument, because of the adverse factor which I have noted, I think it is fair to limit the plaintiff's entitlements under subrule (1), to party and party costs. As to the plaintiff's credibility, I think it is proper to have regard to the fact that it was a significant aspect of the trial.. I made significantly adverse findings as to the plaintiff's credibility, but these were reflected only in relation to damages. I will take this factor into account when determining a proper division between the parties' entitlements under the two subrules.
87 I will deal with the fashioning of orders to reflect the rulings which I have made as to the validity of the offers and the consequent concurrent operation of the two subrules, and the views I have formed as to the weight of various factors. The task is to give effect to each subrule to an extent which produces an overall fair and reasonable outcome having regard to all of the relevant circumstances. As a starting point, I will adopt the broad conceptual formulation of orders which I previously set out. That formulation proceeds on the basis of a differentiation between liability and quantum. The difficulty is that the issues of liability and quantum are not easily isolated one from the other. As just noted, the question of the plaintiff's credibility was a significant one at trial and the defendants made it referable to both issues. Multiple and complicated taxations are to be avoided where possible. The plaintiff has made submissions as to alternatives which are open. Beyond those which I have dealt with, the defendants made no submissions in relation to what might happen were I to take the view that each subrule should be given effect as far as practicable.
88 I think that the appropriate course is to order that the plaintiff pay a proportion of the defendants' party and party costs, whilst the defendants should pay a proportion of the plaintiff's party and party costs. I do not think it is possible that the various combinations and permutations can be satisfactorily resolved at this level so as to produce one order as to the costs after 20 August 2009. The plaintiff submits that a 70/30 apportionment is appropriate. I accept that proposition as a reasonable estimate, taking into account the issue of credibility. Complete precision is impossible but I think the division to be a fair one.
89 The further question which arises is whether, in relation to the proportion of the defendants' costs which the plaintiff will be required to pay, the defendants are entitled to the whole of the costs incurred in the representation of all three defendants. The plaintiff's offer was made jointly to all defendants. Acceptance of it did not necessarily mean that they were required to agree upon apportionment between themselves. All that was required was an acceptance that each was liable. To the extent that the case was one against the plaintiff, their interests would have then been identical. As it turned out, I was not required to apportion liability between defendants. No matter relating to that issue was raised before me, and I was told at the end of the trial that agreement had been reached.
90 For those reasons, the plaintiff submits that were I minded to make orders in favour of the plaintiff after 20 August 2009, which of course encompasses the trial, then the defendants' costs should be limited to one third. It is said that there is no reason justifying separate representation at a trial which would have been limited to an assessment of damages. The defendants made no submissions as to this issue. It seems to me that the plaintiff's submissions are a valid and proper approach to the matter, but I think it is fair that only the actual trial be the subject of such treatment. I would make the specific observation that it will be a matter for the taxing officer as to whether, although one third of the total costs of the trial is the appropriate quantification, allowance for two counsel at the trial would be proper.
91 The plaintiff made submissions as to what orders should be made in relation to the proceedings after judgment was handed down. Orders were suggested but no submissions made in support. The defendants did not address the issue of these costs. I will make the orders which I see to be appropriate in all of the circumstances. I think it is just that defendants' pay the plaintiff's costs of the appearance on 22 December 2010. As to the costs of this hearing, the applications can be properly treated as a separate event: Latrobe Council v Williams [2008] TASSC 56; Forestry Tasmania v Ombudsman (No 2) [2010] TASSC 39 at [30]. Given the outcomes on the various issues raised, I think it appropriate that each party bear their own costs.
92 For the reasons which I have set out, the orders I make are as follows:
(1) A party to any proceedings may make to another party to the proceedings an offer of compromise of a claim of that other party or a claim made against that other party.
(3) An offer of compromise may be made by a defendant by offering to -
(a) pay a nominated sum of money to the plaintiff; or
If 2 or more defendants are alleged to be jointly, or jointly and severally, liable to the plaintiff in respect of a debt or damages and a right of contribution or indemnity is alleged to exist between the defendants, the consequences as to costs referred to in rule 289 do not apply to an offer of compromise unless -
(b) in the case of an offer made to the plaintiff -
(i) the offer is to compromise the claim against all defendants; and
[2] 280(4) An offer of compromise may be made by a plaintiff by offering to -
(c) concede a proportion, expressed as a percentage, of the plaintiff's claim.
[3] In the action, the "third defendants" are four individuals. In my reasons for judgment of 17 December 2010, I treated them as one defendant as they were in the pleadings, and will do so in these reasons.
[4] This is the description of the offer set out in the judgment. It is not clear whether the offer was precisely in those terms.
[5] These statements assume that there is a difference between indemnity costs and costs taxed on a solicitor-client basis, the difference giving rise to a potentially greater entitlement. As to the difference see Bouras v Grandelis [2005] NSWCA 463; (2005) 65 NSWLR 214 at 233 [92] - 241 [119].
[6] The Uniting Church v Takacs (No 2) [2008] NSWCA 172 per Basten JA at [33].
Partridge
Hobart City Council
(1992) 27 NSWLR 721
(1993) 176 CLR 300
(2010) 85 ALJR 302
(1996) 70 FCR 236
(1999) 9 Tas R 54
(1993) 42 NSWLR 100
(1991) 56 SASR 362
(2004) 212 ALR 281
(1999) 76 SASR 28
(1995) 36 NSWLR 44
(1990) 94 ALR 310
(2007) 244 ALR 374
(2005) 65 NSWLR 214