The parties' submissions and their resolution
28 In the circumstances, the claimant accepted that in order for this Court to intervene it was necessary for him to establish that the primary judge had erred either as a matter of law or fact. As to the former, it was submitted, albeit faintly, that the question of whether an offer of compromise had been left open for a reasonable time in the circumstances within the meaning of r 20.26(7)(b), was to be determined as at the date the offer was made. It was further submitted that although the circumstances would include the knowledge of the party making the offer, in the present case, as at the time the Offer was made on 25 September 2007, there had been no notification to the claimant's solicitor that the opponent proposed to qualify a specialist orthopaedic surgeon to respond to the views expressed by Drs Matheson and Blue in their reports which were served in early September.
29 In my opinion the construction of the rule contended for by the claimant should be rejected. It is ambulatory in its operation. It may be a moot question as to whether, for it to be reasonable for an offer to be left open for a particular time, the circumstances justifying such a finding must occur prior to the time limited by the offer within which it was to be open for acceptance. In the case of an offer made two months or more before the date set down for commencement of the trial, the closing date for acceptance must not be less than 28 days. There is no such requirement in respect of an offer made less than two months before that date: only that it must be left open for such time as is reasonable in the circumstances. That might be more or less than 28 days depending on those circumstances: cf Leda v Weerden (No 3) [2006] NSWSC 220 at [10]. In any event, in the present case the relevant circumstances occurred prior to 26 October when the Offer, as extended, expired.
30 One of the difficulties with the claimant's submission is that in the present case it would have been open to the claimant to serve the Offer on the same day as it served the reports of Drs Matheson and Blue. In such circumstances, and as was in fact the case until 17 October, the claimant's solicitor was not on notice that the opponent had been advised to qualify a specialist orthopaedic surgeon to counter the strong opinions expressed by Drs Blue and Matheson, particularly the latter. If the reasonableness of an offer, limited by the time within which it was to be kept open for acceptance, was to be determined as the date it was made, then in the circumstances postulated a few days might well be regarded as a reasonable period for the offer to be kept open: that being a period sufficient for the offeree to be advised whether or not to accept the offer. It would not matter that the offeree had, in effect, been ambushed by the service of damning medical reports and the making of an offer of compromise at the same time. It would be irrelevant on the claimant's argument that the service of those reports cried out for a response thereto, if necessary from an independent medical specialist. In my opinion that is not the intent of the rule.
31 No doubt there may be circumstances where it is appropriate for the offeror, having served medical reports, to assume that the offeree does not propose to respond to them. Whether or not in a particular case the circumstances justify such an assumption is a matter of judgment on the part of the court. In the present case his Honour, a highly experienced common law judge, considered that it was perfectly reasonable for those advising the opponent to seek to answer those reports and in particular to obtain a report from a specialist orthopaedic surgeon. I can see no error in his Honour making that finding. It was one that was, in my view, clearly open to him. In fact, it was not the subject of challenge.
32 However, of greater significance is the fact that on 17 October 2007, some six days before the expiration of the time limited by the Offer within which it was to be kept open for acceptance, the opponent's solicitor informed the claimant's solicitor that Dr Ellis had been qualified and that he was to see the opponent on the very day that the Offer was to expire. A request was then made that the Offer be kept open for a further seven days until 30 October to enable Dr Ellis' report to be obtained and for the opponent and her advisers to consider whether or not to accept the Offer in the light of Dr Ellis' expressed opinions. This request was only partly acceded to, namely, until 26 October. His Honour found that it was unreasonable to expect that the opponent's solicitor would be able to obtain a report from an orthopaedic surgeon by 29 October, a fortiori by 26 October being the date until which the claimant had agreed to keep the offer open.
33 The claimant submitted that it was not part of his approach to what was adversarial litigation to in any way assist the opponent. In particular, there was no reason why he should have kept the Offer open so as to enable the opponent to consider Dr Ellis' report for the purpose of determining whether or not to accept the Offer. In effect, as the litigation was conducted on the usual adversarial basis, it was unnecessary for any quarter to be given.
34 This is no doubt true. Indeed, it was clearly in the claimant's interests to exert as much pressure as possible upon the opponent to accept the Offer in the light of the reports of Drs Matheson and Blue. I have no problem with that approach: indeed, as submitted, it was part of the cut and thrust of adversarial litigation of the nature of that under consideration.
35 However, an offeror such as the claimant, although entitled to take this tactical approach to the matter, takes the risk that in an application for costs under r 42.15, the offer not being accepted within the time limited thereby, a court may be requested by the offeree to find that in the circumstances the offer was not kept open for a reasonable time.
36 In my opinion it was open to his Honour to find that it was not reasonable to expect the opponent to accept the Offer without having had the opportunity to obtain an opinion from a qualified orthopaedic surgeon such as Dr Ellis provided that this was achieved expeditiously. I do not consider that there was any error on his Honour's part in so finding.
37 Although it is true that the purpose of making an offer of compromise, and the rules relating to costs where such an offer is not accepted, are intended to encourage the proper compromise of litigation and to oblige the offeree to give serious thought to the risk involved in non-acceptance (Morgan v Johnson [1998] NSWSC 367; (1998) 44 NSWLR 578 at 581 F-G; cf South Eastern Sydney Area Health Service v King [2006] NSWCA 2 at [83]), such principles need to be read in the light of the clear intent of r 20.26(7)(b). Where an offer is made less than two months before the date set down for the commencement of the trial, it must be left open for such time as is reasonable in the circumstances. That required an evaluative judgment to be made by the primary judge in the present case that in my view has not been infected by error either of fact or principle.
38 Furthermore, keeping the Offer open for a further short period to enable the opponent and her advisers to receive and consider Dr Ellis' report would not be inconsistent with the principles to which I have referred. Had the Offer been kept open to permit this to occur, the fact that Dr Ellis' opinion, as ultimately expressed, displayed somewhat of a gulf between his views and those of Dr Hopcroft on the one hand and those of Drs Matheson and Blue on the other may or may not have led to the acceptance of the Offer. Even if it had led to the Offer being rejected, it may well have generated a counter-offer of compromise, thus continuing and encouraging the proper compromise of the litigation in the interests of both the parties and the public.
39 In my view the purpose of the rule under consideration is to avoid the very situation that occurred in the present case. The relevant principles to which I have referred do not require an offeree to accept an offer that may well be inimical to his or her interests. Nor do those principles require an offeree to be placed under undue and unfair pressure to accept an offer in circumstances where, as in the present case, a further medical report, the production of which was then in the pipeline, would if accepted justify rejection of the offer. The subject rule is intended to operate fairly as between the parties and in particular, to avoid in appropriate circumstances, one party exerting undue pressure on the other in a manner that is unreasonable. Indeed, it is intended to afford an offeree the opportunity, if the circumstances so warrant, to make an informed and reasoned judgment whether or not to accept the offer.
40 Finally, the claimant referred the Court to the factors set out at para 42.14.10 of Ritchie's Uniform Civil Procedure NSW, page 8782 which the authorities had established did not require refusal of a special costs order when an offer of compromise had not been accepted and the offeree had obtained a judgment less favourable to the offer. In particular, reference was made to it having been held that the fact that an offeree is unaware of adverse material evidence, such as an adverse video surveillance film, was not a ground that would justify refusal of an indemnity costs order. This point was mentioned because ultimately in the present case there was a video surveillance film of the opponent of which she and her legal advisers were at all material times unaware and upon which the primary judge relied in declining to accept, at least in whole, the evidence of Drs Hopcroft and Ellis.
41 However, in my opinion the existence of the video surveillance film and its use is of no relevance to the present issue. Rules 42.14 and 42.15 deal with the question of costs where the offer is not accepted and a judgment less favourable to the offeree is obtained. The present appeal is not concerned with that issue, which would only arise if the Offer in the present case had been kept open for a reasonable time in the circumstances. As it was not, then it follows that the fact that the Offer was not accepted is irrelevant and no question of refusal of a special costs order under Pt 42.15 arose for consideration.