Plaintiff v Defendant

2 On 17 September 2012, fourteen days before the trial commenced, the defendant made an offer of compromise to the plaintiff in the following terms:

"TAKE NOTICE that the defendant makes an offer of compromise of $150,000 plus the plaintiff's costs plus retention of benefits under the Transport Accident Act 1986.

AND FURTHER TAKE NOTICE that this offer is served in accordance with Part 2 of Order 26 and Order 63.36 of the Supreme Court (General Civil Procedure) Rules 2005 and remains open to be accepted for a period of 14 days after service of this notice upon you."

3 Rule 26.08(3) of the Supreme Court (General Civil Procedure) Rules 2005 provides:

"Where an offer of compromise is made by a defendant and not accepted by the plaintiff, and the plaintiff obtains a judgment on the claim to which the offer relates not more favourable to the plaintiff than the terms of the offer, then unless the Court otherwise orders -

(a) the plaintiff shall be entitled to an order against the defendant for the plaintiff's costs in respect of the claim up to and including the day the offer was served taxed on a party and party basis; and

(b) the defendant shall be entitled to an order against the plaintiff for the defendant's costs in respect of the claim thereafter taxed on a party and party basis."

4 Section 42 of the Transport Accident Act 1986 relevantly provides:

"42. Entitlement to compensation outside Victoria

(1) This section applies where a person is injured or dies as a result of a transport accident if-

(a) the person, a dependant of the person or the surviving partner of the person is entitled to compensation in respect of the accident in accordance with this Act; and

(b) a person has a right to claim compensation or a right of action in respect of the accident under the law of a place outside Victoria.

...

(3) If the person, a dependant or a surviving partner of the person-

(a) receives compensation under this Act in respect of a transport accident; and

(b) under the law of a place outside Victoria-

(i) receives compensation or damages; or

(ii) obtains an award of compensation or judgment for damages; or

(iii) payment into court has been accepted; or

(iv) there has been a settlement or compromise of a claim-

in respect of the accident-

the Commission may recover from that person, dependant or surviving partner as a debt due to the Commission the amount of compensation paid under this Act or the amount to which paragraph (b) refers, whichever is the lesser.

..."

5 Section 42 of the Transport Accident Act has application to the plaintiff's claim. By s 42(3), the plaintiff is liable to the Transport Accident Commission in the amount of the compensation paid in respect of his injuries. While this amount was not specified in the offer of compromise, this morning the Court was informed that the relevant payments total $224,980.

6 The defendant contends that the plaintiff did not obtain a judgment on the claim to which the offer related which was "not more favourable to the plaintiff than the terms of the offer". The defendant submits that the offer of compromise should be construed as an offer to pay $150,000 together with (despite its actual terms) an offer to indemnify the plaintiff in respect of Transport Accident Act benefits totalling $224,980. Thus, it is submitted, if the plaintiff had accepted the offer, he would have received $150,000. Whereas the plaintiff's judgment of $309,992 means the plaintiff will only receive $85,012 after paying the amount owing under s 42 of the Transport Accident Act.

7 The plaintiff contends that the offer of compromise is defective. Two points are made. First, the defendant does not have any power to permit the plaintiff to retain amounts he would otherwise be liable to pay pursuant to s 42 of the Transport Accident Act. Secondly, even if the defendant had such power, the benefits the defendant purports to permit the plaintiff to retain are not specified. That is, the offer of compromise is uncertain in whether it purports to confer a right of retention in respect of only those benefits that had been paid at the time of its service or in respect of all benefits which might have been paid and payable at that time, or possibly all benefits paid and payable up to the time of any acceptance of the offer of compromise.

8 In Azzopardi v Netin,[1] the Full Court had to consider a personal injury case where a payment into Court had been made, notice of which was sent to the plaintiff under cover of a letter stating that if the payment into Court was accepted, the plaintiff would not be obliged to refund certain workers compensation payments. Brooking J[2] set out the facts as follows:

"In a running down case brought in the County Court by Ismail Netin and tried as an assessment, the jury assessed the damages at $20,000. After verdict the learned trial Judge was informed by counsel for the plaintiff and defendant that the plaintiff's employer had made payments of workers compensation in respect of his injury amounting to $35,663.64, comprising medical expenses of $3856.20 and weekly payments of $31,807.44. His Honour fixed the amount of damages in the nature of interest at $2000. It was revealed to the learned Judge that on 4 September 1984 the defendant had paid into court by way of bond the sum of $15,000 and proved or admitted that the notice of payment in was sent on that day by the defendant's solicitors to the plaintiff's solicitors under cover of a letter, which I had better now read in full: -

'We enclose herewith Notice of Payment into Court on the basis that notwithstanding the provisions of Section 79(3A) of the Workers Compensation Act 1958, if the Payment Into Court is accepted, the Plaintiff shall not be obliged to refund to his employer or its Workers Compensation insurer, the amount of $24,823.13 recovered from his employer or its Workers Compensation insurer from the Motor Accidents Board, and further, in the event of such Payment Into Court being accepted, the Defendant will indemnify the Plaintiff against any liability to make such payment.

'The Plaintiff will however be obliged to repay any amount paid to or on his behalf, over and above the aforesaid amount which the Workers Compensation insurer has not recovered from the Motor Accidents Board. We understand that Workers Compensation payments made to or on behalf of your client total $30,180.34, of which sum an amount of $24,823.13 has been recovered from the Motor Accidents Board. Therefore, the shortfall presently stands at $5,357.21.

'Kindly acknowledge receipt of the Notice of Payment into Court and let us have your client's response thereto.'"

9 In Azzopardi, the plaintiff contended that the offer of compromise and the letter failed to offer anything of value to the plaintiff. He also contended that he had in fact recovered more than the amount paid into Court. The Court rejected these contentions, holding that the notice of payment into Court must be considered together with the letter both as a payment into Court and as an offer. The Court held it was competent for the defendant to offer the indemnity, which was something of value; and that the payment into Court together with the letter (when considered as an offer) constituted an offer of a greater sum than the plaintiff eventually recovered. Accordingly, the Court then concluded that the plaintiff was only entitled to his costs to the date of the payment into Court and the defendant was entitled to her costs from that date.

10 As was said by McGarvie J in Mallairos v Moralis,[3] the offer of compromise rules should be construed so as to allow them to work fairly and efficiently in accordance with their apparent policy. That policy includes encouraging a party to whom a fair and reasonable offer of compromise has been made, to accept the offer and bring the proceeding to an end. Further, as was said by Murphy J in Henderson v Simon Engineering (Aust) Pty Ltd,[4] matters of the present kind should be approached attempting to give effect to the spirit of the rules.

11 The defendant contends that the present case is on all fours with Azzopardi. I reject that submission. If the defendant had expressed his offer of compromise on the basis of the offer of a sum of money together with an indemnity in respect of specified payments made under the Transport Accident Act (either by reference to a total, or on the basis of all such payments made up to an identified point in time), then Azzopardi might well have been on all fours with the present case. However, the defendant chose to offer a right of retention in respect of which there was no evidence that he, or his insurer, had any authority from the Transport Accident Commission to give to the plaintiff.[5] Further, the purported right of retention was offered in respect of payments which were not identified with any specificity, and which could not have enabled the plaintiff to know with sufficient precision the judgment he needed to obtain in order to avoid the operation of r 26.08(3). It follows that in my view, even thought the approach to be taken in deciding this matter is that referred to in Malliaros and Henderson as identified above, the offer of compromise was uncertain.

12 In Duncan & Weller v Mendelson,[6] Kaye J[7] said[8] an offer of compromise ought not leave an offeree in any reasonable doubt about the consequences of its acceptance. Further, the terms of an offer of compromise should be reasonably certain.[9] As I have already said, in my view, the offer of a right of retention which the defendant did not possess, of unspecified "benefits under the Transport Accident Act", made the terms of offer of compromise uncertain. To put it in the words used by the court in Duncan & Weller v Mendelson, there was reasonable doubt about the terms of the offer of compromise. It follows that the defendant's application for costs orders in accordance with the provisions of r 26.08(3) must fail.

13 The matter would have been different if the defendant had simply offered a sum of money equivalent to, or greater than, $309,992 - then permitting s 42 of the Transport Accident Act to have whatever application it might have in the circumstances. Similarly, Azzopardi may well have mandated a different result in this case if the defendant had offered an indemnity in respect of a specified total of Transport Accident Act payments.[10]

14 The plaintiff succeeded in the proceeding. The defendant's application in respect of its offer of compromise having failed for the reasons just given, the plaintiff is entitled to his costs of and incidental to the proceeding, including reserved costs. Accordingly, there will be an order in those terms.

[1] [1986] VicRp 56; [1986] VR 593.

[2] With whom Murray J and Nathan J agreed.

[3] [1991] VicRp 86; [1991] 2 VR 501, 505.

[4] [1988] VicRp 77; [1988] VR 867, 872.

[5] Cf Azzopardi v Netin [1986] VicRp 56; [1986] VR 593, 596.

[6] [1989] VicRp 36; [1989] VR 386.

[7] With whom Southwell and Hampel JJ agreed.

[8] At [1989] VR 401.

[9] See further, John Goss Projects Pty Ltd v Thiess Watkins White Constructions Limited [1995] 2 QdR 591, 595; Gove v Black & Ors [2006] WASC 298, [58]; and AJ Lucas Drilling Pty Ltd v McConnell Dowell Constructors (No 2) (2010) ATR 925; [2010] VSCA 128, [32].

[10] See specifically, Azzopardi v Netin [1986] VicRp 56; [1986] VR 593, 595 - wherein Brooking J referred to the fact that the letter that accompanied the payment into court in that case "goes on to offer an indemnity against any liability to refund workers compensation".