Preti v Sahara Tours Pty Ltd & Anor [2008] NTCA 2

Astley v Austrust Ltd (1991) 197 CLR 1; Barisic v Devenport and Others [1978] 2 NSWLR 111; Fitzgerald v Lane [1988] UKHL 5; [1989] AC 328; Insurance Commissioner v Joyce [1948] HCA 17; (1948) 77 CLR 39; Johns v Cosgrove (2002) 1 Qd R 57; Joslyn v Berryman [2003] HCA 34; (2003) 214 CLR 552; Kulczycki v Metalex Pty Ltd [1995] VICSC 22; (1995) 2 VR 377; Phillis v Daly (1989) Aust Torts Reports 80-189; Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492, referred to

Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (1989) 15 NSWLR 448; Horton v Byrne (1956) 30 ALJ 583; Nance v British Colombia Electric R y Co Ltd [1951] AC 601; Nguyen v Nguyen [1990] HCA 9; (1990) 169 CLR 245; Pennington v Norris [1956] HCA 26; (1956) 96 CLR 10; Roads and Traffic Authority (NSW) v Dederer [2007] HCA 42; (2007) 81 ALJR 1773, followed

Preti v Sahara Tours Pty Ltd & Anor [2008] NTCA 2

[1]

Mauro Santo Preti ("the deceased") died on 18 January 1999 at Ellery Creek Big Hole in Central Australia when his head hit a submerged obstacle after he lost his balance and dived into the water. Proceedings on behalf of members of his family were commenced by the personal representative of the deceased seeking damages pursuant to the Compensation (Fatal Injuries) Act. The proceedings were against the tour operator, Sahara Tours, and against the Parks and Wildlife Commission which, at all material times, had the care, control and management of Ellery Creek Big Hole. Proceedings had also been taken against the Conservation Land Corporation but those proceedings were unsuccessful. At the completion of the trial the appellant was awarded damages against Sahara Tours and the Commission. The learned trial judge determined that the deceased was guilty of contributory negligence and that his actions contributed towards his death. He concluded that it was "fair and equitable" to reduce the damages recoverable by 50% as a result of the contributory negligence.

[2]

The appellant appeals against the finding of contributory negligence on the part of the deceased and also challenges one aspect of the assessment of damages. Further, the appellant challenges the validity of an offer of compromise which became significant in determining issues of costs.

[3]

The deceased was a Swiss tourist travelling in Australia. He spoke and understood little English. At the time of his death he was on the final day of a five-day adventure tour of Central Australia with Sahara. The tour group visited Ellery Creek Big Hole which is a large permanent water hole west of Alice Springs. The water hole was described as being approximately 20 metres deep and surrounded by trees and rocks. The water was muddy and it was not possible to see below the surface. There were rocks under the water and, the learned judge found, the tops of two or three rocks could be seen above the surface of the water. A rope was attached to a tree on the eastern edge of the water hole and was used by visitors to the area to swing from the bank and land in the water.

[4]

The tour group was led by a Mr Hill and was taken to the area for the purpose of using the rope to swing into the water. Mr Hill described how to use the rope swing and he demonstrated the process. Members of the group then took turns in using the rope to swing into the water. One person would stand near to the point of launching and grab the rope to pass to the next jumper. Some people swung into the water from a stump and others did so from an adjacent sloping tree trunk. It was difficult to climb the tree trunk and, in so doing, the climber would be "almost forced off the tree trunk and into the swing". The learned trial judge observed that "it was difficult to hold on to the rope when climbing the tree and one could only climb approximately one metre before the tension became so great that a person was forced to swing off the tree trunk". The deceased swung into the water from the tree trunk on at least two occasions. On each occasion he swam back to the edge of the water hole, grabbed hold of the rocks below the surface of the water and stood on them to get out of the water hole. He then assisted others by standing on the bank of the waterhole to recover the rope and hand it to the next person. To do this he stood on a steep part of the bank and quite close to the person who was about to use the rope.

[5]

The accident occurred when the deceased was watching a male French tourist known as Fabrice. Fabrice, whilst climbing the sloping tree trunk, lost his balance and slipped off the trunk. He swung away from the tree towards the water in a sideways trajectory. In so doing he collided with the deceased who was standing to his right on a ledge on the bank about two to four metres from the stump. The deceased was not standing in that location to assist Fabrice but, rather, was watching him take his turn. The deceased was facing towards Fabrice and away from the water at the time of the collision. As a result of the collision the deceased lost his balance, turned to his right and dived into the water. The dive was not a voluntary dive but rather a response to the collision and the deceased losing his balance. The learned trial judge held that the deceased:

"... struck his head on a rock or some other obstacle that was submerged below the surface of the water. The deceased remained submerged below the water for about 20 seconds. When he surfaced he was face down and blood was coming out of the top of his head. It is a fair inference that the deceased did not have time to avoid being struck by Fabrice because of the speed at which Fabrice swung on the rope after he fell from the tree trunk. But for being struck by Fabrice the deceased would not have dived into the water. His dive was a reaction to the collision."

[6]

The learned trial judge found that the defendants were together liable in damages to the members of the family of the deceased. There was no issue as to contribution or apportionment as between the defendants. His Honour noted that prior to the incident and as early as 1991 the Commission had a policy of removing similar ropes from waterholes within its Parks. That policy had not been pursued immediately before the death of the deceased. His Honour held that if the policy had been maintained it was more likely than not that the deceased would not have been able to participate in the activity because there would have been no rope swing available for him to use.

[7]

His Honour also held that the provision of a warning sign of a kind that was subsequently put in place would have persuaded the tour leader and members of the tour group not to swing from any rope that may have been in place. The tour leader made it clear that if there had been a sign present he would have been obliged to comply with its terms failing which he would have been in jeopardy of losing his job. In addition the learned judge found that the tour leader should have warned the members of the tour group not to use the rope swing or, at the least, should have given them warnings about the dangers of doing so including that there may be submerged rocks or other obstacles below the surface of the water. Further, the tour leader should have alerted them to the danger of swinging on the rope when there was someone standing on the bank or the ledge. There has been no challenge to the findings of his Honour in this regard.

[8]

The appellant complained firstly that the learned trial judge should not have found him guilty of contributory negligence and, secondly, if that argument was unsuccessful, that any such finding should have been limited to a nominal amount rather than 50%. In so complaining the appellant acknowledged the force of the decision of the High Court in Pennington v Norris [1956] HCA 26; (1956) 96 CLR 10 at 15 where it was made clear that apportionment legislation gives a very wide discretion to the trial judge in making an apportionment and, consequently, much latitude must be allowed to the trial judge in arriving at a judgment as to what is just and equitable. An appeal court will not lightly disturb the apportionment of damages decided by a trial judge or jury: Roads and Traffic Authority (NSW) v Dederer [2007] HCA 42; (2007) 81 ALJR 1773 per Kirby J [168 - 169] with Gleeson CJ concurring. The apportionment applied will only be set aside if it was outside what could reasonably have been determined: Kulczycki v Metalex Pty Ltd [1995] VICSC 22; (1995) 2 VR 377 at 391 and 413-414. The judge or jury must have acted upon a wrong principle or the apportionment be manifestly erroneous: Phillis v Daly (1989) Aust Torts Reports 80-189 at 68477.

[9]

The apportionment of liability where a person suffers damage as a result partly of the person's failure to take reasonable care and partly of the wrong of another person is addressed in Part V of the Law Reform (Miscellaneous Provisions) Act read with s 11 of the Compensation (Fatal Injuries) Act by providing the damages recoverable in respect of the wrong be reduced "to the extent the court thinks just and equitable having regard to the claimant's share in the responsibility for the damage". In Pennington v Norris (supra at 16) the High Court explained the process of apportioning damage in the following terms:

"What has to be done is to arrive at a "just and equitable" apportionment as between the plaintiff and the defendant of the "responsibility" for the damage. It seems clear that this must of necessity involve a comparison of culpability. By "culpability" we do not mean moral blameworthiness but degree of departure from the standard of care of the reasonable man. To institute a comparison in respect of blameworthiness in such a case as the present seems more or less impracticable, because, while the defendant's negligence is a breach of duty owed to other persons and therefore blameworthy, the plaintiffs "contributory" negligence is not a breach of any duty at all, and it is difficult to impute "moral" blame to one who is careless merely of his own safety."

[10]

In Nance v British Colombia Electric Ry Co Ltd [1951] AC 601 at 611 it was said that:

"... when contributory negligence is set up as a defence, its existence does not depend on any duty owed by the injured party to the party sued, and all that is necessary to establish such a defence is to prove to the satisfaction of the jury that the injured party did not in his own interest take reasonable care of himself and contributed, by his want of care, to his own injury."

[11]

An enquiry into contributory negligence is not limited to the specific mechanism of the injury sustained in a particular case but, rather, extends to a broader consideration of the activity in which the injured person was engaged and the general fact of his participation. The issue is concerned with the failure of a plaintiff to protect his or her person against damage, whether or not that failure contributed directly to the accident: Astley v Austrust Ltd (1991) 197 CLR 1 at 14. Contributory negligence "certainly includes failure to adopt reasonable precautions or a reasonable course of action to avoid the consequences or risks which the defendant's negligence sets up.": Insurance Commissioner v Joyce [1948] HCA 17; (1948) 77 CLR 39 at 56 per Dixon J. The plaintiff is guilty of contributory negligence when the plaintiff exposes himself to a risk of injury which might reasonably have been foreseen and avoided and suffers an injury within the class of risk to which the plaintiff was exposed: Joslyn v Berryman [2003] HCA 34; (2003) 214 CLR 552 at 558 per McHugh J_._ There is involved a comparison of culpability, that is, the degree of departure from the standard of care of the reasonable man (Pennington v Norris supra at 16) together with a comparison of the relative importance of the acts of each of the parties in causing the damage. The whole conduct of each party in relation to the circumstances of the accident must be subjected to examination: Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492 at 494.

[12]

In circumstances such as the present where a plaintiff proceeds against two or more independent, concurrent tortfeasors the extent to which the plaintiff's damages should be reduced on account of his own negligence should be that which is just and equitable having regard to his departure from the standard of the reasonable man. The comparison is between the plaintiff's fault on the one hand and the combined fault of the defendants, viewed as a unit, on the other. The comparison is not of the culpability of the plaintiff and the defendants individually. See the discussion in Barisic v Devenport and Others [1978] 2 NSWLR 111 per Samuels JA at 152-153; Fitzgerald v Lane [1988] UKHL 5; [1989] AC 328 at 345; Johns v Cosgrove (2002) 1 Qd R 57 at 89 - 90.

[13]

A significant factor in determining whether there was contributory negligence on the part of the deceased was the state of his knowledge as to the dangers involved in the undertaking. His Honour concluded that the deceased was aware that there was a risk of injury if a person dived into the waterhole because he might strike his head on submerged obstacles. There was a strong evidentiary basis for so concluding. Importantly, immediately prior to his death, the deceased had twice used the rope to swing into the water. In leaving the water he necessarily scrambled over rocks near to the bank. As is revealed by the evidence of Mr Hill, those rocks were adjacent to the location of the rope and close to where the deceased stood when he was struck by Fabrice. The appellant complained that his Honour erred in referring to a danger created by the rocks for someone who "dived" into the water. That is to misunderstand the finding. His Honour was doing no more than identifying the nature of the danger created by the presence of submerged obstacles below the surface of the muddy water.

[14]

In addition, but of less significance, the deceased had previously swum at other waterholes where there had been rocks under the water and Mr Hill had previously warned him, at another waterhole, to watch out for submerged rocks. The attention of the deceased had thereby been drawn, in a general sense, to the risk that may arise from the presence of submerged and hidden obstacles in swimming holes in the area. On the occasion of his death the deceased had been aware that the water was brown and muddy and that it was not possible to see below the surface. He was aware of the presence of rocks in the area adjacent to where he was standing when Fabrice came into collision with him.

[15]

The learned trial judge also held that the deceased knew of the risk that someone could slip off the sloping tree whilst endeavouring to swing on the rope. The deceased had climbed the tree trunk on two occasions and was aware of the fact that it was quite steep and there was little to hold onto other than the rope. His Honour concluded that the deceased knew of the risk that a person may slip off the tree and collide with someone, such as himself, standing nearby. The area in which the deceased had been standing while watching Fabrice was rough and sloping and, of course, the deceased was aware of that. He must also have known that it was a location which made him vulnerable to a collision of the kind that in fact occurred. Again there was a sound evidentiary basis for the conclusions reached by the learned trial judge.

[16]

In finding the deceased guilty of contributory negligence the learned trial judge said:

"The deceased voluntarily exposed himself to the risks that the rope swing presented. He was aware of the risk created by the narrow ledge on the bank and the submerged rocks. He must have also been aware of the risk of collision that existed if a person stood on the ledge on the bank to the west of somebody about to swing from the sloping tree trunk. Given the direction that the deceased was facing prior to the collision with Fabrice he must have seen that Fabrice was about to try to climb the sloping tree trunk in order to use the rope to swing into the water. He had climbed the sloping tree trunk at least twice to swing on the rope into the water and he was aware of the difficulties encountered when climbing the sloping tree trunk. Those difficulties would be known to any person who attempted to climb the sloping tree trunk with the rope."

[17]

In our view there was clear evidence supporting the finding that the deceased was guilty of contributory negligence and the ground of appeal challenging that finding has not been made out.

[18]

The real issue on appeal was whether his Honour erred in concluding that it was "fair and equitable to reduce the amount of damages recoverable by the claimants by 50% as a result of the deceased's contributory negligence." The submission made on behalf of the appellant was that the degree of departure from the reasonable standard of care by Sahara Tours and the Parks and Wildlife Commission "was so overwhelmingly the cause of the death a finding of contributory negligence ought not have exceeded approximately 10%".

[19]

In light of what the deceased had seen and experienced himself he was in a good position to make his own assessment of the general risks of the activity in which he elected to participate. This was a recreational activity in which he chose to take part. He was involved for about 20 minutes before the collision and he played a central role. He had sufficient time and involvement in the activity prior to the accident to be aware of the general risks involved. He was also in a good position to assess the specific risk attached to standing where he did at the time he did. He voluntarily exposed himself to the risk and he elected to remain in a position of danger. Commonsense was all that was required for the deceased to appreciate the existence of the risks involved.

[20]

Similarly Sahara Tours (through Mr Hill) was able to make an assessment of the general risks and of the specific risk. There was no suggestion that Mr Hill had any knowledge beyond that available to the deceased relevant to the risks involved in the activity. In other words both the deceased and Mr Hill must have been aware of the danger involved in the activity and the risks attached to the deceased standing where he did at the time of the collision. The risks were obvious to all concerned. However, it must also be borne in mind that the first respondent, through Mr Hill, planned the exercise. Mr Hill took the group to the site for the purpose of swinging from the rope. He instructed the group how to proceed and they followed his lead. He had undertaken the exercise on a number of occasions with different groups and therefore had greater time and opportunity to consider the dangers involved.

[21]

As has been noted above, in the case of concurrent tortfeasors it is necessary to compare the plaintiff's fault on the one hand with the combined fault of the defendants on the other. In this case it is necessary to compare the fault of the plaintiff not just with that of Mr Hill but with the combined fault of Sahara Tours and the Commission. In considering the duty of care imposed upon the defendants it is necessary to bear in mind that the duty is to exercise reasonable care, assessed prospectively, not to prevent harm occurring to others: Roads and Traffic Authority (NSW) v Dederer (supra at [51], [54], [270] and [283]). The learned trial judge found that the Commission failed to maintain its pre-existing system of inspection with a view to removing ropes from the area. It also failed, prior to the accident, to erect signs of the kind put in place after the accident, warning of the dangers. As his Honour found, had the Commission fulfilled either of those obligations the group of which the deceased was a part would not have participated in the exercise. The failures of the Commission were different from those of Sahara Tours. When those failures on behalf of the Commission are considered together with the failures of Mr Hill it can be seen that the combined fault of the respondents must significantly outweigh that of the deceased.

[22]

In those circumstances the learned trial judge erred in concluding that the deceased and the respondents were equally negligent. Although he provided no analysis it seems the learned trial judge failed to compare the fault of the plaintiff with the combined fault of the defendants. Had he done so he could not have reached the conclusion that it was fair and equitable to reduce the amount of damages recoverable by the plaintiff by 50% as a result of the contributory negligence of the deceased. In our view the appeal must be allowed on this ground.

[23]

It is necessary for this Court to determine an appropriate apportionment of damages in all the circumstances. The exercise is not straightforward. There are many competing considerations. As Kirby J. pointed out in Roads and Traffic Authority (NSW) v Dederer (supra) such decisions are evaluative and multifactorial. It must be acknowledged that this is an exercise of judgment where reasonable minds, properly instructed, may differ.

[24]

In our view a just and equitable apportionment of responsibility for the damage would be for the Commission and Sahara Tours to bear 80% and the plaintiff 20%.

[25]

The appellant complains that the learned trial judge failed to apply, or properly apply, the proper legal test in assessing the claim for damages by the parents of the deceased.

[26]

The principles applicable to such a claim are not controversial. They were established by the High Court in Horton v Byrne (1956) 30 ALJ 583 and repeated in Nguyen v Nguyen [1990] HCA 9; (1990) 169 CLR 245. The measure of such damages is to reflect the balance of the loss, reduced to terms of money, which the deceased's relatives incur in consequence of his death after deducting the pecuniary gains which accrue to them from that event. The damages are confined to compensation for the loss of material benefits or of the reasonable prospect of such benefits occasioned by the death. If, by reason of the death, the claimant is better off than before the death there is no cause of action. It is the net loss, on a balance of losses and gains, that may be recovered as damages.

[27]

The findings of the learned trial judge in relation to the claims of the parents revolved around the patisserie business that they ran in Geneva, Switzerland. Prior to the death of the deceased it was planned that when the parents became too old to work in the business they would retire and transfer the business to the deceased for a nominal price. The parents would also receive a small pension. The sale was to be at "less than commercial terms". After his divorce the deceased moved in to live with his parents above the shop and he continued in his employment as a car salesman. He would help out in the parents' business and his Honour found he would usually work about eight hours per week for his parents. He did not receive any payment for his work but he was provided with free accommodation and, at least, some of his meals. After the death the family plans changed and, in effect, the brother Fabio substituted for the deceased. The parents claimed that they lost the benefit of the gratuitous services provided by the deceased. Fabio was not a qualified pastry chef as the deceased had been and his parents had to pay him a wage for some five years whilst he qualified. They then sold the business to Fabio.

[28]

The parents presented their claim for damages on alternative bases. Firstly, they sought recovery of the wages of Fabio. His Honour disallowed the claim. He ruled that the parents did not lose a financial benefit because of the death of the deceased. There was no reasonable expectation of future benefit to the parents through the sale of the business to the deceased. The business was to be sold to the deceased under its true value, and after the death that remained the case, although the sale was then to be to Fabio. There was no loss arising because of the death.

[29]

The claim was put on a second basis being that the parents lost the benefit of the gratuitous services previously provided by the deceased and they should therefore be compensated. The learned trial judge determined that such a claim would ordinarily be maintainable but, in the circumstances of this case, could not be allowed as he had insufficient evidence to determine whether or not the value of the deceased's gratuitous services to the parents exceeded the cost of providing him with free board. In other words the learned trial judge was unable to determine whether there was in fact a net loss because the information provided to him did not allow him to ascertain the value of the pecuniary gain to the parents consequent upon the death. As was submitted by the respondents, the plaintiff in the court below bore the onus of establishing that the parents had suffered a net pecuniary loss as a result of the death of the deceased taking into account the net value of the loss of his gratuitous services and the saving of the cost of providing board to the deceased. His Honour held that the plaintiff did not satisfy this onus and there was insufficient evidence upon which the learned trial judge could make a determination in favour of the parents.

[30]

The difficulty with this reasoning is that it overlooks the fact that Fabio, when he replaced the deceased, also received free board and lodging and a salary of CHF 4,500 per month net. Whilst Fabio's wage is not the measure of the loss because his hourly rate and the number of hours worked were different, the true measure of the loss, in the circumstances of this case, was the value of the deceased's services without any deduction for savings, because there were in fact none after Fabio began to work in the business in August 1999. The learned trial Judge found that the deceased usually worked about eight hours per week and that the value of his work was about CHF 190 per week or about CHF 24 per hour.

[31]

Fabio was paid CHF 4,500 per month which was more than the wage of an apprentice. Fabio's evidence was that the baker started work from 3:00 am and the pastry maker from 5:00 am and that the earliest the pastry maker would finish was 12 noon. This represents a nine hour working day. His evidence was also that the business was open six days per week, except for Wednesdays. This represents a 54 hour working week. At CHF 4,500 per month, Fabio was paid at a rate of approximately CHF 20 per hour, or something less per hour than the value of the deceased's services.

[32]

It was submitted by Mrs Kelly for the respondents that the fact that Fabio went to live with his parents and received free board has no bearing on the question of whether there was a saving to the parents of the cost of the deceased's board as a result of the death. It was put that the only basis for asserting that the free board given to Fabio could cancel out the saving of the free board to the deceased is that which forms the basis of the appellant's primary submission and there was no loss to the parents by substituting Fabio for the deceased.

[33]

It is difficult to follow this reasoning. The evidence did not establish with any clarity precisely what the arrangements were between the deceased and his parents. This did not become clear until after Fabio had been substituted for the deceased.

[34]

In the period before the parents retired, it is clear that the deceased provided voluntary assistance to his parents. Usually the value of that assistance would be assessed by deducting from the value of that assistance at commercial rates the savings from not having to provide him with free board. However, if the parents had hired a substitute and paid him a wage as well as free board the loss is more readily ascertained. In this case, the parents substituted Fabio for the deceased and paid him at a lesser hourly rate and also provided him with free board. The fact that Fabio worked longer hours and was paid less per hour for what he did is not relevant.

[35]

The learned trial Judge valued the deceased's administrative and bookkeeping services at CHF 20 per hour. Fabio's uncontested evidence was that the casual rate for that work at the time he began to work in the business was CHF 80 per hour (Ext P24). Fabio was not cross examined. The evidence supported a conclusion that the appellant spent two hours per week on administrative work and it is implicit in his Honour's reasoning that he accepted that evidence. Assuming the learned Judge's calculation of eight hours per week is correct, the value of the deceased's services was more like six hours at CHF 25 per hour as a pastry chef plus two hours at CHF 80 per hour, a total of CHF 310 per week rather than the CHF 190 found by the learned trial Judge.

[36]

There is no finding by the learned trial Judge as to the probable period of time that the deceased would have continued to provide gratuitous services to his parents. The evidence was that the deceased's parents planned to sell their business to the deceased in return for a pension paid out of the gross proceeds of the business on their retirement. As at the date of the deceased's death, the deceased's parents were respectively aged about 61 years and 57 years of age. Following the deceased's death, Mr and Mrs Preti senior employed Fabio from August 1999 until 1 September 2004 when he purchased their business. By this time Mr Preti senior was aged 67 and Mrs Preti was aged 63.

[37]

It is not possible to be precise about how long the deceased may have continued to have worked before his parents retired. Counsel for the plaintiffs claimed five years, but a more realistic figure is probably only four years when Mr Preti senior turned 65. The evidence and findings of his Honour enable an inference to be drawn that the deceased would probably have continued to provide the same level of assistance for about four years. Some allowance must be made for the possibility that the deceased may not have continued with the plan if, for example, he remarried or changed his employment or his circumstances otherwise changed. A perfect calculation of the damages is not possible, but an award of CHF 32,000 seems reasonable in the circumstances to compensate Mr and Mrs Preti for the pecuniary loss sustained, including an allowance for interest.

[38]

In the course of the hearing the appellant was granted leave to add a further ground of appeal namely that the trial judge erred in finding that the voluntary services rendered by the deceased were for eight hours per week. The appellant contended that there was evidence that such services were regularly provided for approximately 20 hours per week. This contention does not fit comfortably with the formulated claim of the plaintiff which referred to the work occupying "at least 10 hours per week".

[39]

The appellant made reference to items of evidence that, it was submitted, supported the complaint. In particular reference was made to statements by the ex-wife of the deceased, Sylvia, the brother of the deceased, Fabio, and the sister of the deceased, Viviana. A review of the evidence does not support the contention. The evidence of Sylvia related to a different time and different circumstances from those which applied at the time of the death. The evidence of Fabio did not include assessments of time. The evidence of Viviana provided imprecise discussion of what occurred on some occasions and did not go so far as to establish a pattern of behaviour. The conclusion of the learned trial judge reflected the best that could be determined on the basis of the evidence available to him. This ground should be rejected.

[40]

In the course of the proceedings in the Supreme Court the defendants made an offer of compromise pursuant to Order 26 of the Supreme Court Rules. The validity of the offer was a matter of significant interest because, in the circumstances, it impacted upon the costs orders to be made. The offer was expressed in Australian dollars and the appellant submitted that it was not valid because it was not made in the "currency of the loss".

[41]

The effect of the submission was that, because the "currency of the loss" claimed on behalf of the claimants was in Swiss francs (CHF) it was therefore mandatory that the court award judgment in Swiss francs and therefore, so it was said, it was mandatory for the offer of compromise to be in Swiss francs failing which it did not qualify as a "valid" offer for the purposes of Order 26.

[42]

The appellant submitted that the claims made on behalf of the claimants were expressed in Swiss francs which was said to be the currency of loss of all of the claimants. The judgment was given in this currency. It was submitted that for an offer of compromise within the meaning of Order 26.07 to be valid the offer must be such as to enable the other party to enter judgment of some kind. The claimant should be protected from the risk of fluctuations in currency other than his own, not only in the judgment given, but in any offer of compromise filed. Reference was made to the observations in Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (1989) 15 NSWLR 448.

[43]

It is clear that in an appropriate case the Supreme Court of the Northern Territory may deliver judgement in a foreign currency. Indeed that occurred in the present matter. The authorities to that effect referred to by the appellant were not challenged. However those authorities did not, as the appellant submitted, "require" the judgment to be in Swiss francs. In Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co Kirby P (with whom Hope and McHugh JJA agreed) said at 463:

"A plaintiff can seek to recover a judgment expressed in a foreign currency ... However this enlargement of the power of a court to proceed to express a judgment in terms of a foreign currency is not authority for a requirement that the court must do so... The court's duty is to express a judgment in the currency which best expresses the loss of the party which has sued." (Authorities omitted)

[44]

If it was not a requirement for the court to express a judgment in terms of a foreign currency it cannot have been a requirement that an offer to compromise made in advance of the judgment be expressed in a foreign currency. This is especially so in circumstances where an award of damages may be sought in differing currencies. In the present case it was at least arguable that the damages for solatium and loss of care and guidance should have been expressed in Australian dollars: Luntz, Assessment of Damages for Personal Injury and Death (fourth edition par 7.5.3).

[45]

The purpose of Order 26 is to encourage a party to whom a fair and reasonable offer of compromise has been made to accept the offer and bring the proceedings to an end. In this case the offer was clear and it enabled the appellant to enter judgment in the sum of $200,000 plus costs. The appellant chose to proceed.

[46]

The rule permits a party to serve on another an offer of compromise of the claim on the terms specified in the offer. The rule provides some formal requirements that must be present in a notice. For example, the offer must be in writing and must identify the number and the title to the proceedings. It must not bear an erasure or alteration that causes material disfigurement and must be signed by the party or the party's solicitor in his or her name. The offer must be open to be accepted for a period of not less than 14 days after the date of service. There is no provision specifying the currency in which an offer may be made.

[47]

Where an offer of compromise is made by a party and is not accepted by the other party cost consequences may follow. If the offer was made by a defendant then Order 26.08(3) provides:

(3) 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 him than the terms of the offer, then, unless the Court otherwise orders, 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 the standard basis and the defendant shall be entitled to an order against the plaintiff for the defendant's costs in respect of the claim after the offer of compromise taxed on the standard basis.

[48]

It can be seen that the court retains a discretion to make a costs order inconsistent with the provisions of the rule. In the event that those provisions would lead to an injustice the court has a discretion to make another order. In so doing it is open to the court to consider whether it would be unfair to a party for the rule to have its normal application. The concerns raised by the appellant as to possible difficulties arising from fluctuations in currencies may, if necessary, be addressed in that way.

[49]

The learned judge rejected the submissions of the appellant and concluded the offer of compromise was validly made under Order 26.07. In our view he was correct in so determining. At the hearing of the appeal there was no submission made on behalf of the appellant that the learned trial judge ought to have departed from the usual costs order provided for in Order 26.08(3).

[50]

This ground of appeal must be dismissed.

The appeal is allowed and the orders of the learned trial Judge except as to costs are set aside. In lieu thereof the amounts awarded to the claimants are varied by substituting therefore the following amounts:

[51]

There will be judgment for the appellant against the respondents in the sum of CHF 323,416.80 apportioned between the claimants accordingly.

[52]

The parties are to file and serve written submission as to costs of the appeal and of the proceedings below within 21 days.