Quality Corp (Aust) P/L & Ors v Millford Builders

[1] McPHERSON JA: I agree with what Davies JA has written on the subject of interest and costs, and with the orders he proposes.

[2] DAVIES JA: On 14 November last this Court gave judgment in these appeals by allowing each appeal, setting aside the judgment of the learned trial judge of 9 April 2003 and his Honour's order for costs of 22 April 2003 and, in lieu, giving judgment for the first plaintiff against the defendants for $234,000, judgment for the second plaintiff against the defendants for $10,000 and judgment for the third plaintiff against the defendants for $12,000, in each case with interest from 18 December 1995 at nine per cent per annum. It also made an order for costs. On the same day on which this Court gave judgment the appellants plaintiffs sought to make further submissions on costs and that request was granted on 17 November.

[3] The main reason for such further argument is that, on 11 March 2003, the plaintiffs made an offer to the defendants to settle the action which was not accepted by the defendants. The offer was in the following terms:

"TAKE NOTICE that the First, Second and Third Plaintiffs offers to settle the above action against the First, Second, Third, Fourth and Fifth Defendants on the following basis:

1. That the First, Second, Third, Fourth and Fifth Defendants pay to the First, Second and Third Plaintiffs the sum of $350,000.00, such payment to be made within 28 days of the date of their acceptance of this offer.

2. That the First, Second, Third, Fourth and Fifth Defendants pay the First, Second and Third Plaintiffs' costs of this action to be assessed on a standard basis, such costs to be paid up to and including the date of acceptance of the offer.

This offer is made in accordance with the provisions of Chapter 9 Part 5 of the Uniform Civil Procedure Rules."

[4] The total judgment amount for all plaintiffs, in consequence of this Court's judgment, was $256,000. Interest on that sum from 18 December 1995 until 11 March 2003, the date of the above offer, at nine per cent (the rate at which the learned trial judge awarded interest) would have been $166,519. That would have made a total judgment with interest on that date of $422,519. It can be seen that such a judgment would be no less favourable to the plaintiffs as a whole than their offer to settle.

[5] However the defendants submit that the above offer was not an offer to settle within the meaning of Part 5 of Chapter 9 of the Uniform Civil Procedure Rules for two reasons. The first is that it was a global offer, that is one made on behalf of all plaintiffs not separate offers to settle by each plaintiff. And the second is that, accepting that the plaintiffs, if successful, were each entitled to interest up to the date of their offer, the offer did not indicate how much was claimed for interest or how it was calculated.

[6] Rule 353 and the rules which follow it are expressed in the singular:

"A party to a proceeding may serve on another party to the proceeding an offer to settle ... ".

Of course the singular may include the plural if the context requires it but I am inclined to think that Part 5 should be construed so as to require each party who wishes to make an offer to settle to serve on another party that party's offer. To permit global offers such as this to have the automatic consequences which follow from non-acceptance under the rules would place offerees in the difficult position of having to accept a global offer or none at all, thereby precluding them, in the case where there is more than one offeror, accepting the offer of one or more and rejecting that of others.

[7] For that reason, in my opinion, the offer of 11 March 2003 was not an offer to settle in accordance with the provisions of Part 5 of Chapter 9 of the Uniform Civil Procedure Rules. It does not follow, however, that the consequence which must follow from non-acceptance of a plaintiff's offer under Part 5 of Chapter 9 (see r 360) may not also follow in this case. On the contrary, for several reasons I think that it should.

[8] The first of these is that the first plaintiff's judgment alone, together with interest at nine per cent up to 11 March 2003, would have exceeded the offer of $350,000. The claims of the second and third plaintiffs were dependant on the success of the first plaintiff's claim.

[9] Secondly, all plaintiffs were plainly entitled to interest on their damages and I do not think that the rate which the learned primary judge accepted, nine per cent, was excessive. It must have been obvious to the defendants' legal advisers that the offer of 11 March included such interest as that to which the plaintiffs claimed they were entitled.

[10] And thirdly, partly because of the first reason given, this was not a case in which the defendants were disadvantaged in not being able to accept one and not accept other offers of settlement.

[11] For those reasons, although I do not think that the plaintiffs' offer was an offer within the meaning of Part 5 of Chapter 9, I think that this Court should nevertheless order that the defendants pay the plaintiffs' costs, from 11 March, on an indemnity basis.

[12] In making his costs order at the trial, the learned trial judge certified for two counsel and it is not contended that that certification should be disturbed. On the other hand, Mr Logan SC for the respondents submits that the very much shortened appeal record, produced by the appellants at the eleventh hour, shows that the questions before this Court were, though complex, much more confined. That may well be true. However I think that the complexity of the questions involved justified the briefing of two counsel in this appeal. It is not the practice of this Court to certify for two counsel. In the circumstances I think it is sufficient, for the purpose of assessment, that I express the view which I have.

[13] There is one further question with respect to costs. It is that, as already mentioned, the appellants, after producing a multi-volume appeal record, at the eleventh hour produced, from that large appeal record, a single appeal book of manageable size. The appellants did not contend in the appeal that they should be entitled to the costs of preparation of the multi-volume appeal record and I think it is sufficient to say that their costs of preparing the appeal record should be confined to the costs of preparing the single volume.

[14] A complexity in calculating interest arises from the fact that the judgment of the learned trial judge in favour of the first plaintiff for $190,000 was paid, together with interest of $128,161.30 on 21 May 2003. Allowance must be made for that. That can be achieved by awarding the first plaintiff interest on $234,000 at nine per cent from 18 December 1995 to 21 May 2003 ($156,420.98) and interest on $44,000 (the difference between $190,000 and $234,000) at nine per cent from 21 May until 14 November 2003 ($1,920.33). There is no difficulty in calculating interest on the judgments in favour of the other plaintiffs. It is convenient to add these judgments for interest to the orders already made.

1. That the judgment for interest for the first plaintiff be $158,340.98 to 14 November 2003; that the judgment for interest for the second plaintiff be $7,096.44 to that date and that the judgment for interest for the third plaintiff be $8,545.32 to that date.

2. The defendants to pay the plaintiffs' costs of the trial on an indemnity basis on the scale of fees prescribed for the Supreme Court.

3. The defendants pay the plaintiffs' costs of the appeal on a standard basis.

[16] WILSON J: I agree with the orders on interest and costs proposed by Davies JA. Subject to what I am about to say about Uniform Civil Procedure Rules r 353, I agree with His Honour's reasons.

[17] Rule 353(1) provides -

"353 (1) A party to a proceeding may serve on another party to the proceeding an offer to settle 1 or more of the claims in the proceeding on the conditions specified in the offer to settle."

The plaintiffs had several (rather than joint) claims, although as Davies JA has observed, the claims of the second and third plaintiffs were dependent on the success of the first plaintiff's claim. The offer was to settle all their claims. I am inclined to think that, consistently with its object of promoting the early resolution of a proceeding, the rule should not be read restrictively as requiring the party making an offer in such circumstances to specify component parts attributable to each plaintiff. In other words, I am inclined to think that the offer of 11 March 2003 was an offer to settle in accordance with part 5 of chapter 9 of the UCPR.

[18] I accept, however, that the majority view is to the contrary. Our differing approaches would not affect the ultimate decision in this particular case.