For reasons given on 23 August 2021 (principal judgment), I ordered:
1. Verdict for the Defendant;
2. Subject to any application to be made to my Associate to relist the matter within 14 days for any further or other order as to costs. The Plaintiff is to pay the Defendant's cost.
On 2 September 2021, the Solicitor for the Defendant wrote to my Associate advising of instructions to seek to vary order 2 pursuant to section 88 of the Civil Procedure Act 2005 (NSW) and r 42.15A of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) as follows:
1. The Plaintiff to pay the Defendant's costs on an ordinary basis to 22 September 2020; and
2. The Plaintiff to pay the Defendant's costs on an indemnity basis from 23 September 2020
Thereafter, the parties were requested to consult with a view to reaching agreement as to appropriate directions and orders.
On 8 September 2021 following receipt of further correspondence from the solicitor for the Defendant with consent from the solicitor for the Plaintiff, I ordered in Chambers:
1. The Defendant to serve any Affidavit in support of the costs application and any written submissions by Friday 17 September 2021 by 4pm; and
2. The Plaintiff to serve any Affidavit and written submissions in reply by Friday 8 October 2021 by 4pm.
The Defendant filed its submissions on 16 September 2021. The Plaintiff filed his submissions on 5 October 2021. I was informed by email addressed to my Associate on 20 September 2021 that both parties did not require oral submissions and the matter was to be determined on the basis of written submissions.
With its submissions, the Defendant forwarded an affidavit of its solicitor Jennifer Dawes affirmed 15 September 2021. The Affidavit annexed an offer of compromise dated 22 September 2020 forwarded by email to the solicitors for the Plaintiff pursuant to UCPR 20.26. That offer was open to be accepted for 28 days thereafter. It proposed judgment in favour of the Defendant against the Plaintiff with each party to pay his or its own costs. The covering letter submitted in the alternative that the offer is made pursuant to the principles enunciated in Calderbank v Calderbank [1975] All ER 333.
On 9 December 2020, Ms Dawes indicated that a further offer of compromise was forwarded by email to the solicitors for the Plaintiff pursuant to UCPR 20.26. That offer was also open to be accepted for 28 days thereafter. It proposed judgment in favour of the Defendant against the Plaintiff with each party to pay his or its own costs. The covering letter submitted in the alternative that the offer is made pursuant to the principles enunciated in Calderbank v Calderbank (supra).
Finally on 11 February 2021, Ms Dawes indicated that a further offer of compromise was forwarded by email to the solicitors for the Plaintiff pursuant UCPR 20.26. That offer was to remain open to be accepted until 5pm on 12 February 2021. It proposed judgment in favour of the Defendant against the Plaintiff with each party to pay his or its own costs. The covering letter indicated that in the alternative the offer was made pursuant to the principles enunciated in Calderbank v Calderbank (supra).
The Defendant submitted that the Plaintiff had commenced the proceedings on 29 October 2018. When the first offer of compromise was served the Defendant had attended to numerous matters including:
1. Filed its Defence;
2. Requested particulars and arranged medical examinations;
3. Considered the Plaintiff's served report of Denis Cauduro dated 12 June 2019;
4. Served an expert liability report from Dr Ann Fairfax dated 16 September 2020.
The Defendant submitted that by the time of the service of the first offer of compromise, the Plaintiff had served its expert liability evidence from Mr Cauduro and accordingly it should be entitled to an order for costs on the ordinary basis up to 22 September 2020 and thereafter on an indemnity basis.
[2]
Was there an offer of compromise under UCPR 20.26
No argument was raised by the Plaintiff in its submissions that the offers of compromise did not comply with UCPR 20.26 such that UCPR 42.15A was not engaged.
Specifically, the Plaintiff did not submit that the offers were not genuine offers of compromise: Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [41], [42]; Fabre v Lui (No 2) [2015] NSWCA 312 at [6]-[8]. Nor did it submit that they constituted procedural moves to trigger costs consequence rather than genuine attempts at settlement: Leichhardt Municipal Council v Green [2004] NSWCA 341 at [39]; The Uniting Church v Takacs (No 2) [2008] NSWCA 172 at [14].
In this instance, the initial offer made in 2020 was nearly two years after the litigation had commenced. It involved a proposal by the Defendant to forgo a substantial amount of costs already incurred. [1] That figure would have grown by the time of the subsequent offers. Taking into account the facts and my impression of the matter, I am satisfied that each offer to forgo costs has been sufficient to satisfy the element of compromise.
[3]
Should the Court otherwise order pursuant to UCPR 42.15A
As I understand it, the Plaintiff's submission was to the effect that notwithstanding UCPR 42.15A, the Court should "otherwise order" so that costs be paid to the Defendant on an ordinary basis. In support the Plaintiff drew attention to the following:
1. In respect of the Defendant's offer of compromise dated 22 September 2020:
1. The Defendant served its liability expert report on the same date.
2. Upon perusal of the subject report, the Plaintiff had ascertained that the Defendant's expert (Dr Ann Fairfax) had inspected a machine and hose in the course of preparing her report, and the Defendant did advise that the subject equipment was available for the inspection and testing. Therefore, the Plaintiff served a Notice to Admit Facts dated 22 September 2020 [2] to which the Defendant responded with a Notice Disputing Facts dated 2 October 2020. [3] The effect was to confirm that Dr Fairfax did not inspect the exact machine used by the Plaintiff at the time of the alleged accident.
3. A Subpoena to Produce addressed to the Defendant was served on 23 September 2021.
4. The Plaintiff's expert (Mr Cauduro) was instructed to inspect the hose and machine inspected by Dr Fairfax. The Plaintiff was also asked to attend in order to identify whether the inspected machine and hose were the same that he used at the time of the subject fall.
5. On 1 December 2020, an email was sent to the Defendant's solicitors seeking additional information referred to in Dr Fairfax's report. [4]
1. In respect of the Defendant's offers of compromise served on the Plaintiff on 9 December 2020 and on 11 February 2021, the Plaintiff submitted the following:
1. An email serving another Notice to Produce was forwarded to the Defendant dated 1 December 2020. [5]
2. Packet no 27 had been produced by the Defendant and accessed by the Plaintiff on 12 February 2021. That appears to relate to the subpoena dated 23 September 2021.
3. Aspect Cleaning Equipment Pty Ltd - packet 24 was accessed by the Plaintiff on 23 December 2021. [6]
4. The Liability experts' conclave had not taken place by then.
5. No evidentiary statements of the Defendants' witnesses had been served upon the Plaintiff by then.
The Plaintiff submitted that he did not act unreasonably in the lead up to the hearing with a completely realistic view of the prospects of liability finding in his favour. It was submitted that the Plaintiff was willing to negotiate on reasonable terms and it was not an unreasonable position to adopt in the circumstances given the complexity of the litigation.
In Houatchanthara v Bednarczyk [1996] NSWCA 253, Clarke JA (with Handley JA and Santow AJA agreeing) stated in respect of a predecessor provision:
[i]t is clear that if the rule operates, the plaintiff will be significantly disadvantaged, but that disadvantage flows naturally from the risks of litigation. The idea behind the rule is to encourage settlement or compromise of proceedings, and more specifically, to encourage litigants to give serious consideration to the settlement of proceedings. Where an offer is made by a defendant to plaintiff, the latter is put on notice that unless he or she accepts that offer, there is a significant risk that the order provided for by the rule may follow. In declining to accept the offer, the plaintiff undertakes the risk and the consequences that flow naturally from that risk. [7]
In Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) (supra), McColl JA (with whom Gleeson JA and Sackville AJA agreed) considered the words "otherwise order" in UCPR 42.15A(2) and held that the prima facie position should only be departed from for proper reasons which, in general, should only arise in an exceptional case. At [48] her Honour stated:
[48] It is impossible exhaustively to state the circumstances in which the court's discretion to "order otherwise" might be exercised: New South Wales Insurance Ministerial Corporation v Reeve (at 102). The mere fact that it was reasonable for the litigant to take the view that he or she did in rejecting the offer is not enough to displace the rule: Morgan v Johnson (at 582). However that does not mean that reasonableness of the rejection is an irrelevant consideration: see Seven Network Ltd v News Ltd (at [64]-[67]); Uniting Church in Australia Property Trust (NSW) t/as Northaven Retirement Village v Takacs (No 2) [2008] NSWCA 172 (at [15]) per Hodgson JA (McColl JA agreeing); cf Basten JA (at [32]-[33]).
In Martinez as trustee for Martinez HWL Practice Trust as representative of the partners trading as HWL Ebsworth Lawyers v Griffiths as trustee for the Griffiths HWL Practice Trust (No 2) [2020] NSWCA 42, the Court (comprising of Bell ACJ, Meagher JA, Barrett AJA) commented:
[12] In ordinary litigation, where the presumption that costs follow the event applies, a significant consideration in determining that an order "otherwise" is justified is whether in the circumstances the offeree acted reasonably in rejecting the offer, although it is recognised that it may not be sufficient to justify such an order that the offeree reasonably believed at the time that it was justified in rejecting the offer: see New South Wales Insurance Ministerial Corporation v Reeve (1993) 42 NSWLR 100 at 102; The Uniting Church in Australia Property Trust (NSW) v Takacs (No 2) [2008] NSWCA 172 at [15], [18], [31]; Leach v Nominal Defendant (QBE Insurance (Australia) Limited) (No 2) [2014] NSWCA 391 at [48]; Aukuso v Tahan (No 2) [2018] NSWCA 302 at [60] - [62].
…
[13] In Fairall v Hobbs (No 2) [2017] NSWCA 133, where it was accepted that the presumption in r 42.15 might be displaced "by demonstrating that the rejection of the offer was reasonable", the Court described the matters relevant to such an assessment as including:
…where the full parameters of the dispute are still uncertain at the time of the offer: Equity 8 Pty Limited v Shaw Stockbroking Limited [2007] NSWSC 503 at [42]; or where the offeror's case changes after the offer: South Eastern Sydney Area Health Service v King [2006] NSWCA 2 at [85]; or where all relevant evidence has not been served before the offer: Vale v Eggins (No.2) [2007] NSWCA 12 at [22].
Ultimately, the Plaintiff needed to demonstrate that that the Court should otherwise order and the fact that he acted reasonably whilst relevant is not sufficient to displace the rule.
The Plaintiff has drawn attention to the perceived need to continue to investigate the matter following each offer being made. His action ultimately failed as the Court did not accept his own evidence as to how the accident occurred (See [100] of principal judgment). Indeed, the Court accepted the evidence by Mr John Smith (see [118] of principal judgment) who gave an account that was inconsistent with the Plaintiff whilst called in the latter's case. As the principal judgment demonstrates the credibility of the Plaintiff's should have been apparent at an early stage.
Much of the additional material sought was well after commencement of the proceedings in 2018 and the Plaintiff has not demonstrated that it meant that the parameters of the dispute were uncertain or that the Defendant's case had changed. There is no evidence in respect of any offer that the Plaintiff availed the opportunity afforded by UCPR 20.26(4).
Whilst I have noted the follow up correspondence in relation to Dr Fairfax's report, the expert evidence sought to be relied upon by both parties was ultimately excluded at trial for reasons given on 14 May 2021.
The only witness called by the Defendant was Mr Jeff Roese who had little recollection of events surrounding the Plaintiff's injury. Pursuant to UCPR 31.1(2) evidence at the trial was in any event required to be given orally and there was no direction for witness statements pursuant to sub-rule (3). [8]
The other matters which the Plaintiff has drawn attention to have not been shown to be such that the Court should otherwise order.
In my view, the ordinary consequence of UCPR 42.15A should apply.
[4]
ORDERS
Accordingly, and for these reasons; I order:
1. In lieu of order 2 made on 23 August 2021, the Plaintiff is to pay the Defendant's costs on an ordinary basis to 22 September 2020 and on an indemnity basis thereafter from 23 September 2020.
[5]
Endnotes
Estimated at that stage at $45,000 according to the covering letter.
Annexure A to Plaintiff's submissions
Annexure B to Plaintiff's submissions.
Annexure C to Plaintiff's submissions.
Annexure D to Plaintiff's submissions.
Documents in response to Subpoena to Produce were marked as Annexure E to Plaintiff's submissions.
See also Shaw v Jarldorn [1999] SASC 529 in relation to the South Australian rule
T 6.41-.45.
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Decision last updated: 09 October 2021