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[2024] ACTSC 28
Supreme Court of the ACT
2024-02-14
Mossop J
Original judgment source is linked above.
Source: the ACT Courts (www.courts.act.gov.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: Tattersall v Dormakaba Australia Pty Ltd (No 2) Citation: [2024] ACTSC 28 Hearing Date: 15 December 2023 Decision Date: 14 February 2024 Before: Mossop J Decision: See [39]. Catchwords: CIVIL LAW – COSTS – Plaintiff purported to make offer of compromise pursuant to Pt 2.10 of the Court Procedures Rules 2006 (ACT) – offer failed to set out terms of orders proposed – offer not an offer of compromise within the meaning of r 1002 – whether plaintiff's offer was instead a Calderbank offer – offer not capable of acceptance by one defendant on behalf of others – first defendant’s offer of compromise to third and fourth defendants eminently reasonable – costs apportioned in line with liability for principal judgment up to date of first defendant’s offer of compromise – third and fourth defendant to pay plaintiff’s and first defendant’s costs from date after first defendant’s offer of compromise Legislation Cited: Civil Law (Wrongs) Act 2002 (ACT), s 21 Court Procedures Rules 2006 (ACT), Pt 2.10, rr 1002, 1010 Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: King v Yurisich (No 2) [2007] FCAFC 51 Vieira v O’Shea [2012] NSWCA 21 Vieira v O’Shea (No 2) [2012] NSWCA 121 Parties: Benjamin Tattersall (Plaintiff) Dormakaba Australia Pty Ltd (First Defendant) Zavindi Pty Ltd t/as Goulburn Roller Doors (Third Defendant) Nathan Flanagan (Fourth Defendant) Representation: Counsel B Jullienne (Plaintiff) M Nesbeth (First Defendant) J Moffett (Third and Fourth Defendants) Solicitors Blumers Personal Injury Lawyers (Plaintiff) Barry Nilsson Lawyers (First Defendant) Mills Oakley (Third and Fourth Defendants) File Number: SC 47 of 2023 MOSSOP J: Introduction
On 14 December 2023 the court gave judgment in favour of the plaintiff against the first defendant, and the third and fourth defendants in the sum of $347,470. It declared that as between the first defendant on the one hand and the third and fourth defendants on the other hand, each was entitled to contribution from the other so that the first defendant bore 30 percent of the liability to the plaintiff and the third and fourth defendants jointly bore 70 percent of the liability. Assuming no issue as to the capacity of those defendants to pay the judgment, that would mean that the first defendant would be liable for $104,241 and the third and fourth defendants would be liable for $243,229.
Argument in relation to costs was heard on 15 December 2023.
In summary, as a result of the making of an offer of compromise, the plaintiff sought an order that the defendants pay his costs on a solicitor and client basis for the whole of the proceedings.
The first defendant sought an order that its costs from 1 December 2023 should be paid by the third and fourth defendants on an indemnity basis and that the third and fourth defendants should pay the entirety of the plaintiff's costs from 1 December 2023. That was based upon the third and fourth defendants’ non-acceptance of a Calderbank offer made on 1 December 2023.
The third and fourth defendants submitted that the defendants should pay the plaintiff’s costs, that the liability as to costs should be apportioned in the same way as the liability for the principal judgment, and that there be no order as to costs as between the first defendant on the one hand and the third and fourth defendants on the other.
Chronology
The evidence disclosed the following chronology of attempts to settle the proceedings.
2 December 2021: The proceedings were commenced in the Magistrates Court.
3 March 2023: The proceedings were transferred to the Supreme Court.
26 June 2023: The plaintiff made an offer to the third and fourth defendants to settle the proceedings for $660,000 plus costs. The offer was carbon copied to the solicitors for the first and second defendants.
26 June 2023: The third and fourth defendants’ solicitors responded to the plaintiff’s offer denying that the offer was an offer of compromise for the purposes of r 1002 of the Court Procedures Rules 2006 (ACT) (the Rules) but noted that the offer had been provided to their client.
12 October 2023: The plaintiff made an offer of compromise pursuant to Pt 2.10 of the Rules. The offer is addressed to the solicitors for each of the first, second, and third and fourth defendants. The offer was expressed as follows: This is an offer of compromise under Part 2.10 of the Court Procedures Rules 2006. We are instructed to offer to settle this matter in the sum of $245,000.00 plus costs as agreed or assessed. This offer is made in relation to the entirety of the plaintiff’s claim SC 47 of 2023 in the Supreme Court of the Australian Capital Territory. The offer was expressed to be open for 28 days. It was also expressed to be a Calderbank offer. The offer was not accepted.
27 November 2023: Proceedings against the second defendant were settled on the basis of a consent judgment in favour of the second defendant, all notices for contribution by and against the second defendant being dismissed, and there being no order as to costs.
1 December 2023: The plaintiff indicated to the first defendant that a joint offer of $500,000 inclusive of costs would be accepted by the plaintiff if such an offer was made that day. The first defendant offered to the third and fourth defendants to settle with the plaintiff for $500,000 inclusive of costs, with the third and fourth defendants contributing $160,000 inclusive of its liability for costs and the first defendant contributing the balance of $340,000. The solicitor for third and fourth defendants asserted that “to comply with the principles of Calderbank v Calderbank, the bases upon which your client relies to state the offer is reasonable need to be expressed”. In a subsequent email, the offer is rejected, the solicitor for the third and fourth defendants saying, “Our client is not willing to contribute to the settlement offer proposed.”
4-7 December 2023: The hearing took place over four days.
6 December 2023: The first defendant made a Calderbank offer to the third and fourth defendants. The offer identified that the plaintiff would accept a total of $575,000 (being $300,000 in damages and $275,000 in costs) as settlement of the whole claim as against the first, third and fourth defendants. It was proposed that the first defendant would pay $400,000 (being $209,000 for damages and $191,000 for costs) and the third and fourth defendants would pay $175,000 (being $92,000 damages and $83,000 costs).
14 December 2023: Judgment is given for the plaintiff against the defendants for $347,470. A declaration is made with the effect that liability is apportioned 30 percent to the first defendant and 70 percent to the third and fourth defendants. The effective result is that the first defendant will pay $104,241 and the third and fourth defendants will pay $243,229.
Plaintiff’s claim for costs
Costs are sought by the plaintiff. The plaintiff submitted that, as a consequence of the offer of compromise made on 12 October 2023, r 1010(2)(a) of the Rules provides that, unless the court otherwise orders, the plaintiff should have an order for costs against the defendants assessed on a solicitor and client basis for the whole of the proceeding. The quantum of that initial offer may be seen, in light of the judgment, as a very reasonable one which reflects an appropriate attempt to resolve the proceedings.
Counsel for the third and fourth defendants submitted that the offer was not an offer of compromise within the scope of r 1002. That is because the offer did not “identify … the proposed orders for disposal of the claim or part of the claim including, if a monetary judgment is proposed, the amount of the judgment”.
Counsel relied in particular upon the decision of the New South Wales Court of Appeal in Vieira v O’Shea (No 2) [2012] NSWCA 121. In that case there was a concession that an offer purporting to be an offer of compromise under the Uniform Civil Procedures Rules 2005 (NSW) was not such an offer. The court therefore went on to consider whether, treating the offer as a Calderbank offer, it was one which was “capable of acceptance” by the defendant that received it. The offer was sent to the solicitors acting for two different sets of defendants, the first defendant on the one hand and the third to seventh defendants on the other. It was expressed to be an offer to compromise “this action in whole” on terms that those defendants “together” pay the sum of $215,600 plus costs. The end result of the substantive hearing was a judgment for $255,248 plus interest against the first defendant: Vieira v O'Shea [2012] NSWCA 21 at [50]. The plaintiff had therefore bettered the offer. However, by its terms, the offer was made to the defendants jointly to resolve the whole of the proceedings. The court concluded that the offer was not capable of being accepted by the first defendant on behalf of the other defendants because it did not have authority to do so. Instead, all that the first defendant could do was to make a counter-offer. In those circumstances, it was not unreasonable for the first defendant to have not accepted the offer.
Any solicitor practising in personal injury litigation should be able to read and understand r 1002 sufficiently to be able to make a complying offer of compromise. In a case such as the present, that requires that: (a) the offer be in writing: r 1002(1); (b) the offer must identify the claim or part of the claim to which it relates: r 1002(2)(a)(i); (c) the offer must identify “the proposed orders for disposal of the claim or part of the claim including, if a monetary judgment is proposed, the amount of the judgment”: r 1002(2)(a)(ii); (d) if the offer relates only to part of the proceeding, the offer must state whether the remainder of the proceedings would be abandoned or pursued: r 1002(2)(b)(i); (e) the offer must not include an amount for costs or state that it is inclusive of costs: r 1002(2)(c); (f) the offer must state that it has been made in accordance with Pt 2.10 of the Rules: r 1002(2)(d); and (g) the offer must state the period for acceptance: rr 1002(2)(e), 1002(5).
In the present case the offer was made in writing.
The offer indicated that it related to the entirety of the plaintiff’s claim. The language of the offer is consistent with it being an offer made to all of the defendants jointly. That is indicated by the reference to “the entirety of the plaintiff’s claim SC 47 of 2023”, rather than identifying the offer as relating to the entirety of the plaintiff’s claim against any one of the defendants.
The offer did not directly identify the proposed orders for the disposal of the claim. Even in a relatively straightforward claim for personal injury, it is highly desirable that r 1002(2)(a)(ii) be complied with by setting out in numbered paragraphs the actual terms of the orders that would be made by the court. This eliminates any ambiguity as to what is proposed that might arise as a result of any paraphrasing of the effect of the orders. In the present case, because the orders were not set out, the content of the offer being made was not clear and was only able to be determined by inference.
Because the offer was said to relate to the entirety of the claim, there was no need to say whether the remainder of the proceedings would be abandoned or pursued.
The offer did not state an amount for costs or say that it was inclusive of costs.
The offer stated that it was made pursuant to Pt 2.10 of the Rules.
The offer stated that it was open for acceptance for 28 days.
Although there may be circumstances in which an offer might “identify … the proposed orders for disposal of the claim” without actually setting out the terms of the orders to be made by the court, in the circumstances of this case, the offer did not identify those orders. That was because it was not made clear that what was proposed was that judgment be entered against each of the defendants for the sum identified. The two alternative readings of the offer were: (a) that it was an offer made to the three defendants jointly, open to be accepted by all of them acting jointly; or (b) that it was an offer made to any one of the defendants to accept whether or not the other defendants accepted the offer.
In favour of the former interpretation are the following: (a) The offer was addressed to all of the defendants. (b) The offer was expressed as relating to the entirety of the plaintiff’s claim in SC 47 of 2023, rather than the claim made in relation to each of the defendants. (c) No reference was made to any order which would address the situation in which some but not all of the defendants accepted the offer.
In favour of the latter interpretation are the following: (a) The offer was not stated to be required to be accepted jointly. (b) The right of contribution established under s 21 of the Civil Law (Wrongs) Act 2002 (ACT) provides for a system of contribution rather than proportionate liability and hence would be consistent with judgment being entered for the whole of the liability to the plaintiff against each defendant and only subsequently subject to orders relating to contribution. It would therefore be possible for one or more of the defendants to accept the offer and then pursue its claim for contribution against any remaining defendants.
I consider that the offer must be read as an offer made jointly and requiring the participation of all defendants if it is to be accepted. That is because of the three factors in favour of such an interpretation referred to above. If the offer was interpreted as open to be accepted by some but not all of the defendants, then the offer would not have the effect of resolving “the entirety of the plaintiff’s claim SC 47 of 2023 in the Supreme Court of the Australian Capital Territory”. It would leave unresolved the status of the claim made by the plaintiff against the non-participating defendants. That would leave the plaintiff exposed to the possibility of costs orders in favour of those non-participating defendants. That would be inconsistent with resolving the entirety of the claim through the acceptance of the offer and makes it very unlikely that that is what the plaintiff’s solicitors intended.
Notwithstanding that it is, by inference, possible to work out, on the balance of probabilities, what was probably intended to have been offered, that inference is not sufficient to turn an offer which fails to comply with the requirement that it “identify … the proposed orders for disposal of the claim” into one which does. Because the offer did not set out or otherwise identify the orders that were to be made for the disposal of the claim, the offer failed to comply with the requirement to “identify … the proposed orders for disposal of the claim”. Therefore, it was not an offer of compromise within the meaning of r 1002.
Had the offer complied with r 1002, the issue would have arisen as to whether such an offer would have been effective to generate an entitlement under r 1010 in circumstances where it could only have been accepted by joint action between the defendants and one of the defendants subsequently settled with the plaintiff: see King v Yurisich (No 2) [2007] FCAFC 51 at [8]-[11].
It is next necessary to consider the effect of the offer on the alternative basis that it was a Calderbank offer. In addition to stating that it was an offer of compromise under the Rules, the offer was clearly stated to be a Calderbank offer. Notwithstanding that the proposed orders were not set out in the offer, for the reasons given earlier it is possible, by a process of inference, to work out that the offer was one made to the defendants jointly and that the judgment proposed would be entered against each of the defendants. Insofar as there was an ambiguity as to the terms of the offer, it was not one which troubled the defendants sufficiently to make any enquiry of the plaintiff. However, it was still a requirement that the offer be one which was capable of acceptance by the relevant defendants. Having regard to my interpretation of the offer as being one which was contingent upon it being accepted by all defendants, it cannot be said that it was open to any of the current defendants to have accepted the offer given that they are not proved to have been agents of each other and there is no evidence that the second defendant was prepared to accept the offer: see Vieira (No 2) at [11]. In those circumstances, it cannot be said that either the first defendant or the third and fourth defendants acted unreasonably in failing to accept the offer even though the plaintiff has ultimately been awarded judgment for a greater sum from each of them.
There remains the issue of the consequences, if any, of the offers made by the first defendant to the third and fourth defendants on 1 and 6 December 2023. It is apparent that on both 1 and 6 December 2023 the first defendant made significant efforts to resolve the proceedings which were rebuffed by the third and fourth defendants. I do not accept the third and fourth defendants’ submission that there was any ambiguity or lack of precision in those offers. The offers made by the first defendant were substantially more favourable to the third and fourth defendants than the ultimate outcome at trial. The offer on 1 December 2023 would have required the third and fourth defendants to pay only $160,000 inclusive of its costs liability to the plaintiff. The offer on 6 December 2023 would have required the third and fourth defendants to pay only $175,000 inclusive of costs liability. Those amounts are each significantly less than the outcome achieved at trial, which requires the third and fourth defendants to pay in effect $243,229 exclusive of any costs liability. The compromise proposed by the first defendant was an eminently reasonable one which saw it bearing the majority of the liability to the plaintiff. The position adopted by the third and fourth defendants on 1 December 2023 (the day prior to the commencement of the hearing) failed to give adequate weight to the risks to which it was exposed, particularly by lay evidence such as that given by Mr Carson which was not required to be provided in written form prior to the hearing.
In effect, the third and fourth defendants’ refusal to accept the reasonable offer made by the first defendant prevented the proceedings from being settled on that day on terms more favourable to the third and fourth defendants than they achieved at trial. The failure to accept that offer was unreasonable in the circumstances because it involved a failure to give appropriate weight to the risks to the third and fourth defendants of proceeding with the trial. It reflected a willingness to proceed to trial and accept the costs consequences that would flow from the refusal of a reasonable offer of settlement. In those circumstances, the first defendant is entitled to be compensated for the costs of being compelled by the third and fourth defendants to proceed with the trial. Further, the first defendant should be protected from the costs liability to the plaintiff in relation to the period following 1 December 2023.
As between the defendants, the costs result should be that from 2 December 2023 the third and fourth defendants should pay the first defendant’s costs of the proceedings, but there is otherwise no order as to costs as between the first defendant on the one hand and the third and fourth defendants on the other.
So far as costs payable to the plaintiff are concerned, the orders that I make are on the basis that there is no issue as to capacity to pay. So far as the proceedings up to and including 1 December 2023 are concerned, the defendants should pay the plaintiffs costs of the proceedings with those costs to be apportioned in a manner consistent with the declaration made at the time of judgment, namely, the first defendant paying 30 percent and the third and fourth defendants paying 70 percent. So far as the period from 2 December 2023 is concerned, the third and fourth defendants should bear the plaintiff’s costs. These orders as to costs are not intended to interfere with any existing costs order.
Orders
I certify that the preceding thirty-nine [39] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop. Associate: Date: 14 February 2024
Tattersall
Dormakaba Australia Pty Ltd