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[2002] VSC 28
Supreme Court of Victoria
2002-02-27
Eames J
Original judgment source is linked above.
COSTS - costs thrown away by defendants by virtue of joinder of additional defendant - refusal of one defendant to make admissions which would have rendered joinder unnecessary. COSTS - offer of compromise - action for personal injuries - contribution proceedings - ten defendants - offers of contribution - Rules of Supreme Court, r.26.10 - Calderbank offer - r.63.02 - section 24 Supreme Court Act.
(Scolaro's Concrete Constructions Ltd (In Liquidation))
COSTS THROWN AWAY BY JOINDER OF TENTH DEFENDANT
"In a case in which liability is accepted as being clear against both or more defendants and only the issue as between defendants as to their proportionate contribution and the amount to be paid to the plaintiff remains to be settled, a defendant may offer to his co-defendant to contribute a nominated percentage, either of the specified amount or of any sum that the plaintiff obtains by way of verdict, and if by a verdict the proportion of liability awarded against him is less than that proportion offered by him to his co-defendant, then again he would seek to be protected against further costs on the liability issue by an order for such costs against his co-defendant. The amount that the offeror has in mind to offer the plaintiff need not in these circumstances be relevant, if the plaintiff was only prepared to settle for an unreasonable amount which neither defendant would pay. However, if the defendant proposed to be protected as to costs both on the issue of liability and damages, he would no doubt in his offer specify an amount to be offered to the plaintiff. But nonetheless the rule would operate to assist in cutting down costs if the issue as to liability between defendants and between the plaintiff and the defendants could be eliminated. Where there are several defendants the permutations of course may vary a great deal." (My emphasis.)
"In the first place there were three defendants. The negligence of each defendant to the plaintiff was always an issue, and causation also remained a live issue apropos any breach of duty owed by any one of the defendants to the plaintiff. The plaintiff's case was unusually lengthy and was designed to establish each element of the tort of negligence against each one of the defendants. They in turn endeavoured to blame one another, although it is perhaps truer to say that Esso and the SEC each attempted to escape liability whilst saying that liability if any should fall on the employer Simon Carves. The latter attempted to shelve responsibility and to blame the other two defendants. I have no doubt but that the length of the trial and thus the very high costs incurred were incurred to an overwhelming extent on the issue of the liability of the defendants to the plaintiff, rather than on the issue as to the proportionate responsibility of the defendants (if any)."
"It is implicit in the notice that in so far as the issue of liability was concerned, had the defendants Esso and Simon Carves each realistically assessed its own percentage liability to contribute to the plaintiff's damages, the matter might have proceeded with one counsel representing all defendants. It is speculative whether or not the chances of settlement with the plaintiff would have been enhanced. Perhaps it may be said that as a matter of practical reality it would have been a step only on the way to settlement."
"The policy of the Court is to encourage litigating parties to undertake genuine settlement negotiations and, for the purpose, to face up to serious offers of settlement. It is for this reason that the power to refer the parties to mediation, recently conferred on the Court in 1990 by Supreme Court Act 1986, Section 25(1)(ea), is now widely exercised under O. 50, particularly in the Building Cases List. The same philosophy underlies the very flexible offer of compromise procedure now found in O. 26 and the realistic approach of the Court to informal offers of compromise in determining orders for costs."
"[13] Let it be assumed in favour of the respondents that, by reason of the position adopted by one or other or both of them, there was no prospect of their agreeing on the three points in the appellant's offer. To my mind, that was no concern of the appellant's. It was contended below and before us that the offer was made in the knowledge that the respondents would not accept it, but that was their problem, not the appellant's. Each respondent could have protected itself by an offer to the other."
"4. Our client has instructed us that it will contribute the sum of $550,000 inclusive of costs to an offer made to the plaintiff of $3.5 million inclusive of costs. Our client's offer is conditional upon the following: (a) That the third defendant also contribute $550,000 to the settlement; (b) that the fourth defendant also contribute $550,000 to the settlement; (c) That the eighth defendant also contribute $550,000 to the settlement (d) That the ninth defendant also contribute $550,000 to the settlement; (e) That the seventh defendant also contribute $750,000 to the settlement; (f) That each of the contributing defendants acknowledge that in funding the settlement they in part are funding the liability of the first and sixth defendants, such defendant being insured by HIH Insurance Ltd or a related insurer now placed in provisional liquidation. (g) That if the proposed offer is made to the plaintiff and accepted that all contribution proceedings between the contributing defendants would be resolved. (h) That the contributing defendants would be at liberty to pursue any liability on the part of the first or sixth defendant as joint tortfeasors to contribute. The offer is made by our client to afford it protection on the question of costs. Our client will rely on the above proposal on two grounds, namely (a) If the plaintiff is awarded an amount which equates to an amount of less than $3.5 million inclusive of costs; and/or (b) If the plaintiff is awarded an amount greater than $3.5 million inclusive of costs and the second defendant is found to be liable for an amount equating to less than $550,000."
"[14] There is less difference than at first appears between an offer made by one defendant to the other in a proceeding where there are only two defendants and an offer made by one defendant to all the others in a proceeding where there are three or more defendants. There is still an offer by A to B. The difference is that B consists of a group. If significant costs would have been saved by acceptance of the offer, it is by no means a conclusive answer to say that the other defendants could not agree among themselves. The intransigence of a particular defendant may mean that the burden of costs falls more heavily on that defendant, as between the other defendants, but in a case such as the present they should be jointly liable to compensate the defendant who made the offer. [15] I hasten to say that the foregoing is not a rule. There are too many possible factors in a case with three or more defendants and, in any event, the discretion should not be fettered. It is simply an indication of the way in which the discretion is likely to be exercised in most cases where one defendant makes a comprehensive offer to the others. The offers made in Henderson's Case were far from comprehensive. There may be cases where the group or one or more of its members have legitimate reasons for refusing such an offer that would not have been available to a single defendant, but they will not ordinarily include inability to agree among themselves."
"That case was towards the van of a series of decisions during the last 20 to 30 years which, in one way or another, have recognised that offers to compromise not directly authorised by Rules of Court, if reasonably made but unreasonably ignored, may properly influence the exercise of judicial discretion as to costs. (Authorities cited). I find it difficult to discern in these decisions a specific principle of general application, save that a successful party may appropriately be deprived of full costs, and indeed may properly be ordered to pay costs, if in the circumstances it seems just so to order."
[2] See [2001] VSC 477 at par. 34-37.
[3] Toomey v Scolaro's Concrete Constructions Pty Ltd and Ors (No. 2) [2001] VSC 279.
[4] Toomey v Scolaro's Concrete Constructions Pty Ltd and Ors (No. 3) [2001] VSC 477.
[5] See Calderbank v Calderbank [1975] 3 All ER 333.
[6] See Mideco v Tate [1989] VicRp 6; [1989] VR 50; VSLR Pty Ltd v Sefa (Appeal Division, unreported, 26 July 1995).
[7] Grbavac v Hart [1996] VSC 37; [1997] 1 VR 154, at 160, per Tadgell JA.
[8] Grbavac v Hart [1996] VSC 37; [1997] 1 VR 154, at 155 per Winneke P.
[11] (Unreported) Byrne J, 28 April 1993 at p. 12 (tab 4).
[12] [2000] VSCA 114 (Phillips, Charles and Callaway JJA)
[13] [1996] VSC 37; [1997] 1 VR 154 at 160 (Winneke P, Tadgell and Hayne JJA) per Tadgell, JA referring to Calderbank v Calderbank.
Toomey
Scolaro's Concrete Constructions Pty Ltd and Ors