Trajkovski v Commonwealth Insurance Ltd

Judgment (4 paragraphs)

[1]

The applicant's submissions

The applicant submits that what was offered in the Calderbank offer constituted a genuine offer of compromise and it was unreasonable for the respondent to reject it. It was a genuine offer since, although it was a 'walk away' offer in nature, the defendant was offering to forego its potential entitlement to obtain costs which, at the point the offer was made, was already calculated to be in excess of $10,000. That entitlement was valuable.
The applicant submits that it was unreasonable for the respondent to reject the offer since the letter pointed out the weakness in the respondent's case (the absence of objective evidence), compounded by the strength in the applicant's case (the expert opinion of Messrs Ziade and Targett) which were served well before the offer was made; and further, that the respondent had adequate opportunity to consider the offer.

[2]

Consideration

It should be apparent that the reasons I have advanced for rejecting the application for a special order under r 42.15A also apply in relation to the Calderbank offer. It is unnecessary to repeat them.
But with specific reference to the matters stated in Ms Yoo's letter, it was premature for the offeree to have formed conclusions about what evidence, objective or otherwise, could be adduced to prove that the chattels were stolen. As events subsequently showed, the respondent could and did prove his possession of items and could and did advance a theory of how they were taken, supported by expert opinion evidence to compete for acceptance with the expert evidence of the applicant.

THE RULES OFFER

The applicant relies upon r 42.15A of the Uniform Civil Procedure Rules (NSW) (the 'UCPR'). That rule is engaged where, as here, a defendant obtains a result no less favourable than the terms of what was offered.
By r 20.26(3)(a)(i) of the UCPR, it is permissible, in terms of its validity, that an offer of compromise be expressed in terms, as it was here, that there be judgment for the defendant with no order as to costs.
Subsequent authorities construing the rule also accept that 'walk away' offers are potentially capable of triggering the operation of r 42.15A: Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd (No 2) [2014] NSWCA 391 at [50]-[51]. However, it is well-established that the offers of that character should not be used simply for the purpose of triggering the costs mechanisms, and there is also authority to indicate that for 'walk-away' offers to engage a rule like r 42.15A, the claim would 'have to approach the character of being frivolous or vexatious for that to be the case': Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [31]. There must be some real benefit to a plaintiff, which is more than an invitation to capitulation.
The letter which enclosed the rules offer featured an assertion that the applicant had, at the time of service of the offer, incurred "in excess of $10,000". The offer to forego an entitlement to claim costs, estimated at that amount, was the only benefit offered to the plaintiff.
It is arguable whether the benefit is so derisory as to amount, effectively, to an offer to capitulate. The offer was made at an early point in the proceeding. At the time it was made, the plaintiff had not yet been directed to serve his evidence. It was too soon for the respondent to reasonably consider that he was unlikely to be able to prove his case. Yet, for the benefit of avoiding a detriment which, at that stage, had been quantified as a costs order in excess of $10,000, he was being invited to abandon a claim which later was quantified at over $300,000.
Accepting that the rules offer was valid, I would 'otherwise' order, within the terms of r 42.15A(2) of the UCPR on the basis that if the offer represented a genuine offer, it was not unreasonable for the respondent to reject it.

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Judgment (4 paragraphs)

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Cases Cited (2)