AAMI Limited v Cirevska (No 2)

[2013] NSWSC 1847

Supreme Court

New South Wales

Case Title:	AAMI Limited v Cirevska (No 2)
Medium Neutral Citation:	[2013] NSWSC 1847
Hearing Date(s):	On the papers
Decision Date:	11 December 2013
Before:	R A Hulme J
Decision:	Plaintiff to pay the first defendant's costs on the ordinary basis
Catchwords:	COSTS - indemnity costs - Calderbank letter - reasonableness of rejection
Legislation Cited:	Civil Procedure Act 2005 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	AAMI Limited v Cirevska [2013] NSWSC 1438 Calderbank v Calderbank [1975] 3 All ER 333 Roberts v Rodier [2006] NSWSC 1084 Whitney v Dream Developments [2013] NSWCA 188
Category:	Principal judgment
Parties:	AAMI Limited (Plaintiff) Jordanka Cirevska (First Defendant) Thomas Goudkamp in his capacity as a Claims Assessor of the Motor Accidents Authority of New South Wales (Second Defendant) Motor Accidents Authority of New South Wales (Third Defendant)
Representation
- Counsel:	Counsel: Mr G J Gemmell (First Defendant)
- Solicitors:	Solicitors: Moray & Agnew (Plaintiff) C & M Lawyers (First Defendant) Crown Solicitor (Second & Third Defendants)
File Number(s):	2012/383739

JUDGMENT

1. HIS HONOUR: This judgment deals with costs arising from proceedings seeking administrative law relief. On 27 September 2013, I delivered my primary judgment in the matter, finding against AAMI Limited: AAMI Limited v Cirevska [2013] NSWSC 1438. Costs on the ordinary basis should follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs: Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") rr 42.1-2.

2. The question of costs has been dealt with by the exchange of further evidence and written submissions. In short, counsel for Ms Cirevska submits that I should grant her indemnity costs from a certain date because the AAMI Limited unreasonably rejected offers of compromise.

3. For the reasons that follow I have determined not to make a special order for costs.

Background

1. The primary judgment determined an application for judicial review of a decision of Mr Thomas Goudkamp in his capacity as a Claims Assessor of the Motor Accidents Authority ("MAA") of New South Wales. The assessment concerned injuries occasioned to Ms Cirevska in a car accident on 29 May 2009. The application was brought by the insurer of the at-fault driver, AAMI Limited, against Mrs Cirevska, Assessor Goudkamp and the MAA (the latter two have filed submitting appearances).

2. The proceedings were commenced by summons. I was critical, in the primary judgment, of its drafting. I said, at [48]-[49]:

   AAMI Limited filed a summons challenging the decision of Assessor Goudkamp on 11 December 2012, initiating these proceedings. It sought, primarily, an order in the nature of certiorari. The summons asserted "a number of jurisdictional errors and/or errors of law on the face of the record as set out below". It then listed, not particularly succinctly, nine errors, and in relation to many made no obvious effort to distinguish whether jurisdictional error or error of law was asserted.

   ... At the hearing of this summons, I was provided vast sheafs of copies of the original material before Assessor Goudkamp. In the context of a failure to make sufficiently clear the specific grounds alleged in the summons, this was not an acceptable way to conduct a proceeding for judicial review.

3. Those remarks give sufficient flavour. As I have indicated, AAMI Limited was unsuccessful in obtaining the relief sought on any of the bases advanced. And as revealed by the evidence filed in support of the present application, Ms Cirevska had made two offers of compromise in advance of the hearing on 26 July 2013.

The first offer

1. On 30 May 2013, Ms Cirevska's lawyers wrote to the representatives of AAMI Limited. The letter was expressed to be without prejudice except as to costs, and was in the following terms:

   We are instructed to offer to resolve Supreme Court proceedings 2012/383739 on the following bases:

   1. Summons dismissed; and
   2. The Plaintiff and First Defendant to pay its or her own costs (respectively).

   Further, this offer is also contingent on confirmation that your client will pay the Plaintiff [sic - First Defendant] interest on the award of Assessor Goudkamp dated 10 October 2012 from the date of the award to the date of your acceptance of this offer.

   This offer is open for 28 days after which time it will lapse.

   The Crown Solicitors Office (acting for the Second and Third Defendants) has indicated to us that its clients will pay their own costs in the event that you accept our offer.

   We reserve the right to rely upon a copy of this letter in any argument as to costs, including indemnity costs, pursuant to Calderbank v Calderbank [1975] 3 All ER 333.

2. AAMI Limited's written submissions were served on the same day. AAMI Limited's solicitors replied to the offer on 4 June:

   We refer to your latter dated 30 May 2013 and note the offer contained therein.

   In the absence of your submissions, our client is unable to properly consider your offer. We note that you do have the plaintiff's submissions and we would respectfully suggest that those submissions strongly indicate error on the part of the Assessor.

   To date no material has been provided by the defendant which would suggest an absence of error on the part of the Assessor.

3. Ms Cirevska's lawyers responded to this correspondence on 17 June. Their letter made a number of contentions that are not relevant here, but did note that submissions on behalf of Ms Cirevska would be filed shortly.

The second offer

1. Ms Cirevska's written submissions were served on 26 June. Her lawyers made another without prejudice offer on 17 July 2013 (by a letter marked 16 July). That offer was in these terms:

   We note that you have now been served with the First Defendant's written submissions. In the light of these submissions, we would ask that you reconsider your position on the current application.

   Our client has instructed us to offer to resolve Supreme Court proceedings 2012/383739 on the following bases:

   1. Full payment of the original award of Assessor Goudkamp plus interest to date plus costs to date of $55,000 on a compromised basis; and
   2. Summons dismissed.

   This offer is open for 7 days after which time it will lapse.

   In the event that this offer is not accepted, we reserve the right to rely upon a copy of this letter in any argument as to costs, including indemnity costs, pursuant to Calderbank v Calderbank [1975] 3 All ER 333.

2. AAMI Limited did not respond to the second offer.

Determination

1. It can be immediately observed that neither offer was an "offer of compromise" as that term is provided for by the UCPR. Aspects substantially complied with the strictures of Part 20 Division 4, but neither expressed itself to be an offer made under those rules as required by UCPR r 20.26(2)(d). Accordingly, they do not activate a presumptive entitlement to indemnity costs. The question of special costs must be determined by the consideration of principles applicable to Calderbank offers.

The first offer

1. The first offer was open for a reasonable period and the "walk away" element of each party bearing its own costs represented something of a compromise. In his written submissions, Mr Gemmell for Ms Cirevska pointed out that the postscript to each offer, making reference to Calderbank v Calderbank, satisfied one of the basic requirements for Calderbank offers: see Whitney v Dream Developments [2013] NSWCA 188 per Barrett JA at [57]. And true it is that, had AAMI Limited accepted the first offer, it would have been in a better position than it is now.

2. I was urged, in a somewhat novel submission in this context, to have regard to ss 56(1) and (2) of the Civil Procedure Act 2005 (NSW):

   (1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

   (2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.

3. Mr Gemmell dealt with AAMI Limited's response to the first offer by submitting that "the assertion that the Plaintiff's submissions 'strongly indicate error on the part of the Assessor' did not provide an appropriate or decisive basis for rejection of the offer". That may be so. But the context of that sentence is more illuminating.

4. Ms Cirevska made an offer on 30 May. On the same day, by coincidence it seems, AAMI Limited served its submissions. In that context, it was quite reasonable to ask that those submissions be considered. It was reasonable to ask for a considered response. This was what was communicated by the letter of 4 June. The not especially prompt reply on behalf of Ms Cirevska by letter of 17 June acknowledged this by remarking that her submissions would be filed shortly. As it turned out, those submissions were not served until 26 June, one day before the expiry of the first offer (if it had not been implicitly withdrawn before that date). There was not enough time, then, to make an evaluation of the true strengths and weaknesses of the claim in the context of the first offer.

5. There was nothing unreasonable in the non-acceptance of the particular offer at the particular time. The first offer does not move me to make a special costs order.

The second offer

1. The second offer was made on 17 July, nine days before the hearing. It was expressed to be open for seven days. The parties, correctly in my view, saw the condition "plus costs to date of $55,000 on a compromised basis" of the second offer as the real issue in respect of the reasonableness of non-acceptance.

2. Mr Gemmell submitted:

   at the time of the [second offer] the Plaintiff had the benefit of the First Defendant's written submissions, which had been served on 26 June 2013. It is submitted that the Plaintiff had, in light of the date of the service of the First Defendant's submissions and the impending hearing date (26 July 2013), sufficient time to consider the First Defendant's offer and the ramifications of its rejection.

3. Mr Cooper, AAMI Limited's solicitor, stated in an affidavit that he was of the view, at the time of receiving the offer, that in the event his client was unsuccessful, costs against it would be assessed at a level lower than the compromise figure of $55,000. In his written submissions, Mr Cooper argued:

   At the time of the making of [the second offer] the Second [sic - First] Defendant had entered an appearance, attended on a direction hearing, served a short affidavit and prepared written submissions. Whilst the First Defendant has noted in its submissions that the Plaintiff's affidavit contained a large volume of material, that was material with which the First Defendant was well familiar given that the solicitor in [sic - and] counsel had conduct of the claim before the CARS Assessor. It could not be suggested that those appearing on behalf of the First Defendant were required to comprehend all of that material for the purposes of preparing submissions.

4. I was referred to, and respectfully agree with, observations made by Campbell J in Roberts v Rodier [2006] NSWSC 1084, at [9]:

   ...a Calderbank offer which is on the basis that it is for a sum of money inclusive of costs, does not result in the person who issued it becoming entitled to indemnity costs: White v Baycorp Advantage Business Information Services [2006] NSWSC 910 at [12] and cases there cited. Similarly, in my view, a Calderbank offer which has as an essential element of it that the party to whom it is made agree to pay a particular sum for costs, without the opportunity for checking or assessment, could give rise to an order for indemnity costs only in circumstances where it ought to have been obvious to the person receiving the offer that the party/party costs of the offeror would be equal to or more than the sum stated in the offer. It is not established that the defendants were in that situation. They had not seen the memo of fees that was tendered on this application. It has not been shown that, by any other means, it ought to have been obvious to the defendants that the party/party costs of the plaintiff to that time would be equal to, or more than, $25,000.

5. In this case, no memorandum of fees was shown to the other side to justify an amount of costs in respect of which $55,000 could be regarded as a compromise. Indeed, no evidence of fees incurred has been produced in the evidence filed in this application, not that it would have any bearing on my assessment of the plaintiff's response to the second offer. Despite the strong views I expressed in the primary judgment about the way this matter was conducted, the absence of any material to base a finding on the essential feature of compromise is insurmountable.

6. I accept, on the word of the legal practitioner, that the fees requested were compromised, but that is an expression that allows great latitude. It must be viewed in the context of the normal reduction in costs actually incurred on costs assessment on the ordinary basis. I also accept that the summons filed by AAMI Limited was broad, and that the submissions were complex. Significant work must have been done to comprehend and respond to them. But in the circumstances, AAMI Limited was not in a position to assess whether it was being offered a real compromise. It was not unreasonable to not accept the offer.

7. The second offer does not move me to make a special costs order.

8. As a bookend, I should add that I was urged by Mr Gemmell to give Ms Cirevska a full indemnity in respect of photocopying costs in the view of the great quantity of unnecessary material put on by AAMI Limited. Mr Cooper replied that that is a matter for the costs assessor. Sadly, Mr Cooper is correct. The issue cannot be fairly addressed by the imprecision of a judicial order.

Order

1. The plaintiff is to pay the first defendant's costs on the ordinary basis.

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