Ali v Was Sales and Repairs Pty Ltd and Victorian WorkCover Authority (Ruling)
[2014] VCC 1102
•25 July 2014
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Revised Not Restricted Suitable for Publication |
DAMAGES AND COMPENSATION LIST
SERIOUS INJURY DIVISION
Case No. CI-09-02221
| EWAZ ALI | Plaintiff |
| v | |
| WAS SALES & REPAIRS PTY LTD (formerly ID SALES & REPAIRS PTY LTD) | First Defendant |
| and | |
| VICTORIAN WORKCOVER AUTHORITY | Second Defendant |
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JUDGE: | HIS HONOUR JUDGE PARRISH | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 17 February 2010, 31 March 2010, 12 April 2010, | |
DATE OF RULING: | 25 July 2014 | |
CASE MAY BE CITED AS: | Ali v WAS Sales & Repairs Pty Ltd & Victorian WorkCover Authority (Ruling) | |
MEDIUM NEUTRAL CITATION: | [2014] VCC 1102 | |
RULING AS TO COSTS
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Subject: ACCIDENT COMPENSATION – COSTS
Catchwords: Serious injury – matter settled by way of a Consent Order for leave to pursue pain and suffering damages – the effect of Calderbank offer – application of various costs rules
Legislation Cited: Accident Compensation Act 1985, s134AB; County Court Act 1958, s78A; County Court Civil Procedure Rules 2008, Order 26 and Order 63A
Cases Cited:Calderbank v Calderbank [1975] 3 All ER 353; Giankos vSPC Ardmona Operations Limited [2009] VCC 819; Giankos vSPC Ardmona Operations Limited (No 2) [2009] VCC 1461; Giankos vSPC Ardmona Operations Limited (2011) 34 VR 120; Ballantyne v Alcoa Portland Aluminium [2009] VCC 1577; Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; Berrigan Shire Council v Ballerini [2006] VSCA 65; Chen v Chan (No 2) [2009] VSCA 233; Richfield Investments Pty Ltd v Oversea-Chinese Banking Corporation Ltd [2004] VSC 351; Love v State of Victoria (No 2) [2009] VSC 531; Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd (No 2) [2010] VSC 70; Metcalfe v Commonwealth of Australia (No 2) [2006] VSC 133; Foster v Galea (No 2) [2008] VSC 331; Grbavac v Hart [1997] 1 VR 154; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721; O’Neill v T D Williamson (No 2) [2008] VSC 430; Crump & Ors v Equine Nutrition Systems Pty Ltd Trading As Horsepower & Anor (No 2) [2007] NSWSC 25
APPEARANCES: | Counsel | Solicitors |
For the Plaintiff: | ||
| 17 February 2010 | Mr T P Tobin SC with | Ryan Carlisle Thomas |
| 31 March 2010 | Mr T P Tobin SC with | |
| 12 April 2010 | Mr T P Tobin SC | |
| 3 June 2011 | Mr T P Tobin SC | |
| 27 May 2014 | Solicitor for the plaintiff | |
For the First Defendant: | ||
| 17 February 2010 | Mr B G Anderson | Hall & Wilcox |
| 31 March 2010 | Mr M F Wheelahan SC with Mr B G Anderson | |
| 12 April 2010 | Mr M F Wheelahan SC | |
| 3 June 2011 | Mr M F Wheelahan SC with Ms C Boyle | |
| 27 May 2014 | Solicitor for the defendant |
HIS HONOUR:
Introduction
1 In this proceeding, I was requested to give a Ruling in relation to an issue involving costs.
2 The proceeding, brought by way of Originating Motion, was fixed for hearing on 17 February 2010. The nature of such proceeding was that the plaintiff sought leave pursuant to s134AB(16) of the Accident Compensation Act 1985 (“the Compensation Act”) to bring common-law proceedings for pain and suffering damages and pecuniary loss damages in respect of an injury suffered by him on or about 6 February 2006 (“the injury”) during the course of his employment with WAS Sales & Repairs Pty Ltd (formerly ID Sales & Repairs Pty Ltd), which I shall refer to as the “first defendant”.
3 On 17 February 2010, Mr T P Tobin SC and Mr N Bird appeared on behalf of the plaintiff, and Mr B G Anderson appeared on behalf of the first defendant.[1]
[1]Although the Originating Motion was also issued against the Victorian WorkCover Authority, there was no need for the Authority to be a party.
4 I was informed by Senior Counsel for the plaintiff that the proceeding had been resolved to the extent that a consent order could be entered into whereby the plaintiff would have leave to bring proceedings with respect to pain and suffering damages in relation to the injury – however, the issue of costs was to be the subject of argument.
5 Counsel for the first defendant sought a costs order in the following terms:
“The defendant is to pay the plaintiff’s costs including reserved costs, to be taxed in default of agreement on County Court Scale D, up to and including 2 September 2009 and thereafter there is to be no order as to costs.”
Senior Counsel for the plaintiff sought a costs order in the following terms:
“The first defendant is to pay the plaintiff’s costs including reserved costs, to be taxed in default of agreement on County Court Scale D.”[2]
[2]Later in the hearing of this application, Senior Counsel for the plaintiff said that if successful, he would also be seeking certificates for the reasonable costs of a court book, two Counsel and appropriate fees for such Counsel. See Transcript of 3 June 2011 – T41, L16 – T46, L22
Background
6 To understand the competing submissions of the parties in relation to the costs issue, it is necessary to set out the following material, all of which is not in dispute.
7 The plaintiff is a thirty-three-year-old (born January 1981) married man with two young children. He was born in Afghanistan, and his education consisted of attending the mosque, where he learned to read his native language, Dari, but he cannot write such language. When living in Afghanistan, he obtained training as a motor mechanic, specialising in working on trucks. He has limited English speaking skills.
8 The plaintiff migrated from Afghanistan in 2000, arriving in Australia in 2001, and now holds permanent resident status. Initially, he was employed as a mechanic, repairing and servicing trucks, before commencing employment with the first defendant (or its predecessor) on 5 April 2004 as a mechanic (probably unqualified). He suffered the injury on 6 February 2006 (when aged twenty-five) during the course of his employment with the first defendant when carrying out routine maintenance on a Kenworth truck. When performing that work, the socket of an airgun broke and flew off, cutting into the back of his left hand, which is his non-dominant hand.
9 After initially being taken to the Dandenong Hospital, the plaintiff was transferred to the Waverley Private Hospital, where he was treated by a plastic surgeon, Mr Guy Dowling, who performed surgery on the hand on 7 February 2006 and again, on 10 February 2006.
10 After about five months, the plaintiff returned to work with the first defendant, performing light duties. After about six weeks, the first defendant was sold and the new owner, although initially offering him a job, later advised him that there was no light duties’ work available for him. He has not worked since then.
11 I set out a chronology of relevant events in relation to the plaintiff seeking a serious injury application for the injury:
(a) On 20 January 2009, WorkSafe Victoria received the plaintiff’s Form A Application pursuant to s134AB(4) of the Compensation Act.[3] The Application included:
[3]Exhibit A (Plaintiff’s Court Book) at pages 10 to 17
§ the plaintiff’s affidavit sworn 7 November 2008;[4]
[4]Exhibit A at pages 23-29
§ the medical reports of the treating general practitioner, Dr Demirtzoglou, dated 10 February 2007 and 30 August 2008;[5]
[5]Exhibit A at pages 30-32
§ the report of the treating plastic surgeon, Mr G Dowling, dated 9 January 2008;[6]
[6]Exhibit A at pages 34-35
§ the medico-legal report from the plastic surgeon, Mr E J Anstee, dated 28 November 2008;[7] and
[7]Exhibit A at pages 36-45
§ the medico-legal report from the hand surgeon, Mr P Slattery, dated 12 December 2008;[8]
[8]Exhibit A at pages 46-52
Various medical records from the Waverley Plastic Surgery and from Dr Demirtzoglou were also received with the Application, together with some taxation returns.
In particular, I highlight the following matters:
§ The plaintiff identifies the injury suffered by him to be a “severe de-gloving injury” to the dorsal aspect of his left hand involving the division of multiple extensor tendons in the hand, index, middle and ring fingers; substantial adjacent soft-tissue damage and extensive skin grafts from donor sites on the left forearm and left thigh which has given rise to scarring;
§ In the Application, the plaintiff indicates that he relies on:
- paragraph (a) (“permanent serious impairment or loss of a body function”); and
- paragraph (b) (“permanent serious disfigurement”) of the definition of “serious injury” contained within s134AB(37) of the Compensation Act;
§ The plaintiff also nominates that he relies upon consequences with respect to “pain and suffering” and “loss of earning capacity”. In his affidavit, the plaintiff deposes:
“I have not returned to work. The only work I know is mechanical work. I don’t think I could handle any other jobs.”[9]
[9]Exhibit A at page 28
§ The plaintiff first consulted Dr Demirtzoglou on 28 February 2006 and in his report dated 10 February 2007, Dr Demirtzoglou states:
“He can return to work performing lighter mechanic duties where he does not have to use his left hand to grip firmly.”
In his later report, Dr Demirtzoglou states:
“He can and wants to return to work performing mechanic duties”
and:
“I believe his hand function should return to normal.”
§ The treating plastic surgeon, Mr Guy Dowling, had not seen the plaintiff since 26 May 2006;
§ When the plaintiff was seen by the plastic surgeon, Mr John Anstee, on 8 November 2008, Mr Anstee was of the opinion:
“Some time ago there was a big demand for diesel mechanics. Whether that is still the case I do not know but while Mr Ali does have some restriction in hand movements he should, with encouragement, be able to perform most of the duties of which he was capable prior to the accident. It is true that he may need help with some heavy lifting and as a diesel mechanic there is a fair bit of heavy lifting involved.”
§ When the plaintiff was seen by the hand surgeon, Mr Philip Slattery, on 4 December 2008, Mr Slattery was of the opinion:
“It is my opinion that he is fit for most types of work. He does have limitation of movement of the metacarpophalangeal joints of the left hand but this should not preclude his returning to work as a mechanic or any other type of work. It is my opinion that he is fit for his pre-injury activities.”
(b) By letter dated 6 May 2009, the first defendant’s solicitors advised the plaintiff’s solicitors, inter alia, that WorkSafe Victoria will grant a certificate for “pain and suffering” damages if the plaintiff withdraws the claim for pecuniary loss;[10]
[10]Exhibit 5 (defendants’ tender bundle) – item 2
(c) By letter dated 12 May 2009, the first defendant’s solicitors, pursuant to s134AB(7) of the Compensation Act, advised the plaintiff’s solicitors that the plaintiff’s application had been rejected.[11] Included in the rejection letter were the medical reports relied on by the plaintiff (on which the first defendant intended to rely) and the medical reports of Mr Marshall dated 8 April 2008 and Dr M Brown dated 11 March 2009 and 6 April 2009;
[11]Exhibit 5 – item 3
(d) On 22 May 2009, the plaintiff’s solicitors filed an Originating Motion in the County Court;[12]
[12]Exhibit A at pages 1-4
(e) By letter dated 4 June 2009, the first defendant’s solicitors advised the plaintiff’s solicitors[13] that:
[13]Exhibit 5 – item 4; See exhibit 3
“We have been instructed to offer your client a certificate for pain and suffering only on the basis that his claim for economic loss is withdrawn. This offer remains open until close of business on 25th June 2009.”
In that letter, the first defendant’s solicitors set out the contents of the various medical reports relied on by the plaintiff and also set out details of the report from Dr M Brown, the medico-legal occupational physician, who, in a report dated 11 March 2009, states that the plaintiff –
“… does have a capacity for suitable employment and would gain psychological benefit from a return to work. He is right hand dominant, and in fact I believe he would have the capacity to do a significant amount of pre-injury work as a mechanic.”
(f) By letter dated 9 June 2009, the plaintiff’s solicitors wrote to the first defendant’s solicitors requesting, inter alia, particulars of the earnings of “comparable” employees to the plaintiff;[14]
[14]Exhibit 5 – item 5
(g) By letter dated 8 July 2009, the first defendant’s solicitors responded to the letter dated 9 June 2009, advising that the requested particulars cannot be provided due to the sale of business to another company and the employer being in liquidation;[15]
[15]Exhibit 5 – item 6
(h) On 27 July 2009, the Court made orders including setting a hearing date for 17 February 2010 and a timetable for exchange of any further material;[16]
[16]Exhibit 5 – item 7
(i) By letter dated 2 September 2009, the first defendant’s solicitors wrote to the plaintiff’s solicitors offering to compromise the proceeding on various terms.[17] The letter was headed “Without Prejudice Save as to the Costs of the Proceeding” and stated:
[17]Exhibit 4; exhibit 5 – item 9
“We refer to our recent discussions and confirm our view that the worker will not satisfy the economic loss test pursuant to s134AB(38) of the Accident Compensation Act 1985. As such we are prepared to offer to the worker the following:
1WorkSafe will compromise the proceeding on the following terms:
(a)The defendant will consent to an order that the plaintiff be given leave to bring a proceeding for the recovery of pain and suffering damages only in respect to the injuries the subject of this proceeding; and
(b)The defendant will consent to an order that the defendant pay the plaintiff’s costs of the proceeding up to the date of this offer and any further costs necessarily or reasonably incurred by the plaintiff upon acceptance of this offer in obtaining the order referred to in (a) above; and
(c)The proceedings otherwise be dismissed.
2This offer is open for 21 days. Should this offer be accepted, then we will prepare Minutes of Consent for signing on behalf of the plaintiff which embodies the terms set out above and will arrange for those Orders to be made by the Court.
3Should this offer not be accepted, and the plaintiff subsequently either:
(a)abandons the application for leave to commence a proceeding for the recovery of pecuniary loss damages; or
(b)fails at the trial of this proceeding to obtain leave on the basis that the plaintiff has no established the loss of earning capacity required by subsection 134AB(38);
then the defendant shall rely on this letter and invite the Court to exercise its discretion in accordance with the principles enunciated in Calderbank v Calderbank [1975] 3 All ER 333 to make no order as to the costs of the proceeding from the date of this letter.”
I shall refer to such letter as the “Calderbank offer”;
(j) By letter dated 4 September 2009, the plaintiff’s solicitors sent to the first defendant’s solicitors a copy of the plaintiff’s taxation return for the financial year ending 30 June 2009;
(k) By letter dated 6 January 2010, the plaintiff’s solicitors served on the first defendant’s solicitors a medical report received from the orthopaedic surgeon, Mr Russell Miller, dated 8 September 2009.[18] Such report relates to an assessment on 7 September 2009 and seemingly was received by the plaintiff’s solicitors on 22 September 2009.[19] Under the heading “Capacity for Work”, Mr Miller states:
[18]Exhibit 5 – item 11
[19]Exhibit A at pages 53-60 – the report is date-stamped 22/9/09
“He is not fit for [pre-]injury work. He has loss of power in the left upper extremity, loss of dexterity and will have difficulty using the left upper extremity for physical work or work requiring dexterity. I do not think he can return to work as a mechanic and believe that he will be only suitable for non-physical work that does not significantly involve the left upper extremity. Given my understanding of this man’s very limited education, lack of other formal skills and limited language skills, a return to the workforce will be extremely problematic in this case due to work-related injury.”[20]
[20]Exhibit 1 at pages 58-59
(l) By letter dated 14 January 2010, the plaintiff’s solicitors served on the first defendant’s solicitors a further report from Dr Jim Demirtzoglou.[21] Such report indicates that Dr Demirtzoglou had continued to consult with the plaintiff in relation to his left hand injury. In particular, Dr Demirtzoglou states:
[21]Exhibit 5 – item 12
“He can do work involving light lifting with his left hand and it was important he overcome the psychological barrier regarding the permanent disfigured appearance of his hand.”[22]
[22]Exhibit 1 at page 33
(m) By letter dated 9 February 2010, the plaintiff’s solicitors served on the first defendant’s solicitors a vocational assessment by Ms Katrina Henderson dated 5 February 2010.[23] Such report followed an interview and assessment at the offices of Evidex on 25 November 2009.[24] In that report, Ms Henderson ultimately opined:
“I conclude no commercial viable occupation in the open labour market for which Mr Ali is likely to qualify meets the definition of ‘suitable employment’ and this situation will continue for the foreseeable future.”
[23]Exhibit 5 – item 15
[24]Exhibit A at pages 61-83
The course of action undertaken by the parties
12 On 17 February 2010, it was agreed that each party would make written submissions in relation to at least the following matters:
(a) Whether a so-called Calderbank offer had any application to s134AB of the Compensation Act;
(b) Whether the Court had any discretion to make a special costs order in an application under s134AB(16)(b) of the Compensation Act;
(c) If yes to either or both previous issues, how is the discretion to be exercised and what matters should be taken into account in making any particular costs order?
13 At that time, the following decisions had been made:
(a) The decision of Giankos vSPC Ardmona Operations Limited,[25] a decision of Judge K L Bourke, wherein she upheld the application by the plaintiff for leave to bring proceedings in relation to pain and suffering damages but dismissed the claim to bring proceedings for pecuniary loss damages. In that proceeding, Judge Bourke held that she was entitled to take account of a Calderbank offer (which was in the same terms as the present Calderbank offer), and ultimately awarded no costs to the plaintiff after the date on which the Calderbank offer lapsed;
(b) The decision of Ballantyne v Alcoa Portland Aluminium,[26] a decision of Judge J Bowman, wherein Judge Bowman also upheld the application by the plaintiff for leave to bring proceedings in relation to pain and suffering damages but dismissed the claim to bring proceedings for pecuniary loss damages. In that proceeding, the defendant also relied on a Calderbank offer – although in different terms to the subject Calderbank offer. Judge Bowman ruled that such offers have no role to play in serious injury applications and that, in any event, the offer was invalid (given its terms) and the rejection of the offer was not unreasonable.[27]
[25][2009] VCC 819
[26][2009] VCC 1577
[27]See Ballantyne v Alcoa Portland Aluminium [2009] VCC 1577
14 It is to be noted that in both of those cases, the issue as to whether the respective plaintiffs were entitled for leave to bring common-law proceedings for pecuniary loss was fully argued and decided upon on the evidence available to each Court.
15 Each of the parties produced written submissions, and argument ensued on 31 March 2010 and 12 April 2010, at which time the decision was reserved and it was hoped that a decision would be handed down by the Court of Appeal in Giankos. The plaintiff, in Giankos, had appealed the decision of Judge Bourke that he had no entitlement to bring proceedings for common-law damages in respect of pecuniary loss and also, in any event, the costs Order made by her Honour Judge Bourke.
16 On 5 May 2011, the Court of Appeal upheld Giankos’ appeal and ordered that he was entitled to leave to bring proceedings in relation to pecuniary loss.[28] Having allowed such appeal, the Court noted that although it was now unnecessary to give a decision in relation to the Costs Order made by her Honour Judge Bourke, the Court considered it appropriate to express its views as to the point of principle raised in the appeal, particularly as there were conflicting decisions by Judges of the County Court on the issue.
[28]See Giankos v SPC Ardmona Operations Ltd (2011) 34 VR 120
17 In my view, it is important to appreciate what the Court of Appeal stated in relation to the costs issue. The Court (consisting of Warren CJ, Neave JA and Hargrave AJA) stated:
“[120] The issue of principle arose in the following context. The appellant sought leave to commence proceedings under s 134AB(16) of the Act in respect of both pain and suffering damages and loss of earning capacity. By subs (17), a worker who satisfies the court that he or she has suffered a compensable serious injury, but who fails to satisfy the court of the requisite loss of earning capacity, may only obtain leave to commence proceedings for recovery of damages for pain and suffering. Accordingly, in a case such as the present, the County Court was faced with two issues for decision. Subsection (17) gives express recognition to the possibility that an applicant for leave to commence proceedings in respect of a serious injury may obtain an order in his or her favour on one issue but may fail on the other issue. That was what happened in this case. A decision was made in the appellant’s favour on the pain and suffering issue, and a decision was made against him on the loss of earning capacity issue.
[121] With this possibility in mind, the respondent’s solicitors sent a letter to the appellant’s solicitors prior to the hearing of the serious injury application. In that letter, the respondent offered to compromise the serious injury application on the basis that, by consent of the parties, the appellant be given leave by the court to bring a common law proceeding for the recovery of pain and suffering damages only, that the respondent pay the appellant’s costs of the proceeding up to the date of acceptance of the offer and that the proceeding be otherwise dismissed. In the event that the offer was not accepted within 21 days, and the appellant thereafter failed to obtain leave to commence proceedings for the recovery of pecuniary loss damages for loss of earning capacity, the respondent stated that it would rely upon the principles enunciated in Calderbank v Calderbank and would invite the court to make no order as to the costs of the proceeding from the date of the letter (“the Calderbank offer”).
[122] The appellant did not accept the Calderbank offer. He proceeded to a contested hearing of all issues. He succeeded on the pain and suffering aspect of his serious injury application, but the decision was against him on the loss of earning capacity issue. In these circumstances, the trial judge heard argument as to whether it was open for the respondent to rely upon the Calderbank offer as a discretionary factor influencing her decision as to the costs of the serious injury application. The judge decided that it was open for the respondent to rely upon the Calderbank offer as a relevant consideration affecting her discretion as to costs, and made orders in accordance with that offered by the Calderbank offer. She ordered that the respondent pay the appellant’s costs to the date of the offer, and that thereafter there be no order as to costs. Having regard to the outcome of the principal issue on appeal, it is unnecessary to consider whether the trial judge exercised her discretion correctly in the circumstances of the case. In particular, it is unnecessary to decide whether the appellant acted unreasonably in rejecting the Calderbank offer. Accordingly, these reasons deal only with the point of principle as to whether the judge was entitled to take the Calderbank offer into account in formulating her costs order.
[123] Before the trial judge, and on appeal, it was submitted on behalf of the appellant that s 134AB(27)(a) requires a court which decides to grant leave under subs (16)(b) to make an order that the employer pay the whole of the worker’s costs of the application without any restriction or modification, even where, as here, the worker fails to obtain leave to commence a proceeding for pecuniary loss damages. In this court, reliance was placed upon Ballantyne v Alcoa Portland Aluminium, a decision of the County Court which declined to follow the trial judge’s decision in this case.
[124] For the reasons appearing below, we do not accept the appellant’s submissions.
[125] Section 134AB(27)(a) makes provision in respect of the costs of serious injury applications under subs (16)(b). It is in the following terms:
‘(27) Subject to the rules of the court—
(a) in proceedings relating to an application for leave of the court under subsection (16), costs are to be awarded against a party against whom a decision is made …’
[126] The opening words of subs (27) govern para (27)(a). They mean what they say. The legislative direction that costs are to be awarded against a party against whom a decision is made is subject to the rules of the court considering the serious injury application.
[127] The County Court Civil Procedure Rules 2008 are made pursuant to s 78 of the County Court Act 1958. Section 78A(1) of that Act states the fundamental principle to be applied in making costs orders: ‘The costs of and incidental to all proceedings are in the discretion of the Court and the Court may determine by whom and to what extent the costs are to be paid.’
[128] The County Court Rules include O 26, which deals with the making and effect of formal offers of compromise. However, although certain presumptive costs entitlements flow under r 26.08 depending on whether the party served with the offer obtains a judgment which is more or less favourable than the terms of the offer, those presumptive entitlements only arise ‘unless the Court otherwise orders’. The court’s general discretion as to costs is thus preserved where r 26.08 is enlivened. The appellant accepted that, if the formal offer of compromise procedure had been adopted, the trial judge would have been entitled to make costs orders under r 26.08, either in accordance with the specified presumptive entitlements or otherwise in the exercise of her discretion.
[129] Further, O 63A makes provision for the manner in which the discretion as to costs is to be exercised. In that regard, r 63A.04 is relevant. It provides:
(1) The Court may make an order for costs in relation to a particular question in or a particular part of a proceeding.
(2) Where the Court makes an order under paragraph (1), the Court shall by order fix the proportion of the total costs of the proceeding which is attributable to the particular question in or the particular part of the proceeding.
[130] Rule 63A.04 is compatible with s 134AB(17) and with the result in this case. It makes express provision for a judge determining a serious injury application to order costs with respect to particular questions in or parts of a proceeding. In a case such as the present, r 63A.04 authorised the court to order that the appellant pay the costs of the question on which the decision went against him, as to loss of earning capacity. Such an approach would have required the judge to fix the proportion of the total costs of the proceeding to be paid by the appellant, with the remaining proportion to be paid by the respondent. However, although such an approach was clearly open to the judge, it was not adopted in this case.
[131] A question arises as to whether such an apportionment must be fixed in terms of a percentage of the total costs of the proceeding, or whether the apportionment may, in the alternative, be fixed by reference to time. In our opinion, an approach by reference to time may be adopted, provided that the time allocation is fixed by reference to a proportionate assessment of the costs attributable to the relevant question or part. This is consistent with the purpose of the rule, to assist in the taxation of costs by making it unnecessary for the taxing officer to consider whether a particular item is attributable to one or other question or part of the proceeding. Difficulties can otherwise arise on taxation, especially where there is overlap between issues. However, for the avoidance of doubt, the fixing of time cannot be determined by the terms of a Calderbank letter, as was done in this case.
[132] As to Calderbank offers, the issue is whether subs (27)(a) has the effect of excluding the general and overriding discretion of the court as to which party is to be awarded costs. In our view, it clearly does. This is notwithstanding that the discretionary power to award costs has been regarded as necessary to avoid injustice. The clear words of the statute must prevail.
[133] The meaning of subs (27) is clear. It is only where the rules of court provide, that the court’s discretion to determine who is to be awarded costs is retained. Otherwise, the court must award costs against ‘a party against whom a decision is made’. As appears above, the Act contemplates that a decision may be made both in favour of a party and against that party in the same serious injury application. The rules provide the parties with opportunities, at least under O 26 and r 63A.04, to protect themselves against such a result on costs. Thus, a party in the position of the respondent here could have utilised the O 26 offer of compromise procedure. If so, an order of the kind made in this case would have been open to the court in its discretion. Alternatively, in the absence of an offer of compromise having been served, it was open to the respondent to submit that the court should adopt the r 63A.04 procedure, and apportion the total costs of the proceeding between the issues of pain and suffering on the one hand and loss of earning capacity on the other.
[134] The Calderbank procedure is not recognised by the County Court Rules. Accordingly, in determining in whose favour costs are to be awarded, the County Court may not have regard to a Calderbank offer such as that made in this case. Although it appears odd that Parliament would intend to preserve the O 26 procedure but exclude the Calderbank procedure, that is the clear meaning of the words used and that result fits within the legislative scheme — which is to prescribe the costs consequences of proceedings under the Act to a high level of specificity.”
(my emphasis).
I shall refer to this excerpt as the “Giankos appeal”.
18 On 3 June 2011, there was further argument by the parties as to the relevance, applicability and meaning of the Calderbank offer, now having the advantage of the dicta of the Court of Appeal in the Giankos[29] appeal.
[29]Op cit
The costs regime
19 Before turning to the various submissions made by the parties, it is important, in my view, to understand the relevant costs regime.
20 Section 134AB(27)(a) of the Compensation Act makes provision in respect to the costs of serious injury applications under ss(16)(b). It is in the following terms:
“(27) Subject to the rules of the court—
(a)in proceedings relating to an application for leave of the court under subsection (16), costs are to be awarded against a party against whom a decision is made … .”
21 As the Court of Appeal in Giankos stressed, the opening words of ss(27) govern paragraph (27)(a) and “they mean what they say”.[30]
[30]See Giankos (op cit) at paragraph [126]
22 Section 78A(1) of the County Court Act 1958 states the fundamental principle to be applied in making costs orders. That subsection states:
“(1) The costs of and incidental to all proceedings are in the discretion of the Court and the Court may determine by whom and to what extent the costs are to be paid.”
23 The County Court Civil Procedure Rules 2008 are made pursuant to s78 of the County Court Act 1958. Order 63A makes provision for the manner in which the discretion as to costs is to be exercised. Order 63A of the County Court Civil Procedure Rules 2008 provides, relevantly:
“63A.02 General powers of Court
The power and discretion of the Court as to costs shall be exercised subject to and in accordance with this Order.
…
63A.04 Costs of question or part of proceeding
(1)The Court may make an order for costs in relation to a particular question in or a particular part of a proceeding.
(2)Where the Court makes an order under paragraph (1), the Court shall by order fix the proportion of the total costs of the proceeding which is attributable to the particular question in or the particular part of the proceeding.
…
63A.07 Taxed or other costs provision
(1)Subject to this Order, where by or under these Rules or any order of the Court costs are to be paid to a party, that party shall be entitled to taxed costs.
(2)Where the Court orders that costs be paid to a party, the Court may then or thereafter order that as to the whole or any part of the costs specified in the order, instead of taxed costs, that party shall be entitled to—
(a) a portion specified in the order of taxed costs;
(b)taxed costs from or up to a stage of the proceeding specified in the order;
(c) a gross sum specified in the order instead of taxed costs;
(d)a sum in respect of costs to be determined in such manner as the Court directs.”
The submissions of the parties
24 Prior to the Giankos appeal, Senior Counsel for the first defendant, Mr M F Wheelahan, SC, together with Mr B G Anderson, made the following submissions in support of the costs order sought by the first defendant:
· The opening words of s134AB(27) of the Compensation Act – that is “subject to the rules of the court” are “very important”. Such words have the consequence that the “norms” set out in ss27 are subject to the rules of the Court and therefore subject “to any order of the Court to the contrary”.
· The decision by his Honour Judge Bowman in Ballantyne v Alcoa Portland Aluminium[31] is “attendant with error” and should not be followed, because his Honour treated s134AB as a “code” (when plainly it is not a code), that his Honour was incorrect to describe the defence’ construction of “subject to the rules of the court” as “artificial”.
[31]Op cit
· The decision of her Honour Judge Bourke in Giankos v SPC Ardmona Operations (No 2)[32] should be followed to the extent that it decides that there is scope for the operation of Calderbank offers in proceedings under s134AB(16)(b) of the Compensation Act. The words “subject to the rules of the court” have the consequence that the prima facie cost consequences in s134AB(27)(a) of the Compensation Act are subject to:
[32][2009] VCC 1461
(a) The general discretion as to costs set out in Rule 63A.02;
(b) Rule 63A.04, which permits the Court to make an order for costs in relation to a particular question in, or a particular part of, a proceeding; and
(c) Rule 63.A.07, which permits the Court to order, inter alia:
(i) a portion specified in the order of taxed costs; or
(ii) taxed costs from or up to a stage of the proceeding specified in the Order.
· Section 134AB(27)(a) of the Compensation Act is no different from any other norm prescribed by statute, which is subject to the Court’s discretion to order otherwise.
· The order in relation to costs sought by the first defendant is authorised by Rules 63A.02, 63A.04 and 63A.07 of the Rules of the Court.
· In exercising any discretion pursuant to the Rules, the following matters were relevant:
(a) The fact of the Calderbank offer and its rejection by the plaintiff;
(b) Although there are some cases which state that a party’s rejection of a Calderbank offer must be unreasonable before it can be relied upon on the question of costs,[33] most of these cases concern applications for indemnity or solicitor-client costs upon the failure to accept a Calderbank offer;[34]
[33]Such cases including Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 at [23]; Berrigan Shire Council v Ballerini [2006] VSCA 65; Chen v Chan (No 2) [2009] VSCA 233; Richfield Investments Pty Ltd v Oversea-Chinese Banking Corporation Ltd [2004] VSC 351 at [49]; Love v State of Victoria (No 2) [2009] VSC 531; Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd (No 2) [2010] VSC 70
[34]Counsel notes that Metcalfe v Commonwealth of Australia (No 2) [2006] VSC 133 did not concern an application for indemnity costs, but Ashley J considered whether the plaintiff’s rejection of the defendant’s Calderbank offer was reasonable.
(c) But there is no requirement under Order 26 that a plaintiff’s rejection of an offer of compromise be unreasonable before the costs consequences provided for therein are engaged. Similarly, there should not be any requirement for when a Calderbank offer is relied upon as an analogue to the Order 26 procedure. The Court’s general discretion as to costs is not fettered so as to require the rejection of a Calderbank offer by a plaintiff be unreasonable before the Court is able to make an order disentitling the plaintiff to costs from the date of the offer. In support of such proposition, Senior Counsel for the first defendant referred to Foster v Galea (No 2),[35] wherein Byrne J stated:
[35][2008] VSC 331 at paragraph [9]
“… The fact remains that the discretion as to costs conferred by statute is an unqualified one and must, therefore, be exercised judicially having regard to the circumstances which the trial judge considers to be relevant to the particular case before him or her. I am mindful of the warning of Fullagar J in 1991 against any judicial attempt to fetter such a discretion.”
· It may be relevant for the Court to consider the provisions of the Rules concerning offers of compromise.[36] Reference was made to Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd (No 2),[37] wherein Croft J stated:
[36]See Richfield Investments Pty Ltd v Oversea-Chinee Banking Corporation Ltd (op cit) at paragraph [53]
[37](op cit) at paragraph [13]
“… Although there may have been some initial doubt as to whether an offer of settlement contained in a Calderbank offer, rather than as a formal offer of compromise under Order 26, would give the offeror any special advantage in relation to costs, the balance of the authorities now favours the treatment of a Calderbank offer in a similar manner to a formal offer of compromise under Order 26, but subject to the specific provisions as to consequences to the extent that they are provided for in Order 26.16. Further, the authorities indicate that the device of a Calderbank offer may be called in aid by a party where there is a failure to satisfy the formal requirements of Order 26 or in circumstances where the provisions of Order 26 do not provide for or specify the consequences of the making of a formal offer of compromise under its provisions in particular circumstances. … .”
· Reference was made to Grbavac v Hart,[38] wherein Hayne JA (dissenting as to the result) noted that the fact that a plaintiff has recovered less than an amount offered in compromise of the claim at an earlier date does not inevitably lead to the conclusion that a plaintiff should bear the costs of the litigation after the date of that offer, but considerations of the kind that were identified in the New South Wales Court of Appeal in Maitland Hospital v Fisher (No 2)[39] are powerful reasons in favour of such a disposition of costs. Such considerations were as follows:
[38][1997] 1 VR 154 at 165
[39](1992) 27 NSWLR 721 at 724
“1. To encourage the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise by defendants which amount to a realistic assessment of the plaintiff's real claim which can be placed before its opponent without risk that its ‘bottom line’ will be revealed to the court;
2. To save the public costs which are necessarily incurred in litigation which events demonstrate to have been unnecessary, having regard to an earlier (and, as found, reasonable) offer of compromise made by a plaintiff to a defendant; and
3. To indemnify the plaintiff who has made the offer of compromise, later found to have been reasonable, against the costs thereafter incurred. This is deemed appropriate because, from the time of the rejection or deemed rejection of the compromise offer, notionally the real cause and occasion of the litigation is the attitude adopted by the defendant which has rejected the compromise. In such circumstances, that party should ordinarily bear the costs of litigation.”
· Therefore the correct principle is that the rejection of the Calderbank offer is a matter which the Court may have regard to when considering costs of an application under s134AB(16)(b), having regard to the principles referred to in Maitland Hospital,[40] as set out above, and the cognate provisions of Order 26.08, although not directly applicable.
[40]Op cit
· If the Calderbank offer had been capable of being expressed as an offer of compromise under Order 26, then the Rules would by their terms have had the consequence that the plaintiff would be liable for the first defendant’s party/party costs from the date after the offer was served. The rejection of the Calderbank offer is sufficient, in itself, to justify an exercise of discretion so that there is no order in respect to the plaintiff’s costs from the day after the Calderbank offer was made.
· Alternatively, the rejection by the plaintiff of the Calderbank offer was not reasonable, bearing in mind the following:
(a) The plaintiff had the legal onus of proving the factual elements to establish leave to claim pecuniary loss damages (see s134AB(19)(b) of the Compensation Act);
(b) The Calderbank offer was made well prior to the hearing date on 17 February 2010, which had been fixed by the Court on 27 July 2009;
(c) The Calderbank offer was open for a reasonable time – a period of 21 days from the date of the letter;
(d) The plaintiff’s prospects of successfully obtaining leave to commence proceedings to claim pecuniary loss damages were always poor, based on the available medical evidence;
(e) Nothing happened after 2 September 2009 to indicate that the plaintiff’s case was any worse than it appeared on 2 September 2009;
(f) The offer was clearly expressed, and there would be no difficulty in comprehending the offer;
(g) The offer foreshadowed that an application for “no order for costs” would be made if the offer was not accepted.
25 Senior Counsel for the plaintiff, Mr T Tobin (together with Mr N Bird), submitted, prior to the Giankos appeal, that:
(a) The provisions pertaining to the costs for serious injury applications are “in effect a code created under the Act to govern the costs between the worker and the Authority and otherwise have no relevance to other parties”. The plaintiff adopted the reasoning of Judge Bowman in Ballantyne v Alcoa Portland Aluminium[41] and Cavanough J in O’Neill v T D Williamson (No 2);[42]
[41]Op cit
[42][2008] VSC 430
(b) The nature of the process under s134AB requires an application to be made by a worker, acceptance or rejection of such application by WorkSafe Australia and, if rejected, for the worker to issue an originating motion to be decided by a court. If successful on such originating motion, the worker is entitled to his costs;
(c) The first defendant seeks by its proposed order as to costs to introduce in effect “an offer of compromise system outside Order 26 but similar in effect”;
(d) If the Parliament intended some other consequence, they could have easily introduced advices that permit a grant of pain and suffering and a stay of that grant until determination of any issued originating motion;
(e) If Calderbank offers are available, the plaintiff did not act unreasonably in rejecting such offer, as:
(i) the plaintiff was aged less than twenty-six at the date of injury;
(ii) the youth of the plaintiff at the time of the injury attracts special provisions in the determination of earning capacity and loss thereof;
(iii) the defendant could not provide wages of comparable earners (see letter dated 8 July 2009);
(iv) the plaintiff had suffered an economic loss, as demonstrated on his taxation returns, of greater than 40 per cent;
(f) The advisors of the plaintiff, because the decision to be made at that time as to the future, required up-to-date material, and upon that material being received from Evidex in February 2010, a decision was made at that time. It was not unreasonable to reject the offer until that material was available;
(g) The Calderbank offer required a determination to be made within 21 days, and those acting for the plaintiff were preparing for the determination on 17 February 2010. The defendant would have been aware that the plaintiff did not have a vocational assessment report at the time that the Calderbank offer was served.
26 When the parties returned for further argument after the Giankos appeal, it was submitted by Mr Wheelahan SC (with Ms C Boyle) that:
· Consistent with the earlier submissions, the Giankos appeal confirmed that the opening words of ss27 of s134AB of the Compensation Act govern paragraph (27)(a) of s134AB.
· In the earlier submissions, it was submitted that there were three bases upon which the order sought by the first defendant was justified pursuant to the Rules. The first basis was the Court’s general discretion as identified in s78A(1) of the County Court Act 1958. The second and third bases were through, respectively, the operation of Order 63A, Rule 4, and Order 63A, Rule 7, of the County Court Civil Procedure Rules 2008. As a result of the Giankos appeal, it is clear that Calderbank offers, not being an offer made within the meaning of Order 26 (that is, an offer of compromise), has the effect of excluding the general and overriding discretion of the Court as to which party is to be awarded costs.
However, it was still open to the Court to apply Order 64A, Rule 4, or Order 63A, Rule 7.
· It is important to correctly characterise the order sought by the first defendant – it is an order that the first defendant pay the plaintiff’s costs, and the only qualification is to the extent of those costs. In particular, the dicta in the Giankos appeal is silent as to “firstly, from when are costs payable; secondly, to when are costs payable; thirdly, in what amount are costs payable”. Furthermore, s134AB(27)(a) is also silent on these three issues, and that is where the opening words “subject to the rules of the court” have work to do, because the rules of the court will address each of those issues – from when, to when and in what amount.
· Calderbank offers – being a letter of offer – that would be relevant in consideration in the exercise of the discretion as contemplated by Rule 4 and Rule 7.
· In the Giankos appeal, the Court stated that Rule 63.A.04 was “compatible” with ss17 of s134AB of the Compensation Act – that is, where a worker satisfies the pain and suffering aspect of the Compensation Act but not the pecuniary loss aspect, is entitled to be given leave to bring common-law proceedings for the recovery of damages for pain and suffering. It was submitted that, just as in Giankos at first instance, the effect of the Consent Order made by the Court was a decision against the plaintiff, in that he was not entitled to leave to bring common-law proceedings for pecuniary loss damages.
· Order 63A.07 is “more straightforward” when seeking that the order sought by the first defendant be made. In particular, because the Court of Appeal in the Giankos appeal recognised that there was work for Rule 4 to do, there must be also work for Rule 7 to do.
27 Senior Counsel for the plaintiff, Mr Tobin SC, made the following submissions after the Giankos appeal:
· The Court of Appeal “has said” that the Calderbank procedure – not being recognised by the County Court Rules – has no place to play in the exercise of the Court’s discretion. Accordingly, the Court should disregard the Calderbank offer, because it is a letter “which provides a warning on the principles in Calderbank”.
· There has been no decision made against the plaintiff in the subject proceeding, in distinction to decisions being made against Giankos by the primary judge. In particular, the plaintiff has issued an Originating Motion in a proceeding without outlining the claim, and there is no pleading in relation to that. The effect of the Consent Order is that the plaintiff has leave to bring a claim for pain and suffering damages, and the Court has “not decided on the question of whether or not the plaintiff had pecuniary loss”.
When queried as to the relevance of the Calderbank offer to Order 63A.07, in that it is, as submitted by the first defendant, a letter of offer which the Court can take into account in the exercise of its discretion, Senior Counsel for the plaintiff referred to paragraph 134 of the Giankos appeal, wherein it is stated, in part:
“The Calderbank procedure is not recognised by the County Court Rules. … .”
· The exercise of discretion under Order 63A.04 and Order 63A.07 is seldom undertaken in circumstances such as this, where there has been a Consent Order, and is usually more apposite to where there has been a judicial determination about issues and one party has succeeded on an issue and another on other issues.
· Even if the Calderbank offer was relevant in the exercise of the discretion, the position of the plaintiff was not unreasonable in failing to accept such offer. In this sense, Senior Counsel referred to his earlier submissions in relation to the issue of reasonableness of the rejection of such offer.
Conclusion
28 Section 134AB(27)(a) makes provision in respect of the costs of serious injury applications under ss(16)(b). As pointed out by the Court of Appeal in the Giankos appeal, the opening words of ss(27) govern paragraph (27)(a) and “they mean what they say”.[43] The legislative direction that costs are to be awarded against a party against whom a decision is made is subject to the rules of the court considering the serious injury application. The County Court Civil Procedure Rules 2008 are made pursuant to s78 of the County Court Act 1958. In particular, s78A(1) of that Act directs that the costs of and incidental to a proceeding are “in the discretion of the court” and the Court may determine by whom and to what extent the costs are to be paid.
[43]Giankos (op cit) at paragraph [126]
29 The County Court Rules of course include Order 63A, which provides for the manner in which the discretion as to costs is to be exercised and also include Order 26, which deals with the making and effect of formal offers of compromise.
30 Order 63A includes:
“63A.04 Costs of question or part of proceeding
(1)The Court may make an order for costs in relation to a particular question in or a particular part of a proceeding.
(2)Where the Court makes an order under paragraph (1), the Court shall by order fix the proportion of the total costs of the proceeding which is attributable to the particular question in or the particular part of the proceeding.
63A.07 Taxed or other costs provision
(1)Subject to this Order, where by or under these Rules or any order of the Court costs are to be paid to a party, that party shall be entitled to taxed costs.
(2)Where the Court orders that costs be paid to a party, the Court may then or thereafter order that as to the whole or any part of the costs specified in the order, instead of taxed costs, that party shall be entitled to—
(a) a portion specified in the order of taxed costs;
(b)taxed costs from or up to a stage of the proceeding specified in the order;
(c) a gross sum specified in the order instead of taxed costs;
(d)a sum in respect of costs to be determined in such manner as the Court directs.”
31 The Calderbank offer relied on by the first defendant offered to compromise the serious injury application on the basis that, by the consent of the parties, the plaintiff be given leave by the Court to bring a common-law proceeding for the recovery of pain and suffering damages only, that the first-named defendant pay the plaintiff’s costs of the proceeding up to the date of acceptance of the offer and that the proceeding be otherwise dismissed. In the event that the offer was not accepted within 21 days, and the plaintiff thereafter abandoned the application for leave to commence proceedings for recovery of pecuniary loss damages or, failed to obtained leave to commence proceedings for recovery of pecuniary loss damages, the first-named defendant stated it would rely upon the principles enunciated in Calderbank v Calderbank[44] and would invite the Court to make no order as to the costs of the proceeding from the date of the Calderbank offer.
[44]Op cit
32 In the Giankos appeal, the Court of Appeal pointed out that if the formal offer of compromise procedure under Order 26 had been utilised, the Court’s general discretion as to costs would have been preserved and the trial judge would have been entitled to make costs orders under Order 26.08, either in accordance with the specified presumptive entitlements set out in that Order (“unless the court otherwise orders”) or otherwise in the exercise of her discretion.
33 The Court of Appeal made clear that in the circumstances confronting the trial judge in Giankos, where she had granted leave to the worker to bring a common-law claim for pain and suffering damages but dismissed his claim for leave to bring a common-law claim in respect of pecuniary loss damages, it was open to the Judge to apply Order 63A.04 and for her to fix the proportion of the total costs of the proceeding to be paid by the worker, with the remaining portion to be paid by the defendant in that proceeding.
34 The Court of Appeal in Giankos discussed whether such an apportionment must be fixed in terms of a percentage of the total cost of the proceeding or whether the apportionment may, in the alternative, be fixed by reference to time. The Court stated that an approach by reference to time may be adopted provided that the time allocation is fixed by reference to the proportional assessment of costs attributable to the relevant question or part. The Court does state though:
“… However, for the avoidance of doubt, the fixing of time cannot be determined by the terms of a Calderbank letter, as was done in this case.”
35 It is to be noted that Order 63A.07(2)(a) and (b) permit a court to exercise a discretion as to whether a party is entitled to the whole or any part of the costs specified in any particular order. Seemingly, the dicta in the Giankos appeal would apply – that is, the fixing of time cannot be determined by the terms of a Calderbank letter.
36 I again refer to the dicta of the Court of Appeal, when it states:
“As to Calderbank offers, the issue is whether subs (27)(a) has the effect of excluding the general and overriding discretion of the court as to which party is to be awarded costs. In our view, it clearly does. This is notwithstanding that the discretionary power to award costs has been regarded as necessary to avoid injustice. The clear words of the statute must prevail.
The meaning of subs (27) is clear. It is only where the rules of court provide, that the court’s discretion to determine who is to be awarded costs is retained. Otherwise, the court must award costs against ‘a party against whom a decision is made’. As appears above, the Act contemplates that a decision may be made both in favour of a party and against that party in the same serious injury application. The rules provide the parties with opportunities, at least under O 26 and r 63A.04, to protect themselves against such a result on costs. Thus, a party in the position of the respondent here could have utilised the O 26 offer of compromise procedure. If so, an order of the kind made in this case would have been open to the court in its discretion. Alternatively, in the absence of an offer of compromise having been served, it was open to the respondent to submit that the court should adopt the r 63A.04 procedure, and apportion the total costs of the proceeding between the issues of pain and suffering on the one hand and loss of earning capacity on the other.
The Calderbank procedure is not recognised by the County Court Rules. Accordingly, in determining in whose favour costs are to be awarded, the County Court may not have regard to a Calderbank offer such as that made in this case. … .”[45]
[45]Giankos appeal (op cit) at paragraphs [132] – [134]
37 In the circumstances of this matter, I consider that the Calderbank offer relied on by the first-named defendant has no utility in the determination of costs in this proceeding. I might add, the circumstances of this matter are precisely those in the Giankos matter which was appealed to the Court of Appeal, save for one important difference. In the Giankos matter, the trial Judge determined the issue as to whether or not the worker was entitled to leave to bring a common-law claim for pecuniary loss damages, and such claim was dismissed.
38 In the circumstances of the subject matter, the Consent Order made by the Court, although dismissing the proceeding otherwise than the leave given by consent to the plaintiff to bring common-law proceedings for pain and suffering damages, did not involve a determination by the Court on the evidence. If for no other reason, even if there be a discretion vested in the Court under Order 63.04, I would refuse to exercise such discretion in favour of the first-named defendant. In such circumstances, the only basis for making an order in favour of the plaintiff up to the date of the Calderbank offer would be the terms of the Calderbank offer itself.
39 For completeness, I should add that if I be wrong about the applicability of a Calderbank offer to the circumstances of this matter, I have come to the view that in the circumstances of this matter, it is appropriate to consider whether or not there was an unreasonable refusal by the plaintiff of such offer. Although Senior Counsel for the first-named defendant submitted that issues of reasonableness in rejecting Calderbank offers seemingly mostly apply in situations where indemnity costs are sought, there would appear to be no rule of law to suggest that the issue of reasonableness is only relevant in such circumstances. Indeed, as pointed out by Senior Counsel for the first-named defendant, Ashley J in Metcalfe v Commonwealth of Australia (No 2),[46] which did not concern an application for indemnity costs, Ashley J took into account the reasonableness of the Calderbank offer.
[46]Op cit
40 The reasonableness or otherwise of a refusal to accept a Calderbank offer must be considered by reference to the situation at the time when the offer was made and not solely by reference to the ultimate outcome of the proceeding.[47] However, the failure of an offeree to accept a Calderbank offer which was not bettered on judgment would not lead to a presumption that the offer was unreasonably rejected.
[47]See Crump & Ors v Equine Nutrition Systems Pty Ltd Trading As Horsepower & Anor (No 2) [2007] NSWSC 25 at paragraph [41]
41 I consider the following matters are relevant in determining whether the offer was unreasonably rejected:
(a) At the date of injury, the plaintiff was twenty-five years old;
(b) At the time that the Calderbank offer was received by those acting on behalf of the plaintiff, the plaintiff was twenty-eight years old, had been unemployed from about August 2006, was untrained and had limited English speaking skills;
(c) At about the time the Calderbank offer was received, those acting for the plaintiff received a report from the orthopaedic surgeon, Mr Russell Miller, advising that the plaintiff was unfit for his pre-injury work, together with the suggestion that a return to the workforce would be “extremely problematic”. The plaintiff’s solicitors also had a report from Dr M Brown, the medico-legal occupational physician (who examined the plaintiff on behalf of the first-named defendant), wherein he opined that the plaintiff would have a capacity to do a significant amount of pre-injury work as a mechanic (and having a capacity for suitable employment). It is unclear when a doctor says that someone has a capacity to do a significant amount of pre-injury work as a mechanic whether indeed that can translate to having a capacity for pre-injury employment;
(d) At the time of the receipt of the Calderbank offer, the plaintiff’s solicitors did not have any vocational assessment, which was subsequently undertaken by Ms Katrina Henderson in or about February 2010;
(e) At the time of the receipt of the Calderbank offer, the hearing date was approximately five months away.
42 It must be borne in mind that as with all plaintiffs in serious injury applications, it would have been incumbent on the plaintiff to establish not only that he satisfied the narrative test, but as at the date of the hearing of the serious injury application, he had a loss of earning capacity of 40 per cent or more and, that after the date of the hearing, he would continue permanently to have a loss of earning capacity which would be productive of a financial loss of 40 per cent or more.
43 The critical difference though between the plaintiff and many other plaintiffs in a serious injury application, that given his age, the calculation of “without injury earnings” was not based on the annualised sum which most fairly reflects such earnings given the earnings three years before the injury and the three years after the injury. It was open to the plaintiff to call evidence as at the date of hearing as to what a diesel mechanic would have been earning at that time to make the assessment as to whether or not there was a 40 per cent loss of earning capacity at that time and likely to continue into the foreseeable future. Although probable that the plaintiff would be found to be capable of some “suitable employment” within the meaning of s5(1) of the Act, significant issues would arise as to whether or not the plaintiff was capable of performing his pre-injury employment and if not, the difference between any remuneration he may recover in suitable employment and then what he would have been earning as a diesel mechanic as at the time of the hearing.
44 Until such time that it could be established what he was losing as at the date of hearing, and also taking account of the vocational assessment, it was difficult for those acting for the plaintiff to make any realistic assessment of the prospects of the plaintiff, notwithstanding that earlier medical reports had predicted a reasonably good organic result.
45 In such circumstances, I consider that the Calderbank offer, if applicable, was not unreasonably refused.
46 In all the circumstances, I decline to exercise any discretion as sought by those acting for the first-named defendant.
47 Accordingly, I order:[48]
[48]Bearing in mind that I have already ordered that the plaintiff have leave to bring proceedings for pain and suffering damages, which I was advised had already been settled.
(1) The first-named defendant to pay the costs of the plaintiff including any reserved costs on Scale “D” of the County Court Scale of Costs. Such costs to be assessed by the Costs Court in default of agreement.
(2) I certify for the reasonable costs for the preparation, service and filing of a Court Book and two copies thereof.
(3) I certify for two counsel: Senior Counsel brief fee of $5,500, together with two hours conferences. I certify the attendance of Senior Counsel on a brief fee of $5,500 each on 31 March 2010, 12 April 2010 and 3 June 2011. I certify for the attendance of Junior Counsel at Scale “D” on 31 March 2010. I also certify for the sum of $3,300.00 for the preparation of written submissions by Senior Counsel for the plaintiff.
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