Alves v Patel

[2005] NSWSC 841

CITATION:	ALVES v PATEL [2005] NSWSC 841
HEARING DATE(S):	5 March 2004
JUDGMENT DATE :	24 August 2005
JURISDICTION:	COMMON LAW
JUDGMENT OF:	Adams J
DECISION:	The defendant is to pay the plaintiff's costs of action as agreed or assessed. From 1 July 2000, those costs are to be assessed on an indemnity basis. The plaintiff is to pay the defendant's costs, if any, thrown away by late service of medical reports listed in annexure AE of the affidavit Keely Louise Graham sworn 13 February 2001

CATCHWORDS:	COSTS - whether indemnity or conventional - principles - reasonableness of defendant's non-acceptance - outstanding particulars as at offer - significance of late provisions of discoverable documents - significance of complexity of issues - notice of compromise requiring acceptance without allowance for significant vacation rule - whether valid notice - extent by which judgment exceeded offer.
CASES CITED:	Morgan v Johnson (1998) 44 NSWLR 578 Houatchanthara v Bednarczyk (Court of Appeal, 14 October 1996 unreported Nobrega v The Trustee of the Roman Catholic Church Sanko Steamship Co Limited v Sumitomo Australia Limited Fed No 22/96 (unreportedf) CBA Investments Ltd v Northern Star Ltd (No2) 2002 NSWCA 146 SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 John S Hayes & Associates v Kimberley-Clarke Australia Pty Ltd (1994) 52 FLR201 MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (1996) 70 FLR 235 Delaney v Short (2001) NSWCA 181 CBA Investments Ltd v Northern Star Ltd (2002) NSWCA 146
PARTIES:	Manuel Barata ALVES- Plaintiff Manuel Barata Alves - Plaintiff Praeful Patel - Defendant
FILE NUMBER(S):	SC 12957/94
COUNSEL:	Mr L King SC - with Mr J Pender - Plaintiff Mr A Sullivan QC with Mr H Stowe - Defendant
SOLICITORS:	Grey & Perkins - Plaintiff Blake Dawson Waldron - Defendant

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

ADAMS J

24 August 2005

12957/94 ALVES v PATEL

JUDGMENT

1 HIS HONOUR: On 19 December 2002 judgment was given for the plaintiff against the defendant in the sum of $3,470,172 plus costs. Not surprisingly, in a case of this size and complexity, negotiations over costs were entered into between the parties from time to time with various offers and counter offers being made. As I understand it, the defendant does not dispute that the usual order for costs should be made since the verdict exceeded by a considerable margin the sum last offered by the defendant to achieve settlement. The substantial issue between the parties is whether costs should be ordered to be paid on an indemnity basis. Relevant to this issue is not only the course of negotiations but also the course of the litigation having regard especially to the changes made by the plaintiff as to certain aspects of his claim and the evidence which he proposed to call in support of it.

Note on affidavits

2 The defendant relied, in addition to the evidence on trial, on the affidavits of Ms Graham and Ms Olliver, both solicitors employed by the defendant’s solicitors (BDW). Essentially, those affidavits set out or annex communications between the solicitors on both sides as to particulars, inspections of documents and service of evidentiary material. A much more extensive collection of such communications (in excess of 650 pages including copies of tendered material I had already considered) is exhibited to the affidavit of Ian Francis Dwyer, a partner of the firm of solicitors retained by the plaintiff. Much of Mr Dwyer’s affidavit is argumentative and some is hearsay. Objection having been taken to these parts, I have disregarded the argument as evidence, though I have used it as expressing the plaintiff’s submission as to matters raised in the defendant’s affidavits. The admissibility of the hearsay material depends on whether the determination of controversies about costs is interlocutory. The crucial question here is the extent, if any, to which the plaintiff is entitled to indemnity costs. It seems to me that such a question is so integral a part of the final determination of the case that it is not interlocutory in character. Accordingly, I have disregarded the hearsay content of Mr Dwyer’s affidavit. No objection was taken to the admissibility of the exhibited documents.

The settlement offers

3 All offers (except the first) were either made under the Supreme Court Rules (SCR) or were Calderbank offers. Unless the context makes it clear, I will refer to the former as offers of compromise and, where the distinction is irrelevant, simply to settlement offers.

4 It appears that the first offer of settlement in this matter was made by the defendant on 3 August 1995, proposing a sum of $35,000 inclusive of costs. I think it fair to say that this sum could not have been seriously proposed except in a bargaining sense to commence negotiations. On 26 September 1997, the plaintiff’s then solicitors responded with a detailed Calderbank offer, broken up into sums proposed as appropriate under the various heads of damages. That offer was just over $1.6 million dollars plus costs and disbursements. On 21 December 1998, an offer of compromise open for acceptance for a period of twenty-eight days was served on the plaintiff by the defendant for the sum of $170,000 plus costs. On 14 December 2000 the defendant served a further offer of compromise open for twenty-eight days in the sum of $850,000 plus costs. On 3 January 2001 the plaintiff made an offer of compromise for the sum of $1,975,000 plus costs, the offer to remain open for a period of twenty-eight days. On 25 January 2001, the plaintiff served a Calderbank offer of $1.3 million plus costs to remain open until 8 February 2001. On 15 February 2001 the defendant made a Calderbank offer of $750,000 plus costs open to 16 February 2001. On 16 February 2001 the plaintiff responded with a Calderbank offer of $1.15 million plus costs open to 19 February 2001.

Was it reasonable for the defendant to decline the offers?

5 On 12 February 2001 the hearing of the trial commenced. At the outset, Mr Sullivan QC for the defendant complained about late service of important reports that dealt, at least in part, with matters upon which it was necessary that he should cross-examine the plaintiff, who was proposed as the first witness. Issues about particulars had already been raised. In the result, the hearing was adjourned for two days to enable the parties to deal with the position as it then presented itself. The significance of this adjournment or, more precisely, the reasons for it, is dealt with later. I note, however, that the defendant was able to put forward an offer on 15 February that reduced by $100,000 its offer of December.

The effect of the plaintiff’s offer of 3 January 2001

6 A significant issue of controversy between the parties concerns the effect of the offer of compromise of 3 January 2001. This is potentially significant since the making of an offer of compromise in accordance with SCR Part 22 by a plaintiff who obtains a more favourable ultimate verdict, will entitle the plaintiff to an order against the defendant for the plaintiff’s costs assessed on an indemnity basis “unless the Court otherwise orders”: Pt 52A subrule 22(4). In Morgan v Johnson (1998) 44 NSWLR 578 Mason P said (at 581-582, omitting references) –

“The following principles can be extracted:
(1) The purpose of the rule is to encourage the proper compromise of litigation, in the private interests of individual litigants and the public interest of the prompt and economical disposal of litigation…
(2) The aim is to oblige the offeree to give serious thought to the risk involved in non- acceptance…
(3) The prima facie consequence of non- acceptance will be that the rule will be enforced against the non-accepting party…This is because, from the time of non-acceptance ‘notionally the real cause in occasion of the litigation is the attitude adopted by [the party] which has rejected the compromise’…


(4) Lying behind the rule is the common knowledge that ‘litigation is inescapably chancy’…For this reason, the ordinary provision is expected to apply in the ordinary case…The mere fact that it was reasonable for the litigant to take the view that he or she did in rejecting the offer is not enough to displace the rule [emphasis added]…As Clark JA expressed it in Houatchanthara v Bednarczyk (Court of Appeal, 14 October 1996, unreported)] (at 2-3):

‘The rule lays down the general principle that should be applied, and the order provided for in that rule should only be departed from for proper reasons which, in general, only arise in an exceptional case.
It is clear that if the rule operates, the plaintiff will be significantly disadvantaged, but that disadvantage flows naturally from the risks of litigation. The idea behind the rule is to encourage settlement or compromise of proceedings, and more specifically, to encourage litigants to give serious consideration to the settlement of proceedings. Where an offer is made by a defendant to a plaintiff the latter is put on notice that unless he or she accepts that offer, there is a significant risk that the order provided for by the rule may follow. In declining to accept the offer, the plaintiff undertakes the risk and the consequences that follow naturally from that risk.’
(5) The discretion to displace the rule is a judicial one, requiring the private and public purposes of the rule to be borne in mind…Reasons must be given for ‘otherwise ordering’…”

7 A significant distinction between an unaccepted offer of compromise on the one hand and a Calderbank offer on the other is that, although indemnity costs may be payable in the event that the plaintiff achieves a larger verdict than the offer, in the first situation indemnity costs are payable unless the circumstances are exceptional while the non acceptance of a Calderbank offer will result in an order for indemnity costs only where, in the particular circumstances of the case, it was “plainly unreasonable” for the defendant to reject the offer: Nobrega v The Trustee of the Roman Catholic Church (No.2) [1999] NSWCA 133 per Powell JA (with whom the other members of the court agreed) at [21] quoting with approval the statement of principle of Sheppard AJA in Sanko Steamship Co Limited v Sumitomo Australia Limited Fed No 22/96 (unreported). Whether there is a real distinction between a refusal that is plainly unreasonable as distinct from merely unreasonable may be doubted: CBA Investments Ltd v Northern Star Ltd (No 2) [2002] NSWCA 146, where the Court quoted with approval the following passage from SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 per Giles JA –

“All the circumstances must be considered, and while the policy informing the regard had to a Calderbank letter is promotion of settlement of disputes an offeree can reasonably fail to accept an offer without suffering in costs. In the end the question is whether the offeree’s failure to accept the offer, in all circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure: see for example, John S Hayes & Associates v Kimberley-Clarke Australia Pty Ltd (1994) 52 FLR 201; MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (1996) 70 FLR 235.”

The Court of Appeal went on to apply the test of reasonableness without gloss.

8 The defendant submits that the plaintiff’s offer of 3 January was not made in accordance with the Rules and, hence that non-acceptance does not have the effect that indemnity costs will be ordered unless the circumstances are exceptional. It is also submitted that, at all events, the circumstances are exceptional.

9 Order 52A provides -

22(1) Upon the acceptance of an offer of compromise in accordance with Part 22 rule 3(5) the defendant shall, unless the Court otherwise orders, pay the costs in respect of the claim by the plaintiff against the defendant up to and including the day the offer was accepted.
(2) If a notice of offer contains a term which purports to negative or limit the operation of sub rule (1), that offer shall be of no effect for any purpose under Part 22 or this rule.

Part 22 rule 3 provides -

(3) an offer may be expressed to be limited as to the time it is open to be accepted but the time expressed shall not be less than 28 days after it is made.
(5) an offeree may accept the offer by serving notice of acceptance in writing on the offeror before -

(a) the expiration of the time specified in accordance with subrule (3) or, if no time is specified, the expiration of 28 days after the offer is made; or

(b) the time prescribed by subrule (8) in respect of the claim to which the offer relates,

whichever is sooner.”

10 Part 22 rule 3(8) is not material. Mr Sullivan relies on Part 2 rule 5 to argue that the offer was defective and thus not one made within the rules by specifying “a period of 28 days from the date hereof” namely 3 January 2001 as the period for which the offer remained open rather than 28 days from 10 January 2001 as effectively required by Part 2 rule 5. That rule is in the following terms –

5(1) In reckoning the time fixed by the rules…for the doing by a party of any act –
(a) the period from the beginning of 25 December until the end of 9 January next following…
shall, unless the Court otherwise orders, be excluded, but subject to Part 1A rule 2(4) (which relates to a trial in the fixed vacation), business may be done during those periods.

11 I do not accept Mr Sullivan’s submission. Firstly, the plaintiff’s notice of offer of compromise is expressly “made in accordance with the Supreme Court Rules Part 22 Division 1”. The 28 days to which it refers is plainly a reflection of the period of not less than 28 days after the notice of offer is made as specified in Pt 22 r 3(3). The offer is therefore literally within the terms of the sub rule. The period of 28 days referred to Pt 22 r 3(3) is not a “time fixed by the rules…for the doing by a party of any act within Pt 2 r 5(1)”: Delaney v Short [2001] NSWCA 181 per Hodgson JA at [9]. It follows that the plaintiff’s offer to compromise complied with the Rules. I must also confess that I am unimpressed with an argument that was kept up the defendant’s sleeve until now. It is perfectly clear that the defendant never had the slightest intention of accepting the plaintiff’s offer, since it did not raise the question of its expiry at the time and ignored the subsequent Calderbank offer, in effect, to accept $675,000 less. I add that it would be plainly unreasonable, indeed daft, if the defendant refused the offer because of a failure to take account of the vacation rule.

12 The defendant also submits that the plaintiff’s Calderbank offer of 25 January 2001 was, at all events, an exceptional circumstance, since no defendant would accept the larger offer when a smaller offer was available for acceptance. The difficulty with this argument, as it seems to me, is that the latter offer was in fact not accepted and lapsed on 8 February 2001. It is true that, had the defendant accepted the second offer, it would have avoided the risk of paying indemnity costs between 3 and 25 January and, in this sense, the second offer would rightly be considered, I think, an exceptional circumstance. But I do not see that an offer that is simply ignored constitutes an exceptional circumstance. As a matter of substance, it cannot be right that a plaintiff who makes an offer of compromise under the Rules loses the advantage of doing so when the defendant ignores the offer because the plaintiff later makes a lower offer which is also ignored. (Upon the assumption that I am wrong in my interpretation of the Rules, it will be necessary to consider whether, at all events, it was unreasonable for the defendant to refuse the offer of compromise of 3 January 2001. I deal with this question in the context of all the Calderbank offers made by the plaintiff.)

Was the defendant’s non-acceptance of the offers unreasonable?

13 The defendant submits that, having regard to the manner in which the plaintiff conducted the litigation and the complex and difficult nature of the case made it was not unreasonable for him to refuse the plaintiff’s Calderbank offers. The plaintiff submits that, although the litigation did involve a number of complexities affecting particular parts of the case, especially as to the extent of financial loss, the general nature of the case was not particularly difficult. In substance, the plaintiff was a very successful businessman who encountered grave problems following the defendant’s negligent operation on him. There was some controversy about the extent of his incapacity but no more than is often encountered in cases of this kind and which the medical reports on both sides elucidated. In the end, the extent of incapacity depended to a significant degree on the credibility of the plaintiff. This, again, is a usual feature of litigation of this type. Certainly, the medical picture was complicated to some extent by the raising of the possibility of organic brain damage, an allegation that was withdrawn during the trial. So far as economic loss was concerned, this was complicated by the application to the particular circumstances here of the mode of assessing loss of earning capacity and the impact on the plaintiff’s earning potential that his ability to acquire a controlling shareholding in a company which he would than manage.

14 When dealing with the issue of costs in the context of settlement negotiations it is important to recognize, as it seems to me, that such negotiations often take place before the trial commences, well before the evidence is concluded and often before its detail is clear. Moreover, as the matter proceeds, the absence of settlement in the period – sometimes lengthy – before trial will often lead to further investigation and the collection of further evidence. The notion that Calderbank offers can safely be ignored without costs consequences just because the offeror’s case is not ready for trial or all pre-trial requirements as to service of reports or supply of particulars have not been complied with cannot be right: much will depend on a commonsense approach to the case and the particular circumstances at the time of the offer.

15 This is very far from the kind of case where, for example, a defendant has strong evidence (say, by surveillance) that the plaintiff is malingering and not unreasonably reckons that his or her credibility will be significantly undermined by cross-examination, quite apart from its effect on the general damages and economic loss claims. The mere fact that a defendant does not know precisely what the value of the plaintiff’s claim or the scope of the evidence proposed to be led in support of it when a Calderbank offer is made does not mean that it is not unreasonable for such an offer to be ignored. After all, the defendant is not without the means of independently estimating the value of the case. Offers are very often made and accepted because the value of the claim is difficult to estimate. Much also depends also on the extent to which the offer is exceeded by the judgment. In this case, moreover, the defendant’s consideration of the offers was simplified by the plaintiff’s very strong case on liability, which was admitted (in careful language) well before the trial.

16 In short, the question is not so much what is the “true” value of the plaintiff’s case but, having due regard to the imponderables and uncertainties in the case, whether it was “plainly” unreasonable to refuse the plaintiff’s offers, bearing mind the “ordinary rule is that costs when ordered in adversary litigation are to be recovered on the party and party basis”: per Sheppard J in Sanko Steamship Co (supra). These are all very much matters of fact and degree.

The particulars

17 It is convenient to start with the Pt 33 rule 8A particulars filed by the plaintiff on 17 June 1994. The list of disabilities, which it is not necessary to set out, was substantially the same as those which were litigated at the trial. Aside from some relatively trivial particulars of special damage a claim of some $1.7 million was made on the loss on sale of the plaintiff’s shares in Allco and something under $400,000 for the cost of a guarantee repaid to EPT Holdings. The basis for these claims was not provided. It certainly suggests that the plaintiff alleged that his incapacity (partial or total) had led to a marked reduction in the value of Allco, with a consequent diminution in the value of his equity and the obligation to pay a large sum for the cost of a guarantee. The particulars of economic loss and loss of earning capacity, although somewhat different from the case ultimately made was not so significantly changed as to make the defendant’s calculation of likely loss particularly difficult, although it was not – and did not become – a straightforward exercise. The allegation was, in substance, one of partial incapacity – at least so far as the brief narrative of loss is concerned – but for the years ended July 1992, 1993 and 1994, the full amount of loss of salary was claimed, implying complete incapacity. Overall, the amounts claimed for loss of income were not completely unreasonable and gave sufficient information for a general assessment to be made by the defendant under this head. The particulars annexed a number of medical reports that gave an adequate picture of the medical case intended to be made at trial. Income tax returns were also attached. The reports of Dr Eikens and Dr Taylor which were attached to the particulars disclosed that the plaintiff had purchased the business in Portugal which he was operating and, indeed, suggested that he was doing so fulltime. The difficulty represented by the failure to clearly state whether the plaintiff, for the future, was claiming partial incapacity (and, if so, to what degree) or total incapacity made it reasonable, as it seems to me for the defendant not to have accepted this offer.

18 Amended Particulars under Pt 33 Rule 8A were served on 28 January 1998. Those Particulars did not refer to the loss of value of the plaintiff’s shares in Allco or to the guarantee. In the letter serving the Amended Particulars, this change was brought to the defendant’s attention. Again, the clear import of the allegations concerning loss of earning capacity was that it was something significantly less than total. The claim for economic loss was made by reference to the annexed report dated 21 August 1997 of Mr Martin Linz of Price Waterhouse. Mr Linz estimated the value of the plaintiff’s net loss at about $948,000 as at 30 July 1997, with an addition for the opportunity cost of the funds foregone, giving a total of about $1.12 million. The tax risk added a further sum of just over $1 million. It was also clear that the plaintiff claimed that he had intended to work – though to a reduced degree – until the age of 70 years. The report did not make it clear that the plaintiff claimed total incapacity although the claim was clearly calculated on that assumption. Further medical reports were annexed to the particulars together with the plaintiff’s income tax returns for the years ending June 1985 to June 1996 together with tax returns for his family trust for the same period.

19 The Calderbank offer of 26 September 1997 of just over $1.6 million (which expressly relied on Mr Linz’s report) specified as its major components economic loss of $948,000 plus $415,000 interest at 7% on past economic loss and general damages of $150,000 plus interest of about $14,000. There was no claim in respect of domestic services, though medicine had been served would have justified such a claim. In light of the significance of the economic loss component, the failure of the particulars (to that point of time) to deal with the apparent incongruity between the description of the plaintiff’s incapacity and the extent of the claim calculated by Mr Linz and, further, the lack of detail concerning the plaintiff’s involvement in GMB, I am unable to conclude that the defendant’s then failure to accept this offer was plainly unreasonable. However, the offer was not subject to a time limit. Whether it later became unreasonable to decline acceptance I will discuss in due course.

20 In a letter of particulars of January 1998 the defendant was informed that the plaintiff owned an 80 percent interest in GMB and was shown on the books of the company as an employee for which he was paid less than $200 per month. It was said that the plaintiff did not actually perform any work as such, as he resided in Australia. The particulars asserted that the plaintiff was not then and had not been self-employed at any relevant time. Mr Linz’s report stated clearly enough the basis of his estimation of the loss suffered by the plaintiff including the independent assessment of the potential earning capacity of an executive with the plaintiff’s experience that was prepared by Mr Peter Ross of Bale Management Services and attached to Mr Linz’s report.

21 No doubt for the purpose (amongst others) of verifying the material upon which Mr Linz relied the defendant’s solicitors issued a subpoena to Price Waterhouse requiring, in substance, the documentary information which was used for the purpose of preparing the report. Access by the defendant’s solicitors and experts to this material is a matter of controversy, it being contended on behalf of the defendant it was not possible to deal sensibly with the plaintiff’s offers (and prepare for trial) because adequate access to this material was not given.

22 A Price Waterhouse file note records a conversation of 13 February 1988 between Ms Keeley Graham, a BDW lawyer involved in the conduct of the litigation, and Ms Suzie Bailey (co-author with Mr Linz of the Price Waterhouse report) from which it can be inferred that it was agreed that the boxes containing the relevant material would be sent by 17 February to Price Waterhouse’s Sydney office to enable inspection by the defendant’s experts, Cooper & Lybrand and certain other information about Allco and Babcock Australia and remuneration paid to the managing and marketing director of each company would be provided. On 15 June 1998 the plaintiff’s solicitors wrote to BDW informing them that they had been told by Price Waterhouse that at least 13 boxes of documents were still in their Sydney office occupying valuable space, that they had been inspected by Coopers & Lybrand in February and would be returned to Newcastle unless BDW advised that there was still a need to have them kept in Sydney. Two days later BDW informed the plaintiff’s solicitors that there “is, for the time being, no requirement for the 13 boxes of documents which were inspected at Price Waterhouse Sydney, to continue to be stored there”. BDW also mentioned that the documents were produced under subpoena and “are likely to be required to be produced directly to the Court” and should remain intact.

23 The only reasonable inference available from this exchange is that both the defendant’s experts and BDW were satisfied that their inspection of the documentation was sufficient. It appears from Ms Graham’s affidavit that the boxes of documents remained in Sydney until November 1998. It is obvious that the documents were available in Newcastle should it have been necessary to further inspect them. It is worth noting, I think, that although these boxes were retained in Newcastle, there is no suggestion in the defendant’s affidavits that any attempt was made by BDW or persons retained by them to further inspect those documents until late December 2000, a matter to which I return. I do not see how any later complaint that these particular documents were not, for some unexplained reason or other, available should be considered to have much substance. Price Waterhouse and Coopers and Lybrand merged in July 1998 to form PriceWaterhouseCoopers and the experts retained by BDW moved into the Price Waterhouse premises in Sydney.

24 In the meantime, on 20 May 1998, the plaintiff’s solicitors provided some additional quite extensive particulars.

25 On 21 December 1998 the defendant served an offer of compromise open for 28 days of $170,000 plus costs.

26 On 28 January 2000 Further Amended Particulars pursuant to Pt 33 rule 8A were filed and served. Although there were some changes to the particulars of the plaintiff’s disabilities, by and large these were merely elaborations of what had been formerly conveyed although there are some material additions. The most significant of these – but for which there was, in a real sense, little medical support – was a claim of brain damage “due to accumulated hours of anaesthesia”. The additional claims and elaborations were not such in my view as to surprise the defendant, having regard to the medical material that had been disclosed. It is fair to say however that the new details, broadly speaking, articulated in greater detail than hitherto a more extensive range of significant disability. The particulars added a substantial claim under Griffiths v Kerkemeyer, although I think that any competent common law litigation lawyer would have long realised that such a claim was likely having regard to the previously served medical reports. Thus this claim was new but predictable. Additional information relating to economic loss was provided, much of which was to a greater or lesser extent either express or implied in what had already been provided. For the first time, as I understand it, a claim was expressly articulated of total disability from carrying out either pre-surgery employment any paid employment at all. So far as DMB is concerned, this was described as an investment although, as a director he was required by Portuguese law to take a base salary which he had done. Two reports of PriceWaterhouseCoopers were served in support of the claim of economic loss, these were dated 21 August 1997 and 21 January 2000. The latter report concluded that the plaintiff’s loss of earnings and opportunity cost of the funds foregone was almost $2.2 million with a risk of tax liability of about $1.7 million. The total of these two sums was claimed. As is usual, additional medical reports were annexed.

27 I have carefully considered the content of the Particulars, the two economic loss reports, the outstanding requests for particulars, the particulars already supplied and the medical reports that had by then been served. Undoubtedly some matters were uncertain and some information was still to be provided. However, the substance of the plaintiff’s case was clear enough. The defendant was informed on 25 January 2000 and on a number of subsequent occasions that the plaintiff’s experts’ reports had been served. In particular, the nature and extent of the plaintiff’s economic loss claim was sufficiently clarified to enable the defendant to evaluate it, within reasonable bounds, of course, making common sense allowances for the extent to which, ultimately, the plaintiff was found to be fully or substantially incapacitated in the relevant sense. The picture on general damages was similarly reasonably capable of sensible assessment. This conclusion takes into account, amongst other things, the lengthy request for particulars (some of the significant queries in which were in the nature of interrogatories or could have been the subject of the defendant’s own inquiries) sent by BDW to the plaintiff’s solicitors on July 2000.

28 On 14 August 2000, I note, BDW wrote to the plaintiff’s solicitors complaining that the letter of instruction to PriceWaterhouseCoopers which resulted in the report of 24 January 2000 was incomplete because of a claim made by the plaintiff of legal professional privilege. It strikes me as surprising that this matter was raised at such a late date, the report having been with BDW for well over seven months. It strongly suggests that it had not been considered – or, at least, seriously considered – until shortly before.

29 In mid December 2000 Ms Graham telephoned Mr Hodges of the plaintiff’s current solicitors to inform him that the defendant’s accountants had reviewed the material already provided but wished to review some of the material again “in light of fresh information relating to the plaintiff’s economic loss claim”, presumably a response to the Further Amended Particulars of January that year and perhaps certain other information that had come to light. However that may be, the fact that no approach had been made to PriceWaterhouseCoopers or to the plaintiff’s solicitors until so late in the day for further access to the documents suggests a significant degree of tardiness. The reasonable conduct of this litigation should have long since given the defendant a thorough understanding of this material. The affidavit of Ms Graham, which refers to her conversation with Mr Hodges, does not say when the need for further inspection became apparent nor when the “fresh” information came to light, nor why it was not until December that the inquiry was made or why it was not (having regard to the previous arrangements) directed to PriceWaterhouseCoopers, who were, after all, subject to the subpoena. Nor does she suggest that any arrangement was made with Mr Hodges in connection with the documents or explain why she did not then contact PriceWaterhouseCoopers. Indeed, her next inquiry was not until 11 January 2001, which is scarcely suggestive of urgency. Ms Graham then raised the matter with the plaintiff’s solicitors almost daily until 23 January with disappointing results. However, I would certainly not infer that the plaintiff’s solicitors were obstructive, though they do not appear to have been cooperative. After all, the plaintiff’s advisers also had to prepare for trial. In light of the apparent lengthy and unexplained period of inaction on the part of the defendant’s representatives and the generality of the evidence as to precisely why the additional review was necessary, I am not disposed to infer that the matters requiring further review were of substantial significance.

30 My own consideration of the state of the documents and particulars at this time leads me to infer that, in all likelihood, proper inspection of the documents whilst they were in Sydney should have provided the defendant with sufficient information to assess the plaintiff’s claim for economic loss and understand the basis for the reports upon which he now relied and which had been with the defendant’s advisers since the previous January. If further inspection was necessary following service of those reports, it was quite unreasonable to delay attempting the task until just before the Christmas vacation almost 11 months later.

31 It will be recalled that the plaintiff’s Calderbank offer of 26 September 1997 was still outstanding. On 11 December Mr Hodges had informed Ms Graham that Mr Crumpton was in Portugal and would be forwarding some economic loss material – presumably concerning GMB – and that the “plaintiff may brief another accounting expert, perhaps Deloittes” and was thinking of amending the statement of claim. This suggested change in the plaintiff’s case might have justified a further delay in accepting the plaintiff’s offer. I think a sensible solicitor would have been troubled by the possible significant increase in costs which, in the event of an adverse result, might have to be paid by the defendant and might well have thought it advisable to give further serious consideration to accepting the Calderbank offer at that time. After all, as I have pointed out, the real scope of the plaintiff’s case was clear enough and the new report would probably only have been sought to strengthen the claim. Be that as it may, as I have mentioned, the defendant did in fact make a substantial offer three days later.

32 Subject to the inherent complexities and difficulties about the case (a matter at the forefront of Mr Sullivan QC’s submissions on behalf of the defendant) my judgment is that the defendant’s non-acceptance of the plaintiff’s offer by a reasonable time after service of the Further Amended Particulars and the attached economic loss reports, despite the extant request for particulars was, in all the circumstances, plainly unreasonable. In my view, the defendant should have been in a position fairly to evaluate and able to accept the plaintiff’s offer by the end of February and certainly by mid 2000. It is important, I think, to consider the position as at that time. The mere fact that there was subsequent sniping of one kind or another as the parties got closer to the trial, some of which might have been significant, does not throw any useful illumination on their comparative positions at this time.

33 Perhaps the most significant change in the case as it unfolded concerned the extent of incapacity. On the face of some of the doctors’ reports, there was real support for the defendant’s contention that the plaintiff retained some significant capacity for work. I do not need to repeat here how I analysed this issue in the principal judgment. Suffice it to say that, as a practical matter, I did not think that this view of the plaintiff was realistic. Of importance in this context was not only the evidence of the plaintiff but also of his former associates. However, it should have been apparent to the defendant, at least, that there was a very substantial risk that the probabilities at the end of the day would favour a substantial diminution in the capacity of the plaintiff to work at the very high level of competence which it was very likely he possessed before the operation. Even a significant residual capacity must have been very much below the standard he had earlier exercised. Accordingly, the economic loss would – even on this hypothesis – have been very substantial. Moreover, the defendant was well able to interview the plaintiff’s former business associates, had he been minded to do so. It is, perhaps, a matter of uncertainty whether they would have been willing to give any information but there is no reason to suppose that they would have been uncooperative. After all, as the outcome of the trial ultimately established, the plaintiff succeeded in exceeding his offer by a very substantial margin upon a battleground that was very substantially the same as it appeared or ought to have appeared at this time. Perhaps to extend the metaphor to breaking point, he had not disclosed all his ammunition but none of it was, to my mind, unconventional or unpredictable. A reasonable defendant would, of course, evaluate these risks. I return to this problem in due course.

34 Just before Christmas 2000 an extensive letter of particulars was provided to BDW. (It is clear from the chronology that this material had not prompted the request to review the PriceWaterhouseCoopers documents.) Some of this information should have been provided at an earlier time. On 28 December BDW requested further particulars but, except as to the information concerning the interest of the plaintiff and his family in DMB, the additional information was not crucial to an understanding of the plaintiff’s case. In relation to DMB some clarification of the table concerning the interest of the plaintiff’s family in the company was proffered and confirmation of the correctness of that interpretation was sought. The BDW interpretation was reasonable and sufficient in my view to enable them to factor this matter into any calculation of damages which might be made for the purpose of compromise.

35 On 25 January 2001, BDW again wrote to the plaintiff’s solicitors noting that the documents produced on subpoena by Price Waterhouse Newcastle would be available on Monday 29 January 2001, seeking copies of letters of instruction and an index of documents sent to the experts whose reports on economic loss had been served, seeking copies of previous reports written by Mr Ross in the matter and noting that certain information from the plaintiff was still outstanding. Additional material was provided by the plaintiff’s solicitors on 7 February 2001.

36 The affidavit of Ms Graham discloses that the thirteen boxes of Price Waterhouse documents were ultimately made available on 30 January and were reviewed by Ms Graham and a Mr Christl, a review which continued daily to 11 February 2001. No doubt this was unfortunate from the defendant’s point of view but it is a task that could and should have been undertaken long before. As I have said, these documents were important to both parties.

37 The trial commenced on 12 February 2001. By that time, of course, the offer of compromise of 3 January had expired. Mr Sullivan QC immediately complained about being “bombarded…in the last week with documents and reports” and foreshadowed the need for an adjournment before cross-examining the plaintiff. As already appears, the position about the service of the boxes of documents made available to the financial experts is somewhat complicated. Most, if not all, of this material was in Price Waterhouse’s Sydney offices for a considerable period in 1998 and, more particularly, available to the defendant’s then expert Mr Lonergan. It was then available in Newcastle had the defendant been minded to look at there or even, I should think, in Sydney had a polite request been made. There was apparently a late lapse in the delivery of two boxes of documents but these were not, as I understand it, a complete surprise to the defendant in the sense that, one way or another, this material had earlier been available. Overall, I consider that the plaintiff’s legal advisers acted reasonably in relation to the provision of documents. The chronology indicates that the defendant followed its own timetable in relation to the inspection of those documents, no doubt reflecting arrangements with its own experts. That it resulted in the late provision of some documents can scarcely be laid at the plaintiff’s hand. Still less do I see that there is any merit in the contention that costs were thrown away by the conduct of the plaintiff’s solicitors.

38 The plaintiff served financial reports – ultimately, those upon which he relied – in late December and late January 2001. It would have been better had these been served earlier. The defendant has not sought by analysis to compare this material with that which had earlier been made available and I do not think that I should undertake such a detailed task. I have, however, generally reviewed it and have concluded that – aside from sympathising with the position in which the defendant was placed so far as preparation for trial was concerned and not being unmindful of the breach of previous case management orders and the Rules which this conduct constituted – it played no significant role in the defendant’s non-acceptance of the plaintiff’s offers. No does the late material, as a practical matter, show that the information already possessed by the defendant was insufficient for it to make a reasonable assessment of the value of the plaintiff’s case.

39 Documents relating to the plaintiff’s efforts to obtain employment were produced to the defendant’s representatives during the plaintiff’s cross-examination by Mr Sullivan QC. They should have been discovered. It may be that they were included in the boxes of Price Waterhouse material but this is not clear. Even assuming, however, that these documents were not in the boxes and accepting that they were relevant, they were not such as to materially change the nature of the plaintiff’s case as it had been exposed to that point with respect to the defendant’s ability to evaluate the plaintiff’s offers.

40 My view about this is confirmed by the offer of compromise of $850,000 plus costs proffered by the defendant on 14 December 2000. This was a substantial change in its position of two years previously and supports the conclusion that there was a substantial understanding of the nature and extent of the litigation and, of course, of the defendant’s risk. This offer was reduced by $100,000 on 15 February 2001, three days after the trial commenced and the date upon which the hearing resumed following an adjournment granted at the request of the defendant.

41 Leaving aside again the issue of the complexity and difficulty of the case, I think it is obvious from the reports ultimately tendered that the defendant had or should have had, sufficient information about the nature of the plaintiff’s claim, both as to disability and economic loss to respond sensibly to the offer of compromise made on 3 January 2001 and the Calderbank letter on 25 January 2001.

42 It is submitted that late provision of the financial documents resulted in additional costs being incurred by the defendant in order to complete inspection and evaluation of that material. Quite apart from the other matters to which I have referred as to the alleged fault of the plaintiff, since that work must have been performed whenever the material was provided, I do not see that there is much merit in this submission. There is no suggestion that counsel were left without work to do which otherwise would have been necessary in their preparation of the case. Accordingly I think that the costs incurred in this respect should simply be regarded as costs in the cause.

43 It is also submitted that costs were thrown by the late service of medical reports. Two reports were served on 2 February, fifteen were served on 7 February and eight were served on 9 February 2001. This was brought to my attention by Mr Sullivan QC on 22 February 2001. Amongst other things, Mr Sullivan said -

“Inevitably, with great respect, that causes us huge problems. It means that we have, on the run, refer all this material to our other experts to see if they haven’t put reports on at all because they didn’t think they needed to – they have to reconsider them. It means we have to have further conferences with potential witnesses to go through this material. It means we don’t have the time for calm reflection preparing cross-examinations that we would have had if the case had been prepared properly and we’d been given proper notice of it. We have to prepare cross examinations, if you like, over night, while we are dealing with other matters.
Those things are prejudicial. It is almost impossible to express the prejudice because one does not know until they confront the addresses on a different occasion. Secondly, it is obvious costs are thrown away by this because experts to have a look at reports on occasions – likewise with counsel and…instructing solicitors – and…of course, cost structures have changed dramatically over the years. The fees charge in 1995 for matters might be completely different to now.”

44 It is submitted in Mr Dwyer’s affidavit that a number of the reports referred to as late served reports were actually curricula vitae, an acknowledgement of the expert code of conduct whilst some became available when it was learned that Dr Hampshire had resumed practice. The new electro-physiological test undergone by the plaintiff on 31 January 2001 could scarcely have been served much earlier. Other reports were merely have been refresher reports which included comment on the defendant’s reports. I do not think it is necessary for me to analyse these matters. An order that the costs thrown away or additionally incurred by virtue of late service does not assume that the defendant indeed incurred such costs by virtue of late service and the extent to which such costs were incurred can be determined by the costs assessor or by agreement between the parties. Whether the reports were in fact medical reports again is a matter I think with which I need not trouble myself. I adhere to the view I intimated at the time that any reports that should have been served earlier in compliance with the rules, late service of which resulted in additional costs to the defendant should lead to the result that the plaintiff should pay those costs. As I have said the actual factual position can be determined in due course on taxation.

45 The defendant also complains about costs allegedly thrown away by what is claimed to have been the plaintiff’s late provision of economic loss particulars, information and documents. I have already dealt with part of the matters involved in this complaint, namely the production of documents relied on by the plaintiff’s experts in preparing their reports. However the substance of this particular claim is quite different and involves what seems to me to be two issues. The first is set out in a letter of 13 February 2001 from BDW to the plaintiff’s solicitors. That letter commences by pointing to part of a matter raised by me with Mr Sullivan QC -

“Mr Sullivan, Mr Crumpton in his opening has eschewed any suggestion that the plaintiff seeks to rely on the REMM contract as demonstrating that, had he been in charge, that, I take it, some calamity resulted and some adverse financial consequences resulted, that they would not have happened and he would have been in a position to take advantage of the improved financial position of Allco. Bur Mr Crumpton said that is now not to be the case. Their case is one that is not a special case depending on Allco, but that in the market place he could command a substantial salary. If that’s so, then its difficult to see why his proposed dealing with the REMM problem may or may not have been successful could even arise.”

46 The letter goes on to assert that the plaintiff’s legal representative understood that “it is not in issue that the REMM contract is relevant in considering the success or failure of Allco and its subsidiaries”. (I do not need to go into the details concerning the REMM contract except to note that the affect Alco’s involvement in it was disastrous for Allco and the plaintiff believed - and asserted on a number of occasions – that had his health not been affected by the negligent operation the contract would not have had such serious consequences for his company.)

47 It seems to me from a perusal of the letters attached or exhibited to the various affidavits, the statements of particulars and the associated reports that the essential nature of the plaintiff’s claim for economic loss did not vary, at least from 1994 and did not involve any claim for the loss of value of Allco and its subsidiaries by virtue of the REMM contract and the plaintiff’s alleged inability by virtue of his illness to avoid the losses which that contract brought about. Thus, the further amended state of particulars filed on 28 January 2000 claimed “damages for loss of earning capacity which has been and will continue to be productive of financial loss…in accordance with the reports of PriceWaterhousCoopers served herewith…”. The report of Mr Linz clearly stated that the claim for economic loss involved an assessment of the plaintiff’s expertise and acknowledged success as a businessman, the attractiveness in the marketplace of those skills and the range of income available to him by exploiting these features. It is not necessary to set out in detail the relevant paragraphs of the report but, by way of example, the report said –

5.2 “We have based our calculation of the loss on the assumption that Mr Alves would have been able to find a position comparable to his role as managing director of Allco, following his resignation from that group. We have assumed that Mr Alves would have retired at the age of seventy-five, which would be around 30 June 2007.
5.3 Based on the independent report prepared by Bale Management Services as to the reasonable achievable salary level of Mr Alves, we have established that a reasonable salary in performing his normal duties would have been $161,260 for the year ending 30 June 1989, being the financial year immediately following surgery.
“Likewise, considering the remuneration which is reasonable in to-days market, we have relied upon the Bale report which states that a salary package of $281,120 would have available to an executive of Mr Alves’s experience …”

48 The Further Amended Particulars served in January 1998 alleged that the plaintiff’s injuries and consequent disabilities caused the plaintiff to be unable to fulfil the proper discharge of his role as a director and consultant of Allco “to his potential” and claimed that he had therefore been “unable to enhance the business of the corporations for whom he has performed work and his own standing in the industry, domestically and internationally, to the extent of his pre-accident potential” and, further, “his capacity to perform work by reason of frustration at his disabilities and diminution in concentration and application arising there from and the perception of his diminished professional capacity by his colleagues…caused a loss of earning capacity”. The Price Waterhouse report served with those particulars calculated that loss “on the assumption that Mr Alves would have been able to find a position comparable to his role as managing director of Allco, following his resignation from that Group”. There is no reference in any of this material to the REMM contract or to the financial problems of Allco except in the oblique suggestion that Allco may have done better had the plaintiff not have been disabled. Furthermore, on 20 May 1998 BDW was informed by the plaintiff’s solicitors (in respect of GMB) that “during the time [the plaintiff] resided in Lisbon, he was not able to perform any work because he did not feel well enough to carry out any work”, adding that the “plaintiff’s evidence will be that he carried out very little work overseas after the operation as he was not well enough to do so”. In the plaintiff’s answer to interrogatories sworn 27 January 2000 he stated that, after resigning as a director of Allco on 2 May 1990, he sought consulting or other paid work between 1990 and 1991 but did not succeed in doing so and added that he had otherwise “not to the best of my recollection sought paid work as I have never felt well enough”. The Particulars served on 28 January 2000 states unequivocally that he was totally disabled from carrying out his pre-surgery employment or any paid employment and claimed damages accordingly for the loss of earning capacity. The business failure of the Allco Group was mentioned simply as an incident of history which required his resignation as a director.

49 It may well be that the REMM contract was relevant in considering the demise of Allco but this was, at its highest, a peripheral issue. The mere fact that the plaintiff indicated an intention before and perhaps for some time after his operation of undertaking a major role in Allco’s business, one way or the other, mattered little if no claim was made arising out of the demise of the company with a consequent frustration of this intention. The real question concerned the plaintiff’s earning capacity as to which extensive reports had been served well before the commencement of the trial. Although not as simple a matter to calculate as comparing wages of co-ordinate employees within a more or less conventional promotion structure, in essence the plaintiff’s earning capacity was not difficult to calculate within parameters that gave the defendant an adequate basis for considering the value of his claim in this respect.

50 I have reviewed the extensive correspondence passing between the parties and the documents as annexed and exhibited to the affidavits which I have mentioned. I am far from satisfied that the contention urged by Mr Sullivan QC, namely that, quite apart from the difficulties in the case, his client was not in a position, by virtue of dilatoriness or other default on behalf of the plaintiff to fairly assess the reasonableness of the plaintiff’s offers of compromise of 3 January 2001 and 25 January 2001, still less the offer of 16 February 2001. My task has not been made easier by the defendant’s failure to make submissions as to the actual ways in which the defendant’s assessment of the reasonableness of the plaintiff’s offers was hindered by the history. The case made by Mr Sullivan QC was, essentially, that I should draw an inference that the defendant was significantly hindered – and that by considering only the plaintiff’s material as it stood then. (Of course, I have borne in mind the evidence as it was ultimately presented, including that of the defendant.) I note that there was no suggestion at any time to the plaintiff that consideration of his offers could not be made until particular matters had been attended to. The present complaints smack in this case of ex post facto rationalisation. This is a material consideration in dealing with the unreasonableness or otherwise of the defendant’s response. Where a party simply ignores offers for settlement, it is easier to decide adversely to that party that it has acted unreasonably in not accepting the offer, especially where the ultimate verdict is for a significantly greater sum.

51 A further complaint made by the defendant concerns costs allegedly thrown away by the late service of the plaintiff’s submission following the hearing. Certainly the original timetable set by me was departed from. However, the mere chronology does not suggest that any costs were incurred by the defendant as a result of delay. So far as additional submissions are concerned, they were reasonable in the circumstances, having regard to the scale and character of the litigation. During oral argument on the question of costs on 5 March 2004, I indicated to Mr King SC for the plaintiff that I thought that there was much in Mr Sullivan’s argument that the defendant did not have a sufficient appreciation of the nature of the plaintiff’s case on incapacity – which to a substantial degree depended on his evidence – to have made it unreasonable not to have accepted the plaintiff’s offers of January and February 2001. Mr King made further brief but powerful arguments in response to that and other arguments advanced on the defendant’s behalf. On 8 March the plaintiff’s advisers asked the defendant to consent to the provision of short further written submissions and, in the meantime forwarded them to me with the information that the defendant’s attitude was, as yet, unknown. Accordingly, I did not read them. On 4 June 2004, the defendant declined to give his consent and objected to any further submissions being made. On 12 August 2004, the plaintiff’s solicitors again raised the matter with BDW, informing them that, if there was no change in the defendant’s attitude, a direction would be sought from me. On 7 September BDW informed the plaintiff’s solicitors that the defendant continued with his objection and opposed the grant of leave. In due course, the application for leave was set down for hearing on 22 December 2004. I gave leave. It seemed to me that the case for doing so was overwhelming. On 18 February 2005, the defendant filed further supplementary submissions replying to those filed by the plaintiff. I do not need to refer to those submissions in detail. I have found them all helpful. The substance of the contentions made on each side is dealt with in the course of this judgment.

The complexity and difficulty of the case

52 Mr Sullivan QC also relies on the nature of the case as demonstrating that it was not unreasonable for the defendant to decline to accept the plaintiff’s offers. He points to a number of particular issues in support of this contention. The major matters relied on concern the addition of the allegation of brain damage, abandoned during the trial, the legal complexities involving the calculation of economic loss including the notion of loss of earning capacity and the significance of the plaintiff’s profits on his GMB equity, the tension between the plaintiff’s claim of incapacity and the histories he gave at various times to his doctors. Reference was also made to the abandonment of any claim for economic loss from 1988 to 1990 (but commented that the defendant thought this was not worth much anyway). Mr Sullivan said that this case was not a mere “assessment of damages case”. He described it as being “as difficult and complex a case as to causation and loss of earning capacity as I have ever done in my 26 years at the Bar”.

53 The abandonment of the allegation of brain damage and for economic loss from 1988 to 1990 are not matters that should impinge on the question of costs in this case. In the context of the case as a whole and the issues actually litigated, these matters were relatively insignificant. I have little doubt that they would not have troubled the defendant much. These were not changes that should deprive the plaintiff of an order for indemnity costs if otherwise appropriate.

54 The nature of the issues in the case – at least as I saw them – appears from my judgment. Certainly there was a deal of evidence requiring detailed consideration. But there was little real controversy about the general thrust of the evidence. Medical opinions varied, certainly, but well within the range of conventional litigation of this kind. Much depended on the evidence of the plaintiff. That, too, is conventionally the case. A common sense view that looked at the matter broadly and objectively would have revealed, I think, much of the picture ultimately drawn, though no doubt with some blurring, some silhouette and some of the canvas remaining blank.

55 Mr Sullivan QC submits that “it is not ‘plainly unreasonable’ for a party to reject a Calderbank offer…when the issues and evidence are complex and contestable, and the likely outcome of the case can therefore not be reasonably predicted”. This is a fair submission but it is important to bear in mind that it is not necessary, or even reasonable, for a defendant to insist on being able to predict the outcome of every issue – even every major issue – in the case before considering settlement. The level of predictability of outcome should be focussed on the likelihood of the verdict that might be recovered compared to the offer made. If an offer accurately reflected the actual chances of success, it may well not contain any real element of compromise. In this case, liability, as I have pointed out was not a live issue. Any real adverse effect on capacity must have a major – and catastrophic effect – on a businessman operating at the plaintiff’s level of excellence. At this level, any significant and observable diminution in capacity was not a gentle downward movement: it was much more like the fall from a cliff. The likelihood that his capacity had suffered at least to this extent – whatever his residual capacity might have been – was very high and, as I see it, fairly obvious from an early stage.

56 As Mr King SC submits, this case was always very far from “all or nothing” case (cf CBA Investments Ltd v Northern Star Ltd [2002] NSWCA 146. In particular he points to the important fact that the plaintiff’s evidence in chief – which was extensive – had been completed when the offer of 16 February was made. By that time the notion that he had retained any significant capacity to earn at anything like his pre-operation level must have been completely scotched in the view of any reasonable and objective observer, not only by virtue of his evidence but the way in which he gave it. Mr King SC also relies on the very large sum by which the plaintiff’s judgment exceeded his offer.

Conclusion

57 It is obvious that the ultimate verdict is weighty consideration since it is against that amount that the reasonableness of the plaintiff’s offers and the response of the defendant should be, to a significant degree, measured. I accept that, in order to evaluate the plaintiff’s offers, the defendant needed to carefully consider a great deal of material and weigh conflicting and uncertain facts. Certainly the calculation of the plaintiff’s economic loss and the extent of incapacity was not easy. But final determination of these issues was not necessary. A common sense judgment of the risks of the litigation and the range of reasonably open outcomes could and should have been made, in my view, by mid-year 2000. That would have demonstrated that the plaintiff’s Calderbank offer of $1.6 million was reasonable and obviously involved significant compromise. I think it was unreasonable for the defendant not to accepted that offer by that time. By 31 January 2001 it was unreasonable for the defendant not to have accepted the plaintiff’s offer of $1.975 million, a fortiori the offers of 25 January and 16 February.

Orders

58 The defendant is to pay the plaintiff’s costs of action as agreed or assessed. From 1 July 2000, those costs are to be assessed on an indemnity basis. The plaintiff is to pay the defendant’s costs, if any, thrown away by late service of medical reports listed in annexure AE of the affidavit of Keely Louise Graham sworn 12 February 2001.

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