Amaca Pty Ltd v CSR Ltd (Costs ruling)
[2018] VSC 67
•21 February 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2003 05689
| AMACA PTY LTD (ACN 000 035 512) (Under NSW Administered Winding Up) | Plaintiff | |
| v | ||
| CSR LTD (ACN 000 001 276) | First Defendant | |
| and | ||
| BRADFORD INSULATION INDUSTRIES PTY LTD (ACN 000 078 357) | Second Defendant | |
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JUDGE: | MACAULAY J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 31 January 2018 |
DATE OF JUDGMENT: | 21 February 2018 |
CASE MAY BE CITED AS: | Amaca Pty Ltd v CSR Ltd & Anor (Costs ruling) |
MEDIUM NEUTRAL CITATION: | [2018] VSC 67 |
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COSTS – Proceeding settled on terms the defendants will pay the plaintiff’s costs to be agreed or as determined by the Court – Application for indemnity costs – Where the defendants rejected the plaintiff’s earlier offers of compromise – Where the settlement sum was significantly greater than the rejected offers – Whether a court can award indemnity costs after a ‘no less favourable’ settlement outcome – Supreme Court Act 1986, s 24(1) – Supreme Court (General Civil Procedure) Rules 2015, rr 63.28 and 63.31 – Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298 considered – Ugly TribeCo Pty Ltd v Sikola [2001] VSC 189 considered – Application refused.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Ruskin QC with Mr D Wallis | DLA Piper Australia |
| For the Defendants | Mr B F Quinn QC with Mr B Barr | Collin Biggers & Paisley |
HIS HONOUR:
Introduction
A question of principle arising from this application is whether a plaintiff who obtains by settlement a litigation outcome more favourable than one it had previously offered to accept should be awarded indemnity costs from the date of its offer. That question arises in the context briefly described below.
Insulation products manufactured by a partnership comprising James Hardie Industries Ltd, now Amaca Pty Ltd (Amaca), and CSR Ltd (CSR) were installed in various power stations operated by the State Electricity Commission of Victoria (SECV). Amaca contributed money to the settlement of claims brought by persons who claimed to have contracted dust diseases from inhaling asbestos dust emanating from insulation at the SECV’s installations. In this proceeding, Amaca (as plaintiff) sought contribution from its former partner, CSR (the defendant), toward the settlement monies it paid to 204 such claimants.
On 21 October 2015 I gave reasons for judgment in respect of eight of the 204 contribution claims,[1] having earlier decided to hear and determine those eight claims as separate questions under r 47.04 of the Supreme Court (General Civil Procedure) Rules 2015 (the Rules). I did so in the hope that by determining those eight claims, selected by the parties as giving rise to many of the disputed questions inherent in the remaining body of claims, the parties might be assisted in resolving many if not all of the remaining claims. It was agreed by the parties that I would not determine the costs of resolving the eight claims separately but, if necessary, decide those costs upon the conclusion of the whole proceeding.[2]
[1]Amaca Pty Ltd v CSR Ltd & Anor [2015] VSC 605, (‘Trial reasons’).
[2]Trial transcript 13/8/14 pp 538-539; 28/10/15 p 3.
At trial, Amaca succeeded in five of its eight claims. Following an appeal and cross-appeal it succeeded on a further two.[3] I gave directions on 31 March 2017 that the parties attend judicial mediation of the remaining 196 contribution claims.
[3]CSR Ltd & Anor v Amaca Pty Ltd [2016] VSCA 320 (‘Appeal reasons’). Table at [15] below sets out the final results of the eight claims.
Ahead of the mediation, Amaca served a Schedule of Claimants outlining its quantum assessment of the 196 claims.[4] At mediation on 13 September 2017, the parties resolved the remaining 196 claims. Part of the terms of the settlement reached at mediation included a term to the following effect:
Defendant to pay Plaintiff’s costs to be agreed or the subject of argument or judicial determination and/or taxation.
[4]Amaca claimed approximately $3,500,000 in damages, and a further $3,000,000 in interest, for an approximate total of $6,500,000.
That term was included because at mediation CSR agreed (and still agree) to pay Amaca’s costs of the proceeding (including the costs of the trial of the eight claims) on a standard basis. Amaca, however, insists that it is entitled to costs on an indemnity basis from the date it made one or the other of two Offers of Compromise it served upon CSR under Order 26 of the Rules. Because that issue was not agreed, the settlement left outstanding the basis of the costs to be applied after the dates of those offers. The parties require judicial determination of that issue.
In short, the issue for me to decide is whether Amaca should receive its costs on an indemnity basis after service of one or the other of the two offers, as it contends, or only on a standard basis as CSR contends. In broad terms Amaca argued that:
(a) because mediation is nowadays an orthodox means of resolving litigation, the ‘result’ of a case against which offers to compromise may be compared on applications for indemnity costs should include mediated settlement outcomes (such as the one in this case); and
(b) any objections to doing so based upon the court’s ignorance of all the factors motivating the parties to settle, the lack of precise identity between the claims the subject of the offers and those that were settled or the complexity of the litigation, as argued by CSR, can confidently be put aside because of the very low fraction of the final outcome that Amaca offered to accept, inherent in each of its two Offers of Compromise.
For its part, CSR argues that:
(a) for good reasons, the litigation outcome against which an offer to compromise a claim is to be compared for the purpose of deciding whether to award indemnity costs, has always been, and should remain, confined to court-adjudicated outcomes, not settlement outcomes; and
(b) in any event, in the circumstances of this case there are too many imponderables, too much imprecision and otherwise good reasons why CSR should not have to pay anything other than costs on the usual (ie standard) basis under Order 63 of the Rules.
For the reasons set out below, I reject Amaca’s submission that it should be awarded indemnity costs after the date of either of its Offers of Compromise. Whether or not it may be appropriate to order indemnity costs comparing a mediated outcome with an offer to settle in other circumstances, it is not appropriate to do so in this case. The consequence of refusing the application is that CSR will be ordered to pay Amaca’s costs of the proceeding on a standard basis only (before and after those dates).
Background
I will set out so much of the procedural history of the matter as is relevant to the arguments. That history has particular relevance to:
(a) the alignment (or lack thereof) of the identity of the claims that were the subject of the offers to settle with those that were the subject of the settlement itself; and, related to that,
(b) the ability of the Court to compare a settlement offer made in respect of a group of claims in existence at one point in time, with a settlement outcome based upon a group of claims in existence at another point in time.
Amaca issued a writ on 6 May 2003 in which it sought contribution in respect of 40 claims, and a second writ on 24 April 2008 in respect of a further 125 claims. Those two proceedings were consolidated on 4 September 2009, and further claims were added, bringing the total to 199 claims. Further amendments to the Statement of Claim on 14 March 2012 and 17 September 2013 altered the total claim numbers to 198 and 244 respectively. By the commencement of the trial on 1 August 2014, the total had been reduced to 204.
Amaca served two Offers of Compromise pursuant to Order 26 of the Rules:
· by the first offer dated 12 June 2008, Amaca offered to resolve the 2008 proceeding for a sum the parties now agree was between 11% – 13% of the settlement sum ($X)[5] reached at judicial mediation on 13 September 2017, and
· by the second offer dated 13 August 2013, Amaca offered to resolve the combined proceedings for a sum the parties agree was between 27% – 30% of $X.
[5]Although, at the hearing of the application, I was provided with a confidential document that disclosed the actual settlement figure, knowledge of it did not influence my analysis. My analysis proceeds on the assumption, agreed by the parties, that the mathematical relationship which the offers made in 2008 and 2013 respectively bore to the settlement sum, $X, was as stated in these two sub-paragraphs of [12].
The first offer was made solely in relation to the 2008 proceeding, which included 125 claims. Of those, 110 were ultimately pursued by the plaintiff. Three of those claims were judicially determined.[6] The second offer included an offer to resolve 198 claims. Of those, 166 claims were pursued by the plaintiff at trial. A further two of those claims were judicially determined.[7]
[6]De Vries, Reid and McGuire: see table at [15] below.
[7]Preston and Alexander: see table at [15] below.
The foregoing information relating to the status of claims and timing of the offers is summarised in the table below:
| Date | Event | Claims +/- | Combined |
| 6 May 2003 | First writ | 40 | |
| 24 April 2008 | Second writ | 125 | |
| 2 June 2008 | Offer for second writ claims (125) | ||
| 4 September 2009 | Consolidation of writs | 34 | 199 |
| 14 March 2012 | Amendment of claim | (1) | 198 |
| 13 August 2013 | Offer for combined claims (198) | ||
| 17 September 2013 | Amendment of claim | 46 | 244 |
| 1 August 2014 | Amendment of claim | (40) | 204 |
| 6 November 2015 | Orders following trial of 8 claims | (8) | 196 |
| 13 September 2017 | Mediated settlement, $X for 196 claims | (196) | 0 |
Following the trial judgment and the judgment of the Court of Appeal, Amaca received judgment in respect of the eight claims as follows:
| Claimant | Amount claimed | Amount awarded |
| Alexander | $52,609.75 | $12,500 |
| De Vries | $79,509.95 | $0 |
| Benjamin | $135,402.14 | $90,268.09 |
| Reid | $96,494.18 | $77,000 |
| Johnstone | $100,850.94 | $90,000 |
| Kracht | $26,018.20 | $15,000 |
| McGuire | $36,304.03 | $36,304.03 |
| Preston | $47,257.06 | $33,000 |
| Total | $574,446.25 | $354,072.12 |
The above figures exclude amounts awarded for penalty interest, which were awarded from the date each claimant was joined to the proceeding. The total amount awarded for the eight claims ($354,072.12) represented 61.64% of the total amount claimed for all of them ($574,446.25).
Relevant statutory provisions
Section 24 of the Supreme Court Act1986 (the SCA) provides the Court with a discretion to award costs in wide terms:
Costs to be in the discretion of Court
(1)Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid.
(2) Nothing in this section alters the practice in any criminal proceeding.
The Court’s power and discretion conferred by s 24 is to be exercised subject to and in accordance with Order 63 of the Rules[8] which, relevantly provides:
63.28 Bases of taxation
Subject to this Part, costs in a proceeding which are to be taxed shall be taxed on—
(a)the standard basis;
(b) the indemnity basis; or
(c) such other basis as the Court may direct.
[8]The Rules, r 63.02.
63.31 Usual basis of taxation
Except as provided by these Rules or any order of the Court, including the Costs Court, costs shall be taxed on the standard basis.
It follows that unless provided otherwise by the Rules or an order of the Court, costs are to be taxed on a standard basis. One provision of the Rules that provides for costs to be taxed on an indemnity basis is Order 26. Order 26 concerns Offers of Compromise of the kind served by Amaca upon CSR in this proceeding. Rule 26.08 stipulates the potential cost consequences for the recipient of such an offer who fails to accept it (emphasis added):
26.08 Costs consequences of failure to accept
(1)This Rule applies to an offer of compromise which has not been accepted at the time of verdict or judgment.
(2)Where an offer of compromise is made by a plaintiff and not accepted by the defendant, and the plaintiff obtains a judgment on the claim to which the offer relates no less favourable to the plaintiff than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall be entitled—
(a)if the claim of the plaintiff is for damages for or arising out of death or bodily injury, to an order against the defendant for the plaintiff's costs in respect of the claim taxed on an indemnity basis;
(b)in the case of any other claim of the plaintiff, to an order against the defendant for the plaintiff's costs in respect of the claim before 11.00 a.m. on the second business day after the offer was served, taxed on the ordinarily applicable basis and for the plaintiff's costs thereafter taxed on an indemnity basis.
Can Courts award indemnity costs after a ‘no less favourable’ settlement outcome?
Amaca concedes that it cannot rely upon the provisions in Order 26 of the Rules to support its entitlement to indemnity costs. Rule 26.08—the rule applicable where a party has served Offers of Compromise under O 26—only applies where a plaintiff ‘obtains a judgment on the claim to which the offer relates no less favourable to the plaintiff than the terms of the offer’. Amaca rightly accepts that rule cannot apply because, apart from the eight claims, it has not obtained a judgment that can be compared with either of its offers.
A second reason the rule might not apply, in my view, is that it is doubtful that Amaca obtained a result (by judgment or otherwise) on ‘the claim to which the offer relates’. Neither offer was made in respect of the same group of contribution claims that was resolved by judgment and settlement.
Nevertheless, Amaca submits that the Court can and should treat the Offers of Compromise as informal offers to compromise, and apply the principles laid down in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2).[9] Doing so, the Court should inquire whether CSR’s failure to accept either or both of the two offers, in all the circumstances, warrants a departure from the usual rule as to costs.[10] More particularly, the critical question is ‘whether the rejection of the offer[s] was unreasonable in the circumstances’.[11]
[9][2005] VSCA 298, (‘Hazeldene’).
[10]Ibid, [20].
[11]Ibid, [23].
Amaca argues that in approaching that question, the Court should at least have regard to the matters listed by the Court of Appeal in Hazeldene, namely:[12]
[12]Ibid, [25].
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree’s prospects of success, assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed;
(f)whether the offer foreshadowed an application for an indemnity costs (sic) in the event of the offeree’s rejecting it.
Amaca was unable to point to any case in which a court has previously decided that an offer can be compared to a litigation result obtained by settlement to support a claim for indemnity costs.[13] Indeed, it was unable to point to any case in which the issue has even been considered.[14] But, Amaca relies upon the wide powers available to the Court under s 24 of the SCA. It submits that the Court could, and in these circumstances should, exercise its unfettered power to award costs on an indemnity basis as provided in rr 63.28 and 63.31.
[13]Research subsequently undertaken by Cate Read, a Trial Division researcher at the Court, confirms that at the time of the hearing no such decision had been published by a court in any Australian jurisdiction.
[14]Coincidentally, shortly after the hearing of the application, Hargrave J published a ruling in Owners Corporation 630063L v CGU Insurance Ltd [2018] VSC 34 (‘Owners Corporation’) in which his Honour refused an application for indemnity costs after the parties had settled all other issues at mediation. An opportunity was given to parties in this case to make additional written submissions in relation to that decision and each has done so. Owners Corporation involved an application made on a different basis to the one made here: there, the basis was the conduct of a party during the pre-litigation and interlocutory stages, relying on principles discussed by Harper J in Ugly TribeCo Pty Ltd v Sikola [2001] VSC 189 (‘Ugly Tribe’).
Amaca meets the proposition that its application is ‘unusual’ in the following way. It submits that the rules with respect to Offers of Compromise were first formulated in an era when mediation, particularly court-ordered mediation, did not form part of the orthodox dispute resolution process to the extent that it does today. That being the case, Amaca contends it is not surprising that Order 26 makes no reference to obtaining a more favourable mediation outcome as a trigger for an entitlement to indemnity costs. But, it contends, there is no reason in principle why a mediation outcome could not be the trigger for such an entitlement, and good reason nowadays why it should.
Given that mediated outcomes are now so prevalent and that court-ordered mediation is very much an orthodox tool available to the Court to achieve the resolution of litigation, Amaca submits that courts should be prepared, in appropriate circumstances, to award indemnity costs to a successful party whose recovery at mediation exceeds what it previously offered to accept. Not to do so, according to Amaca, would discourage settlements whenever parties had made reasonable offers in the past that had been refused and who thus enjoyed a legitimate expectation of recovering indemnity costs if the case proceeded to hearing and judgment.
CSR argues that the principles in Hazeldene have no application in the current case: the relevant result (that is, the defeat of an appeal following a successful trial judgment) was a court-adjudicated result. Further, CSR contends that Amaca’s reliance on the Court’s powers in r 63.02 coupled with r 63.28 to award indemnity costs invokes the jurisdiction to award costs in ‘special circumstances’ such as those instanced by Harper J in Ugly Tribe.[15] Cases are generally held to involve ‘special circumstances’ because of some form of misconduct by the party against whom indemnity costs are sought,[16] which, CSR points out, is not alleged here.
[15]Ugly Tribe, above n 14, [7].
[16]PCI Investments Pty Ltd v National Golf Holdings [2002] VSCA 24, [36] (Chernov JA).
But, to constrain the exercise of judicial discretion under s 24 of the SCA in that way is neither necessary nor wise, and it has been repeatedly emphasised that the categories of special circumstances are not closed.[17] That said, in my view there are a number of reasons why, in most cases, a court would be disinclined to apply principles that are applicable to Offers of Compromise or Calderbank letters to award indemnity costs following a mediated settlement outcome.
[17]Ibid. See also Ugly Tribe, above n 14, [8].
First, courts do not compel parties to settle. Courts may strongly encourage parties to attend mediation and to reach sensible compromises, but beyond that, any settlement reached is the province of the parties alone. Along with the freedom and flexibility that process affords comes also responsibility and accountability for the result that the parties choose to reach. Taking responsibility for the result should ordinarily include resolving the costs of the litigation.[18]
[18]See the similar views of Hargrave J in Owners Corporation, above n 14, [13].
Secondly, contrasted with the situation where a judge or jury has determined the outcome according to evidence and legal principle, a settlement is reached confidentially. It follows that it is reached for reasons known only to the parties, and through a process over which the Court has no visibility.[19] So, the capacity of the Court to assess the reasonableness of a party’s rejection of a previous settlement offer, having regard to a mediated outcome, is much inferior to its capacity to assess that reasonableness having regard to a court-adjudicated outcome when the Court is cognisant of all the factors that led to the result.
[19]Ibid, [11].
Indeed, the Court’s attempt to assess the reasonableness of a party having rejected an offer following a confidentially reached settlement outcome is potentially fraught with danger. The Court cannot know which variables, extraneous to the litigation subject matter, the parties may have taken into account in reaching their agreed position. In other words, the Court may not be comparing ‘apples with apples’.
Thirdly, an oft-remarked benefit of settlement is that parties can craft a resolution that would not be open to the Court to produce. So, for example, parties can combine monetary exchange with, say, the forgiveness of a debt or a promise to perform some other obligation, neither of which is the subject of the actual litigation. Equally, parties can roll up questions of damages, interest and costs into lump sums and apply global discounts to obtain a fair compromise between risk and opportunity.
In that environment, where a party believes that settling a matter on the then proposed terms would have entitled it to indemnity costs—had the same result been imposed by the Court—because a previous offer it made had been rejected, that party is at liberty to hold out for terms of settlement that take account of its entitlement.
Fourthly, I doubt that any disinclination by courts to award indemnity costs to a party as a result of a settlement outcome would act as a disincentive to parties settling at mediation. For a start, as I have said, parties who believe they have such a right can press for a settlement that takes that opportunity into account. But, in any event, I think the opposite is likely to be true. A practice by courts of routinely entertaining applications for and awarding indemnity costs to ‘successful’ parties after mediation, based upon earlier offers, would probably deter parties from settling cases.
A significant benefit of mediation is finality. Leaving a costs component outstanding would prolong disputes and preclude finality. Its capacity to undermine that finality and the dynamics of negotiation may be a plausible explanation why the practice of leaving aside the question of costs for later argument has not ‘caught on’.
Finally, there is a consideration of fairness to bear in mind. In the current litigation environment, the recipient of an offer to settle would not consider himself, herself or itself susceptible to a liability to pay indemnity costs should they ultimately settle on terms more favourable to the other side than those which the other side previously offered.
Recipients of Offers of Compromise do not see themselves as susceptible because, as noted, the regime is predicated upon there being a judgment result. Recipients of a Calderbank letter would also not see themselves as susceptible because a usual consideration is to take into account whether the offeror has warned the offeree of the relevant cost consequences of unreasonably refusing the offer. Such offers do not, typically, foreshadow an application for indemnity costs following a more favourable settlement. Finally, recipients of offers to settle would not see themselves as susceptible because of any ‘common practice’; put simply, there is no such practice.
It follows from this that for a court to award indemnity costs after a ‘no less favourable’ settlement outcome could, in the current litigation environment, reasonably be viewed as altering the rules of engagement without fair warning.
In conclusion, in view of the very broad discretion conferred under s 24 of the SCA to determine by whom and to what extent any costs of and incidental to all matters in the Court are to be paid, it is not possible—or, it is at least unwise—to say that this Court can never award costs on an indemnity basis after a ‘result’ is obtained by mediation. But before doing so the Court would likely have regard to the sorts of considerations I have discussed above.
Should indemnity costs be awarded in this case?
Turning from general considerations to those that are specific to the circumstances of this case, Amaca argues that CSR’s rejection of its offers of compromise in 2008 and 2013 were unreasonable. It is that unreasonableness, it says, that warrants a departure from the usual order as to costs and the imposition of indemnity costs after the date of those offers.
Recapping the information above, in June 2008 Amaca offered to accept from CSR, for 125 claims (of which 110 were pursued at trial), a sum that represented between 11% and 13% of $X, the sum it ultimately recovered by the settlement for 196 claims. Further, in 2013, Amaca offered to accept, for 198 claims (of which 166 were pursued at trial), a sum representing between 27% and 30% of $X. If the amount recovered by judgment for the eight claims is added to $X, the percentages of the combined sum represented by each offer is even less.
Allowing for the fact that, at the relevant times, the offers were not for the same number of claims for which the ultimate sum was recovered, and that some of the claims the subject of those offers were not ultimately pressed, Amaca nevertheless argues that the Court could comfortably conclude that Amaca has obtained, by judgment and settlement, a result that is more favourable than the outcome it offered to accept at each of the relevant points in time.
Taking into account the six considerations set out in Hazeldene, Amaca argues:
·both offers of compromise were made extremely early in the proceeding;
·CSR is an experienced litigant and, if it thought the time required for response (14 days in each case) was too short, it could have asked for additional time: in any event, by the time of the second offer, it had had the opportunity to consider the first;
·given the outcome of the litigation by settlement (about eight times the first offer and three times the second offer), the offers of compromise were very modest indeed;
·Amaca’s prospects of success were always strong because of the dominance of the partnership products in the market and the likelihood that courts would infer that the claimants had suffered their asbestos diseases as a result of the partnership products (a significant issue in the litigation);
·at the time each offer was made, CSR knew clearly which claims Amaca was offering to settle by its particular offer;
·because the offers were in the form of Offers of Compromise, CSR, an experienced litigant, would have understood the potential for an application for indemnity costs in the event of Amaca achieving an outcome no less favourable.
In my view it is not appropriate to award costs in favour of Amaca on anything other than a standard basis.
First, as with any application of this kind, I cannot know with confidence the factors that caused the parties to choose to settle the claims for the amount they settled for. Further, I am not aware of all the ingredients of their bargain. I am conscious of the danger that if I simply compare the apparently modest sums of money offered in 2008 and 2013 with the sum of money comprising the 2017 settlement result, I may not be comparing like with like.
Secondly, although there must necessarily have been some alignment between the claims that were the subject of the offers and the claims ultimately settled, the extent of that alignment is unclear. To accurately compare the money offered for the body of claims in existence at the time of each offer with the recovery Amaca made for the body of claims the subject of the mediation outcome, one would need to assume that the profile of cases in the first body (in terms of prospects of success and average quantum amounts) was much the same as the profile of cases in the second body of claims. Observing the variation in the outcomes of the eight claims that were decided by the Court, both in terms of success and degree of success, it is clear that there could be a marked difference in profiles across those two bodies of claims depending on the frequency of occurrence of different types of claimants within each body.
Thirdly, this case was one of undoubted complexity, both factually and legally. In my view, the reasons given for both the trial and appeal judgments demonstrate that proposition.[20] Both parties were, I understand, assisted by the Court’s resolution of principles (some novel) in the determination of the eight cases in order to reach settlement on the remaining 196 claims. The extent to which those determinations assisted both parties is a matter only the parties can know. But it is fair to infer that, before and until those matters were resolved, there were legitimate issues of legal complexity which made it difficult to predict the outcome of the litigation.
[20]Appeal reasons, above n 3, [14]–[24] and [293].
Fourthly, the vast array of facts from which the Court was ultimately able to draw essential inferences concerning the extent of the partnership products present in relevant SECV installations was progressively assembled and marshalled right up to the time of trial. So were the opinions of Professor Henderson that were relevant to an assessment of each and every claimant’s illness and the likely causal factors for it. In those circumstances, it is not so apparent which facts CSR should have realised would be established before all of that evidence was finally gathered.[21]
[21]See Trial reasons, above n 3, [17]–[18], where the nature of the evidence is described.
Fifthly, at trial, Amaca sought and obtained leave to amend its pleading in an important way. Until that amendment, CSR submits, Amaca’s entire claim was defective. Amaca seeks to characterise its amendment as merely clarifying an allegation which, in substance, it had already made.
Amaca’s entire claim for contribution was premised upon there being a coordinate liability between itself and CSR, toward which, once Amaca had discharged that liability, CSR was obliged to make a contribution. But until the amendment, the pleading of the coordinate liability was misdirected.[22] Had Amaca rested on its claim as formulated before the amendment it may well have lost the proceeding entirely. The defect in the pleading was in existence at the time of each of the two offers of compromise. It could be said with some justification that the change, first made during the trial in August 2014, put CSR at real risk of loss for the first time.
[22]Ibid, [203]–[207].
In this context, it is instructive to be reminded of the policy objectives that underlie the availability of special orders for costs where offers of compromise are rejected. They were adopted by the Court of Appeal in Hazeldene,[23] from Maitland Hospital v Fisher (No 2),[24] and include:
·to save public costs incurred in litigation ‘which events demonstrate to have been unnecessary’; and
·to indemnify the plaintiff when ‘the real cause and occasion of the litigation is the attitude adopted by the defendant which has rejected the compromise’.
[23]Hazeldene, above n 9, [21].
[24](1992) 27 NSWLR 721, 724.
Having regard to my third, fourth and fifth reasons above, I am not satisfied that events since the offers were made demonstrate the litigation to have been ‘unnecessary’ or that the ‘real cause’ of the litigation continuing after the offers were made was the attitude adopted by CSR in rejecting the them.
Sixthly, the offers were made expressly in respect of judgment outcomes and not settlement outcomes. CSR was not put on notice that a possible consequence of it refusing an offer and later agreeing to pay a higher amount might be a liability for indemnity costs. To impose that consequence now would seem unfair.
Conclusion
Amaca’s application for its costs to be assessed on an indemnity basis after the date of one or the other of its Offers of Compromise is refused. It follows that the costs CSR must pay Amaca, as agreed between them, are to be assessed wholly on a standard basis.
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