Atton v National Mutual Life Association of Australasia (No 2)

[2007] NSWSC 348

CITATION:	Atton v National Mutual Life Association of Australasia (No 2) [2007] NSWSC 348 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	11/04/07
JUDGMENT OF:	Gzell J
EX TEMPORE JUDGMENT DATE:	11 April 2007
DECISION:	Indemnity costs from date of offer.
CATCHWORDS:	PROCEDURE - Costs - Indemnity costs - "Walk away" offer - Whether genuine offer of compromise - Unreasonableness to be determined, motionally, when offer made - No evidence served - Whether strike-out application would have succeeded - Evidence peculiarly within the knowledge of plaintiff
CASES CITED:	Leichhardt Municipal Council v Green [2004] NSWCA 341 GIO General Ltd v ABB Installation and Service Pty Ltd [2000] NSWCA 118 Calderbank v Calderbank (1975) 3 WLR 586
PARTIES:	John Atton - Plainitff National Mutual Life Association of Australasia - Defendant
FILE NUMBER(S):	SC 3573/05
COUNSEL:	Mr John Clifton - Plaintiff Mr R Cavanagh - Defendant
SOLICITORS:	Thomas Mitchel Solicitors - Plaintiff Turkslegal - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

WEDNESDAY 11 APRIL 2007

3573/05 JOHN ATTON v NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA (NO 2)

EX TEMPORE JUDGMENT

1 Yesterday, I gave judgment in this matter in favour of the defendant and ordered the plaintiff to pay the defendant’s costs.

2 An application is made for an order that the costs be assessed on an indemnity basis based upon Calderbank offers of 14 October 2005 and 30 May 2006. The offers were to “walk away” from the proceedings, each party to pay their own costs.

3 In Leichhardt Municipal Council v Green [2004] NSWCA 341, Santow JA considered the question whether a “walk away” offer could be a genuine offer of compromise. His Honour concluded that the decision of the Court of Appeal in GIO General Ltd v ABB Installation and Service Pty Ltd [2000] NSWCA 118 showed that no error of legal principles exists in holding that a “walk away” offer can, in a particular case, be a genuine offer of compromise and there was no reason to doubt the correctness of that decision.

4 It is well established that an offer that does not involve a real and genuine element of compromise will not be taken into account in relation to costs, either under the general law principle established by Calderbank v Calderbank (1975) 3 WLR 586 or under rules of court.

5 It was submitted on behalf of the defendant that the “walk away” offer in this case constituted a genuine offer of compromise because there was a relationship between the parties with which the defendant complied. The proceedings were not for a money claim but raised the question whether the benefits under the policy were for life or to cease at the end of five years. The Calderbank offer sought to convince the plaintiff that there was no merit in his case. That was the only course of action open to the defendant to protect its position.

6 It was argued for the plaintiff that the principle is that it must be shown that the plaintiff's rejection of the offer was unreasonable under the general rule and that task is to be undertaken, notionally, at the time the offer was made and rejected. It was so held in Green.

7 The plaintiff submitted that at the time the offers were made, the evidence had not been put on and the issue should be determined on the pleadings. It was submitted that the relevant question is whether, if a strike-out application had been made at that time, it would have been successful. Because the case turned on evidentiary issues as indicated in paragraphs 21 to 23 of my reasons for judgment, a strike out application would not have been successful. Hence, it was submitted, it was not unreasonable for the plaintiff to reject the offers.

8 But the evidence had to come from the plaintiff. The question was whether he fell within the definition in the policy and whether the extended definition of "sickness" applied. The elements necessary to establish the plaintiff's claim were peculiarly within his knowledge and he was, in my view, able to assess his position by reference to the evidence that would be adduced by him at the time the offers were made.

9 In the circumstances, it does seem to me that it was unreasonable at least to reject the second of the two offers of 30 May 2006.

10 I order that the costs be assessed on an indemnity basis from that date.

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13/04/2007 - Counsel Name omitted from the Coversheet - Paragraph(s) Coversheet