Beagle v Australian Capital Territory and Southern New South Wales Rugby Union Limited (No 2)
[2017] ACTCA 40
•13 September 2017
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
COURT OF APPEAL
Case Title: | Beagle v Australian Capital Territory and Southern New South Wales Rugby Union Limited (No 2) |
Citation: | [2017] ACTCA 40 |
Hearing Date: | Determined on the papers |
DecisionDate: | 13 September 2017 |
Before: | Murrell CJ, Burns and Collier JJ |
Decision: | 1. The appellant pay the costs of the respondent of and incidental to the appeal on a party/party basis, such costs to be taxed if not otherwise agreed. 2. The amount of $10,000 held in the trust account of Nelson & Co pursuant to the order of Refshauge J in 2 November 2016 be released to the respondent, or its solicitors, within seven days of the costs of the respondent being taxed or otherwise agreed by the appellant. |
Catchwords: | COSTS – costs on appeal – appeal dismissed - Calderbank offers pre-trial – Calderbank offers rejected by plaintiff – solicitor/client costs ordered at first instance from date offer was rejected – Calderbank offers not renewed on appeal – whether solicitor/client order appropriate on appeal – whether pre-trial Calderbank offer continues to have cost consequences on appeal – no application to strike out grounds of appeal – no objection to competency – award of costs at discretion of Court – costs ordered on party/party basis |
Legislation Cited: | Supreme Court Act 1933 (ACT) pt 2A Court Procedures Rules 2006 (ACT) pts 2.17, 5.4, rr 1721, 5001(2), 5001(3) Supreme Court Rules 1970 (NSW) pt 52A, r 22(4) |
Cases Cited: | AIG Australia Ltd v Jaques (No 2) [2015] VSCA 3 Beagle v Australian Capital Territory and Southern New South Wales Rugby Union Limited [2017] ACTCA 29 Stuart Pty Limited v Condor Commercial Insulation Pty Limited (No 2) [2006] NSWCA 379 |
Parties: | John Stanley Beagle (Appellant) Australian Capital Territory and Southern New South Wales Rugby Union Limited (Respondent) |
Representation: | Counsel Dr D Hassall (Appellant) Mr I Meagher (Respondent) |
| Solicitors Nelson & Co Solicitors (Appellant) Bradley Allen Love Lawyers (Respondent) | |
File Number: | ACTCA 53 of 2016 |
THE COURT:
On 21 July 2017, this Court delivered judgment (Beagle v Australian Capital Territory and Southern New South Wales Rugby Union Limited [2017] ACTCA 29) dismissing an appeal from a decision of a Judge of the Supreme Court. The appellant relied on 36 grounds of appeal, each of which the Court found was unsubstantiated. The Court sought further written submissions in respect of costs.
At first instance, the primary Judge ordered Mr Beagle to pay the respondent’s costs on a party/party basis until 3 February 2016 and thereafter on a solicitor/client basis. This order was made in light of a Calderbank offer made by the respondent to Mr Beagle dated 18 December 2015, which was ultimately rejected by Mr Beagle on 3 February 2016.
We also note that, pursuant to orders of Refshauge J on 2 November 2016, Mr Beagle paid the sum of $10,000 as security for costs in this appeal into the trust account of his solicitors, Nelson & Co.
In relation to the appeal, Mr Beagle submitted that the usual order as to costs was appropriate, namely that costs follow the event. To that extent Mr Beagle conceded that he should pay the respondent’s costs of the appeal on a party/party basis, to be taxed if not agreed.
In the alternative, Mr Beagle submitted that the Court could exercise its discretion and make no order as to costs, or order he pay only a proportion of the respondent’s costs, because the appeal had clarified the law in the Australian Capital Territory (ACT) with respect to the application of the principles of unjust enrichment and quantum meruit claims.
The respondent sought orders that Mr Beagle pay its costs of the appeal on a solicitor/client basis, and that the $10,000 held on trust pursuant to the order of Refshauge J be released to the respondent or its solicitors within seven days.
In summary, the respondent submitted that it was entitled to these orders because:
· The first instance costs order was made on the basis of the Calderbank offer of 18 December 2015;
· The Calderbank offer of 18 December 2015 was extended, and then later improved by an offer made by the respondent on 16 August 2016. On that date, the respondent offered Mr Beagle the amount of $30,000 plus $15,000 for costs (or as otherwise agreed or assessed). The subsequent offer was also rejected by Mr Beagle;
· Noting that the 18 December 2015 offer was made, extended and later improved, the respondent provided three opportunities for Mr Beagle to discontinue his claim. All three offers were rejected. The respondent submitted that this was unreasonable conduct on the part of Mr Beagle;
· At all times material to the consideration of the respondent’s offers, Mr Beagle was on detailed notice of the defence the respondent would run;
· Given the success enjoyed by the respondent at first instance, which was upheld on appeal, it would not be reasonable to expect the respondent to have restated any of their earlier Calderbank offers after Mr Beagle had commenced his appeal;
· The large number of appeal grounds unreasonably put the respondent to higher expense in preparation for the appeal; and
· The fact that security for costs was ordered against Mr Beagle, an individual, was indicative of the poor prospects of success of his appeal.
Consideration
It has been noted by previous Courts of Appeal that:
· Part 2.17 of the Court Procedures Rules 2006 (ACT) applies to costs in proceedings in the Supreme Court of the ACT, and includes r 1721 which states that costs are at the discretion of the Court, and
· Rule 1721 applies, with necessary changes, to appellate proceedings which are civil proceedings (r 5001(2) and (3)).
The facts of this case invoke two legal principles to which Courts commonly have regard in the exercise of their discretion. First, in the absence of special features warranting a different order, costs ordinarily follow the event: Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [67]; GJ v AS (No 4) [2017] ACTCA 7 at [25]-[27]. Second, it is settled principle – derived from the case of Calderbank v Calderbank [1976] Fam 93 – that where a valid offer of settlement is made but rejected, and the offeree obtains an order or judgment on the claim that is less favourable than that offered, the offeror will be entitled (unless the Court orders otherwise) to its costs assessed on an indemnity basis from the date of offer (see, for example, Cooper v Singh [2017] ACTCA 21 at [19]).
It is not in dispute that Mr Beagle was unsuccessful in his appeal. In dismissing the appeal, we can identify no reason to disturb his Honour’s orders as to costs at first instance, including the award of solicitor/client costs against Mr Beagle from 3 February 2016.
We consider that, in the appeal, costs should follow the event. We do not consider that this appeal has clarified the law in the ACT in respect of principles of unjust enrichment and restitution such as to warrant an order that the parties bear their own costs. Applicable principles in these proceedings were apparent from the High Court decisions we identified in our judgment. The application of those principles to the facts of the case inevitably resulted in Mr Beagle’s appeal being dismissed. The length of the judgment was primarily attributable to the unfortunate necessity of the Court examining extensive and repetitive appeal grounds, wherein Mr Beagle not only “nitpicked” the primary Judge’s decision but in a number of grounds sought to minutely cavil with factual and credit findings. As we indicated in our judgment, those grounds of appeal were not substantiated.
The key question for this Court’s consideration is the basis on which costs in the appeal should be awarded against Mr Beagle.
Examining the position in respect of costs orders in appeals, where a Calderbank offer has been made pre-trial, there is an apparent divergence of authority in relation to the extent to which such an offer is relevant to the exercise of an appellate court’s discretionary powers to order costs.
One school of thought is that, in considering an appropriate order for costs, a pre-trial offer of compromise continues to have cost consequences in the event of an unsuccessful appeal. In Ettingshausen v Australian Consolidated Press (1995) 38 NSWLR 404 (“Ettingshausen”), Gleeson CJ and Priestley JA considered pt 52A r 22(4) of the Supreme Court Rules 1970 (NSW) then in effect. This rule provided:
(4)Where an offer is made by a plaintiff and not accepted by the defendant, and the plaintiff obtains an order or 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, subject to rule 33, be entitled to an order against the defendant for the plaintiff’s costs in respect of the claim from the day on which the offer was made, assessed on an indemnity basis in addition to his costs incurred before and on that day, assessed on a party and party basis.
Their Honours observed:
… the offer is made, not in respect of a trial, but in respect of a claim. Depending upon the circumstances of a case, a claim may not be finally heard and determined until after there have been a number of appeals, and, perhaps, a number of trials ... In truth, this Court routinely reassesses damages on appeal, and is frequently asked to make, and makes, orders for indemnity costs based upon offers of compromise that were made before the original trial.
... In our view, there is no justification for concluding that, once the claim to which it relates has been the subject of a complete trial, an offer of compromise made before the trial has no further significance for any appeal, or subsequent re-trial.
(Emphasis added.)
This principle was applied by the Court of Appeal of New South Wales in Fotheringham v Fotheringham (No 2) [1999] NSWCA 21; 46 NSWLR 194 at [26] (“Fotheringham”) and [33], although in the circumstances the Court considered that an award of indemnity costs was not warranted. It was also accepted in such cases as Diamond v Simpson (No 2) [2003] NSWCA 78 and CSR Limited v Thompson [2004] NSWCA 11.
In McDonald v Dods [2017] VSCA 197, the Court of Appeal of Victoria awarded costs on an indemnity basis in dismissing an application for leave to appeal where a pre-trial offer of compromise had been made by the respondent.
The second school of thought appears to accord greater flexibility to appellate courts in the assessment of costs, dependent on the facts of the particular case. In Lower Murray Urban and Rural Water Corporation v Di Masi (No 2) [2014] VSCA 133, each of the respondents had been successful in defamation proceedings against the appellant, had served offers of compromise on the appellant prior to trial, and had ultimately recovered judgment on terms more favourable to them than the terms of their offers of compromise. The Court of Appeal found that these facts were relevant for the Court to take into consideration in exercising its discretion in awarding costs of the subsequent unsuccessful appeals by the appellant. The Court also considered as relevant the absence of merit in the grounds of appeal, the manner in which the appellant conducted its case, and the lack of substance in the appellant’s contentions concerning the engagement of counsel by the respondents. Taking these issues into consideration, the Court concluded that justice was best served by making an order for costs on a standard basis in favour of each respondent for the whole of the appeal.
In AIG Australia Ltd v Jaques (No 2) [2015] VSCA 3, the Court of Appeal of Victoria noted that there was no suggestion that the grounds of appeal lacked merit, or that the appeal was otherwise conducted in a manner warranting a special costs order. Rather, the only additional factor offered in support of the application for indemnity costs was the unreasonableness of the appellant in rejecting the offer to compromise the trial (at [11]). The Court found that this was insufficient to warrant departing from the usual order as to costs in the appeal.
In South Sydney Council v Morris (No 3) [2001] NSWCA 200 (“Morris”), the Court of Appeal of New South Wales examined Ettingshausen and Fotheringham, observing that both cases had been argued pursuant to the provisions of pt 52A r 22(4). In Morris, the Court found that no rule specifically applied to the circumstances of the case, and that any order for indemnity costs of the appeal in favour of the respondent would depend on a favourable exercise of the inherent jurisdiction of the Court. Heydon JA, with whom Meagher JA and Fitzgerald AJA agreed, considered that relevant considerations were relevant delinquency on the part of the unsuccessful party, or a failure to better pre-trial offers either at trial or on appeal, neither of which was the case. In circumstances where no real argument had been directed to the inherent jurisdiction of the Court the case was not an appropriate one to examine it.
In Stuart Pty Limited v Condor Commercial Insulation Pty Limited (No 2) [2006] NSWCA 379, the Court of Appeal of New South Wales found that notwithstanding that there had been offers of compromise made at first instance, and that some of the grounds of appeal were not argued, the usual order for costs should apply in circumstances where no delinquent or unreasonable conduct by the appellant had been established.
In Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 the Court of Appeal of New South Wales discussed at some length the status of offers of settlement made prior to trial judgment in respect of an appeal, and in particular offers made outside the framework of rules of Court. In refusing to award indemnity costs in the appeal, their Honours observed:
22.This Court was not referred to any case where an informal offer, made prior to the judgment under appeal and reasonably rejected by the successful party in the trial court, has been successfully relied upon by the offeror in respect of the costs of its successful appeal to obtain indemnity costs. There are three significant reasons why that is not surprising. First, where the offer has expired and not been renewed, the offeree is entitled to say that its success at trial would be a significant event, rendering reasonable the hypothetical rejection of a renewed offer. Secondly, the failure of the offeror to renew the offer prevents that possibility being tested. Thirdly, the offer in the court below to settle “the proceedings” may reasonably be treated as referring to the proceedings then on foot, and not to the possibility of an appeal.
23.The substance of settlement negotiations undertaken at any time on a ‘without prejudice except as to costs’ basis may be relevant to the exercise of the discretion to award costs of an appeal … To continue to refer to a pre-trial offer as generally “relevant” to the exercise of discretion in respect of the costs of the appeal is apt to encourage futile applications. (Different considerations may apply in respect of offers under the rules, which are made in relation to “claims”, which remain on foot until finally determined.)
In our view, the better approach is to recognise that the award of costs in an appeal is at the discretion of the appellate Court, and to further recognise that the fact that a pre-trial offer of compromise was made and rejected is one of the factors the appellate Court can take into consideration in exercising its discretion.
In this case, Mr Beagle submitted that the respondent made no renewal of offers of settlement in the appeal process which would have made it unreasonable for him to exercise his right to challenge the first instance decision. While there is authority that a failure to renew a Calderbank offer during an appeal may be a relevant consideration in the Court declining to make an order for indemnity costs in the appeal (Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [21]), we consider this a somewhat curious principle. Why should it be to the respondent’s prejudice that, in circumstances where it had been successful at first instance, it chose not to make an offer of settlement favourable to the appellant to deter him or her from prosecuting an appeal? The respondent was successful, and was entitled to the fruits of that success. As a general proposition there is no reason for it to do other than insist on enforcement of its judgment.
Appeals from superior Courts are creatures of statute: Grierson v The King (1938) 60 CLR 431, 435; Da Costa v Cockburn Salvage & Trading Pty Ltd (1970) 124 CLR 192, 202; Fox v Percy [2003] HCA 22; 214 CLR 118, 125. In the ACT the relevant legislation is pt 2A of the Supreme Court Act 1933 (ACT) and pt 5.4 of the Court Procedures Rules 2006 (ACT). Mr Beagle was entitled to appeal the decision of the primary Judge without leave. No question of competency arose in respect of Mr Beagle’s appeal. While there was extensive – and in our view, unnecessary – repetition in the grounds of appeal, requiring engagement by the respondent, we do not consider that the notice of appeal was attended by delinquency on the part of Mr Beagle or his legal advisers, or that the appeal could be characterised as futile. On balance, we do not consider that the circumstances warrant an order for indemnity costs in the appeal. The appropriate order is that Mr Beagle should pay the costs of the respondent of and incidental to the appeal on a party/party basis.
Finally, although the amount of $10,000 paid by Mr Beagle as security for costs is currently held on trust, there is no evidence before us to indicate the respondent’s quantum of the costs on the appeal. Accordingly the appropriate order is that that amount of $10,000 be released to the respondent, or its solicitors, within seven days of the costs of the respondent being taxed, or otherwise agreed by the appellant.
THE COURT ORDERS THAT:
The appellant pay the costs of the respondent of and incidental to the appeal on a party/party basis, such costs to be taxed if not otherwise agreed.
The amount of $10,000 held in the trust account of Nelson & Co pursuant to the order of Refshauge J in 2 November 2016 be released to the respondent, or its solicitors, within seven days of the costs of the respondent being taxed or otherwise agreed by the appellant.
| I certify that the preceding twenty-eight [28] numbered paragraphs are a true copy of the Reasons for Judgment of their Honours Chief Justice Murrell, Justice Burns and Justice Collier. Associate: Date: 13 September 2017 |
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