Broomhall v National Roads and Motoring Association Insurance Ltd (No 2)
[2004] VSC 366
•29 September 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. 4819 of 2002
| BRIAN BROOMHALL | Plaintiff |
| V | |
| NATIONAL ROADS AND MOTORING ASSOCIATION INSURANCE LTD | Defendant |
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JUDGE: | SMITH J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 15 September 2004 | |
DATE OF JUDGMENT: | 29 September 2004 | |
CASE MAY BE CITED AS: | Broomhall v National Roads and Motoring Association Insurance Ltd (No 2) | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 366 | |
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Negligence – personal injuries – cost – offer of compromise by plaintiff on last day of trial.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P Elliott QC and Mr R Dyer | Kenyons Lawyers |
| For the Defendant | Mr D Kendall QC and Miss A Magee | Sparke Helmore |
HIS HONOUR:
The costs issue
Following the publication of my reasons for judgment in this matter on 15 September 2004, the parties agreed that the amount to be entered for judgment for the plaintiff, after allowing for funds repayable under the Transport Accident Act, was $602,807.06.
Counsel for the plaintiff then sought costs on an indemnity basis relying upon an offer of compromise served by the plaintiff on the defendant on the last sitting day of the trial.
The offer of compromise was in writing and given pursuant to Order 26 Part 2 of the Rules. In it, the plaintiff offered to accept in full and final settlement, the sum of $449,000 together with costs and disbursements on Supreme Court scale and on the basis that the plaintiff would repay statutory sums as required by the Act. The offer of compromise stated that it was open to be accepted within 14 days of service. The offer of compromise was served during the early part of the sitting day on 3 August 2004. The hearing concluded later that day at approximately 1.20 pm. It is common ground that the offer has not been accepted.
Parties submissions
Counsel for the plaintiff relied upon Rule 26.08 which so far as relevant provides as follows:
“26.08 (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 the 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 him 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 his costs in respect of the claim taxed on an indemnity basis; or
(b)in the case of any other claim of the plaintiff, to an order against the defendant for his costs in respect of the claim up to and including the day the offer was served taxed on a party/party basis and for his costs thereafter taxed on an indemnity basis.”
Counsel for the plaintiff submitted that Rule 26.08 (2) (a) clearly applied and that the plaintiff was entitled to his costs of the proceedings taxed on an indemnity basis. He submitted that the discretion to order otherwise did not arise. He submitted that the discretion was included to cover situations such as those where judgment is given within the fourteen day minimum period specified in circumstances where the defendant was deprived of the opportunity of reaching a decision on the offer within that period. Counsel submitted that in this case, that situation did not arise and in fact some five or six weeks had passed since the trial had concluded.
Counsel for the defendant submitted that the policy lying behind the rules was to encourage settlement to avoid a wastage of court time and the incurring of unnecessary expense by the parties. He submitted that where the case had virtually concluded, there was nothing to be saved by the settlement of the proceedings and the timing of the offer meant that the defendant had no reasonable opportunity to obtain instructions in relation to the offer until after the matter had concluded. He submitted that any fees or costs which the plaintiff incurred in respect of the proceedings had already been incurred by that time. Counsel went on to argue that applying the Rule in the present circumstances would be to punish the defendant simply because the judgment given was greater than that which the plaintiff had been prepared to accept at the conclusion of the trial. In essence he argued that ordering the costs to be paid from the commencement of the writ and at a more burdensome scale was not warranted and was a punishment. Counsel also drew attention to alleged irregularities in the fax by which the defendant was given notice the result of which was that service was deemed to have occurred on the following day, 4 August 2004. Counsel submitted that the appropriate order would be party/party costs up until 4 August 2004 and indemnity costs thereafter if any costs were incurred.
Challenged as to the reason for the distinction between paragraphs (a) and (b) of Rule 26.08(2), defence counsel referred to the statement in Williams Supreme Court Practice p 3607, relying on Connolly v Skratulja[1] that
“The general rule that a plaintiff who has to good effect served an offer of compromise will be awarded solicitor/client costs for the entire proceeding strengthens generally the bargaining position of plaintiffs in settlement negotiations with defendants.”
Counsel submitted that that proposition was not apposite in this case because there was no real scope for negotiation at a point where the matter was effectively concluded and all that remained was the delivery of a judgment. He submitted that an offer made during the course of a trial can have the effect of shortening the matter or lessening the matter and that backdating the order to the date of the writ increased the pressure for settlement if the offer is a reasonable one. Counsel submitted, however, that there were no costs to be saved by this particular offer of compromise.
[1]Supreme Court (Victoria), McDonald J, 2 March 1993, unreported.
Counsel for the defendant also submitted that a relevant matter was that the plaintiff had not taken the opportunity to make offers prior to trial or earlier in the trial.[2] He submitted that the plaintiff was in a much better position to know what the plaintiff’s case was going to be than the defendant. He argued that it followed that the plaintiff and his advisers were better placed to assess the plaintiff’s case well before the defendant was. It was put that to require the defendant in those circumstances to pay the costs of the entire proceedings on the higher scale would be unfair. As to this issue, the plaintiff did not know what evidence the defendant might call about work opportunities and it was not until late on the second last day that it was confirmed that evidence would not be called. That knowledge was very important to the plaintiff in assessing his prospects.
[2]I was invited to consider the content of a Calderbank letter from the defendant but the fact that the defendant made an offer and its content do not appear to me to be relevant.
Analysis
The judgement of McDonald J in Connolly v Skartluja[3] is instructive. In that case the plaintiff was suing for damages alleged to have been suffered as a result of a motor car collision. The case was initially fought on both liability and damages issues. During the course of the plaintiff’s case, however, agreement was reached between the parties about matters relevant to the assessment of quantum; the amount of the award wage for a machinist at the time of the collision and at the time of trial, the amount that the plaintiff would have earned employed as a machinist from the time of the collision until the trial and the amount of the multiplier to be used in assessing future loss of earning capacity. After the plaintiff closed her case at 2.15 pm on 8 February 1993, counsel for the defendant announced to the Court that the defendant admitted that the defendant’s negligence was the cause of the collision and abandoned the allegation of contributory negligence. His Honour noted[4]
“Up to that point of time the issue of liability had been strenuously contested by the defendant.”
His Honour also noted that the defendant, having admitted negligence and abandoned contributory negligence, did not call evidence on quantum. Senior counsel for the plaintiff then addressed the jury concluding his address at 3.40 pm on 8 February 1993. Counsel for the defendant then commenced his final address but did not conclude it that day.
[3]Above.
[4]P 3(a).
An offer of compromise was served on the defendant’s solicitors offices in Melbourne by facsimile transmission at 5.48 pm on Monday 8 February 1993. There had been no oral notice prior to that.
The trial had taken place in Geelong. Because the defendant’s counsel and instructing solicitor had been travelling between Geelong and Melbourne each day during the course of the trial, the defendant’s solicitor did not receive the facsimile transmission sent to the Melbourne office. The defendant’s solicitor did not become aware of the written offer of compromise until 9.50 am on the following day, 9 February 1993, shortly before the trial resumed. At that time he was served with a copy of the written offer of compromise. A little later, at 11.30 am, the defendant’s solicitor intimated to the plaintiff’s solicitor that the defendant was not disposed to accept the offer. At that time counsel for the defendant had completed his address to the jury and the jury was being charged.
The jury retired and considered its verdict. The verdict reached was that “pain and suffering damages” was assessed at $195,000 and “pecuniary loss damages” at $172,000. His Honour referred to the Rules noting, for example, that Rule 26.03(1) provided that an offer of compromise may be served at any time before “verdict or judgment in respect of the claim to which it relates”.[5] His Honour referred to a predecessor of the present rule under consideration namely a former Rule 26.08(2) which provided:
“Where an offer of compromise is made by a plaintiff and not accepted by the defendant and the plaintiff obtains a judgment on their claim to which the offer relates, no less favourable to him than the terms of the offer, then unless the Court otherwise orders the plaintiff shall be entitled to an order against the defendant for his costs in respect of the claim taxed on a solicitor/client basis.”
[5]Also the present rule.
His Honour then discussed the purpose of the Rule. He stated that it was:
“. . . to give a plaintiff, in an action for damages, arising out of death or bodily injury, some position of standing or strength in any negotiations for settlement of his or her claim against the defendant, which in the majority of cases has a corporate body whether statutory or otherwise standing behind it. It gives to such a plaintiff as part of his or her armoury the ability to make an offer which is able to be accepted bringing the litigation to an end but if it is not accepted and he or she should recover by judgment an amount no less favourable to them than the offer then the plaintiff may recover their full costs of the proceedings unless the Court otherwise orders. The Rule enables a plaintiff and a defendant in such proceedings to have some degree of equality in their bargaining or negotiating position when endeavouring to resolve the proceedings by settlement. It also has the effect of encouraging a defendant and those who may stand behind the defendant in such proceedings as the present to not ignore a reasonable offer of compromise made by a plaintiff which may be made even during the course of a trial.”[6]
[6]At p 8a.
His Honour then referred to the judgment of Fullagar J in Baxter v Newell[7] concerning the discretion in Rule 26.08(2) as it then was. Fullagar J stated that the discretion conferred is a “very wide one” and he urged the judges not say anything “calculated to whittle it down”.
[7]Unreported, 11 March 1988.
McDonald J commented that in determining whether to “otherwise” order regard must be had to the structure of the Rule. The first point then made was that the rule contemplated that an offer might be made by a plaintiff during the course of the trial in the circumstances which gave the defendant little time to contemplate and deal with it and, notwithstanding that, if the offer was not accepted and the amount received by the plaintiff was not less favourable than the offer, the defendant would, unless the Court otherwise ordered, be obliged to pay the plaintiff’s costs of the proceedings on a higher basis than normal. His Honour said:
“The fact that the defendant may be faced with such costs over and above the costs as between party and party is a fact that it is to be expected that a defendant will take into account and assess when determining whether or not to accept an offer of compromise by the plaintiff.
It is part of the scheme of the Rules that exerts some pressure on a defendant to give proper consideration to an offer made by a plaintiff even if the same is made at a late stage during a trial.”[8]
His Honour also commented that it was relevant to consider the time that the defendant had had to consider and react to the offer and whether it was reasonable. In that case, he was satisfied that reasonable time had been given if only because the offer that was communicated at 9.50 am on 9 February had been rejected approximately one hour forty minutes later. His Honour also commented that the trial had been run on the issues of both liability and damages up until the close of the plaintiff’s case and the parties had agreed on the basic facts and figures needed for the assessment of loss of earning capacity. His Honour commented that those advising the Transport Accident Commission had had ample opportunity to assess the plaintiff during the course of the trial – including an opportunity to assess her appearance and the extent of her disfigurement resulting from the loss of her right eye and her facial scaring. In those circumstances he was satisfied that the time available to the defendant’s legal advisers and those instructing them between the time when the defendant’s solicitor first became aware of the offer and the time the jury retired to consider its verdict was an ample period of time to consider and react to the offer. His Honour noted that nothing had been advanced to indicate that there were any problems existing in the structure of the Transport Accident Commission. His Honour noted that all they had to consider in assessing the offer was the claim for damages which had been simplified and limited by the agreements reached about the various matters relevant to the assessment of pecuniary loss. Having regard to all of these matters his Honour concluded that there was no basis to exercise the discretion in favour of the defendant.
[8]My emphasis.
In the present case the defendant had ample time to consider the offer of compromise. The case had proceeded as an assessment. Agreement had been reached on a number of factual matters relevant to the assessment of the loss of earning capacity. The defendant had highly competent counsel and instructing solicitors who could be expected to advise relatively quickly. The offer made was a cautious and reasonable proposal and should have been seen as reasonable by the defendant.
Finally, while the offer was made at the stage where it was unlikely that further substantial legal costs would be incurred at trial level there was still room for negotiation and a place for the Rule in such negotiation – as was the case in Connolly v Skartluja. It must not be forgotten that there is still a considerable benefit in resolution of an injuries claim even at the late stage of this proceeding. It avoids the possibility of further costs and expenses being incurred in appeals and the taking up of court time in such appeals. In addition, provided there is a quiet response there is the potential to save the trial judge’s time and enable the trial judge to deal with other cases or other judgments or both. The writing of a judgment such as the judgment in the present case is a matter that takes many days of judicial time. Thus, there are still benefits to be had from an offer made at a late stage as this one was.
For these reasons I am not persuaded that I should otherwise order but am persuaded that Rule 26.08(2) (a) should be applied. It is therefore appropriate that an order be made that the defendant pay the plaintiff’s costs in respect of the claim taxed on an indemnity basis.
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