Cheng v Geussens (No 2)

[2014] NSWCA 254

Court of Appeal

New South Wales

Case Title:

Cheng v Geussens (No 2)

Medium Neutral Citation:

[2014] NSWCA 254

Hearing Date(s):

On the papers

Decision Date:

04 August 2014

Before:

Basten JA at [1]; Barrett JA at [2]; Ward JA at [3]

Decision:

1. Set aside order 4 made on 8 April 2014 and in place thereof order that the applicant/appellant pay the costs of the respondent in this Court assessed on the ordinary basis.
2.No order as to the costs of the respondent's notice of motion filed 22 April 2014.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

PROCEDURE - costs - departing from the general rule - order for costs on indemnity basis - where appellant successful in reducing assessment of his contributory negligence - where respondent made offer of compromise prior to District Court proceedings that was not accepted and judgment on appeal no more favourable to the appellant than the offer - where appeal was limited to question of liability and damages not yet determined by the District Court - whether appellant should pay respondent's costs of the appeal and/or District Court proceedings on an indemnity basis from the day following the day of making of the offer of compromise

Legislation Cited:

Civil Procedure Act 2005 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Bathurst Regional Council as Trustee for the Bathurst City Council Crown Reserves Reserve Trust v Thompson (No 2) [2012] NSWCA 420
Cheng v Geussens [2014] NSWCA 113
Daly v Thiering [2013] HCA 45; (2013) 88 ALJR 67
Encyclopaedia Britannica Australia Ltd v Campbell (No 2) [2009] NSWCA 335
Grace v Thomas Street Café Pty Ltd (No 2) [2008] NSWCA 72
Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368
The Uniting Church v Takacs (No 2) [2008] NSWCA 172

Category:

Costs

Parties:

Yingen Cheng by his tutor Gendi Qian (Applicant)
Joachim Geussens (Respondent)

Representation

- Counsel:

Counsel:
P Segal (Applicant)
J B Turnbull (Respondent)

- Solicitors:

Solicitors:
McInnes Wilson (Respondent)

File Number(s):

2013/62444

Decision Under Appeal

- Before:

Elkaim DCJ

- Date of Decision: 

06 February 2014

- Court File Number(s):

2011/411308

Publication Restriction:

Nil

JUDGMENT

1. BASTEN JA: I agree with Ward JA.

2. BARRETT JA: I also agree with Ward JA.

3. WARD JA: On 8 April 2014, this Court granted the applicant, Yingen Cheng, leave to appeal from a decision in the District Court as to the liability of the respondent, Joachim Geussens, for injury suffered by Mr Cheng when Mr Geussens' car collided with Mr Cheng as he was crossing an intersection in Coogee ([2014] NSWCA 113).

4. The District Court judgment from which leave to appeal was granted had decided two separate questions: the liability of Mr Geussens and the contributory negligence of Mr Cheng. There was, however, no determination at that stage as to the quantum of damages. The assessment of damages was stood over for later determination, pending the delivery of judgment by the High Court in Daly v Thiering [2013] HCA 45; (2013) 88 ALJR 67.

5. This Court allowed Mr Cheng's appeal on one of the four grounds raised by Mr Cheng and ordered that, in place of the primary judge's assessment of contributory negligence at 80%, there should be a reduction in the damages recoverable by Mr Cheng on account of his contributory negligence of 67%.

6. Mr Geussens was ordered to pay Mr Cheng's costs of the appeal.

7. By notice of motion filed on 22 April 2014, Mr Geussens seeks to have that costs order set aside and an order in place thereof that Mr Cheng pay Mr Geussens' costs both of the appeal and of the proceedings in the District Court as from 22 December 2012 on an indemnity basis. He also seeks costs of the motion.

8. The basis on which Mr Geussens seeks those costs orders is that, prior to the District Court hearing that commenced in February 2013, he had served an Offer of Compromise, offering to compromise the claim in respect of liability by way of judgment for the appellant with a reduction of any damages received of 60% on account of Mr Cheng's contributory negligence. That offer was served under cover of a letter dated 21 December 2012. The letter was headed "[w]ithout prejudice, save as to costs". In it, Mr Geussens' intention to rely on the offer as a Calderbank offer, in the event that the offer was held not to comply with r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), was clearly stated.

9. The UCPR, r 42.15, as in force when the offer was made, provided that if an offer of compromise was served by a defendant and not accepted, and there is a judgment "as favourable to the plaintiff, or less favourable to the plaintiff, than the terms of the offer", then unless the court otherwise orders the plaintiff is entitled to costs assessed on an ordinary basis up to the date of the offer and the defendant is entitled to costs on an indemnity basis as from the beginning of the day following the day on which the offer was made.

10. It is clear that this Court's finding as to contributory negligence is less favourable to Mr Cheng than the Offer of Compromise.

Submissions

1. In written submissions filed for Mr Cheng on the present application, Mr Cheng indicated that he wished to have an oral hearing in order to argue whether an appellate court "can determine an issue as to costs before the case in the lower court is finally determined and the application of that exercise to other Offers of Compromise whose effect is not yet triggered".

2. Mr Cheng also indicated that he wished to seek leave to lead oral evidence on the subject of "offers of compromise" that had been made. An affidavit sworn by his daughter on 19 May 2014 was filed in which reference is made, in unspecific terms, to offers made by the respective parties during the course of the District Court hearing and to the fact that, since judgment on liability was delivered in the District Court on 6 February 2013, no application had been made by Mr Geussens in relation to costs in that court.

3. I do not consider it to be consistent with the principle mandated by s 56 of the Civil Procedure Act 2005 (NSW) for there to be an oral hearing on the present application. Mr Cheng's objection to the costs orders sought by Mr Geussens has been set out in some detail in his written submissions. The only point on which an oral hearing is sought, and in relation to which an application to lead oral evidence is foreshadowed, goes to whether this Court should make orders in relation to the costs of the District Court hearing on liability. No such orders were made when judgment was handed down in relation to Mr Cheng's appeal and, for the reasons I set out below, I do not consider that any such orders should now be made. Therefore, there is no need for oral submissions or the oral evidence.

Alleged contravention of UCPR 20.30

1. The first basis on which Mr Cheng resists the present application is his contention that the affidavit sworn in support of the application by Mr Geussens contains material (at [4], [5] and [13]) that amounts to a contravention of r 20.30(1).

2. Rule 20.30 prohibits disclosure to the court of the fact that an offer of compromise has been made and, if the offer is not accepted, communication of that fact. However, r 20.26 permitted an offer to compromise "any claim in the proceedings, either in whole or in part". The defendant's offer was to compromise a discrete aspect of the proceedings, and thus part of the claim. Rule 20.30(3)(c) permits disclosure of an offer of compromise "after all questions of liability and relief have been determined, to the extent necessary to determine questions as to costs".

3. Here, all questions of liability and relief pertaining to the issue the subject of the offer have been determined and there is an application for particular orders to be made as to the costs of the appeal. Hence, disclosure to this Court of the fact of the offer of compromise and its non-acceptance by Mr Cheng is not prohibited by r 20.30. Mr Cheng's objection to the application on this ground must fail.

Costs of the District Court proceedings

1. As to the costs of the District Court proceedings, it is submitted by Mr Cheng that this Court should not "activate its discretion as to costs in the District Court where, by inadvertence or design, no attempt has been made in the District Court to act in relation to a partial offer of compromise before the tribunal best suited to decide the matter".

2. Mr Cheng submits that it can be inferred, from the reference to three offers of compromise in the letter of 21 December 2012, that while one related to percentages "and hence liability", the others related to money and damages. He submits that after final determination as to damages, other offers of compromise may then be "activated" and hence it is premature to undertake the exercise of discretion as to the application of costs in the District Court when some offer or offers may succeed and others may not.

3. It is also submitted that there may be a question as to whether costs were unnecessarily incurred in the District Court in preparing for a damages hearing which did not at that stage take place.

4. Further, Mr Cheng submits that in relation to the order sought for the costs of the District Court proceedings Mr Geussens has not complied with r 42.17, since no application for those costs was made forthwith after the order or judgment giving rise to the entitlement to the order for costs. It is noted that the primary judge's decision as to liability was delivered ex tempore on 6 February 2013.

5. It is not appropriate for this Court to speculate on the content of other offers of compromise not relied upon by Mr Geussens for the purposes of the present application. It is by no means uncommon for parties to serve more than one offer of compromise or Calderbank offer and then to rely on the most favourable offer once the outcome of the proceedings is known. That said, it is also not appropriate for this Court to make orders as to the costs of the proceedings below at a time when those proceedings have not finally been determined and the primary judge has yet to rule on any costs application.

6. No order should be made as to the costs of the District Court proceedings.

Costs of the appeal

1. Mr Cheng submits that the Offer of Compromise relied upon by Mr Geussens is not valid because it does not comply with r 20.26(2)(b)(ii) and cannot be relied upon as a Calderbank offer.

2. As to its validity under r 20.26, Mr Cheng argues that the offer is invalid because it does not comply with the requirement that an offer that relates only to part of a claim in the proceedings must include a statement (in the case of an offer by a defendant) as to whether the balance of the proceedings will be defended or conceded.

3. However, as at December 2012 when the relevant Offer of Compromise was served, there was no such requirement under r 20.26. Therefore, this basis for objection is not well-founded. There is no other basis on which it is asserted that the offer does not comply with the rules. That makes it unnecessary to consider whether it could be relied upon as a Calderbank offer in circumstances where it dealt only with liability and not with damages.

4. Mr Cheng next points out that it was open to Mr Geussens to make a fresh offer of compromise in the appeal proceedings pursuant to r 51.47 and that he did not do so. He argues that he should not be denied costs in the Court of Appeal in circumstances where no offer of compromise was made in relation to the appeal proceedings.

5. Reference is made by Mr Cheng to various authorities in which this Court has considered whether account should be taken, in the exercise of the discretion as to costs of the appeal, of an offer of compromise made before or during the hearing below and not renewed in the context of subsequent appeal proceedings (Grace v Thomas Street Café Pty Ltd (No 2) [2008] NSWCA 72 at [33]-[34]; The Uniting Church v Takacs (No 2) [2008] NSWCA 172 at [16]; Encyclopaedia Britannica Australia Ltd v Campbell (No 2) [2009] NSWCA 335 at [10]; Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [37]-[43]).

6. However, it is recognised that a pre-trial offer is relevant in the exercise of the costs discretion (UCPR, r 51.49; Regency Media v AAV Australia at [39]) and may be persuasive depending upon all of the circumstances of the case (Grace v Thomas Street at [33]).

7. In Bathurst Regional Council as Trustee for the Bathurst City Council Crown Reserves Reserve Trust v Thompson (No 2) [2012] NSWCA 420 at [16], Hoeben JA, with whom Meagher JA and Tobias AJA agreed, having noted that r 51.49 permits this court to have regard to any offer of compromise made in the court below, said that the usual position is that appeal costs should primarily be determined by the issues in and the outcome of the appeal proceedings themselves.

8. As a general matter, Mr Cheng submits that he was willing to settle the District Court proceedings late on the afternoon of 6 February 2013 "on exactly the same terms that the present applicant had offered up until 10am on the very same day" and this should be taken into account in this Court's discretionary decision as to costs. There is no evidence of the terms of the offers to which this submission refers other than the unspecific evidence in his daughter's affidavit. Moreover, the relevance of willingness to accept an offer, after it had expired and at a time when a liability for further costs may have been incurred, is not immediately apparent. It is not suggested that when the matter was in issue at the appellate level Mr Cheng had indicated a willingness to accept a reduction in the assessment of his contributory negligence that would have been more favourable to Mr Geussens than the judgment which was ultimately obtained on that issue.

9. When one takes into account the fact that the first three grounds of appeal were without substance and that Mr Cheng succeeded only on the fourth ground of appeal and then only in obtaining a reassessment of the level of his contributory negligence that was less favourable to him than the offer of compromise made by Mr Geussens, this is a case where the existence of the earlier offer of compromise should be taken into account even though not apparently renewed during the course of the proceedings in this Court.

10. This is not a case where the party who chose not to accept an offer could be said to have been acting reasonably in seeking on the appeal to support the primary judge's reasoning, as was the case in various of the authorities to which Mr Cheng referred. Rather, it is a case where Mr Cheng was challenging his Honour's determination as to his contributory negligence. Mr Cheng did so successfully but not to the extent that Mr Geussens had been prepared at a much earlier time to accept by way of a judgment on liability.

11. However, things have moved on since the offer was made: the issue of contributory negligence was no longer at large. The appeal concerned the finding and reasoning of the primary judge. That required each party to reassess his position in the changed circumstances. No doubt Mr Cheng did that, but there was then no offer open for him to accept. He is not to be penalised for not himself making an offer, although it was open to him to put Mr Geussens' expired offer back to him.

12. In the circumstances, I am of the opinion that there should be an order that Mr Cheng pay Mr Geussens' costs of the appeal but that those costs be assessed on the ordinary basis. I am not persuaded that the costs should be assessed on an indemnity basis, as I would have considered appropriate had the offer of compromise been renewed in the context of the appeal proceedings.

13. As neither party has been entirely successful on this motion there should be no order as to the costs of the motion.

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