Cleere v Matic Service Pty. Ltd. [No. 2]

[2005] NSWCA 176

CITATION:	Cleere v. Matic Service Pty. Ltd. [No. 2] [2005] NSWCA 176
HEARING DATE(S):	on papers
JUDGMENT DATE:	24 May 2005
JUDGMENT OF:	Beazley JA; Hodgson JA; Barrett J
DECISION:	The respondent to pay 80% of the appellant's costs of the appeal assessed on a party/party basis.; The respondent to have a certificate under the Suitors Fund Act 1951 (NSW) if so entitled.; The parties are directed to bring in Short Minutes of Order in accordance with these reasons and those of the Court given on 10 December 2004.

CATCHWORDS:	APPEAL - indemnity costs - offer of compromise made by defendant at trial pursuant to Pt 19A District Court Rules - court's discretion as to costs - s.76 Supreme Court Act - COSTS - appellant ultimately successful on appeal but unsuccessful on issue of contributory negligence - whether appellant entitled to entirety of their costs
LEGISLATION CITED:	District Court Rules 1973 (NSW) Supreme Court Act 1970 (NSW) Workers Compensation Act 1987 (NSW)
CASES CITED:	Ettingshausen v Australian Consolidated Press (1995) 38 NSWLR 404 Moore v Woodforth (No.2) [2003] NSWCA 46 Oshlack v Richmond River Council (1998) 193 CLR 72 South Sydney Council v Morris (No.3) [2001] NSWCA 200 South Sydney Council v Walsh (No.2) [2003] NSWCA 111
PARTIES:	Michael Cleere - Appellant Matic Service Pty. Limited - Respondent
FILE NUMBER(S):	CA CA 41102/2003
COUNSEL:	A.J. Lidden/Ms E Welsh - Appellant D.G. Nock SC - Respondent
SOLICITORS:	Bryden's Law Office - Appellant Vandervords - Respondent

LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	12269/01
LOWER COURT JUDICIAL OFFICER:	Sorby DCJ

CA 41102/03
DC 12269/01

BEAZLEY JA
HODGSON JA
BARRETT J

24 May 2005

CLEERE v. MATIC SERVICE PTY. LIMITED [NO. 2]

Judgment

1 THE COURT: On 10 December 2004 this Court gave judgment ([2004] NSWCA 453) allowing the appeal in part and requiring the parties to bring in Short Minutes of Order. The respondent now makes an application that despite the appellant’s partial success on the appeal, he should pay the respondent’s costs of the appeal on an indemnity basis.

2 The appellant was injured in the course of his employment with the respondent on 23 February 2000. He was successful in his claim for damages in the District Court and was awarded the sum of $196,191.00. This amount was calculated after the deduction of a finding of 25% contributory negligence. It appears that that sum did not include any deduction for moneys paid under the Workers Compensation Act 1987 (NSW).

3 The appellant appealed to this Court challenging the trial judge’s finding as to contributory negligence and also challenging the adequacy of all components of the award of damages, save for out of pocket expenses. The respondent conceded from the outset that the trial judge omitted to include an amount for the Fox v. Wood component and that an award in an agreed amount of $9,530.00 had to be included in the final award of damages. The parties also agreed that the trial judge’s approach to superannuation was correct, but that if the appellant was successful in relation to his claim in respect of past or future economic loss, an appropriate adjustment of that item would also be required.

4 On the appeal, the Court rejected the appellant’s challenge to the trial judge’s finding of contributory negligence and also rejected the challenge to the adequacy of the award for non-economic loss. The appellant was successful, however, in respect of his appeal as to the adequacy of the awards for past and future economic loss and, it followed, the awards made for superannuation.

5 The success in respect of these components of damages was significant. Past economic loss was increased from $34,800.00 to $90,480.00. Future economic loss was increased from $99,127.00 to $141,690.00. Superannuation was increased accordingly. The overall effect of the appellant’s success was that the verdict increased from $196,191.00 to $282,317.10. The final judgment amount to which the appellant is entitled is, however, $193,573.73, being the amount to which the appellant is entitled after the deduction of payments and outgoings paid under the Workers Compensation Act in a total amount of $88,743.37 (and after the appropriate allowance of 25% for contributory negligence is also made). The parties are agreed as to these figures.

6 The respondent contends that despite the appellant’s significant success on the appeal, it should have an order for indemnity costs of the appeal because the final judgment sum is less than the amount offered by the respondent in an offer of compromise made under Part 19A of the District Court Rules (DCR) on 20 November 2002. In that offer, the respondent offered to compromise the claim on the basis of a verdict and judgment for the plaintiff in the sum of $200,000.00 clear of payments made pursuant to the Workers Compensation Act. The appellant concedes that he should pay the respondent’s costs of the proceedings below after the date of the offer of compromise. The precise order to be made is as governed by the District Court Rules.

7 The appellant had also made an offer of compromise under the DCR prior to the hearing at first instance. However, the sum contained in that offer of compromise was vastly in excess of the amount to which this Court has determined the appellant is entitled, and is not relevant to the issue presently under consideration.

8 The respondent did not renew its offer of compromise or make any other offer of compromise subsequent to that contained in the offer made on 20 November 2002.

9 The respondent submits that its offer remained effective for the purposes of the appeal. It relies upon the decision of this Court in Ettingshausen v. Australian Consolidated Press Limited (1995) 38 NSWLR 404. In support of its application for indemnity costs, it was submitted that the appellant had an ample opportunity to consider his position and that there was no material change in the considerations to be taken into account in the conduct of the case both at first instance and on the appeal. In those circumstances, the respondent contended that the appellant should be required to pay its costs of the appeal on an indemnity basis in accordance with the principles stated in South Sydney Council v. Walsh(No. 2) [2003] NSWCA 111.

10 In South Sydney Council v. Walsh (No. 2), the Court ordered an unsuccessful appellant to pay the costs of the appeal on an indemnity basis. In doing so, Ipp JA, who wrote the leading judgment, stated that the paramount factor determinative of the costs issue in that case was that the respondent had made an offer of compromise during the course of the trial which was substantially less than the verdict it had obtained at trial and that the appellant had been entirely unsuccessful on the appeal. His Honour pointed out that the case was not one where the appellant had had some success on the appeal, albeit in a way that had been insufficient to improve on the offer. His Honour contrasted the case before him with the decision of the Court in Moore v. Woodforth (No. 2) [2003] NSWCA 46.

11 In Moore v. Woodforth (No. 2) Mason P and Meagher JA in the judgment of the Court stated:

“13. Ettingshausen established that a pre-trial offer of compromise is not exhausted once the trial comes to an end. The offer is made in relation to the claim itself and the claim may not be determined until after the appeal.

14 But Ettingshausen does not establish that the Court of Appeal is bound to apply provisions such as Pt 39A r25(6) of the District Court Rules to the costs of the appeal itself. The leading case is Fotheringham v Fotheringham (No 2) (1999) 46 NSWLR 194. It establishes that the rejection of an offer of compromise made at first instance is a relevant factor to consider on the question of costs in an appeal; but the Court of Appeal retains a discretion as to costs. That discretion is guided by Pt 52A r11 of the Supreme Court Rules which provides:
If the Court makes any order as to costs, the Court shall, subject to this Part, order that costs follow the event, except where it appears to the Court that some other order should be made as to the whole or any part of the costs.
15 In the present case the pre-trial offer of compromise is relevant, but so too is the absence of any renewal or variation of that offer during the pendency of the proceedings in this Court. ” (emphasis added)

12 In the earlier decision of the Court in South Sydney Council v. Morris(No. 3) [2001] NSWCA 200, Heydon JA, which whom Meagher and Fitzgerald JJA agreed, stated that the favourable consequences of making an offer of compromise under the DCR (see Pt 19A and Pt 39A r.25(4)), do not apply in terms to the costs of the appeal and that in this Court costs are in the Court’s discretion pursuant to s. 76(1)(a) of the Supreme Court Act 1970 (NSW). Under s.76(1)(c), the Court may order that costs be assessed on an indemnity basis.

13 The same principles apply in respect of an offer of compromise made by a defendant, so that the respondent’s offer of compromise does not, for the purposes of the appeal, have the same effect as at first instance. Accordingly, an order for indemnity costs of an appeal was only made by the Court in the exercise of its inherent jurisdiction.

14 In Morris, Heydon JA pointed out that there was no relevant delinquency on the part of the unsuccessful appellant party: see Oshlack v. Richmond River Council (1998) 193 CLR 72 at 89, and that the only other relevant possibility for the exercise of the court’s inherent jurisdiction to order indemnity costs rested upon the failure to better a pre-trial offer either made either before or during the trial, or on the appeal. His Honour considered that although the trial judge’s award in favour of the respondent/plaintiff was much greater than the offer of compromise she had made under the DCR, there were aspects of the trial judge’s reasoning that were not unreasonable for the appellant/defendant to test. In that circumstance, the Court dismissed the respondent/plaintiff’s application for indemnity costs in relation to the appeal.

15 In this case, the respondent (who was the defendant at first instance) made an offer of compromise in accordance with the DCR. The consequence, provided for in Pt 39A r.25(6) of the DCR in that circumstance, and subject to the Court making some different order “in an exceptional case and for the avoidance of substantial injustice”, is that the defendant was entitled to an order for costs of the trial from the date of the offer assessed on a party/party basis. That is not the issue. What is in issue is the costs of the appeal.

16 The respondent did not make any subsequent offer of compromise and thus relies upon the offer made at trial. On the principles which we have discussed, that offer is only one factor relevant to the Court’s exercise of its discretion under s.76 of the Supreme Court Act. As the Court pointed out in Moore v. Woodforth (No. 2) at [15], it is also relevant that there is no renewal or variation of the offer of compromise during the pendency of the appeal.

17 In this case, there is the further circumstance that the appellant was successful, in a substantial amount, in respect of the awards for economic loss. In Moore v. Woodforth (No. 2), the Court commented at [16] that the defendant’s generous pre-trial offer of settlement was not renewed and that the appeal had be fought on the basis that the verdict at trial was the starting point of the issues that were joined thereafter. A like comment can be made in respect of this case. In Moore v. Woodforth (No. 2) the Court also pointed out at [16] that the appellant had established error “in a not insubstantial matter and was therefore successful in the appeal”. The same position applies here.

18 In the circumstances, we do not consider that the respondent has established a basis for the Court to exercise its discretion so as to order the appellant to pay its costs of the appeal on an indemnity basis.

19 The question does arise, however, as to whether the appellant should have all of his costs, given that he was not successful on all issues. The issues upon which the appellant was unsuccessful, namely, contributory negligence and non-economic loss were themselves substantial issues. However, the evidence that the Court was required to consider in relation to non-economic loss also needed to be considered in relation to economic loss, as it was necessary for the Court to understand the extent of the appellant’s injury and on-going disabilities to determine whether the trial judge made any appealable error in respect of either award. Accordingly, we would not deprive the appellant of the costs referable to the preparation and argument in respect of that aspect of non-economic loss.

20 The issue of contributory negligence stands in a different category. It was the only issue raised on liability and required the Court to examine in some detail the system of work and the precise manner in which the injury occurred. As the appellant was unsuccessful on that issue, we consider that he should be deprived of a portion of the costs of the appeal. An assessment of such proportion is always somewhat arbitrary. However, in the Court’s opinion, a fair assessment is that the contributory negligence issue accounted for about 20% of the time taken to argue the appeal and we consider that the same percentage would be a reasonable assessment of the preparation time required for that aspect of the argument. If the 20% was applied fully, it would mean that the respondent should pay 80% of the appellant’s costs and the appellant should pay 20% of the respondent’s costs (or alternatively the respondent should pay 60% of the appellant’s costs, assuming approximate equality of costs). However, where the appeal was concluded within a day, 20% of the costs does not necessarily readily translate into 20% of the costs of the appeal. Accordingly, we have reached the conclusion that the appropriate order for costs of the appeal in this matter is that the respondent pay 80% of the appellant’s costs of the appeal, assessed on a party-party basis. The respondent should have a certificate under the Suitors Fund Act 1951 (NSW), if so entitled.

21 The parties are directed to bring in Short Minutes of Order in accordance with these reasons and those of the Court given on 10 December 2004.

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