CSS v KD [No 2]
[2017] WADC 61
•3 MAY 2017
CSS -v- KD [No 2] [2017] WADC 61
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2017] WADC 61 | |
| 04/05/2017 | |||
| Case No: | CIV:3468/2012 | 3 MAY 2017 | |
| Coram: | DERRICK DCJ | 3/05/17 | |
| PERTH | |||
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| PDF Version |
| Parties: | CSS KD |
Catchwords: | Practice and procedure Costs Offer of compromise made prior to trial under O 24A of the Rules of the Supreme Court 1971 (WA) Offer not accepted by plaintiff Whether judgment obtained by plaintiff not more favourable than offer Whether discretion to refuse to award costs to the plaintiff should be exercised |
Legislation: | District Court Act 1969 (WA) Rules of the Supreme Court 1971 (WA) Supreme Court Act 1935 (WA) |
Case References: | CSS v KD [2016] WADC 82 Fortron Automotive Treatments Pty Ltd v Eurotime Holdings Pty Ltd [2001] WASCA 384 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
KD
Defendant
Catchwords:
Practice and procedure - Costs - Offer of compromise made prior to trial under O 24A of the Rules of the Supreme Court 1971 (WA) - Offer not accepted by plaintiff - Whether judgment obtained by plaintiff not more favourable than offer - Whether discretion to refuse to award costs to the plaintiff should be exercised
Legislation:
District Court Act 1969 (WA)
Rules of the Supreme Court 1971 (WA)
Supreme Court Act 1935 (WA)
Result:
Application dismissed
Representation:
Counsel:
Plaintiff : Mr S V Forbes
Defendant : Mr P E Jarman
Solicitors:
Plaintiff : Simon Walters
Defendant : Jarman McKenna
Case(s) referred to in judgment(s):
CSS v KD [2016] WADC 82
Fortron Automotive Treatments Pty Ltd v Eurotime Holdings Pty Ltd [2001] WASCA 384
- DERRICK DCJ: [This judgment was delivered extemporaneously on 3 May 2017 and has been edited from the transcript.]
Introduction
1 Over a period of 10 days in March 2016 I presided over the trial of the plaintiff's claim for damages arising out of a motor vehicle accident caused by the defendant's negligence. The plaintiff's claim was for an amount in excess of $1,000,000.
2 On 31 May 2016 I delivered my judgment: CSS v KD [2016] WADC 82. I made an order that judgment be entered for the plaintiff in the amount of $102,448. At the request of the defendant, I adjourned the plaintiff's application for costs and granted the parties liberty to apply.
3 The defendant has now made an application by way of a chamber summons dated 23 November 2016 (the application) for orders in the following terms:
1. The defendant do pay the plaintiff's costs of the action up to 25 June 2015 to be taxed if not agreed.
2. The plaintiff do pay the defendant's costs of the action from 26 June 2015 to be taxed if not agreed.
3. The costs of and occasioned by this application be the defendant's in any event.
4 The application is supported by an affidavit sworn by Ms Joanne Patricia Clarke on 23 November 2016. Ms Clarke is a solicitor employed by the defendant's solicitors.
5 The application is opposed by the plaintiff. The plaintiff contends that the appropriate costs order is that the defendant pay the plaintiff's costs of the action, including reserved costs, to be taxed if not agreed. The plaintiff has filed an affidavit in support of his opposition to the application sworn by him on 30 January 2017.
The defendant's offer to compromise
6 The genesis of the application is an offer to compromise the action made by the defendant to the plaintiff by letter dated 26 June 2015 pursuant to O 24A of the Rules of the Supreme Court 1971 (WA) (RSC) (the offer). By the offer the defendant offered to pay to the plaintiff 'the sum of $100,000 plus costs (to be taxed if not agreed) in full and final settlement of all claims the subject of these proceedings'.
7 By letter dated 29 June 2015 the plaintiff acknowledged safe receipt of the offer. The offer was neither rejected nor accepted by the plaintiff.
The terms of O 24A r 10(5)
8 Order 24A r 10(5) of the RSC is in the following terms:
When an offer is made by a defendant and not accepted by the plaintiff, and the plaintiff obtains judgment on the claim to which the offer relates not more 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 up to and including the day the offer was made, taxed on a party and party basis, and the defendant shall be entitled to an order against the plaintiff for his costs in respect of the claim thereafter, taxed on a party and party basis, except as provided in subrule (7A).
9 Order 24A r 10(7A) is in the following terms:
If the Court is satisfied that the failure by the plaintiff to accept the offer made by the defendant was unreasonable, the defendant's costs are to be taxed on an indemnity basis, unless the interests of justice require otherwise.
10 The defendant has expressly disavowed seeking an order for indemnity costs to be paid by the plaintiff from the date of the offer pursuant to O 24A r 10(7A).
The parties' submissions – overview
11 The defendant makes two principal submissions in support of the application.
12 First, the defendant submits that the plaintiff, by failing to accept the offer, and by proceeding to a two week trial which resulted in a damages award that exceeded the offer by only $2,448, failed to achieve an outcome that was 'materially better' than the offer. The defendant therefore submits that the plaintiff is liable to pay the costs of the defendant from the date of the offer pursuant to O 24A r 10(5).
13 Second, the defendant submits that even if the court does not accept that the judgment obtained by the plaintiff was not 'materially better' than the offer, it should nonetheless, in the exercise of its discretion, refrain from awarding the plaintiff his costs from the date of the offer given the conduct of the plaintiff in the way that he pursued his claim to trial. In this regard the defendant points out that although in the ordinary course costs will follow the event, costs awards are always at the discretion of the court: Supreme Court Act 1935 (WA), s 37; District Court of Western Australia Act 1969 (WA), s 64(3); RSC O 66 r 1(1).
14 The plaintiff's position in response to the application is straightforward. It is as follows.
15 The plaintiff obtained judgment for an amount that exceeded the amount the subject of the offer by $2,448. Therefore the plaintiff obtained a judgment that was more favourable to him than the terms of the offer. Accordingly, O 24A r 10(5) does not operate so as to give rise to an entitlement on the part of the defendant to an order against the plaintiff for her costs in respect of the claim from the date that the offer was made. Rather, the general rule in relation to costs should apply with the result that the plaintiff is entitled to recover his costs of the action.
16 There is, in my view, one point that needs to be made at the outset in response to the defendant's first submission. It relates to the defendant's assertion that the plaintiff did not achieve an outcome that was 'materially better' than the offer.
17 The defendant has not cited any authority to support her assertion that the question, in applying O24A r 10(5), is whether the outcome achieved is 'materially better' than the terms of the offer to compromise. This is in my view not surprising. How is a court supposed to determine if the outcome achieved by a plaintiff is 'materially better' than the terms of an offer to compromise? At what point does a judgment cease to be 'materially better' than the terms of an offer to compromise? To take the present case as an example, if I had awarded the amount of $105,000, or $110,000 or even $115,000 would the defendant still be contending that the plaintiff had failed to obtain a judgment that was 'materially better' than the offer? It just does not seem to me that if a defendant makes an offer under O 24A the court, in applying O24A r 10(5), should be required to engage in the somewhat arbitrary process of deciding if the outcome was 'materially better' than the terms of the offer. In short, in my view the question in applying O24A r 10(5) is not whether the judgment obtained by the plaintiff was not 'materially better' than the offer. Rather, the question is, as the words of the rule dictate, whether the plaintiff obtained a judgment that was not 'more favourable' to him than the terms of the offer. I therefore propose to treat the defendant's arguments advanced in support of the contention that the plaintiff failed to achieve an outcome that was 'materially better' than the offer, to which I am about to turn, as arguments advanced in support of the contention that the plaintiff failed to achieve an outcome that was 'more favourable' than the terms of the offer.
First submission - outcome not more favourable than the offer
18 The defendant advances two arguments in support of her submission that the judgment obtained by the plaintiff was not more favourable than the terms of the offer. I will deal with each of the arguments in turn.
The retrospective assessment argument
19 The defendant submits, having regard to the reasoning which formed the basis of my assessment of the damages payable to the plaintiff, that if the assessment of damages had taken place on 26 June 2015 the amount of damages awarded would have been less than the offer. Therefore, the defendant argues, the plaintiff has in real terms failed to beat the offer.
20 The damages that I assessed as being payable by the defendant to the plaintiff were as follows:
Past loss of earning capacity $38,614
Future loss of earning capacity $30,204
Past loss of superannuation $4,251
Future loss of superannuation $3,489
Past medical costs $0
Future medical costs $2,000
General damages $23,890
Total $102,448
21 The detail of the defendant's submission that if damages had been assessed as at the date of the offer the damages awarded would have been less than the offer is expressed in pars 16 – 20 of the affidavit sworn by Ms Clarke in the following terms:
16. The defendant contends that if the assessment of damages had taken place on 26 June 2015, having regard to the damages awarded by his Honour Judge Derrick, the award would have been unchanged as to non-pecuniary loss, future economic loss and future treatment. The total damages excluding past economic loss amounted to $59,583.
17. However, if the plaintiff's past economic loss claim were calculated as at 26 June 2015 the defendant calculates the loss as follows:
13 March – 30 June 2014 $4,861 (unchanged from the judgment)
1 July 2014 – 26 June 2015 = 51.5 weeks
51.5 x $1,555 x 20% = $16,017
Sub-total: $20,878
Interest thereon: $20,878 x 1.3 x 3% = $814
Total past economic loss $21,692
Superannuation thereon
13 March – 30 June 2014 $513 (unchanged from the judgment)
1 July 2014 – 26 June 2015 = 51.5 weeks
51.5 x $2,153 x 20% x 9% x 85% = $1,696
Sub-total $2,209
Interest thereon $2,209 x 1.3 x 3% - $86
Total past loss of superannuation $2,295
18. In total the defendant calculates the plaintiff's past economic loss to 26 June 2015 at $23,978 instead of $38,614 + $4,251 = $42,865 as at 31 May 2016, a difference of $18,878.
19. The defendant asserts that if the plaintiff had been awarded $23,987 for past economic loss and $59,593 for the remaining heads of damage, his claim would have amounted to $83,570 and the plaintiff would have failed to beat the defendant's Order 24A offer.
20. If his Honour Judge Derrick had assessed the claim for future economic loss 11 months earlier (as at 26 June 2015) instead of the date of judgment (31 May 2016), and allowed the plaintiff a period of 3 years and 48 weeks before he was likely to resume full-time work, instead of 3 years, the claim for future economic loss would have been calculated as follows:
144 + 48 weeks = 192 weeks
$1,611 x 192 x 20% x 70% x 93% = $40,272
Lost superannuation thereon:
$2,262 x 148 x 20% x 70% x 9% x 85% = $3,585
Total future economic loss $43,857
23 The defendant's submission is premised on the assumption that it is appropriate, in determining if the judgment obtained by the plaintiff was not more favourable than the offer, to attempt to retrospectively work out the amount of damages that would have been awarded if damages had been assessed as at the date of the offer. I do not accept that this is an appropriate approach to determining if the judgment obtained by the plaintiff was not more favourable than the offer. I do not do so for three reasons.
24 First, there does not seem to me to be any warrant in the wording of O24A r 10(5) for adopting this type of approach.
25 Second, the defendant has not cited any authority in support of the proposition that this type of approach is permissible or appropriate, and I am not aware of any such authority.
26 Third, it does not seem to me to be appropriate as a matter of principle to require the court, in applying O 24A r 10(5), to not only in effect revisit the reasoning which led it to make the damages award that it did, but then also to attempt to work out, by reference to that reasoning, the damages that it would have awarded if it had been assessing damages as at the date that the offer to compromise was made.
27 For these reasons alone I do not accept the defendant's submission.
28 In any event, even if contrary to my above expressed conclusion it is appropriate for the court to engage in the type of approach advocated for by the defendant, there is, in my view, a difficulty with the specifics of the defendant's argument, namely that it fails to recognise that if I had assessed damages as at the date of the offer this may have impacted on:
1. The period of time by reference to which I based my calculations for damages for future loss of earning capacity and future loss of superannuation;
2. The extent of the percentage deduction that I allowed to take account of the possibility that the plaintiff could recover his earning capacity within a lesser period of time than that allowed for;
3. The 7% discount that I applied for contingencies; and
4. My decision not to award any amount in respect of past medical costs given that as at the date of the offer the defendant's insurer had not, as the plaintiff points out, paid an amount in respect of the plaintiff's past medical costs totalling $2,084.70 which the defendant did pay during the period 26 June 2015 to 31 May 2016.
29 The specific difficulties with the defendant's argument which I have just identified simply serve, in my view, to highlight the inappropriateness as a matter of principle for the court, in applying O24A r 10(5), to engage in the necessarily speculative exercise of attempting to work out the amount of damages that it would have awarded if the damages had been assessed as at the date of an offer to compromise.
30 For the reasons I have stated, I do not accept the first of the defendant's arguments for saying that the judgment obtained by the plaintiff was not more favourable than the offer.
The investment argument
31 The second argument advanced by the defendant in support of her submission that the judgment obtained by the plaintiff was not more favourable than the terms of the offer is set out in pars 21 – 22 of Ms Clarke's affidavit in the following terms:
21. If the plaintiff had been awarded $43,857 for future economic loss, $23,987 for past economic loss, $2,000 for future treatment and $23,890 for non-pecuniary loss, his damages would have amounted to $93,734 and the plaintiff would have failed to beat the defendant's Order 24A offer.
22. If the plaintiff had accepted $100,000 on 26 June 2015 and invested that sum in a term deposit account, with a rate of interest of 2.95% the plaintiff would have accrued $2,950 in interest after 12 months and by 26 June 2016 would have had $102,950, which is more than the judgment he achieved. If the sum of $100,000 has (sic) been invested for 11 months (to the end of May 2016) he would have earned $2,704 in interest giving a total of $102,704 (also more than the judgment).
32 There is no evidence before me that there are term deposit accounts or other investments available which would have provided a rate of interest of 2.95%. However, for the purpose of dealing with the argument I will assume the availability of such a rate of interest.
33 The submission is put by the defendant in par 23 of the written submissions filed in support of the application in the following terms:
The plaintiff in this instance has arguably failed to obtain a better result at trial than would have been the case by accepting the defendant's offer. The defendant contends that if the plaintiff had accepted the plaintiff's offer on 26 June 2015 and invested the money in a term deposit account, he would have been financially better off by the time of trial than the outcome he obtained at the trial.
34 I do not accept the defendant's submission for the following reasons.
35 First, the defendant has not cited any authority which supports the proposition that in deciding if a plaintiff has obtained judgment not more favourable to him than the terms of an offer to compromise, it is appropriate to have regard to the interest that the plaintiff would have earned if the offer was accepted and the monies paid pursuant to the offer invested in a term deposit. Further, I am not aware of any authority which supports this proposition.
36 During the hearing of the application counsel for the defendant cited Fortron Automotive Treatments Pty Ltd v Eurotime Holdings Pty Ltd [2001] WASCA 384 as authority for the proposition that in deciding if a plaintiff has obtained judgment not more favourable to him than the terms of an offer to compromise, it is appropriate to have regard to the interest that the plaintiff would have earned if the offer was accepted and the monies paid pursuant to the offer invested in a term deposit. I do not accept that this decision is authority for the proposition advanced. Fortron was a case in which the offer to compromise had been made by the plaintiff/appellant pursuant to O 24A r 10(4) of the RSC. At the time O 24A r 10(4) provided that where an offer is made by a plaintiff and not accepted by a defendant and the plaintiff obtains judgment on the claim to which the offer relates no less favourable to him than the terms of the offer, the plaintiff is entitled to an order against the defendant for his costs in respect of his claim from the date upon which the offer was made, taxed on an indemnity basis, in addition to his costs incurred before that date taxed on a party and party basis. The appellant's claim was for a capital sum plus interest. The offer to compromise was for the capital sum only. The appellant, on appeal, was successful. That is, the appellant was awarded the capital sum plus interest. The third respondent contended that it should not have to pay indemnity costs because the only compromise entailed in the offer to compromise was in regard to the interest component of the claim.
37 The Court of Appeal rejected this argument. In doing so it held that the offer to compromise, bearing in mind the amount of interest that had accrued as at the date of the offer, was a genuine offer that should have been accepted. Thus, the court took into account the amount of interest the subject of the claim in deciding if the offer should have been accepted and hence whether the third respondent should be ordered to pay indemnity costs. This is not, however, the same as saying that in deciding if a judgment obtained by a plaintiff is not more favourable than an offer to compromise the court should take into account what interest could have been earned on the sum the subject of the offer if the offer had been accepted and the sum invested.
38 My second reason for not accepting the defendant's submission as put in par 23 of the written submissions is that the submission assumes, without any proper foundation for doing so, that a plaintiff is required to, or can be expected to, make use of monies paid pursuant to an offer to compromise in a way in which he or she will generate additional income. That need not be the case. A plaintiff, once money is paid pursuant to an offer, is entitled to use the money as he or she sees fit.
39 For these reasons I do not accept the second of the defendant's arguments for saying that the judgment obtained by the plaintiff was not more favourable than the offer.
Second submission – discretionary refusal to award plaintiff costs
40 The defendant's second submission is, in essence, that the adverse findings that I made as to the plaintiff's credibility in relation to various aspects of his claim, reveal that his conduct in pursuing his action to trial and in the presentation of his case was 'wholly unreasonable', and that his unreasonable conduct forced the defendant to incur the significant and unnecessary expense associated with issuing numerous subpoenas, calling witnesses to give evidence, and extensively cross-examining the plaintiff and his witnesses in order to refute his claim and expose his lack of credibility. It is submitted that in these 'special circumstances' it is appropriate for me, even if I find that the judgment obtained by the plaintiff was more favourable than the offer, to depart from the general rule that costs follow the event and order that the plaintiff pay the defendant's costs from the date of the offer.
41 It is the case that I took a generally adverse view of the plaintiff's credibility and that I did not award to him damages in an amount anything like the amount that he was claiming. It may well also be the case that the defendant was, by reason of the plaintiff's conduct, forced to incur the significant expense associated with issuing numerous subpoenas, calling witnesses to give evidence, and extensively cross-examining the plaintiff and his witnesses in order to refute aspects of his claim and expose his lack of credibility. However, at the end of the day I still awarded a not insignificant amount of damages to the plaintiff, the amount being higher than the amount of the offer. In these circumstances I do not consider that there is a proper basis for me, in the exercise of my discretion, to depart from the general rule stated in O 66 r 1(1) of the RSC, namely that the successful party to an action is entitled to his costs. I do not accept the defendant's submission to the contrary.
42 The various complaints by the defendant about the way the plaintiff prepared and presented his case may have been relevant if the plaintiff did not beat the offer and the defendant claimed costs on an indemnity basis pursuant to O 24A r 10(7A). However, the plaintiff did not beat the offer and has in any event expressly disavowed claiming costs on an indemnity basis.
Conclusion
43 For the reasons stated I dismiss the application.
44 It follows that in my view the appropriate order is that the defendant pay the plaintiff's costs of the action, including reserved costs, to be taxed if not agreed.
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