Echin v Southern Tablelands Gliding Club (No. 2)
[2013] NSWSC 744
•28 June 2013
Supreme Court
New South Wales
Medium Neutral Citation: Echin v Southern Tablelands Gliding Club (No. 2) [2013] NSWSC 744 Hearing dates: 10 June 2013 Decision date: 28 June 2013 Jurisdiction: Common Law Before: Davies J Decision: The First Defendant's application for indemnity costs is dismissed.
Catchwords: PROCEDURE - costs - Calderbank offers - consideration of the stage the proceedings had reached - one offer made "inclusive of costs" - effect of such an offer - whether can result in order for indemnity costs - reasonableness of the time for acceptance of the offer Legislation Cited: Civil Liability Act 2002
Civil Procedure Act 2005
Uniform Civil Procedure RulesCases Cited: Calderbank v Calderbank [1975] 3 WLR 586; [1975] 3 All ER 333
Echin v Southern Tablelands Gliding Club [2013] NSWSC 516
Echin v Southern Tablelands Gliding Club Inc and Civil Aviation Safety Authority [2012] NSWSC 966
Elite Protective Personnel Pty Ltd & Anor v Salmon [2007] NSWCA 322
Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No. 2) [2008] NSWCA 85Category: Costs Parties: Malcolm Echin (Plaintiff)
Southern Tablelands Gliding Club (First Defendant)Representation: Counsel:
J Anderson (Plaintiff)
D A Lloyd (First Defendant)
Solicitors:
Galland Elder Lulham (Plaintiff)
Riley Gray-Spencer Lawyers (First Defendant)
File Number(s): 2011/004376
Judgment
I gave judgment in the principal proceedings on 28 May 2013: Echin v Southern Tablelands Gliding Club [2013] NSWSC 516. I found that the First Defendant did not breach its duty of care to the Plaintiff. Judgment was given for the First Defendant and the Plaintiff was ordered to pay the First Defendant's costs of the proceedings.
The First Defendant now seeks an order that the Plaintiff pay its costs on an indemnity basis for one of two specified periods. The first period is from 13 March 2012 to the conclusion of the proceedings on the basis that an offer was made on that date to settle the proceedings for the sum of $300,000 inclusive of costs. The alternative period is from 29 August 2012 when the Defendant made an offer to settle the proceedings with a verdict and judgment being entered in favour of the Defendant with each party to bear their own costs.
The Plaintiff commenced the proceedings naming the Southern Tablelands Gliding Club Inc as the First Defendant and the Civil Aviation Safety Authority (CASA) as the Second Defendant.
The Second Defendant applied to strike out the claim against it. On 21 August 2012 McCallum J struck out the claim against the Second Defendant pursuant to r 14.28(1)(a) UCPR: Echin v Southern Tablelands Gliding Club Inc and Civil Aviation Safety Authority [2012] NSWSC 966. Thereafter the proceedings continued against the Club only.
The offers
Prior to the judgment of McCallum J the solicitors acting for the Second Defendant wrote on behalf of both Defendants to the Plaintiff's solicitors on 13 March 2012. The letter was marked "WITHOUT PREJUDICE EXCEPT AS TO COSTS". The letter said this:
We refer to the mediation of this matter on 24 January 2012.
The defendants are, together, prepared to resolve your client's claim by way of payment of $300,000 inclusive of costs and all paybacks. This offer takes Into consideration the significant difficulties your client faces in successfully showing that either defendant is liable and the current evidence In support of the damages he claims.
This offer is made in accordance with the principle enunciated in the matter of Calderbank v Calderbank [1975] 3 ALL ER 333 and will be relied upon in support of an application for Indemnity costs from the date of this correspondence, should the offer not be accepted and the plaintiff, at any eventual hearing, obtain an award of damages in the same or a lesser amount.
This offer remains open for acceptance for 14 days from the date of this letter. We look forward to receiving your client's response.
The Plaintiff rejected that offer.
On 20 August 2012 the two experts completed their joint report. Precisely when this was seen by the parties and their solicitors is not clear but certainly no later than 29 August.
On 23 August 2012 the Plaintiff's solicitors wrote to the Club's solicitors offering in accordance with the principles in Calderbank v Calderbank [1975] 3 WLR 586; [1975] 3 All ER 333 that they would settle the proceedings if the payment of a sum of $400,000 inclusive of costs in full and final settlement of the claim. The offer was said to remain open until the close of business on 24 August 2012.
It seems that there must have been further correspondence rejecting that offer because on 29 August 2012 the First Defendant's solicitors sent to the Plaintiff's solicitors a letter also marked "Without Prejudice Save as to Costs". The letter offered to settle the proceedings with a verdict and judgment being entered in favour of the First Defendant and with each party to bear its own costs.
The letter set out at some length reasons for the offer that was made. It is necessary to set out the letter in its entirety:
We refer to our without prejudice correspondence dated 27 August 2012 and your subsequent telephone conversation with Ms Collantes of this office.
We refer to the joint expert conclave report ("the report") dated 20 August 2012 which we received on 24 August 2012 and which was sent to you by email on 27 August 2012.
We have now, as we understand you have, had time to consider the report.
It is our client's view that the report is very favourable to its position.
It is significant to note that the authors do not disagree on any of the responses to the questions provided by both parties in the joint letter of instruction dated 9 August 2012.
It is also apparent given the assumptions the experts make (particularly in relation to the plaintiffs training and knowledge of the power lines) that the first defendant did not fail to exercise the reasonable care and skill expected of a gliding club in providing and/or designating Runway 30.
The experts also state on several occasions that the plaintiff was aware of the power line hazard and furthermore that the plaintiffs training (which he received prior to being cleared for solo flight) would have included landing technique, landing area selection and safe clearance of obstacles.
The experts further comment that it is not uncommon that many gliding clubs operate in the vicinity of power lines. Pilots are briefed on these hazards but it is not considered unusual for there to be no specific reference to them in daily briefings.
The experts also agree that the training provided by Mr Gamble to the plaintiff met the GFA standards and included the need to clear obstacles whilst maintaining a safe speed.
In light of the report it is our client's view that it will not be held liable as there was no breach of any duty that might be owed to your client.
It is clear that the plaintiff was aware of the existence of the power lines which were known hazards and which had been regularly discussed amongst Club members.
Even if the Club was to be found to have breached some duty owed, the Club still has its defences under the Civil Liability Act 2002 (NSW) in relation to being a volunteer and the plaintiff undertaking a dangerous recreational activity.
From the conversation with Ms Collantes we understand that your client is still maintaining that the following issues assist your client on liability:
1. that the duty pilot "told" him via radio that he could "hangar land" the glider; and
2. that there was no Instructor with a Level 2 Instructor rating on the field on the date of the incident.
In relation to numbered paragraph 1, as your client well knows all flight management decisions including the selection of where to land a glider are the sole responsibility of the pilot.
The plaintiff did receive advice from the duty pilot that he could conduct a "hangar landing" but this advice was no more than a suggestion to the pilot to land safely on a runway as close as possible to the hangar.
This advice cannot be interpreted as a direction to the pilot to land on a specific runway or to fly a specific circuit pattern.
It is also clear that the plaintiff had a number of options of where to land the glider but chose to land over the power lines onto Runway 30.
In relation to numbered paragraph 2 we have already provided you with a copy of the page of Mr Hayward's log book which clearly shows that his Level 2 Instructor rating was endorsed on 29 June 2008 (i.e. prior to the incident). Therefore on the date of the incident Mr Hayward had the appropriate qualifications to be the Level 2 Instructor at the field.
We also note that your Counsel acknowledged in Court during the hearing of the Motion concerning the amendment of the pleadings that we had served evidence of Mr Hayward having a Level 2 Instructor rating on the date of the incident,
In light of all of the above our client is of the view that the plaintiffs case will not succeed.
However our client is prepared to compromise the proceedings on the following basis:-
1. a verdict and judgment being entered in favour of the first defendant; and
2. Each party to bear their own costs.
This offer is open until 5.00pm on Thursday. 30 August 2012.
This offer is made in accordance with the principles articulated in the decision of Calderbank v Calderbank [1975] 3 All ER 333.
If the trial proceeds to a judgment and our client is successful, we will rely upon this correspondence to make an application for indemnity costs.
This letter was sent by email but there is no evidence of the time of sending. It is to be noted that the Plaintiff was given only until 30 August 2012 to accept the offer. That was no doubt because the hearing was listed to commence the following Monday (3 September), 30 August being a Thursday.
Submissions
The Plaintiff correctly submitted that the issue of whether indemnity costs should be ordered following the service of a Calderbank offer is a matter for the Court's discretion.
The Plaintiff then submitted that the Court would not order payment of costs on an indemnity basis for these reasons:
(a) The Defendant elected not to serve an offer of compromise pursuant to the Rules;
(b) The offer of 13 March 2012 was made before the Second Defendant obtained summary judgment, and before the First Defendant filed a Defence relying on ss 3C and s 61 of the Civil Liability Act 2002. The Plaintiff asserted that the First Defendant was unsuccessful in relation to that Defence;
(c) On 23 August 2012 the Plaintiff made an offer of $400,000; and
(d) During the trial the First Defendant agreed on quantum in the sum of $750,000.
The relevance of items (c) and (d) above was never elucidated and is not apparent to me.
No submission was made by the Plaintiff in relation to the fact that the Calderbank offer of 13 March 2012 was an offer made inclusive of costs.
The Defendant accepted that an offer inclusive of costs might result in it being found that the opposite party did not act unreasonably in rejecting the offer but submitted that it was always a matter for the particular circumstances to be considered.
Legal principles
In Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322 each of the members of the Court of Appeal considered whether a Calderbank letter making an offer inclusive of costs could attract an order of indemnity costs. Each of the members of the Court accepted that such a result could not be excluded because it would fetter the discretion contained in s 98 Civil Procedure Act 2005. Both Beazley JA at [7] and Basten JA at [141], [144], [145] and [146] said that each situation needed to be considered on its own facts.
Basten JA provided some examples of where an inclusive offer may be appropriate and where a failure to accept such an offer might result in an order for indemnity costs. In relation to an inclusive offer by a defendant his Honour said:
[144] The suggestion that a Calderbank letter which is expressed to be inclusive of costs is "insufficiently precise to qualify as a Calderbank offer" requires to be addressed in particular circumstances. A defendant who fears that even if successful it will be unable to recover costs awarded against the plaintiff, may wish to make an offer in full and final settlement, without further disputation over costs. It may wish to place pressure on the plaintiff to consider the offer favourably by reserving an entitlement to use the offer in relation to costs if the matter proceeds to trial. There is no reason based on policy or principle which would preclude a defendant relying on such an offer only when it is said to be exclusive of costs. Such an inclusive offer will not cause the plaintiff embarrassment: its value will be that amount remaining to him or her after deducting costs already incurred, which the plaintiff's lawyer should be readily able to quantify. The disadvantage of an inclusive offer lies with the defendant if the matter proceeds to judgment. Where the judgment is equal to or above the inclusive figure, the defendant will have failed to better its own offer. However, if the judgment is below the offer there may be uncertainty because the offer included an unquantified element for costs incurred up to the time when it lapsed or was rejected. No doubt the figure for costs incurred to that time by the plaintiff could be resolved by some form of assessment, but if the calculation of the damages component is not clearly seen to provide a figure above the judgment, then the interests of justice will usually not be served by incurring further expense in assessing the costs element of an offer and the plaintiff would be entitled to his or her costs....
The time at which an offer is made during the course of proceedings is a relevant factor as to the reasonableness or otherwise of accepting that offer. So too is the time in which the offeree is given to accept the offer: Elite at [146]-[147] and [149].
Consideration
(a) Offer of 13 March 2012
I do not consider it was unreasonable of the Plaintiff to have rejected this offer at that stage of the proceedings. First, the Second Defendant was still a party to the proceedings and no application had been made by the Second Defendant to strike out the proceedings out against it. Secondly, the fairly brief expert report that the Plaintiff had obtained from Tim Flower dated 11 April 2011 contained an opinion that provided some modest support for the case the Plaintiff wished to assert. Thirdly, the joint expert report which went a long way to support the Defendant's position was not served until August 2012.
I do not consider that the later reliance by the First Defendant on ss 3C and 61 CLA to be relevant to this assessment. Contrary to the Plaintiff's assertion that the First Defendant was unsuccessful in relation to those matters I found that if the First Defendant had a truly vicarious liability for Mr Gamble s 3C produced the result that the First Defendant would have the same immunity: see Echin at [105]. That, however, was a subsidiary determination and was strictly not necessary because of my finding of no breach of duty.
The First Defendant submitted that it was unreasonable for the Plaintiff to reject an offer of $300,000 inclusive of costs when the Plaintiff ultimately lost the proceedings. In that way it was said that the fact that the offer was inclusive did not assist the Plaintiff. Whilst I agree that the fact that the offer was an inclusive offer is not something that would, of itself, preclude the First Defendant from obtaining an order for indemnity costs in an appropriate situation, it was not unreasonable for the Plaintiff in March 2012 not to accept it because of the stage the proceedings were at and, in particular, the continuing position of Second Defendant and the Plaintiff's expert report.
(b) Offer of 29 August 2012
In the first place, the Plaintiff was unsuccessful in the proceedings for reasons very similar to those advanced in the letter of 29 August 2012. Further, I accept that the letter was written shortly after receipt of the joint expert report. The letter pointed out matters from that joint report which were matters I also accepted in finding no breach by the First Defendant. Ordinarily, that would be a strong support for an order for indemnity costs.
The First Defendant submitted that the offer was made at a time when the Plaintiff would have been working to prepare for the trial and would have been well versed in the issues he faced.
Nevertheless, the question is whether it was unreasonable in all the circumstances for the Plaintiff not to have accepted the offer that there be a verdict for the First Defendant with each party bearing their own costs by the close of business on the day following the date of the letter. In my opinion, it was not unreasonable for the Plaintiff not to have accepted the offer.
Whilst it is understandable that the First Defendant wished to be in a position to know whether preparations would have to be made for the hearing of the matter, listed to commence on 3 September 2012, I consider that the period of time given for acceptance was unreasonably short. In Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No. 2) [2008] NSWCA 85 at [2], [15]-[16] and [20]-[24] it was held that it was not unreasonable for a Plaintiff not to have accepted an offer left open for a similarly short period. Indeed, there was probably more justification in that case for the shortness of time because the offer was made on the day preceding the commencement of the hearing: Basten JA thought, in that regard, that r 42.15(2)(b) UCPR was relevant (at [18]).
I have considered the relevant matters where an offer is made during final preparation for trial: Kooee at [20]. Matters which lead me to the view that the time allowed was too short for a finding that the Plaintiff acted unreasonably in not accepting the offer are (a) the offer was one which would result in the Plaintiff receiving nothing (the earlier offer involved a not insubstantial sum), (b) the joint expert report had only just been received, (c) from the date of the letter there were two clear business days before the trial was due to commence and four days in total (cf Kooee), and (d) the counterbalancing factor referred to by Basten JA of the offer resulting in a distraction from preparation for the trial.
Accordingly, there should be no variation to the costs order that I made in my principal judgment.
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Decision last updated: 28 June 2013
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