Eggins v Vale

[2007] HCATrans 410

[2007] HCATrans 410

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S89 of 2007

B e t w e e n -

TIM DAVID EGGINS

Applicant

and

THOMAS WILLIAM VALE

Respondent

Application for special leave to appeal

GUMMOW J
KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 3 AUGUST 2007, AT 4.25 PM

Copyright in the High Court of Australia

MR K.P. REWELL, SC:   If the Court pleases, I appear with my learned friend, MR M.A. CLEARY, for the applicant.  (instructed by TL Lawyers)

MR L.T. GREY:   May it please the Court, I appear for the respondent.  (instructed by McClellands)

GUMMOW J:   Yes, Mr Rewell.

MR REWELL:   Your Honours, in ordinary circumstances we would not trouble this Court with matters concerning costs but the matter in issue here, we will submit, is critical to the conduct of civil litigation in this State and elsewhere.  I do not need to remind your Honours that the modern emphasis in civil litigation is to encourage rather than discourage the early resolution of disputes and, in particular, the resolution of litigated disputes without recourse to a final hearing before a judge.

GUMMOW J:   It comes down to what “in an exceptional case and for the avoidance of substantial injustice” means in rule 25(6), does it not?

MR REWELL:   Yes, it does and we say that that has not changed with the enactment of the Uniform Civil Procedure Rules.  The test is substantially the same.  We made that point in our reply that when looking at a previous Supreme Court Rule which was in almost identical terms to the current, the Supreme Court and Court of Appeal of this State both made comments from time to time that, yes, an exceptional case is required and there has to be a substantial risk of injustice.

The point of principle arises because it is important as a matter of policy and otherwise that rules relating to offers of compromise be given their intended effect.  Justice Kirby when the President of the Court of Appeal in this State made that point several times.  The first, I think, your Honour, was in 1993 in Fowdh v Fowdh in which dealing with the Supreme Court Rule of that time your Honour said:

The purpose of the Rule . . . is to encourage not only the saving of private costs and time but also the saving of public costs and the expeditious disposal of litigation in the Supreme Court.

Then importantly your Honour said:

Unless primary judges give meaning and application to the Rule, in accordance with its terms and obvious purpose, the operation of the Rule will be frustrated and its effectiveness denied.

GUMMOW J:   What do you say about paragraph 20 of Mr Grey’s written submissions at page 95?

KIRBY J:   Justice Gummow was not impressed with my words of wisdom in the Court of Appeal days – brushed them aside.

MR REWELL:   I always like to remind your Honour of them.

KIRBY J:   Yes.

MR REWELL:   Two things, your Honour.  There are two aspects to what we say ‑ ‑ ‑

GUMMOW J:   Why would we get involved in that?

MR REWELL:   Because there is a matter of principle involved.

GUMMOW J:   What is the principle?

MR REWELL:   Secondly, there is a manifest injustice which has been done.  Can I deal with the principle first.  We would formulate the question that this Court needs to answer in these terms, what are the principles to be applied in determining whether the prescribed consequences as to costs of a successful offer of compromise should or should not be enforced?  On that question the two camps in the Court of Appeal took completely different positions.  The majority said, if there is a change in the case that the party who has failed to comply with an offer had to meet, then that is an indication that the court ought otherwise order or, to put it another way, that it is an exceptional case, a case where there is a risk of substantial injustice.  The contrary position was put by Justice Bryson.  I cannot really improve on his Honour’s expression of the position.  It is in page 69 of the application book.

GUMMOW J:   It is quite laconic.

MR REWELL:   Yes, it is but it is also ‑ ‑ ‑

GUMMOW J:   Not that that is a bad thing.

MR REWELL:   It is a very realistic expression of not only how litigation happens on a day‑to-day basis but how it ought to happen.  What his Honour says, in essence, is that when a person – whichever party it is, plaintiff or defendant – is served with an offer of compromise, the offeree should look at their own case and say, “On the basis of our own case, is this offer an offer which is reasonable or an offer which is unreasonable?  Is it an offer which ought to be accepted or not?  Is it an offer we are likely to do better than or not?”  I emphasise this affects plaintiffs and defendants in exactly the same way.

Justice Bryson said, when one receives such an offer one does not try to look over the fence at the other team’s evidence and say, “What have they shown us so far and how does the evidence stack up at the moment”, because, as Justice Bryson pointed out, it is absolutely inevitable that as time goes on the evidence that comes from the other side will change and probably the evidence on one’s own side will change.  So Justice Bryson said there is nothing exceptional about what happened here, that is, that further evidence came to light to the offeree’s knowledge after the offers of compromise were made.  His Honour said that, indeed, it would be exceptional if that did not happen.  So, we have a conflict between the members of the Court of Appeal as to what the correct principle to be applied is. 

Justice Bryson’s statement of principle gives full effect, we submit, to the purpose of the rules relating to offers of compromise.  On the other hand, the majority’s statement of principle undermines, with respect, the purposes of offers of compromise because, as Justice Bryson points out, it is inevitable in almost every case that there will be evidence served after an offer of compromise and therefore if the Court of Appeal’s decision stands, it is inevitable that in almost every case there will be an argument when an offer of compromise is successful as to whether it should be enforced.  The party against whom costs orders are sought will say, “Just a moment, there was evidence served after the offer of compromise came to us and after it expired and therefore it is not fair to enforce the offer against us.”  So rather than shortening litigation, it will be lengthened by post‑judgment arguments as to costs. 

In this particular case we reinforce our position by saying that the outcome was manifestly unjust.  My client, who was the defendant at the trial, served not one but two offers of compromise, as it was entitled to do, one as to liability offering to split a verdict on the basis of 70 per cent contributory negligence, the other as to an overall resolution of the dispute.  That was an appropriate course at the time because liability was obviously the key issue.  Both offers were allowed to expire by the plaintiff.  Both offers were ultimately successful in terms of the fact that the plaintiff did worse both on liability and on damages. 

Dealing quickly with the liability offer, what concerned the Court of Appeal was that the defendant obtained expert evidence long after the expiry of the offer of compromise, served the expert evidence and used it at the trial.  The majority of the Court of Appeal said that changed the case that the plaintiff was required to meet at the time the liability was open for consideration.  What we say about that is, first, it was wrong in principle because that is not something that the plaintiff should have had in consideration.  It was inevitable that there would be some more liability evidence but, more importantly, the Court of Appeal, contrary to the trial judge’s approach, said that the expert evidence was irrelevant, that the case we sought to raise by expert evidence – which was an agony of the moment case – was the wrong approach, any way. 

That was the whole reason why the trial judge’s decision, which was a verdict for the defendant, was set aside.  So, evidence which was ultimately found to be irrelevant was at the same time and, indeed, in the same paragraph of the Court of Appeal’s majority judgment found to be evidence which disqualified us from relying on our liability offer of compromise and we say ‑ ‑ ‑

KIRBY J:   Is there not a problem in propounding this as a case of great principle, that the words “exceptional case” are themselves what Professor Julius Stone would have called a category of indeterminate reference.  It is a very general expression that is going to vary from case to case.  It is very unlikely that the High Court of Australia could ever lay down some great principle that would elucidate this.  It just has to be evaluated from case to case.

MR REWELL:   We seek no more than the Court’s imprimatur for the principle espoused by Justice Bryson which, in effect, is that when one is served with an offer of compromise, the offer is to be assessed by the offeree on the basis of the offeree’s own evidence at the time the offer is served which cannot ever change.  So that exceptional circumstances will therefore not include a service of later evidence and that is what we seek to eliminate because that is something that will happen in every case and lead to an argument about offers of compromise in every case.  We do not ask this Court to go any further than that.

KIRBY J:   The problem is that next week somebody will be up here with some other factual variant and they will say this is a great principle, it has got to be laid down in the books by the highest Court in the nation.

MR REWELL:   Given the courage it takes to bring costs arguments before this Court in the first place and the rare ‑ ‑ ‑

KIRBY J:   Indeed it does.  Only a person with your courage would attempt the struggle.

MR REWELL:   And the rarity with which it is done.  We say it will only come here once, but what we are trying to take out of play ‑ ‑ ‑

GUMMOW J:   The appetite will grow with eating.

MR REWELL:   What we are trying to take out of play is something which happens as a day‑to‑day event because while we are bound by a decision of the Court of Appeal which says any time there is some evidence served after you have not accepted an offer of compromise, the door is open for you at the end of the case to say ‑ ‑ ‑

GUMMOW J:   Justice Bryson puts it very high, does he not, “delinquency, deception, abuse of the offer”, wickedness, in other words?

MR REWELL:   Yes, but there are other statements in our courts of what ‑ ‑ ‑

GUMMOW J:   It is the sort of thing that would have attracted a sermon by John Knox.

MR REWELL:   There are other perhaps less florid statements of what constitute exceptional circumstances to which we have referred in our reply and President Mason of the Court of Appeal in one judgment collated them all together.  There are numerous examples that I do not need to go into here of what exceptional circumstances are, but the point we are making is that the very common circumstance of additional evidence cannot be regarded as an exceptional case or exceptional circumstances and if it is, the rules as to offers of compromise are frustrated.

GUMMOW J:   The fact is, the experience of law has taught both of us, up here anyway, that you cannot run a court fencing yourself in with all sorts of rules about broad terms like “exceptional case”.

MR REWELL:   But some guidance has to be given.  I mean, the more general the terminology, the more guidance is required.

GUMMOW J:   That is why you have good judges.

MR REWELL:   But the litigants have to know whether they have a prospect of having their offer of compromise enforced either for them or against them or not and if they do not, the incentive ‑ ‑ ‑

KIRBY J:   Especially in matters of costs, though.  The tradition of the common law and of the courts of Australia has been to acknowledge the variation of the circumstances of cases and therefore to leave it to the good judges to decide how it falls out.  Of course there will cases where you can say that was not really fair, but the costs then of litigating the costs issue then becomes cumulative and people get locked into litigation which is really about costs.

MR REWELL:   What we are here for is to attempt to prevent future arguments about costs of this type.

GUMMOW J:   You are here to win this case.

MR REWELL:   I am not here to lose it but, at the same time, I am here to – part of what we are here for is a generic purpose.  Part of what we are here for is to offer to pay the costs of both parties of a High Court appeal because it is important to regular litigants because if regular litigants do not know where they stand in terms of offers of compromise, then the system will not operate as it ought to because ‑ ‑ ‑

KIRBY J:   You have declared what you are here for.  I am here for upholding the purpose of Parliament in a category of indeterminate reference which is to acknowledge you cannot get it down to a taxonomy of rules, it just has to be left to the particular circumstances of the case.  That is what the courts have been saying forever about costs.

MR REWELL:   I am not going to repeat myself but we certainly do not seek a taxonomy of rules.  What we seek is guidance as to a particular matter that is a day‑to‑day occurrence and that is why we are here.  As your Honours please.

GUMMOW J:   We do not need to call on you, Mr Grey.

The applicant propounded this application as one that would tender on appeal a question of great principle and also manifest injustice.  We do not accept that that is what is involved here.  What is involved is the determination of costs and that is rarely a question attracting grant of special leave, although exceptionally that does happen.  As well what is involved here is whether the case was “an exceptional case” under the relevant rules of the District Court of New South Wales warranting the order which the majority of the Court of Appeal of that State favoured.

Whilst there is force in some of the reasoning of Justice Bryson who dissented, we are not ultimately convinced that the order favoured by the majority was wrong or that an appeal to this Court would enjoy reasonable prospects of success.  Accordingly, special leave is refused with costs.

The Court will now adjourn to 2.15 pm on Monday, 6 August 2007 in Adelaide.

AT 4.41 PM THE MATTER WAS CONCLUDED