Evans v Dawson (No 2)
[2012] TASSC 30
•30 May 2012
[2012] TASSC 30
COURT: SUPREME COURT OF TASMANIA
CITATION: Evans v Dawson (No 2) [2012] TASSC 30
PARTIES: EVANS, Mark Alexander
v
DAWSON, Reginald
FILE NO/S: 740/2009
DELIVERED ON: 30 May 2012
DELIVERED AT: Hobart
HEARING DATE: 25 May 2012
JUDGMENT OF: Tennent J
CATCHWORDS:
Procedure - Costs – Departing from general rule – Generally – Effect of Calderbank offer on exercise of discretion.
Supreme Court Rules 2000 (Tas), Pt9.
Grbavac v Hart [1997] 1 VR 154; Smallacombe v Smallacombe and Swanwood Pty Ltd [1993] FCA 169; Morris v McEwen [2005] SASC 284, referred to.
Aust Dig Procedure [581]
REPRESENTATION:
Counsel:
Plaintiff: B R McTaggart
Defendant: S Brown
Solicitors:
Plaintiff: McGrath & Co
Defendant: Bartletts
Judgment Number: [2012] TASSC 30
Number of paragraphs: 25
Serial No 30/2012
File No 740/2009
MARK ALEXANDER EVANS v REGINALD DAWSON (No 2)
REASONS FOR JUDGMENT TENNENT J
30 May 2012
On 26 April 2012, I delivered a judgment in a personal injury claim by the plaintiff. I awarded him an amount of $152,853.53 by way of damages. The parties are now in dispute as to the costs associated with the plaintiff's action.
The plaintiff seeks an order that the defendant pay his taxed costs. The defendant does not oppose such an order up to 10am on 24 June 2011. However, the defendant seeks an order that the plaintiff pay his costs as from that time. The dispute centres around the effectiveness of a Calderbank offer sent by facsimile transmission by the solicitors for the defendant to the solicitors for the plaintiff at 4.35pm on 17 June 2011. The offer required a reply by 10am on 24 June 2011. The offer was not accepted.
The plaintiff resided in Sulphur Creek near Burnie. His and the defendant's solicitors were in Burnie. The trial was conducted in Launceston. The plaintiff's counsel was from Hobart, while the defendant's counsel was from Launceston.
Terms of Calderbank offer
The letter containing the offer provided as follows:
"I am instructed by the Board to increase the Board's proposal to settle herein.
The Board's offer is an offer made without prejudice save as to costs. The Board offers the sum of $200,000 plus costs to be agreed or taxed.
The offer remains open until Friday the 24 June 2011 at 10.00am.
It is a condition of the offer that any monies repayable to Centrelink be repaid out of the $200,000.00.
It is a condition of the offer that there be a 90/10 advance payment, with 10% going to Medicare. If you have a current notice please let me know.
As you will appreciate we are not in a position to make an Offer of Compromise in accordance with the Rules. We therefore advise that, should the above offer not be accepted, and your client fail to obtain a Judgment more favourable than the offer made above, then this letter shall be used on the issue of costs with an application being made for costs against your client. Such an application will in accordance with principles applied in Calderbank v Calderbank (1975) 3 ALL ER 333 and adopted in Australia including in MT Associates Pty Ltd v Aqua-Max Pty Ltd (No 3) [2003] VSC 163.
In the event the offer is accepted we would propose that Judgment be entered for the Plaintiff in the sum of $200,000.00 together with costs to be taxed."
It is apparent that the offer made exceeded the amount awarded to the plaintiff at trial.
History of offers
The Calderbank offer relied upon was not the first time an offer of settlement had been made. There had been at least two prior offers, one in January 2010 and one by letter dated 5 May 2011. The offer relied upon represented an increase of $50,000 on that made in May 2011.
The law
The Supreme Court Rules 2000 ("the Rules"), Pt9, provides for the making of offers of compromise. Specific rules provide for the form of such offers, the period for which they remain open, how they may be accepted and the impact of acceptance or failure to accept. The Rules provide, it might be said, for a certainty of outcome where a party is faced with an offer of compromise made within the Rules and accepts such an offer. However as Professor Dal Pont said in his text Law of Costs (2003 ed) at 404:
"In any event, Australian courts have not treated the availability of a payment in procedure, or for that matter the procedure for offers of compromise prescribed by court rules, as displacing the usefulness of a Calderbank offer. The availability of an alternative procedure instead goes to the weight of the Calderbank offer, not its lack of utility."
The terms of the offer should be unambiguously clear. (See Grbavac v Hart [1997] 1 VR 154 at 155 per Winneke J). Tadgell JA in the same case said at 160 – 161:
"It would ordinarily, I should think, be pre-eminently necessary to consider whether the terms of the offer were unambiguously clear. It would be necessary also to consider whether the attention of the offerree had been fairly drawn to the purpose for which, and the intention with which, the offer had been made. In particular it would be relevant to consider whether the offer was reasonably to be understood as one made simply for the purpose of inducing a settlement of the appeal, or as one whose purpose was also to secure a costs advantage if the appeal proceeded; and if the latter, what ultimate costs advantage the offerror had in mind to achieve."
In Smallacombe v Smallacombe and Swanwood Pty Ltd [1993] FCA 169, Spender J canvassed authorities dealing with Calderbank offers. His Honour said in pars[15] to [23]:
"15 In Cutts v Head (1984) Ch 290, the Court of Appeal held that a Calderbank letter may be relied upon in proceedings in any division of the court, not just in family disputes. However Oliver LJ, who delivered the principal judgment said that the procedure may be adopted only where the facility of a payment into court is not available. His Lordship said, at 312:
'I would add only one word of caution. The qualification imposed on the without prejudice nature of the Calderbank letter is, as I have held, sufficient to enable it to be taken into account on the question of costs; but it should not be thought that this involves the consequence that such a letter can now be used as a substitute for a payment into court, where a payment into court is appropriate. In the case of the simple money claim, a defendant who wishes to avail himself of the protection afforded by an offer must, in the ordinary way, back his offer with cash by making a payment in and, speaking for myself, I should not, as at present advised, be disposed in such a case to treat a Calderbank offer as carrying the same consequences as payment in.'
16 Fox LJ at 317 explicitly concurred in that observation by Oliver LJ.
17 In Corby District Council v Holst and Co. Ltd (1985) 1 WLR 427 the judgment of the Court of Appeal was again that of Oliver LJ. His Lordship said at 433:
'The cost of legal proceedings are by statute left to the discretion of the court, and that discretion is to be exercised in accordance with the rules. One of the matters which may be taken into account, and indeed, ordinarily would be, is an open offer by the defendant of everything to which the plaintiff ultimately showed himself entitled. Whether, however, such an offer is to be treated for all purposes in the same way as a payment into court must itself be a matter on which the judge of trial will have to make up his own mind in the exercise of his discretion.'
18 In Messiter v Hutchinson (1987) 10 NSWLR 525, Rogers J held that a letter of offer, in which a party has offered as much as or more than that to which the opposing party ultimately establishes his entitlement following a hearing, should be taken into account by the court in determining whether to make a special costs order displacing the usual order that costs follow the event.
19 That case concerned the value of a race horse that had been destroyed. Somewhat prophetically his Honour said at 526:
'Very reasonably, if I may say so, the parties agreed to have this question determined by an arbitrator or referee somewhat more knowledgeable in these matters than the usual commercial judge.'
20 The letter with which his Honour was concerned was written on 3 April 1986, was headed 'without prejudice' and, in essence, offered $120,000 inclusive of interest (plus agreed or taxed costs) to settle the claim provided that the amount is accepted prior to 4.00 pm on Wednesday, 8 April 1987.
21 Notice was given that the making of the offer would be used if and when the question of costs arose.
22 There was no response to that letter and ultimately the arbitration determined that the value of the horse with interest was less than the sum offered. After referring to the English cases, his Honour said at 528:
'There are good reasons why, generally speaking, in order to get the benefit of an offer of payment, a defendant should be required to comply with the provisions of Pt 72 (that part of the rules which deals with payment in under the rules of the Supreme Court). ... the rules rightly take the view that, all other things being equal, a plaintiff who is desirous of accepting an offer should not be left to look for the actual amount from a possibly impecunious defendant.'
23 His Honour, however, did not think it appropriate to adopt the position advocated by Oliver LJ that the court should not have regard to a Calderbank letter in circumstances where a payment into court can be effected under the rules. His Honour said at 528:
'The public policy on which the judgments in Cutts rests argues against a hard and fast exclusion of the availability of this method for disposition of disputes by compromise. The purpose of a Calderbank letter is, after all, essentially the promotion of settlement of disputes,'
and he commented:
'The discouragement to practitioners to the use of a Calderbank letter in instances where the procedure of payment in is available is that the consequences of payment in, prescribed by the rules will not automatically be available.'
and his Honour expressed his conclusion in these words:
'In my view, at least as a matter of principle, a Calderbank letter should be permitted to be taken into account by the Court in determining whether a special order displacing that which generally obtains of costs following the event should be made.'
He said at 529:
'In considering what weight should be given to an offer, the Court will no doubt pay regard to all relevant circumstances including the reason why no payment in was made, the security of payment available to the plaintiff and the time at which the Calderbank letter was received by the plaintiff.'"
His Honour went on to identify the court rules which dealt with payments into court. He then said that in his view the flexible approach of Rogers J in Messiter v Hutchinson should be adopted. He identified aspects of offers which might suggest they be given little effect. These were that there might be genuine doubt as to the worth of the offer which he noted was an inherent difficulty with a Calderbank offer when contrasted with a court rule based regime, that the time frame allowed for consideration of the offer might be too short and whether acceptance of the offer carried with it the possibility of further litigation in the event of non-payment.
In Morris v McEwen [2005] SASC 284, the full court considered an appeal from a decision of a judge of the district court. White J said, when dealing with the interaction between a Calderbank offer and rules of court relating to offers, at pars[74] to [75]:
"74 The first matter lends support to the view that a court may have regard to a Calderbank letter even though an offer in accordance with the Rules of Court could have been lodged. The second matter suggests that there are some limitations on the circumstances in which it will be appropriate to attach any weight to a Calderbank letter. It suggests that in order for effect to be given to a Calderbank letter, it should be framed in terms which are consistent with the spirit and intent of Rule 40. In particular, for effect to be given to a Calderbank letter where an offer in accordance with the Rules of Court could have been lodged, the Calderbank letter should not impose more onerous obligations on the recipient than would an offer filed in accordance with the Rules. The procedure specified in the Rules for the lodgement of an offer is to be understood as an expression of what the Court regards as a reasonable approach. To the extent that a defendant departs from that régime, it runs the risk that the Court will regard the manner or content of its offer as being unreasonable and, therefore, as not warranting any alteration of the usual position as to costs.
75 In considering whether to give a Calderbank letter the same effect as an offer lodged pursuant to Rule 40, a number of matters will be relevant. These will include: whether or not an offer could have been lodged pursuant to Rule 40; any difficulties associated with the framing of an appropriate offer; any difficulties occurring because of the involvement of other parties in the litigation; the proximity of the trial at the time when the offer was made and the time available to the plaintiff in which to consider the offer; the commitments to which the plaintiff may be subject at that time; and the extent to which, if at all, the circumstances of the offer, or its terms and conditions, differ from the circumstances, or terms and conditions, of an offer lodged in accordance with Rule 40. This is not intended to be an exhaustive list of the matters which may be relevant."
The submissions by counsel for the plaintiff
Counsel provided a summary of his submissions in dot point form. Those relating to any argument about the unreasonableness of the time allowed for the plaintiff to respond to the offer were abandoned to avoid unnecessarily delaying the hearing to determine the admissibility of a letter sent by the plaintiff's solicitors to the defendant's solicitors on 22 June 2011.
The first point made was that a plaintiff accepting an offer should be able to enforce it pursuant to the Rules. The offer made by the defendant in this case, counsel submitted, if accepted, still required the defendant's consent before judgment could be entered. This, as a consequence, placed the plaintiff in a much more uncertain situation than he would have been had he simply been accepting an offer of compromise. With respect, this, in my view, was an overly legalistic and technical approach. In practical terms the plaintiff was dealing with the MAIB. The offer contained the words, "In the event that the offer is accepted we would propose that judgment be entered for the plaintiff in the sum of $200,000 together with costs to be taxed.". Counsel appeared to be suggesting that, were the plaintiff to instruct his solicitors to accept the offer in writing, somehow the defendant would not be bound by his offer and there would still need to be some further process by which the defendant had to consent to judgment.
It is unrealistic to suggest that, had for example the plaintiff's solicitors written back to the defendant's solicitors accepting the offer and forwarded with their letter a consent judgment, that such a document would not have been signed and lodged with the Court, thus giving the plaintiff the protection of a judgment.
The second point raised was that the Calderbank offer carried with it the possibility of further litigation in the event of non or delayed payment. With respect, I am unable to understand why this might be so. The stated intent in the Calderbank offer was that judgment be entered for the plaintiff if the offer were accepted. Once judgment was entered, whether it be as a consequence of acceptance of an offer of compromise or a Calderbank offer, the plaintiff would have been in the same position as far as enforcement was concerned should that prove necessary. While it might be accepted that a defendant known to be in financial difficulties might be a matter of concern for the plaintiff, the concern would be the same however any judgment came to be entered. In any event, it is hardly likely that a statutory authority such as the MAIB would default.
The third and fourth points may be dealt with together. The third point made by counsel for the plaintiff was that there was no reason why the offer could not have been made as an offer of compromise pursuant to the Rules, r280(6). That is not strictly correct. This offer was made 10 days prior to the trial being listed to commence. Clearly it was designed to resolve the matter, if possible, prior to the commencement of the trial (since the time within which acceptance was to occur expired on the last working day before trial). The Rules require an offer of compromise to be open for not less than 14 days from the date of service. A formal offer of compromise would have defeated the purpose of resolving the matter prior to trial. I accept that the defendant might have been able to make an offer earlier, such that a 14 day period could have expired on 24 June. However there was nothing put before me as to the circumstances which led up to the trial. There may or may not have been good reason why an offer could not have been made earlier.
As to the fifth point, there is no dispute as to when the litigation commenced and when particulars were originally filed. However, those factors have, in my view, little impact on the weight to be given to the offer made. It is clear from material tendered at trial that, in the short time before the trial actually commenced, specialist reports were still being delivered and that the surveillance video had just been provided. It is not as if the situation as at September and December 2009 (the time at which the defence and particulars were filed) remained unaltered between then and trial.
As to points 12, 13 and 14 raised by counsel for the plaintiff, these all related to the submission that the terms of this offer were not unambiguously clear. Firstly counsel submitted that it was unclear from the offer who was to pay the amount to be paid to Medicare. The offer said, "It is a condition of the offer that there be a 90/10 advance payment, with 10% going to Medicare. If you have a current notice please let me know". That condition was imposed in the context of a settlement offer of $200,000 plus costs. I would have to say that I did not immediately understand what the condition meant, and was obliged to ask counsel at the hearing. I was told that what it meant was that, of the $200,000 offered, were it accepted, 90% ($180,000) would be paid to the plaintiff and the remaining $20,000 would be paid to Medicare. From that $20,000, Medicare would take what it was owed and pay any balance to the plaintiff. The addition of the query about the notice was that, if the plaintiff's solicitors already had a notice from Medicare identifying the amount which it claimed, then the 90/10 arrangement might not be necessary.
Counsel for the plaintiff submitted that this terminology required the plaintiff to draw an inference and was therefore not unambiguously clear. I reject that submission. The legal representatives on both sides of this argument were experienced in personal injury litigation. I accept that the plaintiff, were the letter left with him to interpret, would not have immediately understood what this particular condition meant. However, it was never going to be the situation that the plaintiff would have to interpret this letter unassisted by experienced counsel. To such counsel, it would have been abundantly clear that what was proposed was that whatever was due to Medicare was to come out of the $200,000 offered to the plaintiff and therefore the plaintiff was to pay anything owed to Medicare.
As to points 13 and 14, the submission by counsel was that it was unclear to what date the plaintiff's costs were payable if the offer were accepted, and the date from which the defendant would seek its costs were the offer not accepted. I reiterate that the plaintiff was assisted by experienced counsel. The only conclusion to be drawn from an offer such as that made which included a time and date by which acceptance was required was that any application for costs by the plaintiff after that time and date would be opposed. I accept that it may not have been clear that, further, the defendant may have sought its costs after that time and date.
I have already in effect dealt with what was point 16, and point 17 relates to a timing issue already abandoned.
Entitlement to costs generally
The Rules, r57, provide that costs are to be in the discretion of the Court or judge. That discretion is obviously affected where there has been an offer of compromise. However, in the absence of such an offer, the discretion remains. In civil proceedings that discretion is usually exercised by reference to the general principle that costs follow the event, unless there is some circumstance established which justifies a departure from that general rule. In the present case, counsel for the plaintiff submits that the Calderbank offer should be given no weight at all as a consequence of the matters he has raised in relation to it, and that the Court's discretion, given that the plaintiff obtained a judgment in his favour, should result in his having an order for costs against the defendant in relation to the entirety of the proceedings.
Counsel for the defendant did not contend that the Calderbank offer gave rise to an automatic entitlement to the costs orders sought or even a presumption that costs might be ordered in a certain way. He submitted however that the offer was a significant factor and should not be ignored. This was particularly so given the plaintiff was to receive, as a result of the Court's decision, significantly less than the offer. Counsel for the defendant also pointed to findings made, which were effectively adverse to the plaintiff, based on the financial material he produced, the evidence of his orthopaedic surgeon, and surveillance film taken of his activities. All of this information was available to the plaintiff prior to trial and should have been considered by him.
The submissions made by counsel for the plaintiff in relation to the weight to be given to the Calderbank offer have largely been rejected. Parties are encouraged to try to settle matters and not waste the costs of a trial. There was no suggestion the attempt by the solicitors for the defendant in the form of the Calderbank offer was not a genuine attempt to settle. Given the ultimate outcome for the plaintiff and the findings made which resulted in it, in my view it is appropriate the offer be given significant weight. As a consequence, it is appropriate that the plaintiff have his costs up until 10 am on 24 June 2011 but not after that.
The question then is, who should be responsible for the costs incurred after that date and time? There are a number of factors to be considered. There is always uncertainty in the outcome of a trial. Witnesses may not come up to proof, and witnesses may not be as unassailable as expected once they are cross-examined. While there were factors I have already identified which suggest the plaintiff needed to exercise caution before going to trial, it cannot be concluded it was entirely unreasonable for him to have done so. What should also be taken into account is that costs orders are not designed to punish. The impact upon the plaintiff of an order in the defendant's favour for the costs of trial will be significant given the level of damages awarded. This is a relevant factor given the plaintiffs circumstances, that is the psychological injury dealt with at trial. In all the circumstances, the appropriate order relating to the costs of trial is that each party pay their own costs.
The orders of the Court are therefore that:
·The defendant pay the plaintiff's taxed costs of the action on a party/party basis incurred up to 10am on 24 June 2011, and
·The parties each pay their own costs incurred in the action after that time.
That last order does not include the costs of the application for costs now being dealt with. I will hear counsel as to those costs.
0
2
1