Fosse v GIO of NSW

[1999] NSWSC 508

CITATION:	Fosse v GIO of NSW [1999] NSWSC 508
CURRENT JURISDICTION:	Common Law
FILE NUMBER(S):	23299/86
HEARING DATE(S):	26 May 1999
JUDGMENT DATE:	31 May 1999
PARTIES :	Nathan Fosse by his next best friend Earl Patrick Fosse (Plaintiff) Government Insurance Office of New South Wales (Defendant)
JUDGMENT OF:	Master Harrison

COUNSEL :	Mr D A Wheelan QC (Plaintiff) Mr P N D Jenkyn (Defendant)
SOLICITORS:	Baker & Edmunds Beecroft (Plaintiff) Bartier Perry Sydney (Defendant)
CATCHWORDS:	Indemnity costs
ACTS CITED:	Supreme Court Act - s 76 Legal Profession Act 1987 (NSW) Supreme Court Rules - Pt 22, Pt 52A r 22 District Court Rules - Pt 19A r 4
CASES CITED:	Hillier v Sheather (1995) 36 NSWLR 414 Maitland Hospital v Fisher (No 2) (1992) NSWLR 721 Hansen v GIO of NSW (NSWCA, unreported Studdert J, 17 June 1994) Colgate Palmolive Pty Ltd v Coussons (1993) 46 FCR 225 Rouse v Shepherd (No 2) (1994) 35 NSWLR 279
DECISION:	See para 16

10

THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

MASTER HARRISON

MONDAY, 31 MAY 1999

23299/86 - NATHAN FOSSE by his next best friend

EARL PATRICK FOSSE v

GOVERNMENT INSURANCE OFFICE
OF NEW SOUTH WALES

JUDGMENT (Indemnity Costs)

1   MASTER: By notice of motion dated 20 January 1999 the plaintiff seek that the his costs be assessed and/or taxed on an indemnity basis as and from 30 July 1997. The plaintiff relied on the affidavits of Earl Patrick Fosse sworn 19 January 1999 and Thomas Edgar Edmunds, the plaintiff’s solicitor sworn 18 January 1999.

2   The following facts are not in dispute.

(1) On 24 July 1996 Mr D A Wheelahan QC, counsel for the plaintiff provided written advice to the plaintiff that:


“A well judged Offer of Compromise can lead to an entitlement to indemnity costs.

It is critical that an appropriate offer of compromise be made as soon as possible to enable the plaintiff to take advantage of this possibility.

The defendant will offer this plaintiff nothing because it will believe it is likely to win the case. Accordingly, a modest offer of compromise can be served.

If the plaintiff’s claim, at full value, would approximate $3 million then any sum over $2.5 million would represent an excellent outcome for him.

For reasons which I explained in conference I recommend that an Offer of Compromise in the sum of $2 million plus costs out of pocket expenses be served upon the defendant forthwith.”


(2) On 30 July 1997 the plaintiff made on offer of compromise to the defendant. The offer was for a verdict for the plaintiff in the sum of $2,200,000 plus $35,000 costs. The offer was expressed to be made in accordance with Pt 22 of the Supreme Court Rules (the Rules) and expired after 28 days from service.

(3) On 3 September 1998, the defendant made an offer of compromise in the sum of $2,325,000 inclusive of out-of-pocket expenses but exclusive of legal costs against the defendant. The offer was expressed to be subject to the terms and conditions set out in the accompanying terms of settlement and stipulated that these terms must be filed prior to seeking payment. This offer was open for 28 days and costs were to be assessed or taxed. The offer did not state that it was made in accordance with Pt 22 of the Rules.

(4) On 19 January 1999 the plaintiff’s father who is the next best friend accepted the offer of compromise.

(5) Paragraph (1) of the terms of settlement entitled verdict (without admission of liability) for the plaintiff for personal injuries in the sum of $2.325 million plus costs.

(6) On 20 February 1999 the court approved the terms of settlement.

3 I turn to the relevant law. The relevant portions of Pt 22 of the Rules provide:

“Time for making or accepting offer (Pt 52 r 17: costs)
3(1) An offer may be made at any time before the time prescribed by subrule (8) in respect of the claim to which it relates.
(2) A party may make more than one offer.
(3) An offer may be expressed to be limited as to the time it is open to be accepted but the time expressed shall not be less than 28 days after it is made.
(4) …
(5) An offeree may accept the offer by serving notice of acceptance in writing on the offeror before—
(a) the expiration of the time specified in accordance with subrule (3) or, if no time is specified, the expiration of 28 days after the offer is made; or
(b) the time prescribed by subrule (8) in respect of the claim to which the offer relates, whichever is sooner.
(6) An offer shall not be withdrawn during the time it is open to be accepted, unless the Court otherwise orders.
(7) An offer is open to be accepted within the period referred to in subrule (5) notwithstanding that during that period the party to whom the offer (the “first offer”) is made makes an offer (the “second offer”) to the party who made the first offer whether or not the second offer is made in accordance with this Division.
(8) The time prescribed for the purposes of subrules (1) and (5) and Part 52A rule 22(3) is—
(a) where the trial is before a jury — after the Judge begins to sum up to the jury;
(b) where the proceedings have been referred under Section 76B(1) of the Act for determination pursuant to the Arbitration (Civil Actions) Act 1983 — after the conclusion of the arbitration hearing; or
(c) in any other case — after the Judge or master gives his decision or begins to give his reasons for decision on a judgment (except an interlocutory judgment).
(9) Where an offer is accepted under this rule, any party to the compromise may enter judgment accordingly.

4 The relevant parts of Pt 52A r 22 of the Rules state:

“Offer of compromise
22(1) …
(2) …
(3) Subrules (4)–(6) apply to an offer which has not been accepted at the time prescribed by Part 22 rule 3(8).
(4) Where an offer is made by a plaintiff and not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim to which the offer relates no less favourable to the plaintiff than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall, subject to rule 33, be entitled to an order against the defendant for the plaintiff's costs in respect of the claim from the day on which the offer was made, assessed on an indemnity basis in addition to his costs incurred before and on that day, assessed on a party and party basis.
(5) For the purpose of subrule (4), where the offer was made on the first or a later day of the trial of the proceedings, then, unless the Court otherwise orders, the plaintiff shall be entitled to the plaintiff's costs in respect of the claim from 11 am on the day following the day on which the offer was made, assessed on an indemnity basis, in addition to the plaintiff's costs incurred before that time, assessed on a party and party basis.
(6) Where an offer is made by a defendant and not accepted by the plaintiff, and the plaintiff obtains an order or 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, subject to rule 33, be entitled to an order against the defendant for the plaintiff's costs in respect of the claim up to and including the day the offer was made, assessed on a party and party basis, and the defendant shall be entitled to an order against the plaintiff for the defendant's costs in respect of the claim thereafter assessed on a party and party basis.
(7) …
(8) …
(9) …
(10) …
(11) Unless the Court otherwise orders, any application for an order for costs under subrule (4) or subrule (6) must be made immediately after the order or judgment giving rise to the entitlement to the order for costs is made or given.”

5 The plaintiff accepted the defendant’s offer outside the time prescribed by Pt 22 r 3(8). Thus Pt 52A r 22(4) to (6) applies. Part 52A r 22(4) applies to this case. The defendant submitted that the terms of settlement stipulated that the defendant was to pay the plaintiff’s costs and the words “plus costs” should be given the settled meaning of plus costs to the date of settlment on a party/party basis. The defendant also submitted that Pt 52A r 22(4) requires an order for costs to be made immediately after the order for judgment giving rise to the entitlement to the order for costs is made or given.

6 By entering into the terms of settlement which included that costs be paid, I do not think the parties intended to preclude the operation of Pt 52A r 22(4). The approval of the terms of settlement was done in chambers and the notice of motion seeking indemnity costs had to be
listed in court to give the defendant an opportunity to be heard as to whether it was appropriate to award indemnity costs. It is my view that the application for costs on an indemnity basis was made immediately after the judgment was made.

7   The plaintiff's counsel referred to Hillier v Sheather (1995) 36 NSWLR 414; Maitland Hospital v Fisher (No 2) (1992) NSWLR 721 and Hansen v GIO of New South Wales (NSWCA, unreported Studdert J, 17 June 1994). In Fisher (No 2) the Court of Appeal referred to the objects of Pt 52 r 17 of the Rules which applied to former regime of the taxation of costs. Part 52A r 22 is its counterpart and applies to the costs assessment regime introduced by the Legal Profession Act 1987 (NSW). The Court of Appeal identified the objects of the rule.

8   They are:

“1. To encourage the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise by defendants which amount to a realistic assessment of the plaintiff’s real claim which can be placed before its opponent without risk that its “bottom line” will be revealed to the court;
2. To save the public costs which are necessarily incurred in litigation which events demonstrate to have been unnecessary, having regard to an earlier (and, as found, reasonable) offer of compromise made by a plaintiff to a defendant; and
3. To indemnify the plaintiff who has made the offer of compromise, later found to have been reasonable, against the costs thereafter incurred. This is deemed appropriate because, from the time of the rejection or deemed rejection of the compromise offer, notionally the real cause and occasion of the litigation is the attitude adopted by the defendant which has rejected the compromise. In such circumstances, that party should ordinarily bear the costs of litigation.”

9   In Hillier the Court of Appeal considered what was meant by “unless otherwise orders” in Pt 19A r 4 of the District Court Rules which relates to offers of compromise. The phrase “unless otherwise orders” requires the case to be in some way exceptional (at p 422t). Once a plaintiff has made an offer of compromise which complies with the Rules and he later succeeds in recovering no less than the amount of his offer then he becomes prima facie entitled to indemnity costs from the date that the offer was made. This is what the sub-rule contemplates “unless the court otherwise orders”. This interpretation is equally applicable to Pt 52A r 22.

10 Is the present case one in which the court should “otherwise order”? Liability was in issue. The plaintiff was an 11 year old pedestrian who may have been found at trial to have been running at the point of impact and not crossing at the pedestrian control lights. Although it would seem that the defendant would have been found guilty of negligence, the plaintiff may have been found guilty of contributory negligence. The plaintiff was very seriously injured. He will not be able to work and will require future care, medical treatment and the like. The defendant did not submit that it was not in a position to assess the plaintiff’s offer of compromise when it was made. The offer of compromise made by the plaintiff was a genuine attempt to settle the matter and to take advantage of Pt 52A r 22. The plaintiff bettered his offer of compromise.

11 It is my view that in accordance with Pt 52A r 22(4) the defendant should pay the plaintiff's costs from 30 July 1997 to the date of settlment on an indemnity basis.

12 If I am wrong and the provisions of Pt 52A r 22(4) do not apply, the court has a discretion to award costs on an indemnity basis (see s 76 of the Supreme Court Act 1970).

13   In Colgate Palmolive Pty Limited v Cussons (1993) 46 FCR 225 at 233-234 Sheppard J reviewed the relevant common law principles and said:

“In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court in departing from the usual course.”

14   This passage was cited with approval by Badgery-Parker J in Rouse v Shepherd (No 2) (1994) 35 NSWLR 279. In making an indemnity costs, the question must always be whether particular facts and circumstances of the case warrant the making of an order for payment of costs other than on a party/party basis.

15   It is my view that the plaintiff, by making a reasonable offer of compromise early in the proceedings, was genuinely attempting to settle the matter and avoid incurring costs and court time. The plaintiff ultimately bettered this offer of compromise and should be entitled to costs on an indemnity basis. Costs of the motion should follow the event. However, it was necessary for the defendant to be given the opportunity to be heard on this issue. In the exercise of my discretion the defendant should pay the plaintiff’s costs of the motion on a party/party basis.

16   The order I make is:

(1) The plaintiff’s costs be assessed on an indemnity basis as from 30 July 1997 except the defendant is to pay the plaintiff’s costs of the notice of motion dated 20 January 1999 on a party/party basis.
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Last Modified: 05/31/1999