Giankos v SPC Ardmona Operations Limited (No 2)

[2009] VCC 1461

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE
CIVIL DIVISION
DAMAGES – COMPENSATION

SERIOUS INJURY DIVISION

Case No. CI-08-01496

PAUL GIANKOS	Plaintiff
v
SPC ARDMONA OPERATIONS LIMITED	Defendant
(ACN 004 077 105)

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JUDGE:	HER HONOUR JUDGE K L BOURKE
WHERE HELD:	Melbourne
DATE OF HEARING:	12, 13 February, 19, 24 June and 17 August 2009
DATE OF JUDGMENT:	6 October 2009
CASE MAY BE CITED AS:	Giankos, Paul v SPC Ardmona Operations Limited (No.2)
MEDIUM NEUTRAL CITATION:	[2009] VCC 1461
(First Revision 11 November 2009)

REASONS FOR JUDGMENT

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Catchwords: ACCIDENT COMPENSATION – Calderbank letter – Accident Compensation Act 1985, s.134AB(27)(a) – leave granted to bring proceedings for pain and suffering damages and loss of earning capacity claim dismissed – no order as to costs sought from the date of offer.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T Tobin SC with	Zaparas Lawyers
Ms B Knoester
For the Defendant	Mr M Fleming	Thomas Playford Cutlers
HER HONOUR:

1          On 24 June 2009, I granted leave to the plaintiff to bring proceedings for pain and suffering damages but dismissed his claim in relation to loss of earning capacity.

2          The serious injury application had proceeded over two days in February 2009 and resumed on 19 June 2009 when the matter was re-opened with further medical evidence being relied upon by the plaintiff.

3          When I gave judgment, the question of costs was reserved after I was informed that on 16 January 2009, the defendant’s solicitors had faxed a letter to the plaintiff’s solicitors making an offer to compromise the serious injury proceeding (“the letter”).

4          In the letter, the defendant’s solicitors advised the plaintiff’s solicitors that they had instructions to consent to:

(i)	the plaintiff having leave to bring common law proceedings for the recovery for pain and suffering damages only and not for loss of earning capacity;
(ii)	the defendant paying the plaintiff’s costs of the proceeding up to that date, together with any further costs incurred in accepting the offer which was to lapse twenty one days thereafter (9 February 2009);
(iii)	the proceeding be otherwise dismissed.

5          It was foreshadowed by the defendant’s solicitors that reliance would be placed upon it for the purposes of costs if the offer was not accepted.

6          Specifically, it was said that the defendant would rely upon the letter and the principles in Calderbank v Calderbank [1975] 3 All ER 333 to argue that the Court should make no order as to the costs of the proceeding from the date of the letter.

7          The issue for determination is whether the defendant is entitled to an order in the terms of the letter – namely that there be no order for costs in the plaintiff’s favour after 9 February 2009.

8          Written submissions were made by Mr Fleming, counsel for the defendant, in support of the applicability of a Calderbank offer to proceedings under the Accident Compensation Act 1985 (“the Act”).

9          It was correctly said that there is no specific provision relating to an offer of compromise under the Act. However, there is the general provision in the Rules “Order 26 offer of compromise”.

10        I accept, as was submitted by counsel for the defendant, that this formal offer of compromise procedure does not deny the availability of the Calderbank offer procedure: see Metcalf v Commonwealth of Australia (No.2) [2006] VSC 133, per Ashley J, at paras 20 to 21, and see also Williams, ‘Civil Procedure in Victoria’, Vol. 126.01.75, at page 3583, citations omitted.

11        Counsel for the defendant then submitted that the Act cannot be construed so as to deny a Calderbank letter can be taken into account in the exercise of the County Court’s general discretion in relation to costs. Reliance was placed upon the decision of Cavanough J, in O’Neill v T D Williamson (No.2) [2008] VSC 430, where His Honour rejected a submission that the costs rules in s.134AB(28) of the Act covered the field in serious injury applications, prohibiting a court from making a costs order on an interlocutory application, save in accordance with that sub-section.

12        His Honour held that sub-s.(28) only referred to a proceeding where the ultimate result thereof was known. More particularly and relevantly to this application, His Honour also described the County Court’s broad jurisdiction in relation to costs.

13        His Honour said that he was unaware of any unambiguous statement to the effect that particular statutory provisions purporting to exclude or limit the making of orders as to costs should be strictly or narrowly construed. His Honour referred to McHugh J’s dissenting judgment in Oshlack v Richmond River Council (1998) 193 CLR 72 at 104-105, where he commented that:

“Legislatures have in many instances found reason to depart from the traditional costs formula by enacting specific legislation varying the incidence and reach of costs orders.”

14        Counsel for the defendant went on to contend that the County Court has conferred upon it a general discretion to award costs in accordance with law. It was submitted that where that discretionary power is concerned, only clear statutory language can authorise an imposition upon or derogation of that discretion. It was submitted that there was no such clear language in the Act as could justify the abrogation of the County Court’s ordinary discretion concerning costs to take into account, in accordance with law, a Calderbank offer made in the course of a serious injury application.

15        It was accepted by the parties that the only provision of the Act that may impinge upon the ordinary costs discretion is s.134AB(27)(a) which sets out that-:

“(27)	Subject to the rules of the court—
(a) in proceedings relating to an application for leave of the court under subsection (16), costs are to be awarded against a party against whom a decision is made;
… .”

16        It was argued on behalf of the defendant that this subsection would not be offended if an order was made consistent with Calderbank principles in the present case as the party against whom the decision was made would still have a costs order awarded against it. It is only the quantum of the costs that is arguably covered by the application of these principles. The plaintiff would recover his costs of the serious injury application to the date of the offer – no costs are sought by the defendant at any stage of the proceeding and no costs subsequent to the offer are recoverable by the plaintiff on his unsuccessful economic loss claim.

17        It was said by the defendant that this provision relates only to the incidence of the costs order and does not purport to prescribe the quantum of the various ingredients of the relevant costs order – a matter remaining in the Court’s discretion.

18 In other words, s.134AB(27)(a) does not, in terms, seek to control or interfere with that discretion. The Act requires, so it is said, clear language to do so and such clear statutory language is not present in that subsection. Therefore, the offer is not inconsistent with the terms of the statutory provision.

19        In response, Mr Tobin, counsel for the plaintiff, described the offer made by the defendant in the letter as one of a pain and suffering “certificate”.

20        This, in my view, incorrectly characterises the nature of the offer. It did not involve granting of a “certificate” but specifically referred to consent being granted by the Court for the plaintiff to bring proceedings for damages for pain and suffering only.

21        Had the offer been made in the form suggested by counsel for the plaintiff, then the argument would have some merit. I accept that the Victorian WorkCover Authority cannot, pursuant to s134AB(16)(a), grant a certificate solely for the bringing of proceedings in respect of pain and suffering and loss of earning capacity. This was accepted by counsel for the defendant.

22        In my view, the submission on behalf of the defendant that the Act does not preclude a Calderbank offer being made by the defendant should be accepted for the reasons advanced by its counsel. The making of the order in the terms suggested is not contrary to s.134AB(27)(a).

23        The next issue for consideration is the reasonableness of the offer and the failure of the plaintiff to accept the offer.

24        Reliance was placed by counsel for the defendant on Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No.2) (2005) 13 VR 435, at 440 and following, where the relevant principles were set out in relation to the construction and application of “Calderbank offers”.

25        Firstly, a court has to take into account the stage of the proceeding at which the offer was received.

26        In this case, the offer was made by facsimile on 16 January 2009. The hearing commenced on 12 February 2009, twenty six days after receipt of the offer. It was submitted that the timing of the offer was propitious for realistic settlement and appropriate in the circumstances.

27        Secondly, the time allowed to consider the offer is relevant. It was submitted that the twenty one days allowed to consider the offer was a realistic time and was fair and reasonable.

28        Thirdly, the offer was one involving a genuine compromise by the defendant offering a consent to leave to commence common law proceedings for pain and suffering damages – a substantial and valuable offer. This is, in my experience, a relatively common method of resolution of applications under s.134AB.

29        Fourthly, the prospects of success assessed at the date of the offer must be considered.

30        It was submitted by the defendant’s counsel that at the time of the offer, the plaintiff, as advised by his solicitors, must have understood that there were difficulties in establishing serious injury in relation to loss of earning capacity consequences.

31        It was said that based on the plaintiff’s own medical evidence, particularly that of his treating orthopaedic surgeon and general practitioner, there was no question he was capable of returning to work as a forklift driver, albeit with restrictions, or of performing the work identified by Recovre as a forklift operator or machine operator.

32        This evidence was available at the date of the offer and made the prospects of the plaintiff successfully establishing serious injury loss of earning capacity highly problematic.

33        Counsel for the defendant then submitted the only additional relief sought was very difficult to obtain on the evidence. It was submitted the plaintiff’s case on loss of earning capacity was no better than arguable and his prospects of success were not good.

34        Fifthly, it was said that the terms in which the offer was expressed were perfectly clear and the failure to accept it cannot in any way be attributed to want of clarity in the offer.

35        Finally, it was submitted the defendant acted reasonably by properly informing the plaintiff of the costs order that would be sought failing acceptance thereof.

36        Counsel for the plaintiff took issue with the fourth point only, namely the prospects of success at the time of the offer and the reasonableness or otherwise of the plaintiff’s failure to take the offer at that time.

37        Counsel for the plaintiff submitted it was unreasonable for the plaintiff to have to consider the offer at that time, as a supplementary report from Ms Ashe from Recovre detailing what was involved in the jobs of forklift driver and machine operator had not been served until after the offer expired. However, this was peripheral. The report of Ms Ashe, as I indicated in my reasons, was of little weight in the overall consideration of this case.

38        As I said in my reasons, the preponderance of medical evidence available to the plaintiff at the time of the offer, including significantly the plaintiff’s treating general practitioner and his treating orthopaedic surgeon, was to the effect that the plaintiff could work full time as a forklift driver or machine operator. The plaintiff’s own evidence was that he could do light process work not beyond shoulder height and he could work as a quality controller and as a machine operator, depending on the machine involved.

39        I find it was unreasonable for the plaintiff not to accept the offer in the circumstances that prevailed at that time.

40        I accept, therefore, the defendant’s submissions that the offer was reasonable and complied with the tests laid down in Hazeldene.

41        Accordingly, I allow the defendant’s application.

42        Unless the parties seek to make further submissions as to the terms of the costs order, I propose to order that the defendant pay the plaintiff’s costs up to and including 9 February 2009 and thereafter there be no order as to costs.

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