Helen Owen v Johnny Musladin (No 2)
[2010] ACTCA 24
•14 October 2010
HELEN OWEN V JOHNNY MUSLADIN (NO 2)
[2010] ACTCA 24 (14 October 2010)
COSTS – costs of appeal – whether Calderbank letter affects the costs of the appeal – order for costs made.
Evidence (Miscellaneous Provisions) Act 1991 (ACT), s 91
Supreme Court Act 1933 (ACT), s 37J
Dal Pont, G E, The Law of Costs (LexisNexis Butterworths: Sydney, 2009) at pp 410-415
Nikolaou v Papasavas, Phillips & Co (1989) 166 CLR 394
Yanner v Eaton (1999) 168 ALR 1
Calderbank v Calderbank [1975] 3 All ER 333
Quirk v Bawden (1992) 112 ACTR 1
Owen v Musladin [2010] ACTCA 16
Ettingshausen v Australian Consolidated Press Ltd (1995) 38 NSWLR 404
Australian Consolidated Press Ltd v Ettingshausen (unreported, NSW Court of Appeal, Gleeson CJ, Kirby P, Clarke JA, 13 October 1993)
G R Vaughan (Holdings) Pty Ltd v Vogt [2006] NSWCA 263
Whitehall Holdings Pty Ltd v Custom Credit Corporation Ltd (unreported, Supreme Court of Western Australia, Ipp, Pidgeon and Owen JJ, 19 June 1992)
Petar v The Macedonian Orthodox Community Church St Petka Inc (No 2) [2007] NSWCA 287
Golski v Kirk (1987) 14 FCR 143
Real Tech Systems Integration Pty Ltd v Meuross (1998) 82 FCR 150
ON APPEAL FROM THE MASTER OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
No. ACTCA 1 - 2009
No. SC 102 of 2006
Judges: Refshauge, Penfold and Buchanan JJ
Court of Appeal of the Australian Capital Territory
Date: 14 October 2010
IN THE SUPREME COURT OF THE ) No. ACTCA 1 - 2009
) No. SC 102 of 2006
AUSTRALIAN CAPITAL TERRITORY )
)
COURT OF APPEAL )
ON APPEAL FROM THE MASTER OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
BETWEEN:HELEN OWEN
Appellant
AND:JOHNNY MUSLADIN
Respondent
ORDER
Judges: Refshauge, Penfold, Buchanan JJ
Date: 14 October 2010
Place: Canberra
THE COURT ORDERS THAT:
The respondent pay the appellant’s costs of the appeal.
IN THE SUPREME COURT OF THE ) No. ACTCA 1 - 2009
) No. SC 102 of 2006
AUSTRALIAN CAPITAL TERRITORY )
)
COURT OF APPEAL )
ON APPEAL FROM THE MASTER OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
BETWEEN:HELEN OWEN
Appellant
AND:JOHNNY MUSLADIN
Respondent
Judges: Refshauge, Penfold and Buchanan JJ
Date: 14 October 2010
Place: Canberra
REASONS FOR JUDGMENT
REFSHAUGE J:
On 17 August 2010, this Court allowed this appeal and ordered a new trial limited to the assessment of the past and future economic loss of the respondent.
The Court did not make an order for costs at that time, as the respondent, in his written submissions, had sought an opportunity to be heard, even if the appeal were to be allowed.
The Court directed that either party should file any written submissions on costs within seven days from the date of judgment. The appellant filed written submissions on 20 August 2010. The respondent sought an extension of time. Relying on my power under s 37J(1)(j) and (k) of the Supreme Court Act 1933 (ACT), I allowed a further seven days and written submissions were received from the respondent within that time.
Unsurprisingly, the appellant sought an order that the respondent pay the appellant’s costs. Her written submissions were to the effect that, while costs are always in the discretion of the court, there was no reason for departing from the general rule that costs of an appeal follow the event, citing such cases as Nikolaou v Papasavas, Phillips & Co (1989) 166 CLR 394 (at 407) and Yanner v Eaton (1999) 168 ALR 1 (at 2).
The respondent submitted that the question of costs should be reserved. The respondent’s submissions made reference to offers of settlement made after judgment and prior to the hearing of the appeal and which were not accepted. These appear to have been made in Calderbank letters (see Calderbank v Calderbank [1975] 3 All ER 333) which, in accordance with the principles set out by the Full Court of the Supreme Court in Quirk v Bawden (1992) 112 ACTR 1, it was said, may affect the costs to be paid at the ultimate trial.
The respondent did not submit directly but seemed to suggest that, were the respondent to recover more than an amount offered in the Calderbank letters, then this could alter the appropriate order to be made on appeal.
The respondent submitted, however, that it was inappropriate to tender the letters to the Court because of the order for a new trial as “their content would then be public and the Court below would be embarrassed”.
Leaving aside for the moment the fact that the Court would have plenary power to order that the letters not be disclosed publicly under s 91 of the Evidence (Miscellaneous Provisions) Act 1991 (ACT), it is difficult to see how the court can take cognizance of letters that are not only not in evidence, but are said by one party not to be able to be tendered and the existence of which, much less their contents, are not the subject of any admission by the other party.
There is, however, a more fundamental point about the submission. The letters seem to make an offer as to the quantum outcome for the respondent in the proceedings. This can be surmised from the circumstances of the case and what is said in the respondent’s submissions. The appeal, however, concerned only one part of the judgment, namely the award of damages for loss of earning capacity (see Owen v Musladin [2010] ACTCA 16 (at [9])).
It is true that the Amended Notice of Appeal sought an unlimited retrial, but the grounds of appeal were limited to the economic loss the subject of the appeal, and this is the more significant determinant of the real scope of the appeal. No argument contrary to that was put orally or in writing. Indeed, the appellant’s Notice of Contention was also directed to that issue.
The Amended Notice of Appeal did not seek orders that would have ended the proceedings. It sought a re-trial or a remitter for assessment of damages. It did not seek that the Court assess the damages itself. Thus, the Calderbank letters could not have directly affected the costs of the appeal as no determination of quantum was sought from, or, in the circumstances, was likely to be made by, this Court.
The respondent relied on the decision of the New South Wales Court of Appeal in Ettingshausen v Australian Consolidated Press Ltd (1995) 38 NSWLR 404. In my view, this decision does not assist the respondent. Apart from the construction of particular rules, the decision can be taken to stand for the following propositions:
(1) an offer of compromise which is not accepted within time, will, subject to any rules to the contrary, continue to have effect in respect of costs for a second trial after an appeal; and
(2) that the offer was incapable of acceptance after an appeal is not a relevant consideration as to the discretion to order indemnity costs after a second trial.
The case says nothing about whether the costs of the appeal would be included in the indemnity costs payable at the conclusion of the second trial, if so ordered. Indeed, that situation seems to have been not even submitted by the successful plaintiff, for (at 406E) Gleeson CJ and Priestley JA noted:
The appellant’s application expressly excluded costs incurred after the service of the offer of compromise in so far as they had been dealt with by the order for costs made by the trial judge at the end of the first trial and subsequent orders made by the Court of Appeal. This exclusion no doubt anticipated the way in which an exercise of judicial discretion, otherwise favourable to the appellant, would be tailored to fit the circumstances of the case.
In the appeal itself, the court had ordered, by majority, that the unsuccessful respondent pay one quarter of the appellant’s costs: Australian Consolidated Press Ltd v Ettingshausen (unreported, New South Wales Court of Appeal, Gleeson CJ, Kirby P, Clarke JA, 13 October 1993).
It is to be noted that in Ettingshausen v Australian Consolidated Press Ltd, neither of the two offers of compromise were made between the end of the first trial and the hearing of the appeal; one was made before the end of the first trial, the second was made after the decision had been given on appeal. Thus, the assistance that can be given from the facts of the case is limited, save that the express exclusion (referred to above at [13]) would have been relevant to the offer made before the end of the first trial.
The respondent also referred to the discussion of the effects of settlement offers on appeal or re-trial in Dal Pont, G E, The Law of Costs (LexisNexis Butterworths: Sydney, 2009) at pp 410-415. There is nothing in that discussion, however, which bears directly on the issue here.
In effect, the respondent must be taken to be submitting that, if at re-trial the verdict exceeds the offer he has made, then he should have a special costs order from the date of the offer, which costs would include, in some way, the costs of the appeal.
What is not clear from the respondent’s submissions is how that outcome would impact on the costs of the appeal. No direct submissions were made as to that. Thus, it is not clear what order as to the costs of the appeal would be sought were the respondent no less successful at re-trial than the offer made.
There are potentially many orders, but the following seem to be four likely options:
(1) the court could order that, notwithstanding that the appeal was successful, the appellant pay the respondent’s costs of the appeal; or
(2) the court could make that order (as in (1)) but order that they be paid as indemnity costs; or
(3) the court could order that there be no order as to costs of the appeal; or
(4) the court could order that the respondent pay the appellant’s costs of the appeal.
While, of course, within power (G R Vaughan (Holdings) Pty Ltd v Vogt [2006] NSWCA 263 (at [20])), it seems to me that it is likely that orders 1 and 2 would be unjust or, at least, quite exceptional. It would be quite odd if a party could take a separate application, that it was entitled to take but for the proper determination of an issue arising out of the proceedings, and have, as here, that application opposed by the other party and then succeed in it and still have to pay the costs of it because that party was less successful in the whole action than an offer which had been made before the application was determined. A special case could be made for such a result but it would be exceptional, and does not seem to be in this case.
No doubt the respondent would argue, though he has not yet done so, that had the appellant accepted the offer, then the appeal itself would have been unnecessary. That is obviously true as a matter of logic.
That, however, does not seem to me to end the matter. Every interlocutory application that is made in proceedings is rendered unnecessary if the action is settled before it is made. That does not seem to me to be sufficient in itself to justify an order of the kind set out in (1), (2) or (3) above (at [19]).
There is no doubt that the costs of some interlocutory applications should await and depend on the outcome of the trial, such as, the costs of a dismissed application for summary judgment (Whitehall Holdings Pty Ltd v Custom Credit Corporation Ltd (unreported, Supreme Court of Western Australia, Ipp, Pidgeon and Owen JJ, 19 June 1992) (at 2-4 per Ipp J) or of an interlocutory injunction which raises a prima facie case (Petar v The Macedonian Orthodox Community Church St Petka Inc (No 2) [2007] NSWCA 287 (at [21])).
On the other hand, the costs of some interlocutory applications should be determined on the results of the application regardless of the outcome of the principal proceedings. Examples include where a party is seeking an indulgence: Golski v Kirk (1987) 14 FCR 143 per Beaumont J (at 157).
Thus, if an offer of settlement of proceedings is made by a plaintiff, who thereafter seeks to amend his or her statement of claim, the plaintiff would nevertheless ordinarily be required to pay the costs of such an application, as he or she is seeking an indulgence of the court, whatever the outcome of the substantive proceedings, including so far as the offer was concerned. If the offer had been accepted, then the application would not have been made; it could, then, be strictly regarded as unnecessary. It does not seem to me, however, that the court should defer making the usual order on such an application because the plaintiff may in the ultimate verdict be as successful as (or more successful than) the offer.
That is not to say that, if the appeal had ended the litigation, the position might not have been different. For example, if the appeal had been dismissed, that would have ended the litigation and the respondent may have been entitled, on the basis of the offer of settlement, to have been awarded costs on an indemnity basis.
Similarly if, as was not the case here, the court did substitute its own view of the proper amount of damages for that of the Master, there would be a case for an order for indemnity costs if that amount was no less than the amount of the offer.
One criterion to determine this issue may be if the order is in the nature of a final order: Real Tech Systems Integration Pty Ltd v Meuross (1998) 82 FCR 150 per Lehane J (at 151-2). That is, perhaps, to characterise the proceeding as a separate and distinct proceeding, even though closely related to the proceedings at first instance. It seems to me an appeal has something of that characteristic.
In this case, the Court has found that the approach of the Master was wrong, but to an extent as a result of the inadequacy of the evidence adduced by the respondent. The appellant is entitled to have a fair trial where the proper approach to the assessment of damages is determined according to law. That she had to take the appeal to achieve that over the respondent’s opposition means, so far as I am concerned, that she is entitled to her costs of taking that step.
If, at the re-trial, the amount of damages awarded after that fair trial is no less than the offer made by the respondent, then the appellant is likely to bear the costs of the trial and possibly on an indemnity basis. How that order affects the costs of the first trial will depend on the assessment by the Master of what, if any, contribution the respondent made to the failure of the first trial.
It seems to me, however, that it cannot affect the successful challenge by appeal made by the appellant to this court over the conduct of the first trial.
I would, accordingly, order that the respondent pay the appellant’s costs.
I certify that the preceding paragraphs numbered one (1) to thirty-two (32) are a true copy of the Reasons for Judgment herein of his Honour Justice Refshauge.
Associate:
Date: 14 October 2010
IN THE SUPREME COURT OF THE ) No. ACTCA 1 - 2009
) No. SC 102 of 2006
AUSTRALIAN CAPITAL TERRITORY )
)
COURT OF APPEAL )
ON APPEAL FROM THE MASTER OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
BETWEEN:HELEN OWEN
Appellant
AND:JOHNNY MUSLADIN
Respondent
Judges: Refshauge, Penfold and Buchanan JJ
Date: 14 October 2010
Place: Canberra
REASONS FOR JUDGMENT
PENFOLD J:
I have read the judgments of Refshauge and Buchanan JJ in draft. I am unfortunately not able to agree with their disposition of the costs question.
As explained by Refshauge J, the successful appellant, who has been granted a re-trial on the question of the respondent’s economic loss, seeks the usual order that the costs of an appeal follow the event. The respondent seeks to have the costs of the appeal reserved until the substantive matter is resolved.
The respondent’s argument is that Calderbank letters (from Calderbank v Calderbank [1975] 3 All ER 333) sent to the appellants after the Master’s decision and before the appeal hearing (but presumably after the institution of the appeal) may, depending on the outcome of the re-trial, affect the costs orders to be made in respect of the appeal.
The Calderbank letters mentioned in the respondent’s written submissions are not in evidence before the Court of Appeal. The respondent says in the written submissions that this is because “[the] content [of the Calderbank letters] would then be public and the Court below would be embarrassed”.
I express no conclusion about whether or not this submission is correct, or about whether there are ways in which any publicity, or any embarrassment of “the Court below”, could be avoided; however, I cannot see that it is appropriate to decide on the respondent’s application, on the basis that the letters are not in evidence, without first reaching a conclusion about whether the respondent’s explanation for the absence of the letters is adequate, and secondly, depending on that conclusion, giving the respondent an opportunity to put the letters in evidence.
The respondent has not argued the clearly correct proposition that the appeal hearing would have been unnecessary if the appellant had accepted a Calderbank offer made after the Master’s decision and before that hearing. However, what the respondent has argued is that if the result on the re-hearing is more favourable to the respondent than the respondent’s Calderbank offers, then “it would thus be open to the Court below to order the appellants to pay the respondent’s costs from the date of the operative offer and this would encompass the appeal costs”.
In effect, the respondent says that, in the absence of a costs order by this Court, the Court dealing with the re-hearing would have power to make a costs order that would include the costs of the appeal to this Court. The correctness of that proposition has not been argued before us; the appellant was not initially given leave to file submissions in response, and nor has the Court invited such submissions. However, the material quoted by Refshauge J at [13] seems to imply that such an order would not be beyond the discretion of the Court dealing with the re-hearing.
If the respondent’s proposition about the discretion of the Court dealing with the re-trial is not clearly wrong, then it seems to me that this Court should not, without reaching any conclusion about the extent of that discretion, close off the option of that Court exercising that discretion in the respondent’s favour.
In my view, courts should encourage any genuine efforts made by parties to resolve matters in dispute between them without the assistance of the courts. The desirability of resolving disputes in that way is, after all, the reason for the beneficial treatment that may be accorded to a party which has made a reasonable or realistic offer of settlement before trial.
In this case, there was no reason for the respondent, as the successful party at first instance, to make any kind of settlement offer except, an appeal having been instituted, for the purpose of avoiding an appeal hearing and its attendant costs. Nor was there anything else he could realistically have been expected to do to avoid the appeal once any such offers had been rejected.
I do not mean to suggest at this stage that the respondent should necessarily be entitled to his costs of the appeal (whether on an indemnity or other basis) if any Calderbank offer made by him turns out to have been more generous to the appellant than the outcome of the re-trial. However, I do consider that the scope for the respondent to make submissions to that effect should not be excluded at this stage simply on the basis of the written submissions that have been received by this Court.
Next, I note that I am not convinced that an appeal from a substantive decision, even an appeal limited to the Master’s assessment of damages for some of the heads of damage rather than extending to all elements of the Master’s decision, is properly characterised as an interlocutory proceeding or a “separate application”, with possible implications for costs decisions, just because the substantive decision that is challenged is to be remitted to the original decision-maker for proper consideration. This is particularly so given my doubt that the appeal could have been characterised as interlocutory if the appellant had been unsuccessful. In such a circumstance, Calderbank offers that had been made by the respondent might well have founded an argument that the respondent was entitled to indemnity costs on the appeal. The nature of the appeal in costs terms is another matter that has not been canvassed in written submissions or otherwise, and accordingly, in my view, should not be relied upon to justify making an order unfavourable to one party where the alternative course is not to make an order unfavourable to the other party but to defer the decision to a point at which the matter can be properly argued.
Finally, I note the submission of counsel for the respondent to the effect that, as a matter of practice, an adverse costs order against a plaintiff in a personal injuries action would not be enforced until the matter is finally determined. On this basis also, reserving the question of costs orders in respect of the appeal seems to be the proper course. This is because reserving those costs does not seem to risk any injustice to the appellant (in that the appellant would not in any case receive any costs before the re-trial is finalised), but avoids a risk of injustice to the respondent.
Accordingly, I would order that the costs of the appeal be reserved for determination after the outcome of the re-hearing ordered by the Court of Appeal, but I would make no order about how or where those costs are to be determined.
I certify that the preceding paragraphs numbered thirty-three (33) to forty-six (46) are a true copy of the Reasons for Judgment herein of her Honour Justice Penfold.
Associate:
Date: 14 October 2010
IN THE SUPREME COURT OF THE ) No. ACTCA 1 - 2009
) No. SC 102 of 2006
AUSTRALIAN CAPITAL TERRITORY )
)
COURT OF APPEAL )
ON APPEAL FROM THE MASTER OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
BETWEEN:HELEN OWEN
Appellant
AND:JOHNNY MUSLADIN
Respondent
Judges: Refshauge, Penfold and Buchanan JJ
Date: 14 October 2010
Place: Canberra
BUCHANAN J:
In my view the respondent should pay the appellant’s costs of the appeal.
Whatever offers were made by the respondent to the appellant after the judgment below and before the appeal was heard, they were not in evidence on the appeal nor on the appellant’s application for the costs of the appeal. In any event, they could not operate to render irrelevant the circumstance that the appellant was obliged to prosecute the appeal, which was resisted by the respondent.
I am not attracted either to the suggestion made by the respondent that costs of the appeal should not be payable until the further assessment of damages is resolved. The difficulties which confronted the Master at the trial arose in large measure from the inadequacy of the respondent’s (the plaintiff’s) case for damages. The appellant succeeded on the appeal in setting aside the challenged damages which were obtained by the respondent based on that case. Whatever the reason for the respondent’s change of position after the appeal was filed, I can see no reason why there should not be a present award of costs to the successful appellant.
I certify that the preceding forty-seven to forty-nine (47-49) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour Justice Buchanan.
Associate:
Date: 14 October 2010
Counsel for the Appellant: Ms C Adamson SC
Solicitor for the Appellant: Moray & Agnew
Counsel for the Respondent: Mr B Meagher SC
Solicitor for the Respondent: Meyer Vandenberg
Date of hearing: Written Submissions on 20 August 2010 and on 1 September 2010
Date of judgment: 14 October 2010
12
2