Itskos v The Nominal Defendant (No 2)

[2021] NSWDC 485

District Court

New South Wales

Medium Neutral Citation:

Itskos v The Nominal Defendant (No 2) [2021] NSWDC 485

Hearing dates:

19 August 2021

Date of orders:

22 September 2021

Decision date:

22 September 2021

Jurisdiction:

Civil

Before:

J Smith SC, DCJ

Decision:

Orders of the Court are found at [16] of this judgment

Catchwords:

COSTS – Variation of costs order – contributory negligence – offers of compromise - ordinary and indemnity basis

Legislation Cited:

Uniform Civil Procedure Rules 2005

Cases Cited:

Equity 8 Pty Limited v Shaw Stockbroking Limited [2007] NSWSC 503

Morgan v Johnson (1998) 44 NSWLR 578

Ryan v Workers Compensation Nominal Insurer (No 2) [2020] NSWCA 129

Vale v Eggins (No 2) [2007] NSWCA 12

Category:

Costs

Parties:

Carlo Itskos (Plaintiff)
The Nominal Defendant (Defendant)

Representation:

Counsel:
Mr W Fitzsimmons SC (Plaintiff)

Solicitors:
Marocchi Law (Plaintiff)
Moray & Agnew Lawyers (Defendant)

File Number(s):

2017/141335

Publication restriction:

Nil

Judgment

1. On 18 January 2015 the plaintiff was injured in a motorcycle accident. He claimed that the accident was caused by the negligence of the driver of another vehicle but he was unable to identify either the vehicle or the driver. For that reason, he commenced proceedings against the Nominal Defendant.

2. On 17 June 2021 I gave judgment for the plaintiff in the sum of $585,000 and ordered the defendant to pay 90% of the plaintiff’s costs. Both the damages and costs orders were made on the basis of my conclusion that the plaintiff’s own negligence had contributed to the accident.

3. The plaintiff now applies for a variation of the costs order. He relies on three offers of compromise made by him during the course of the proceedings under r 42.14 of the Uniform Civil Procedure Rules 2005 (UCPR). The following facts were not in dispute and are taken from the plaintiff’s written submissions.

4. The proceedings were commenced on 11 May 2017. On 8 May 2018 the plaintiff served an expert liability report. On 28 May 2018 the plaintiff served an offer of compromise being an offer of judgment for the plaintiff in the sum of $360,000 (First Offer). That offer was not accepted. On 2 June 2020 the defendant served an offer of compromise being for a verdict for the defendant with each party to pay its own costs. That offer was not accepted by the plaintiff.

5. On 7 September 2020 the parties engaged in mediation. As a result of that mediation, damages were agreed in the sum of $650,000. The issue of liability remained contested.

6. Following the mediation, the defendant advised that the matter would proceed to trial and that it would make no further offers.

7. On 8 September 2020 the plaintiff served an offer of compromise on the basis that there be a verdict for the plaintiff with the damages reduced by 50% for contributory negligence (Second Offer). That offer was not accepted.

8. On 21 May 2021 the plaintiff served an offer of compromise on the basis of a verdict for the plaintiff in the sum of $250,000 (Third Offer). That offer was not accepted.

9. The hearing commenced on 24 May 2021. On that day the plaintiff made a further offer which was not accepted.

Offers of compromise under the UCPR

10. Division 3 of Part 42 of the UCPR applies to proceedings in respect of which an offer of compromise is made under r 20.26 with respect to the plaintiff’s claim. There is no question that each of the first, second and third offers were made under r 20.26. For that reason, r 42.14 applies. That rule provides:

42.14   Where offer not accepted and judgment no less favourable to plaintiff

(1)     This rule applies if the offer is made by the plaintiff, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim no less favourable to the plaintiff than the terms of the offer.

(2)     Unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff’s costs in respect of the claim—

(a)     assessed on the ordinary basis up to the time from which those costs are to be assessed on an indemnity basis under paragraph (b), and

(b)     assessed on an indemnity basis—

(i)     if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and

(ii)     if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made.

11. The defendant bears the onus of establishing that the court should “order otherwise”. The defendant accepts that it cannot do so in respect of the Third Offer. However, in respect of the First and Second Offers it says the following.

12. The First Offer was made at a time when the defendant was not in a position to understand the basis of the offer or to assess whether it offered a genuine compromise. It relied on the decision in Equity 8 Pty Limited v Shaw Stockbroking Limited [2007] NSWSC 503. That case did not relate to an offer of compromise under the Rules. However, I accept that the state of the proceedings was such that there should not be an order for costs on an indemnity basis from 29 May 2018. Although the issues concerning liability were clear cut (and remained so), there was no clear evidence about the extent of the damage. While the plaintiff suffered frank injuries, an assessment in 2016 showed that there was no stabilisation of the injury to the foot and there were ongoing disclosures of other loss suffered.

13. In respect of the Second Offer (made in September 2020) the defendant makes the same submission and adds that, at that time, the plaintiff was yet to obtain evidence from a biomechanical engineer. I do not accept that the possible evidentiary development or, indeed, any further such development, warrants a departure from the ordinary course posited by r 42.14. Such developments are routine: see Vale v Eggins (No 2) [2007] NSWCA 12 (Bryson JA, dissenting) referred to with approval in Ryan v Workers Compensation Nominal Insurer (No 2) [2020] NSWCA 129 at [20]. The purpose of the rule is to encourage proper compromise of litigation in the private interests of individual litigants and the public interest of the prompt and economical disposal of litigation: Morgan v Johnson (1998) 44 NSWLR 578 at 381.

14. If the potential impact of further evidence after an offer were sufficient to displace the ordinary consequence of failing to accept that offer that purpose would only rarely be served. For that reason, the appropriate costs order should include indemnity costs from 8 September 2020.

15. It remains to consider the appropriate costs order prior to that date. The plaintiff argues that, contrary to the order made on 17 June 2021, there should be no adjustment to the costs to take into account contributory negligence. He argued that costs should follow the event and that it “is the invariable practice of the Court … there is no proportional reduction in costs reflecting the finding of contributory negligence”. I was not taken to any authority in support of that proposition and there was nothing beyond assertion as to the practice of the Court. As a matter of principle, I can see no reason why the partial success of a defence of contributory negligence cannot be reflected in the award of costs in the same way that partial success of an otherwise unsuccessful party in any other type of claim may be reflected in the order for costs.

16. The suggestion by the plaintiff’s solicitors in correspondence that such an adjustment is “incorrect at law” was not supported. The plaintiff contested the proceeding on the basis that he took all reasonable care for his own safety and that the accident and resulting loss were occasioned entirely by the negligence of an unknown driver. I did not accept that and I remain of the view that it is appropriate that that be reflected in the award of costs.

17. For those reasons, I make the following orders:

1. Order 2 made on 17 June 2021 be varied so that it provides:

“The defendant is to pay 90% of the plaintiff’s costs as assessed or agreed on an ordinary basis up to 7 September 2020 and thereafter on an indemnity basis.”

2. The defendant pay the plaintiff’s costs of the motion as assessed or agreed.

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Decision last updated: 22 September 2021