CITATION: Jones v Bradley (No. 2) [2003] NSWCA 258
FILE NUMBER(S): 41050/01
HEARING DATE(S): Written Submissions
JUDGMENT DATE: 16/09/2003
PARTIES: Edward John Jones (Appellant) Emma Ward Bradley (Respondent)
JUDGMENT OF: Meagher JA Beazley JA Santow JA
LOWER COURT JURISDICTION: District Court
LOWER COURT FILE NUMBER(S): DC 2140/99
LOWER COURT JUDICIAL OFFICER: Dent DCJ
COUNSEL: C Hoeban (Appellant) Paul S Jones (Respondent)
SOLICITORS: Connery & Partners (Appellant) Colin Daley Quinn (Respondent)
CATCHWORDS: Costs - offer of compromise - Calderbank offer - exercise of discretion - settlement negotiations - reasonableness of offer - time to consider offer - application of Rules of Court
DECISION: 1. The respondent is to pay the appellant's costs from 26 October 2001 to 3 December 2001 on a party/party basis 2. The respondent is to pay the appellant's costs of the appeal until 20 December 2001 on a party/party basis 3. The respondent is to pay the appellant's costs of the appeal from 21 December 2001 on an indemnity basis
JUDGMENT:
IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL
CA 41050/01 DC 2140/99
MEAGHER JA BEAZLEY JA SANTOW JA
16 Sepember 2003
JONES v BRADLEY (No. 2)
Judgment
The Court: The Court delivered Judgment in this matter on 16 April 2003. The appeal was allowed and the verdict in favour of the respondent was reduced by $1,314,844.20, leaving a judgment sum in her favour of $769,854.85.
That left outstanding the question of the costs of the trial and of the appeal. At trial, Dent DCJ ordered the appellant to pay costs on an indemnity basis from 23 October 2001. Given his success on the appeal, the appellant now seeks to set aside that order and seeks an order that the respondent pay his costs on a party/party basis from 26 October 2001, when he made his final offer of settlement, until 3 December 2001, when Dent DCJ made his costs order in the matter. The appellant also seeks an order that the respondent pay indemnity costs of the appeal from 21 December 2001, including the costs of this costs application.
The respondent resists the appellant’s application. She acknowledges that, due to the outcome of the appeal, it is appropriate that Dent DCJ’s costs order be varied and proposes that the appellant pay the respondent’s costs of the trial on a party/party basis. She concedes her liability to pay the appellant’s costs of the appeal but proposes that these be on a party/party basis.
It is necessary to review the history of the litigation in this matter in order to understand the bases upon which each party contends it is entitled to costs:
On 15 October 2001 the proceedings commenced before Dent DCJ;
On 22 October 2001, the appellant made an offer of settlement, in terms purporting to be a Calderbank offer, of $1,000,000 inclusive of out of pocket expenses plus costs. This offer was open until 10.00am on Wednesday 24…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Jones v Bradley (No 2) [2003] NSWCA 258
Case
[2003] NSWCA 258
Decision Date
CaseChat Overview and Summary
The case of Jones v Bradley (No 2) concerned an application for costs following settlement negotiations. The dispute involved the appellant and the respondent, with the court being asked to determine the appropriate basis for awarding costs, specifically in light of an offer of compromise made by the respondent.
The central legal issue before the court was the effect of a *Calderbank* offer on the court's discretion in awarding costs. Specifically, the court had to consider two differing lines of authority: one that suggested a prima facie presumption that a party rejecting an unaccepted offer, and subsequently receiving a less favourable outcome, should pay the other party's costs on an indemnity basis from the date of the offer; and another line of authority that rejected this presumption, holding that the exercise of discretion depends on all relevant circumstances of the case.
The court's reasoning favoured the approach that all circumstances must be considered when determining costs following a *Calderbank* offer. It was held that while the making of an offer and a less favourable outcome for the offeree are matters to which the court may have regard, they do not automatically lead to an order for costs on an indemnity basis. The court emphasised that the policy behind *Calderbank* offers is the promotion of settlement, and an offeree can reasonably refuse an offer without necessarily suffering adverse cost consequences. The ultimate question is whether the offeree's failure to accept the offer, in all the circumstances, warrants a departure from the ordinary rule as to costs.
The court ordered that the respondent pay the appellant's costs on a party/party basis for a specified period, and thereafter on an indemnity basis for the costs of the appeal from a later date.
Orders
Orders of the court
1. The respondent is to pay the appellant's costs from 26 October 2001 to 3 December 2001 on a party/party basis
2. The respondent is to pay the appellant's costs of the appeal until 20 December 2001 on a party/party basis
3. The respondent is to pay the appellant's costs of the appeal from 21 December 2001 on an indemnity basis
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
There are two lines of authority on the question of what effect a Calderbank offer has on the Court’s discretion in awarding costs. The first is reflected in Rolfe J’s judgment in Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425 where his Honour stated at 451:“… the proper approach to take to an offer of compromise … or pursuant to a Calderbank letter, is that there should be a prima facie presumption in the event of the offer not being accepted and in the event of a recipient of the offer not receiving a result more favourable than the offer, that the party rejecting the offer should pay the costs of the other party on an indemnity basis from the date of the making of the offer.”This line of authority has been followed in: Naomi Marble & Granite Pty Ltd v FAI General Insurance Company Ltd (No 2) [1999] 1 Qd R 518, and Brittain v Commonwealth of Australia [2003] NSWSC 270. The other line of authority rejects the “prima facie presumption” approach. In MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (1996) 70 FCR 236 Lindgren J said at page 239:“It is important, however, to appreciate that the mere making of an offer by a Calderbank letter and its non-acceptance followed by a result more favourable will not automatically lead to the making of an order for payment of costs on an indemnity basis.”His Honour said the manner of exercise of the discretion “depends on all relevant circumstances of that case”. His Honour’s view reflected the jurisprudence in the Federal Court at the time: see WCW Pty Ltd v Charthill Ltd (unreported, Federal Court, Olney J, 7 July 1992); John S Hayes & Associates Pty Ltd v Kimberly-Clark Australia Pty Ltd (1994) 52 FCR 201; and has continued to be applied in that Court: see The Sanko Steamship Co Ltd v Sumitomo Australia Ltd (unreported, Federal Court, Sheppard J, 7 February 1996) and NMFM Property v Citibank (2001) 109 FCR 77. This principle has also been enunciated in this Court. In SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 Giles JA stated at para 37: “The making of an offer of compromise in the form of a Calderbank Letter … where the offeree does not accept the offer but ends up worse off than if the offer had been accepted, is a matter to which the court may have regard when deciding whether to otherwise order, but it does not automatically bring a different order as to costs. All the circumstances must be considered, and while the policy informing the regard had to a Calderbank letter is promotion of settlement of disputes an offeree can reasonably fail to accept an offer without suffering in costs. In the end the question is whether the offeree’s failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure.” It appears that Priestley JA, by his Orders in this case, would endorse this approval. But in any event, the principle has been applied in the Supreme Court both at first instance and on appeal: see Enron Australia Finance Pty Limited (in liquidation) v Integral Energy Australia [2002] NSWSC 819; Nobrega v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney (No 2) [1999] NSWCA 133; LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74; and Cummings v Sands [2001] NSWSC 706.