Lo Presti v Ford Motor Company of Australia Ltd [No 2]
[2008] WASC 12 (S)
•19 FEBRUARY 2008
LO PRESTI -v- FORD MOTOR COMPANY OF AUSTRALIA LTD [No 2] [2008] WASC 12 (S)
| Link to Appeal : | [2009] WASCA 115 |
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2008] WASC 12 (S) | |
| Case No: | CIV:1583/2003 | ON THE PAPERS (WRITTEN SUBMISSIONS FILED 4 MARCH 2008) | |
| Coram: | BEECH J | 18/02/08 | |
| 11/03/08 | |||
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Defendant to pay the plaintiff's costs on a party-party basis | ||
| B | |||
| PDF Version |
| Parties: | ANTONINO LO PRESTI FORD MOTOR COMPANY OF AUSTRALIA LTD |
Catchwords: | Costs Indemnity costs Calderbank offer Whether gives rise to prima facie entitlement to indemnity costs Whether rejection of Calderbank offer ground for ordering indemnity costs |
Legislation: | Rules of the Supreme Court 1971 (WA) O 24A |
Case References: | Alpine Holdings Pty Ltd v Warwick Entertainment Centre Pty Ltd [2003] WASC 53 (S) Calderbank v Calderbank [1976] Fam 93 Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 Fyna Foods Australia Pty Ltd v Cobannah Holdings Pty Ltd (No 2) [2004] FCA 1212 Globaltech Pty Ltd v Pareek [2006] WASC 30 (S) Gove v Black [2006] WASC 298 (S) Gretton v Commonwealth of Australia [2007] NSWSC 149 Jones v Bradley (No 2) [2003] NSWCA 258 MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236 Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425 NMFM Property Pty Ltd v Citibank Ltd (No 11) [2001] FCA 480; (2001) 109 FCR 77 SMEC Testing Services Pty Limited v Campbelltown City Council [2000] NSWCA 323 Townsend v Collova [2005] WASC 4 (S) Unioil International Pty Ltd v Deloitte Touche Tohmatsu (No 2) (1997) 18 WAR 190 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 12 MARCH 2008 FILE NO/S : CIV 1583 of 2003 BETWEEN : ANTONINO LO PRESTI
- Plaintiff
AND
FORD MOTOR COMPANY OF AUSTRALIA LTD
Defendant
Catchwords:
Costs - Indemnity costs - Calderbank offer - Whether gives rise to prima facie entitlement to indemnity costs - Whether rejection of Calderbank offer ground for ordering indemnity costs
Legislation:
Rules of the Supreme Court 1971 (WA) O 24A
Result:
Defendant to pay the plaintiff's costs on a party-party basis
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : No appearance
Defendant : No appearance
Solicitors:
Plaintiff : Slater & Gordon
Defendant : Clayton Utz
Alpine Holdings Pty Ltd v Warwick Entertainment Centre Pty Ltd [2003] WASC 53 (S)
Calderbank v Calderbank [1976] Fam 93
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95
Fyna Foods Australia Pty Ltd v Cobannah Holdings Pty Ltd (No 2) [2004] FCA 1212
Globaltech Pty Ltd v Pareek [2006] WASC 30 (S)
Gove v Black [2006] WASC 298 (S)
Gretton v Commonwealth of Australia [2007] NSWSC 149
Jones v Bradley (No 2) [2003] NSWCA 258
MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236
Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425
NMFM Property Pty Ltd v Citibank Ltd (No 11) [2001] FCA 480; (2001) 109 FCR 77
SMEC Testing Services Pty Limited v Campbelltown City Council [2000] NSWCA 323
Townsend v Collova [2005] WASC 4 (S)
Unioil International Pty Ltd v Deloitte Touche Tohmatsu (No 2) (1997) 18 WAR 190
(Page 3)
1 BEECH J: On 19 February 2008 I delivered reasons for decision after the trial of this action. I concluded that the plaintiff was entitled to judgment for damages in the agreed sum of $840,000. Judgment in that amount was entered on that day.
2 The plaintiff seeks an order that the defendant pay his costs on an indemnity basis, or alternatively on a solicitor and own client basis. No other special costs orders were sought by the plaintiff.
3 The plaintiff relies primarily upon the rejection, by the defendant, of an offer of settlement. On 12 September 2007 the plaintiff offered to settle his claim for $450,000 plus indemnities for certain repayments to Medibank Private and the Health Insurance Commission, plus costs to be taxed if not agreed.
4 The offer was expressed to be without prejudice except as to costs. The letter stated that if the offer was not accepted and the judgment entered after trial was more favourable to the plaintiff than the offer, the plaintiff would apply for costs on a solicitor-own client basis from the date of the letter, in accordance with the principles applied in Calderbank v Calderbank [1976] Fam 93.
5 The offer was rejected on 13 September 2007.
6 The trial commenced on 24 September 2007.
7 It is convenient to begin by outlining some general principles relevant to the exercise of the discretion to award costs.
8 The usual costs order is that the successful party in an action is awarded its costs on a party and party basis. An order for indemnity costs will be made only if there is some special or unusual feature in the case to justify departure from the ordinary practice. The court has power to make an indemnity costs order whenever justice requires it: Unioil International Pty Ltd v Deloitte Touche Tohmatsu (No 2) (1997) 18 WAR 190, 191; Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [8].
9 The categories of cases in which the discretion to award indemnity costs may be exercised are not closed: Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225, 233 - 234; Unioil (191).
10 Most of the situations in which indemnity costs have been awarded have involved an element of improper or unreasonable conduct on the part
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- of the parties or their advisors in the conduct of the case: Flotilla [9]; Colgate-Palmolive (233 - 234).
11 An offer of compromise is capable of being a ground relevant to the award of indemnity costs. However in my opinion, the rejection by a defendant of an offer of compromise which subsequently proves to be more favourable to the defendant than the result of the trial does not necessarily or presumptively lead to an award of indemnity costs for the plaintiff. All the circumstances must be considered in determining whether justice requires the exceptional exercise of the power to award indemnity costs.
12 The plaintiff relies upon the decision of Roberts-Smith J in Alpine Holdings Pty Ltd v Warwick Entertainment Centre Pty Ltd [2003] WASC 53 (S). In that case, his Honour followed the decision of Rolfe J in Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425 in holding that an offer of compromise, whether made under the Rules of Court or pursuant to a 'Calderbank letter', gives rise to a prima facie presumption of indemnity costs in the event that the result of the trial was less favourable to the recipient of the offer than was the terms of the original offer [72].
13 The decision in Multicon Engineering was not followed by Lindgren J in MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236, 240. Lindgren J pointed to decisions of judges of the Federal Court who had taken an approach different from that stated by Rolfe J. There seems to me to be considerable force in the matters referred to by Lindgren J as supporting the view that non-acceptance of a Calderbank offer does not give rise to a prima facie entitlement to indemnity costs. See also SMEC Testing Services Pty Limited v Campbelltown City Council [2000] NSWCA 323 [37]; Jones v Bradley (No 2) [2003] NSWCA 258 [9]; Gretton v Commonwealth of Australia [2007] NSWSC 149 [10].
14 In any event, in the light of the amendments to O 24A of the Rules of the Supreme Court 1971 (WA) which took effect on 1 March 2007, it does not seem to me to be necessary to decide whether the approach of Roberts-Smith J in Alpine should be followed. That is because his Honour's approach was founded upon the then prima facie entitlement of a plaintiff who had made an offer under O 24A to indemnity costs in the circumstance that the result of the trial was less favourable to the defendant than the terms of the offer. His Honour adopted the view that the same prima facie entitlement to indemnity costs should arise from a
(Page 5)
- Calderbank offer. The amendments to O 24A which took effect on 1 March 2007 mean that there is now no such prima facie entitlement under O 24A. See O 24A r 10(4). Thus the foundation for his Honour's view that rejection of a Calderbank offer can give rise to a presumption in favour of indemnity costs no longer exists.
15 In this regard, I note that in Townsend v Collova [2005] WASC 4 (S), Le Miere J held that rejection by a plaintiff of a Calderbank offer did not give rise to a prima facie entitlement to indemnity costs. In so holding, Le Miere J distinguished Alpine Holdings and Multicon Engineering on the basis that those were cases in which the plaintiff had made a Calderbank offer. In Townsend, the Calderbank offer had been made by the defendant. Under the provisions of O 24A, a defendant had (and has) no prima facie entitlement to indemnity costs in circumstances where a plaintiff has rejected an offer from a defendant that is more favourable to the plaintiff than the outcome of the action.
16 The amendments to O 24A in 2007 have equated the position of a plaintiff offeror under O 24A with the position of a defendant offeror.
17 For these reasons, in my opinion the making of an offer of settlement which is more favourable to the offeree than the outcome of a trial does not give rise to any prima facie entitlement to indemnity costs.
18 The relevance of the rejection of what proves to be a favourable offer of settlement to the award of indemnity costs has been stated in different ways in various decisions. For example, it has been said that rejection of a settlement offer may lead to indemnity costs where the rejection is 'imprudent' (Colgate-Palmolive (233); NMFM Property Pty Ltd v Citibank Ltd (No 11) [2001] FCA 480; (2001) 109 FCR 77 [82]); 'plainly unreasonable' (NMFM [82]); or simply 'unreasonable' (Globaltech Pty Ltd v Pareek [2006] WASC 30 (S) [17]; Fyna Foods Australia Pty Ltd v Cobannah Holdings Pty Ltd (No 2) [2004] FCA 1212 [5]).
19 In Gove v Black [2006] WASC 298 (S) [45] - [46], Templeman J adopted the approach that a failure to accept an offer may give rise to costs on an indemnity basis if the failure to accept the offer was so unreasonable in all the circumstances that an order for costs on a party and party basis would not be just. That is the formulation which I would adopt.
20 In assessing any question of the reasonableness of the rejection of an offer, it is of the first importance that the assessment be made without the benefit of hindsight. See, for example, Gretton [24], [38].
(Page 6)
21 In my opinion, in the circumstances of this case the defendant's rejection of the plaintiff's offer of settlement falls well short of being so unreasonable as to mean that it is just to order indemnity costs.
22 The defendant had a case of substance, supported by a substantial body of expert evidence. In some instances (Mr Rogers, Associate Professor McKenzie), the evidence of the defendant's experts conflicted directly with the plaintiff's experts. In other cases, the questions were as to the weight to be given to expert evidence on a subject (for instance, epidemiology), in determining the cause of the plaintiff's fibrosis.
23 The defendant cannot be expected to have been able to predict what my findings would be in determining the various issues regarding the expert evidence. Many of the plaintiff's submissions in support of an award of indemnity costs seem to me to involve, implicitly, expecting the defendant to have been able to do so.
24 The defendant's conduct in deciding to have the court decide the substantial issues arising from the expert evidence was, in my opinion, not unreasonable and certainly not so unreasonable as to make it just to order indemnity costs.
25 The plaintiff submitted that the defendant ought to have recognised that it faced a real risk in the litigation. I accept that that is so, but that fact alone does not provide an adequate basis for the award of indemnity costs.
26 Nor, in my opinion, is the question to be determined (as some of the plaintiff's submissions suggest), by whether the defendant reasonably held the view that it was 'likely' to succeed in its defence. That is a judgment which the court is not well placed to make, in that the views expressed by those who advised the defendant are not available. (The defendant's submissions contain various statements as to what the defendant 'believed' prior to trial, in various respects. As these assertions are not supported by evidence I have not had regard to them.) In any event, a decision to litigate a case of substance which had a reasonable prospect of success (albeit that such prospects were thought to be less than 'even money') in the face of an offer to settle, would not, in the absence of further facts, give rise to a sufficient ground to order indemnity costs.
27 It follows that I do not accept the plaintiff's submission that 'the defendant having chosen to take the risk of litigating, there ought to be a price to pay beyond party/party costs'. The 'price to be paid' by the defendant includes the excess of its liability under the judgment compared
(Page 7)
- to the settlement offer, its own costs after the offer was rejected, as well as its liability for the plaintiff's costs on a party-party basis. In any case, for the reasons I have sought to explain, I do not consider that the plaintiff's submission in this regard reflects a proper basis for the award of indemnity costs.
28 This was not an instance where a party's case was doomed to fail, or suffered from a fatal flaw which was pointed out by the other party in the Calderbank offer; see NMFM [87].
29 The plaintiff emphasised that the defendant rejected his offer within one day of receiving it. In the circumstances of this case I do not consider that that fact affords any support for a conclusion that the rejection was hasty or pre-emptory and so unreasonable in the sense that I have explained.
30 The plaintiff also submitted that the relative ability of the parties to bear the additional costs of the trial is relevant. I do not accept that the differing means of the parties provides any ground for ordering indemnity costs.
31 In my opinion, neither the defendant's rejection of the offer of settlement, nor any other aspect of the defendant's conduct referred to in the plaintiff's submissions provides any sufficient basis to order indemnity costs.
32 The plaintiff seeks, in the alternative, costs on a solicitor-own client basis. No separate submissions were made in support of that application.
33 For the reasons already stated I am not satisfied that it is appropriate in this case to depart from the usual order for costs on a party-party basis.
34 For these reasons I order that the defendant pay the plaintiff's costs of the action, including any reserved costs, such costs to be taxed if not agreed.
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