Marchant v Maitland - [2004] WADC 159

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: MARCHANT -v- MAITLAND [2004] WADC 159

CORAM: NISBET DCJ

HEARD: 22 JUNE 2004

DELIVERED : 30 JULY 2004

FILE NO/S: CIV 2704 of 2002

BETWEEN: DONNA RUTH MARCHANT
Plaintiff
AND
JOHN WILLIAM MAITLAND
Defendant

Catchwords:

Costs - Calderbank offer - Effect of O 24A of the Rules of the Supreme Court - Motion for indemnity costs based on Calderbank offer - Principles

Legislation:

Rules of the Supreme Court

Result:

Motion refused

Representation:

Counsel:

Plaintiff: Mr P L Haynes
Defendant: Mr P R Momber

Solicitors:

Plaintiff: Paul O'Halloran & Associates
Defendant: Peter Momber

Case(s) referred to in judgment(s):

Alpine Holdings Pty Ltd & Ors v Warwick Entertainment Centre Pty Ltd & Ors [2003] WASC 53(S)
Calderbank v Calderbank [1975] 3 All ER 333; 3 WLR 586
Colgate Palmolive Co & Anor v Cussons Pty Ltd (1993) 118 ALR 248
Collins v Westralian Sands Ltd (1993) 9 WAR 56
Dobb v Hackett (1993) 10 WAR 532
Koh v Tay [1999] WASC 228
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

Case(s) also cited:

Nil

NISBET DCJ: After I delivered judgment in this matter on 6 May 2004 ([2004] WADC 80) I entered judgment for the plaintiff and gave her liberty to apply as to costs.
Pursuant to that liberty to apply the plaintiff re‑listed the matter for hearing before me and moved for an order that the defendant do pay the plaintiff's costs of the action to be taxed, such costs to be taxed on an indemnity basis from and including 13 November 2003.
Two grounds were advanced in support of the motion they being that the plaintiff had made a Calderbank offer in October of 2003, that is to say an offer to settle her claim without prejudice as to costs, which offer was rejected by the defendant and bettered by the plaintiff in the judgment she obtained from me. The source of the Calderbank offer is of course Calderbank v Calderbank [1975] 3 All ER 333; 3 WLR 586. The idea of Calderbank offers is to put the offeree at risk as to an enlarged order for costs in the event that the offer is matched or bettered by judgment following trial.
The second or subsidiary argument put in support of the motion was that the plaintiff was a difficult client to prepare for trial in that her natural timidity and excessive caution meant that her solicitors had to go to extraordinary lengths to prepare her case for trial.
The motion for indemnity costs was opposed by the defendant who submitted that since O 24A was brought into the Rules of the Supreme Court the only means by which a litigant may obtain an enlarged order for costs is in conformity with the procedure there provided. In support of this submission the defendant cited Koh v Tay [1999] WASC 228. The defendant further submitted that for there to be an order for indemnity costs a mere offer to settle not made in conformity with O 24A was insufficient. There had to be more. The party moving for an order for indemnity costs had to demonstrate some misconduct on the part of the opposite party. In support of this submission the defendant cited Alpine Holdings Pty Ltd & Ors v Warwick Entertainment Centre Pty Ltd & Ors [2003] WASC 53(S).
Dealing with these issues in turn, O 24A became a rule of the Supreme Court on 5 April 1991. Other courts have rules to similar effect most notably the Federal Court by its O 23. Order 24A does not in its terms provide that its scheme of regulation of offers of compromise of suit is exclusive, and that no offer of compromise may be made outside of its terms. Neither, incidentally, does O 23 of the Federal Court Rules. Further, as other authorities point out, whether the offer of compromise be of the informal Calderbank type, or formal pursuant to O 24A or a similar rule of Court in other jurisdictions, the provision of a formal offer of compromise regime does not exclude the operation, in an appropriate case, of the informal Calderbank offer of compromise. So much is made clear by the discussions in cases which both precede Koh v Tay and post‑date it: Dobb v Hackett (1993) 10 WAR 532 at 539 and Alpine Holdings Pty Ltd & Ors v Warwick Entertainment Centre Pty Ltd & Ors. In the Federal Court the relationship between a Calderbank offer and a formal offer of compromise pursuant to O 23 of the Rules of the Federal Court has been considered on a number of occasions. The regime established by O 23 is thought to be more protective of an offeree's position than the unregulated offer made in the Calderbank style: MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236 at 240 where Lindgren J observed that it would be difficult to accept that in the extreme case of an offer made in a Calderbank style which contained only a minimal element of compromise and was open for acceptance for a limited period, should, in the event of total success of the offeror, give rise to a presumptive entitlement to indemnity costs generally similar to that provided for in O 23, even if, in such a case, the presumptive entitlement might be easily displaced by the offeree. In Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425 Rolfe J at 451 was considering the New South Wales offer of compromise regime and a Calderbank style offer and he said:
"In my opinion the proper approach to take to an offer of compromise, whether made under the Rules 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 the 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. I proceed on the basis that the unreasonableness was the failure by the offeree to accept the offer, which unreasonableness is demonstrated, prima facie by the ultimate result. This approach is consistent with the decisions to which I have referred, the policy evidenced by the Act and the Rules and the widely accepted philosophy that settlements should be encouraged. The relevant Rules provide that costs will be paid on the basis set out therein 'unless the Court otherwise orders'. My understanding is that the court is required to proceed on the basis that it should make the order provided for by the Rules, unless the party rejecting the offer is able to establish good reason for having done so.
…
That is the starting point from which I propose to proceed and, in my opinion, it is not only consistent with the thrust of the Act and Rules, the general philosophy behind the desirability of settlements and the decisions of this court, but it is also removes (sic) from the arena questions to be considered in relation to indemnity costs, which are really only relevant to a consideration of costs on that basis absent any offer of compromise. In saying what I have I acknowledge the force and accept the applicability of the principle that each case must be determined by an exercise of the judicial discretion having regard to the particular facts of each case. Thus the prima facie position having been established the court must be satisfied that an order for indemnity costs is not appropriate. As I have indicated, if that is not done there is a failure to exercise the judicial discretion." (My emphasis.)
His Honour then went on to consider whether it was reasonable for the offeree to reject the offer of settlement and in so doing considered a submission that the outcome of the proceedings depended very much on who among the various witnesses was accepted (p 453). Clearly his Honour was of the opinion that where there was an evidentiary issue which could only be resolved by reference to credibility then it would be reasonable to reject an offer of compromise in circumstances where there was no way of testing the issue of credibility other than in a trial. In the case before his Honour he went on to determine that that submission was not matched by the chronology of events because at the time the defendant's offer was made to the plaintiff all of the relevant witnesses in respect of whom those considerations applied, had given their evidence and hence the offeree was at risk. This is the approach which was adopted by the court in Alpine Holdings Pty Ltd & Ors v Warwick Entertainment Centre Pty Ltd & Ors. Accordingly, I think it is fair to say that the position advanced by Scott J in Koh v Tay does not enjoy any authoritative support in Western Australia or New South Wales or in the Federal Court of Australia and I decline to follow it.
This means that the starting point as Rolfe J said in Multicon as adopted in Alpine Holdings that there being a Calderbank offer made by the plaintiff and rejected by the defendant, this would prima facie entitle the plaintiff to indemnity costs from a reasonable time after the offer was made. In this regard counsel for the plaintiff agreed that a reasonable time from a Calderbank offer made in October would have been the same period of time as for which an offer if made under O 24A would have been open, namely 13 November 2003. As I understood counsel for the defendant's submissions he did not disagree with that particular approach.
The defendant then carries the onus of establishing that it was reasonable for him to reject the offer. In this case the defendant strongly submitted that it was reasonable for him to reject the plaintiff's offer of compromise in circumstances where the plaintiff had presented to a large number of medical practitioners with a large variety of symptoms for which there was no discernible pathology (see my judgment at [22], [40] and [41]). In those circumstances the defendant submitted, he was left with only the opinions of the expert psychiatrists which, before the trial at least, the defendant could have reasonably read as being at odds with each other such that any conflict between them could only be resolved on a trial. In the end result of course I found that the difference between the psychiatrist's opinions was largely semantic but I accept that that would not have been obvious on the face of the opinions as expressed in the reports exchanged prior to trial.
In my opinion the defendant had more than adequate reason to refuse the plaintiff's offer of compromise and as the Calderbank offer was the only ground upon which the plaintiff moved for an order for indemnity costs, there being no allegation of improper conduct or misconduct on the part of the defendant (as to which see Colgate Palmolive Co & Anor v Cussons Pty Ltd (1993) 118 ALR 248) then the plaintiff's application for indemnity costs must fail.
This leaves but one further matter for comment. The plaintiff by way of support for her motion for an order for indemnity costs pointed to the large amount of extra work involved in preparing her case for trial having regard to her timid if not fragile personality making her a very difficult witness from whom to take instructions let alone prepare for trial. Where a plaintiff seeks an enlargement of costs by reason of the additional work involved the proper course is to make application for a special order for costs in accordance with authorities such as Collins v Westralian Sands Ltd (1993) 9 WAR 56. Such an application of course must be supported by evidence of the type there described. Ordinarily speaking the amount of additional work involved is not a factor supporting an award for indemnity costs unless the extra work has been occasioned by some misleading or deceptive or otherwise improper conduct on the part of the other party or parties to the litigation.