Mark Andrew Johnson v MNG Investments Pty Ltd T/As; Australian Temporary Fencing

Mark Andrew Johnson commenced proceedings in the Supreme Court of the Australian Capital Territory against MNG Investments Pty Ltd T/As Australian Temporary Fencing, seeking damages for personal injury. During the proceedings, several third parties were joined, including insurance companies and the Workers Compensation Default Insurance Fund Manager. The first defendant did not contest its liability to the plaintiff and the task of the court was to determine who should bear the plaintiff's damages and in what proportion. The court found that the first defendant was wholly to blame for the plaintiff's injuries and that it was entitled to indemnity by the third party insurer and the workers' compensation insurer. The two insurers were liable to bear the losses equally.

The legal issues in the case related to the costs orders to be made following the agreement of the parties as to quantum of damages. The first defendant had already paid the plaintiff's costs of the action, agreed at $130,000.00. The first defendant sought indemnity costs from the third party insurer from 18 September 2009, the date of expiry of an offer which was not accepted by the third party insurer. The third party insurer argued that it should not be required to contribute to the first defendant's costs at all.

The court considered whether the letter of 16 September 2009 should be construed as a letter having a Calderbank effect. The court concluded that the letter did not represent a compromise, as it did not involve the first defendant giving anything away or offering a discount from a position of complete success in the action. The court further held that even if the letter had a Calderbank effect, the third party insurer did not act unreasonably in not accepting the offer.

The court ordered that judgment be entered for the first defendant against the first third party in the sum of $463,967.17. The first defendant must pay the third defendant's costs of the action, and the first third party must pay the first defendant's costs of the third party proceedings against it, both on the conventional basis. The first defendant cannot recover any portion of the Fund's costs from the first third party.

This case highlights the importance of considering the context and the state of knowledge of the parties when determining the effect of a letter in the context of costs orders. It also emphasises the need for a Calderbank offer to represent a compromise for it to have Calderbank consequences.