Noble v Fraraccio (Ruling No 2)
[2016] VCC 680
•27 May 2016
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
| GENERAL LIST |
Case No. CI-13-02686
| DIANNE MARY NOBLE | Plaintiff |
| v | |
| MATTHEW JOHN FRARACCIO | Defendant |
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JUDGE: | HIS HONOUR JUDGE SACCARDO | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 5, 6, 10, 11, 12, 16, 17 and 18 May 2016 | |
DATE OF RULING: | 27 May 2016 | |
CASE MAY BE CITED AS: | Noble v Fraraccio (Ruling No 2) | |
MEDIUM NEUTRAL CITATION: | [2016] VCC 680 | |
RULING
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Subject: PRACTICE AND PROCEDURE
Catchwords: Costs – offer of compromise made – validity and enforceability of offer of compromise
Legislation Cited: Guardianship and Administration Act 1986, s51, s58B(l), s58B(m) and s58B(n); Supreme Court (General Civil Procedure) Rules 2015, r 15.03, r 26.02, r 26.06
Cases Cited:IFTC Broking Services Limited v The Commissioner of Taxation [2010] FCAFC 3; Simply Irresistible Pty Ltd v Couper & Ors [2012] VSC 33; Nakos v Serdaris [2016] VSC 179; Parish v Yixuan Wu(No 2) [2010] VSC 64VSC 336; Brown v Owners Corporation SP021532U (Ruling No 2) [2013] VSC 127
Ruling: Plaintiff’s offer of compromise given full force and effect. Defendant entitled to an order with respect to its costs relevant to the first and second day of the trial.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms M A Hartley QC with Mr D Seeman | Robinson Gill |
| For the Defendant | Mr A D Clements QC with Ms C Spitaleri | Solicitor to the Transport Accident Commission |
HIS HONOUR:
1 In this proceeding, I am required by the parties to adjudicate upon the validity and enforceability of an offer of compromise served by the plaintiff on 4 May 2016 in the sum of $35,000.
2 There is no issue that at the time at which the offer was served, the parties had agreed that the quantum of damages in the claim should be fixed in the sum of $448,439.00, the result being that the compromise offered by the plaintiff to the defendant involved a discount of the plaintiff’s claim in excess of 90 per cent. Neither is it in issue that the verdict of the jury at the conclusion of the trial fixed the plaintiff’s contributory negligence at 90 per cent, with the result that the verdict for the plaintiff exceeds her offer of compromise.
3 The defendant submits that the plaintiff is not entitled to rely upon her offer of compromise for the following reasons:
(i)The offer was made immediately before the trial and at a time at which the issue as to whether the plaintiff would be entitled to rely upon the expert evidence of Dr Peter Raftos was unknown, given the defendant’s position that the evidence was inadmissible;
(ii)The offer of compromise is invalid, having regard to the fact that:
·At the time at which the offer was made, the plaintiff was the subject of an Order made by the Victorian Civil and Administrative Tribunal by which FTL Judge and Papaleo Pty Ltd (“the administrator”) had been appointed as the administrator of the estate of the plaintiff having regard to her presentation as a person who was:
“… unable by reason of her disability to make reasonable judgements about their estate; and needs an administrator.”[1]
· During the trial, the title of the proceeding was amended so as to appoint the administrator as the plaintiff’s litigation guardian pursuant to Rule 15.03.
[1]Section 51 of the Guardianship and Administration Act 1986
Approach to analysis
4 In IFTC Broking Services Limited v The Commissioner of Taxation,[2] the Full Federal Court set out the following principles applicable to the exercise for discretion of the type involved in this instance as follows:
[2][2010] FCAFC 31
“It may be accepted that the prima facie position established by O 23 r 11(6) can be departed from. So much is clear from the statement of exception in the rule which the appellants seek to invoke (“unless the Court otherwise orders”). The cases say more than this, however. The cases establish that:
(1) If O 23 r 11(6) is engaged it is for the applicant to satisfy the Court that the prima facie position established by that rule should be departed from (Futuretronics at [12]).
(2) Unlike a case in which a Calderbank offer (named after the decision in Calderbank v Calderbank [1975] 3 All ER 333) is made, the fact that an unsuccessful litigant acted reasonably in rejecting an offer of compromise ‘is not of itself a sufficient reason to displace the operation of the rule’ (Futuretronics at [11]).
(3) It is true that doubts have been expressed about a need to show ‘compelling and exceptional circumstances’ to justify otherwise ordering (see Port Kembla Coal Terminal at [17]). Nevertheless, properly understood, the rule creates a presumption in favour of indemnity costs which the unsuccessful party must rebut. A court may depart from the presumptive position but only ‘for proper reasons which, in general, only arise in an exceptional case’ (Port Kembla Coal Terminal at [17] cited with approval in Futuretronics at [10]).
(4) The requirement for ‘proper reasons’ for any departure from the prima facie position of indemnity costs reflects the purpose of the rule. As explained by Mason P in Morgan v Johnson (1998) 44 NSWLR 578 at 581F–582E the rule is intended to encourage the compromise of litigation (such compromise being in both the private and the public interest) and to oblige parties ‘to give serious thought to the risk involved in non-acceptance’ on the basis that ‘litigation is inescapably chancy’ (Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 725). For these reasons ‘the ordinary provision is expected to apply in the ordinary case’ (referring to New South Wales Insurance Ministerial Corporation v Reeve (1993) 42 NSWLR 100 at 102–103).”
5 That position was adopted by Kyrou J in Simply Irresistible Pty Ltd v Couper & Ors [3] and by Zammit J in Nakos v Serdaris.[4]
[3][2012] VSC 33
[4][2016] VSC 179 at paragraph [18]
6 I adopt the statements above and the analytical approach adopted by each of the above courts in my analysis of the issues relevant to the current application
The validity of the offer of compromise having regard to the incapacity of the Plaintiff
7 Pursuant to s58(b) of the Guardianship and Administration Act 1986, the appointment of the administrator in this instance had the effect of vesting with the administrator the power to:
(i)bring them to defend actions and other legal proceedings in the name of the represented person;
(ii) execute and sign deeds, instruments or other documents; and
(iii)complete any contract for the performance of which the represented person was liable.[5]
[5]See s58B(l), s58B(m) and s58B(n) of the Guardianship and Administration Act 1986
8 I am satisfied in those circumstances that, at the time at which the offer of compromise was made, the administrator had the authority to provide instructions that the offer be made and, accordingly, that the offer was a valid one.
9 At the commencement of the trial, an application was made to amend the proceeding so as to allow the proceeding to be maintained by a litigation guardian, namely the administrator. It is a moot point whether such an amendment was required in this instance, having regard to the powers and liabilities conferred upon the administrator at the time of its appointment.
10 It is the defendant’s position:
· that the offer of compromise could not be enforced because, to be effective it required the approval of the Court; and
· that the failure by the plaintiff to identify the fact that the offer of compromise required the sanction of the Court involved an irregularity of both form or substance which should operate so as to deny the plaintiff an entitlement to rely upon the offer.
11 It is clear that the rules with respect to offers of compromise as they are currently formulated, make no prescription as to the form of the offer. Equally, the structure of the Rules of the Court applicable to the conduct of litigation through the litigation guardian and the process and procedure associated with the making of an offer of compromise make no mention as to the form of such an offer.
12 Relevantly, Rule 26.06 provides that a person under a disability may make or accept an offer of compromise, but that:
· no acceptance of an offer made by a person under a disability; and
· no acceptance by a person under a disability of an offer
shall be binding until the Court has approved the compromise.
13 I am satisfied that there is no merit in the position put by the defendant that the plaintiff’s offer of compromise was not effective merely by reason of the fact that it required the approval of the Court.
14 The purpose and structure of Rule 15 is in my opinion directed at the supervision of the adequacy of proposed settlements not the process of negotiation between that parties or the formulation of offers by the parties made in an attempt to resolve the proceeding.
15 Rule 26 clearly recognises the fact that an offer of compromise may be made on behalf of a party under a disability.
16 Having regard to the presence of Rule 26.06, which establishes the process which must be applied in respect of the acceptance of an offer of compromise made by a person under a disability, I find the defendant’s position that the plaintiff, in making the offer in this instance, was obliged to make a statement to the defendant that the provisions of Rule 26.06 were applicable to the offer, or to effectively recite the content of that provision when making the offer, to lack persuasion. It is difficult to see the argument which might be made in support of the position that:
· the inclusion of the allegedly missing words would have upon the thought process of the recipient of such an offer; or
· the absence of the allegedly missing words should have an effect upon the validity of the offer.
given the presence of Rule 26.06.
17 In Nakos v Serdaris,[6] Zammit J, in upholding the binding nature of the offer of compromise which had been served on behalf of the defendant in a proceeding commenced on behalf of the plaintiff by her litigation guardian, rejected the position put on behalf of the plaintiff that the mere fact that the acceptance of the offer made by the defendant in that instance requiring the determination of the court, was determinative upon the issue as to whether or not the defendant’s offer could be enforced. Rather, in giving an effect to the offer, her Honour observed:
“… Whether the offer would have been approved by the Court does not assist. Ultimately, the test a court applies when considering an approval of a settlement is whether the prospect of getting a greater sum by rejecting the offer is good enough to outweigh, significantly, the risk of not getting more. It would have been open to the court to approve the settlement in the sum of the offer.” [7]
[6]Supra
[7]Nakos v Serdaris (supra) at paragraph [41]
18 Relevantly, the offer in that instance contained no qualification that the offer was made subject to the approval of the Court under the provisions of Rule 26.06.
19 As Zammit J commented in the course of her decision in Nakos:
“… The problem for the plaintiff is that this is an ordinary case. The plaintiff did not accept the offer, but instead took a chance in the inherently risky business of litigation. The fact that the plaintiff’s litigation guardian believed the plaintiff’s case had a reasonable prospect of success is insufficient. The plaintiff has not identified any fact, matter or event that provided a proper and principal basis for making an order displacing the ordinary consequences of the refusal to accept the defendant’s offer. The rules governing offers of compromise are intended to encourage the compromise of litigation and to make parties give ‘serious thought’ to the risk involved in non-acceptance on the basis that ‘litigation is inescapably chancy’.”[8]
[8]Nakos v Serdaris (supra) at paragraph [42]
20 I am satisfied in this instance that:
· had the defendant made application to accept the offer during the trial, the approach which I would have undertaken as trial judge would have been to refer the issue to another judge for determination;
· the difficulties which the plaintiff faced as to liability make it extremely likely that the offer would have been approved.
21 For the reasons set out above I am satisfied that the statements made by Zammit J to which I have referred above are apposite in this instance and I adopt them.
22 For these reasons I reject the defendant’s position that the plaintiff’s offer of compromise should not be enforced by reason of its form.
The timing of the offer
23 I am satisfied that there is no merit in the position taken by the defendant that the offer of compromise should not be enforced by reason of the timing at which the offer was made.
24 The fact that an offer of compromise is made at a time at which the evidence to be adduced on behalf of the parties is not finally determined is not uncommon, particularly if an offer of compromise is served prior to the commencement of a trial.
25 Further, there is an abundance of authority in support of the position that the late timing an offer of compromise served does not necessarily have any determinative bearing upon the enforceability of the offer.[9]
[9]See Parish v Yixuan Wu(No 2) [2010] VSC 64VSC 336; see also Brown v Owners Corporation SP021532U (Ruling No 2) [2013] VSC 127
26 I am not satisfied that the circumstances associated with timing of the current offer by the plaintiff raises any unusual point or warrants any discount being applied to the potential penalty to the defendant associated with the plaintiff in achieving a verdict in a sum which exceeded her offer.
27 Whilst I accept the position put on behalf of the defendant that the evidence of Dr Raftos may have figured significantly in the reasoning process of the jury, the influence of that evidence upon that process is really a matter of speculation.
28 Given:
· that the critical feature of the position put by the plaintiff to the jury on the issue of causation involved the statement by Dr Rechnitzer that the defendant approached the point of collision at a speed of 30 kilometres per hour or less, he should have been able to observe the plaintiff if she was on the roadway and brake his vehicle so as to stop the vehicle before it came into collision with the plaintiff; and
· the effect of the evidence of Dr Raftos was that, at the time of the collision, the defendant’s vehicle was travelling at a speed in excess of 50 kilometres per hour;
the relevance one way or another of the evidence of Dr Raftos, insofar as it had the potential of influencing the plaintiff’s case in a positive manner, becomes, in my opinion, a moot point.
29 Even taking the defendant’s position at its highest, the timing of the offer of compromise was such that it remained open to be accepted by the defendant throughout the trial in circumstances in which:
· my ruling as to the admissibility of the evidence of Dr Raftos was made prior to the time in which the jury was empanelled; and
· the defendant was well placed to assess the potential of the influence which the evidence of Dr Raftos may have had upon the jury given the fact that the evidence had been tested in the course of a voir dire.
30 There can be little doubt that the offer made by the plaintiff to the defendant involved an extremely significant compromise, the effect of which was to reduce the potential assessment figure of $386,660 (being the agreed quantum of the claim of $448,430 after reduction of no-fault benefits of $79,770) by more than 90 per cent.
31 While I commented in the course of submissions that the defendant’s position in this case that no offers should be made to the plaintiff, was one which could not be considered unreasonable having regard to the difficulties which the plaintiff faced in establishing a liability, in my opinion, that thought process should be given no weight in deciding whether or not the plaintiff should be entitled to rely upon the enforcement of the cost penalties levied upon the defendant in circumstances in which the plaintiff has achieved a verdict in an amount greater than the sum the subject of her validly served offer of compromise.
32 In the course of submissions upon this issue, the parties helpfully referred me to a Ruling by his Honour Dixon J in Brown v Owners Corporation SP021532 (Ruling No 2).[10]
[10]Supra
33 I am satisfied that I should adopt the reasoning process set out by his Honour in that instance.
34 While it is clear that there are circumstances in which a discretion may be exercised to order otherwise that the effect of the Rules, the operation of which would require the defendant in this instance to meet the plaintiff’s cost on an indemnity basis from the commencement of the trial not be given full effect, I can see no justification which should move me to adopt such a position in the present case for the following reasons:
(i) The offer was made prior to the commencement of the trial;
(ii)At the time at which the Ruling with respect to the admissibility of the evidence of Dr Raftos was made, the offer was able to be accepted by the defendant;
(iii)At the time at which the above Ruling was made, having regard to the defendant’s position that any costs associated with the plaintiff’s application to rely upon the evidence of Dr Raftos was reserved, the defendant was in a position to accept the plaintiff’s offer, and to forcefully put a position that in doing so it should not be exposed to costs additional to those to which it would have been exposed had the offer been accepted before pre-trial argument, and the trial had been commenced;
(iv)The offer of compromise remained open throughout the trial and was available to be accepted by the defendant following the testing by the defendant of each of the witnesses called by the plaintiff. In those circumstances, the defendant was well placed to consider the strength of the plaintiff’s case and the risks to it in proceeding with the trial and seeking a verdict from the jury;
(v)I am satisfied that the defendant, as a professional litigant, had ample time to consider the offer and make an informed decision as to whether the offer should be accepted;
(vi)The offer, in my opinion, can be seen as a very realistic position taken by the plaintiff as to the risks associated with the litigation, particularly having regard to the defendant’s position put to the jury that, if a finding of negligence was made against the defendant, an apportionment in the vicinity of 90 per cent in favour of the defendant should be the position taken by the jury.
35 For the reasons set out above, I am satisfied that the defendant has not displaced the heavy onus it faces in establishing that special circumstances exist in the present case, which operate to displace the effect of the rule-based presumption as provided in Rule 26.08 and that the plaintiff’s offer of compromise should be given full force and effect.
The Defendant’s application with respect to the costs of the first and second days of the trial
36 I am satisfied that the defendant is entitled to an order with respect to its costs relevant to the first and second day of the trial for the following reasons:
(i) On the first day of the trial, approximately three-quarters-of-an-hour was spent dealing with the defendant’s application that there be a view in the matter. The balance of the time was spent discussing what I am satisfied is appropriate to describe as the comprehensive failure of the report of Dr Raftos to comply with the provisions of Order 44 both as to:
· qualifying Dr Raftos as possessing the appropriate experience to express the opinion sought to be elicited from him;
· but also the failure to provide the defendant with details of the material relied upon by Dr Raftos in expressing his opinion and in particular, to identify the article cited by Dr Raftos in the course of his report.
(ii) The second day of the trial was occupied by the need for a voir dire which arose again by reason of the failure by the plaintiff to serve an Order 44 statement which contained the information elicited in the course of the voir dire upon which I relied in formulating my Ruling as to the admissibility of the evidence proposed to be elicited from Dr Raftos.
(iii) I am satisfied that it was at all times open to the plaintiff to obtain from Dr Raftos a written statement which set out in accordance with the provisions of Rule 44:
· the basis of expertise of Dr Raftos; and
· the detail of any literature relied upon by Dr Raftos;
relevant to the formation of his opinion such that a voir dire was unnecessary, and that the failure to do as falls squarely upon the shoulders of the plaintiff.
37 As to the plaintiff’s position that time on the first day was occupied in dealing with the defendant’s application for a view, I am satisfied that absent the issue which arose as to the admissibility of the evidence ought to be adduced from Dr Raftos, a jury could have been assembled and empanelled before lunchtime on the first day of the trial and for that reason, the bulk of the first day was lost by reason of the failure by the plaintiff to comply with the expert evidence provisions of Order 44.
38 Finally, given my satisfaction that the plaintiff is entitled to an order for indemnity costs in this instance it becomes a moot point as to whether the plaintiff requires any order as to preparation fees for Counsel. I do not propose to adjudicate upon that issue. I am satisfied that the Costs Court is better placed to deal with that issue. If necessary however, I will make an order that that plaintiff’s application for preparation fees be referred to and dealt with by the Costs Court.
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