Parish v Wu (No. 2)
[2010] VSC 64
•12 March 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
PERSONAL INJURIES LIST
No. 6200 of 2009
| DAVID PARISH | Plaintiff |
| v | |
| YIXUAN WU | Defendant |
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JUDGE: | J. FORREST J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 8-12, 15-16 February 2010; written submissions filed 24 February 2010 | |
DATE OF RULING: | 12 March 2010 | |
CASE MAY BE CITED AS: | Parish v Wu (No. 2) | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 64 | |
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COSTS – Plaintiff’s offer of compromise given during the running of the trial and accepted by the defendant – Rule 26.03 Supreme Court (General Civil Procedure) Rules 2005 – Whether plaintiff’s costs payable to date of offer or to date of acceptance – Exercise of discretion.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T. Casey QC with Mr A. Moulds | Burt & Davies |
| For the Defendant | Mr R.H. Gillies QC with Ms R. Annesley | Solicitor to the Transport Accident Commission |
HIS HONOUR:
Introduction
On the afternoon of the fifth day of the trial, Friday 12 February 2010, the plaintiff, David Parish, served an offer of compromise on the defendant, Yixuan Wu, offering to settle his claim for $750,000 plus retention of benefits repayable pursuant to the Transport Accident Act 1986 (“the Act”).
On the afternoon of the seventh day of the trial, Tuesday 16 February 2010, Mr Wu accepted the offer.
Upon the jury being discharged without verdict, an issue arose as to the appropriate order for costs. It was not disputed that Mr Wu was liable to pay Mr Parish’s costs up to and including those incurred on 12 February, however, it was said on Mr Wu’s behalf that he should not be liable for costs after that date. Mr Parish contends that, once the offer had been served, Mr Wu had the option of accepting it at any time prior to verdict, however, he should meet the costs up to the date of acceptance.
I have determined that Mr Parish is entitled to his costs up to and including the day of Mr Wu’s acceptance of the offer of compromise.
Background
The trial commenced on Monday 8 February confined to one issue: the assessment of Mr Parish’s damages arising out of a transport accident on 21 August 2004.
Mr Parish and Mr Wu were each represented by experienced litigation solicitors and counsel. Mr Wu’s defence was conducted by the solicitor for the Transport Accident Commission (“the Commission”). It was common ground that the Commission indemnified Mr Wu in respect of any liability to Mr Parish, as required by the Act. It was not suggested that the Commission is anything other than a vastly experienced litigant with great corporate expertise in the handling and defence of claims brought in relation to transport accident.
Mr Wu’s solicitors made two offers of compromise prior to trial, one of $460,000 plus costs plus retention of repayable benefits (paid by the Commission pursuant to the Act) on 1 July 2009, and a second of $690,000 plus costs plus retention of repayable benefits (paid by the Commission pursuant to the Act) on 19 October 2009. The only offer of compromise made by Mr Parish was the subject offer, served at approximately 2.30pm on 12 February. I was informed by counsel that later that afternoon, Senior Counsel for Mr Wu informed Senior Counsel for Mr Parish that he was instructed to put a counter-offer of $500,000, all in.[1]
[1]T827-828.
Further evidence was led on Monday the 15th and Tuesday the 16th, particularly from Mr Moran, an orthopaedic surgeon, and Mr Burns, a helicopter pilot who had taken part in Mr Parish’s return to work programme in 2007. For present purposes, it suffices to say that each witness, in my view, advanced rather than detracted from Mr Parish’s case. This is particularly so of Mr Burns, who was called by Mr Wu. The contrast between the assertions put to Mr Parish in cross-examination as to the substance of Mr Burns’ anticipated evidence and the evidence which was subsequently given by Mr Burns was readily apparent to any experienced (or, I venture to say, inexperienced) litigator, as were, I suggest, the consequences for Mr Wu’s defence of the claim.
Order 26
By r 26.02 of the Supreme Court (General Civil Procedure)Rules 2005, a plaintiff and defendant each have the right to serve an offer of compromise. Rule 26.02(3) sets out the form of an offer of compromise. Rule 26.03(4) provides:
A party on whom an offer of compromise is served may accept the offer by serving notice of acceptance in writing on the party who made the offer before –
(a) the expiration of the time specified in accordance with paragraph (3) or, if no time is specified, the expiration of 14 days after the service of the offer; or
(b) verdict or judgment in respect of the claim to which the offer relates – whichever event is the sooner.
There was no issue that Mr Parish’s offer was given in accordance with r 26.03(1) and (4) and that Mr Wu had accepted the offer in accordance with r 26.03(4).
The costs consequences following the acceptance of an offer by a party (be it plaintiff or defendant) pursuant to r 26.03(4) are set out in r 26.03(7):
Upon the acceptance of an offer of compromise in accordance with paragraph (4), unless the court otherwise orders, the defendant shall pay the costs of the plaintiff in respect of the claim up to and including the day the offer was served.
However, the rule is silent in relation to the payment of costs after the date of the offer.
It is to be noted that in a personal injury case, the costs consequences flowing from a failure to accept an offer of compromise differ between the plaintiff’s offer and the defendant’s offer. Where an offer is made in the course of the running of a trial, a plaintiff is entitled to an order for costs in respect of the claim taxed on an indemnity basis irrespective of when the offer was made absent the court exercising its discretion otherwise: r 26.08(2)(a). However, by reason of r 26.03 and r 26.04, a defendant who has made a successful offer of compromise is required to pay the plaintiff’s costs up to the opening of the Court on the day after the service of the offer on a party/party basis and thereafter the plaintiff is required to pay the defendant’s costs on a party/party basis.
In Malliaros v Moralis & Anor,[2] McGarvie J determined that, as r 26.03(7) made no provision in relation to the question of payment by a defendant of a plaintiff’s costs after service of a plaintiff’s offer of compromise, then the question of payment of the plaintiff’s costs after that date was to be resolved by the exercise of the discretion of the trial judge. Neither Mr Parish nor Mr Wu argued otherwise.
[2](1991) 2 VR 501, 504 (“Malliaros”).
The submissions of the parties
Consistent with what was said by McGarvie J in Malliaros, counsel for Mr Parish contends that, having put an offer of compromise, Mr Parish is entitled to costs to the date of acceptance. Any argument suggesting that Mr Wu required time to make a “thoughtful decision” about acceptance of the offer was negated by the swift reaction to the offer on late Friday afternoon. It was argued that the delayed acceptance of the offer was not a case of considered reflection but a response to developments in the trial which boded ill for Mr Wu’s case.
In oral submissions (admittedly made without the opportunity to consider the argument at any length), Senior Counsel for Mr Wu emphasised the need for a thoughtful decision as to acceptance of the offer made by Mr Parish, consistent with what had been said by Lush J in Setka v John Holland (Constructions) Pty Ltd[3] in relation to a defendant’s offer of compromise. However, in subsequent written submissions, counsel for Mr Wu, understandably, relegated the “thoughtful decision” contention to a minor or “very secondary” role. In their written submissions, counsel contended that a “very heavy onus rests upon a plaintiff to justify the lateness of the offer”. Indeed, the Court was invited to embark upon a policy crusade: “A clear message needs to be sent to legal practitioners to the effect that late offers of compromise, in particular, offers of compromise made during trial, are to be discouraged”. This argument was advanced on the basis that modern case management principles emphasise the need to avoid the waste of Court time and therefore public resources. The following bold, if I may so describe it, proposition was then put: “It is submitted that the plaintiff’s offer was not a serious attempt to resolve the proceeding”, but rather was calculated to provide a windfall to the plaintiff in respect of an award of indemnity costs.
[3][1974] VR 475, 476.
Analysis
The arguments on behalf of Mr Wu should be rejected. Whilst the Court must be concerned with maximising efficiency and ensuring that there is the best possible productive use of Court resources, its task remains to interpret legislation and statutory instruments in accordance with established principle.
There is nothing in Order 26 or, indeed, the purpose underlying r 26.03, which suggests that in exercising the Court’s discretion in relation to the appropriate order for costs, a different position is to be adopted where the plaintiff’s offer of compromise is given during the course of a trial as opposed to prior to the trial of the proceeding. Nor is there anything within the Order or Rule which supports the proposition that there is a “heavy onus” upon a plaintiff to make an offer prior to trial, or that a plaintiff need demonstrate “special circumstances” to obtain an order that he or she be entitled to costs on a party/party basis up until the date of acceptance of the offer where an offer is given during the course of a trial. Rather, as Malliaros makes clear, determining whether to make such an order is determined solely by the exercise of the Court’s discretion based on the established facts.
The argument put by counsel for Mr Wu that Mr Parish did not make any offer to settle his claim prior to the offer of compromise being given is not to the point. Mr Parish was not compelled to make such an offer. Notwithstanding the modern trend to alternative dispute resolution and resultant Court efficiencies, Mr Parish had a right to bring his claim (indeed, to proceed to verdict) without making any such offer; just as Mr Wu had the right to make or not make an offer or offers of compromise at any time before or during the trial. Indeed, a well pitched offer by Mr Wu would have resulted in serious costs consequences for Mr Parish if his claim had fallen short of it. The submissions of Mr Wu’s counsel focus solely on Mr Parish’s conduct and seem to overlook Mr Wu’s entitlement under Order 26.
I reject the proposition that Mr Parish’s offer was not serious, but rather some extraordinary tactic. Mr Parish struck me as an intelligent man who had observed the proceedings with keen interest. His case was that he had been robbed of his chosen career per force of the injuries and would find it difficult to obtain work in the future. Indeed, it was abundantly clear that his counsel would have gone to the jury asking for a total verdict of well over $1 million as a result of the effects of the transport accident. It was Mr Parish’s decision when and in what form he made such an offer. As I have said, Mr Parish was not compelled to make an offer; no criticism can be made of him for not making an offer up until the time he did, nor for making the offer at that time. Patently, Mr Parish was aware once the offer was made then it was open to be accepted, as it ultimately was - presumably on the basis that, from Mr Wu’s position, it represented a reasonable resolution of the proceeding.
To accept Mr Wu’s contention that there is a prima facie case for limiting the payment of Mr Parish’s costs to the day of the offer would run counter to the underlying purpose of the rule – the resolution of the proceeding. The inevitable result of the application of such a principle is that a plaintiff will refrain from making an offer in the course of the running of a trial. Let me explain why. If an offer was made by the plaintiff, say, on the first day of the trial, he or she could run the case for, say, the next 13 days without having any entitlement to costs in the event that the offer was accepted by the defendant on the last day it was open. Indeed, a vindictive defendant could simply sit back and permit the plaintiff to run up an enormous amount of costs until the last moment. This scenario would, understandably deter a plaintiff from making an offer and thus, I think, run contrary to the spirit of the order. This consequence was recognised by McGarvie J in Malliaros.[4]
[4]Ibid, 505-506.
In Malliaros, McGarvie J, in permitting the plaintiff to have her costs up until the date of acceptance, took into account the underlying policy of the rule – to encourage the resolution of proceedings,[5] which is what has occurred here. It should be recognised that there was a real utility in the making of the offer of compromise, albeit that it was made during the trial. First, its acceptance avoided a further two and perhaps three days of Court time and resultant cost to the Court and the parties. Second, and consistent with the principle underlying much of Mr Wu’s submissions, it is preferable for the litigants to resolve their differences by agreement, rather than to have the Court impose a solution upon them by either jury verdict or judgment. Even if such a resolution occurs during the course of a trial, it is nonetheless a more desirable outcome than a judgment or verdict which inevitably will leave one or other (or perhaps both) dissatisfied.
[5]Ibid, 505.
I accept that there may be cases in which a plaintiff making an offer of compromise during the course of a trial may not obtain an order for costs up to the date of acceptance, particularly if the timing was such as to demonstrate that such an offer was not bona fide. This, however, is not such a case.
Consistent with what was said by McGarvie J in Malliaros,[6] the costs of both sides were incurred from the time of the offer, primarily because Mr Wu refrained from accepting Mr Parish’s offer to receive his “proper entitlement”.
[6]Ibid, 506.
Given the relegation of Mr Wu’s “thoughtful decision” argument to a very distant second place, I need say no more than the facts demonstrate amply why the argument was not persisted with.
Mr Parish is entitled to costs on a party/party basis up to the acceptance of the offer on 16 February 2010.
Summary
There is no reason in principle to distinguish between an offer of compromise made in the course of the running of a trial as opposed to one given prior to a trial. The exercise of the Court’s discretion in making such an order turns upon the facts relevant to the offer and its acceptance. For the reasons I have set out Mr Parish should have his costs up to the date of acceptance of the offer.
Orders
Subject to any submissions that counsel wish to make, I propose the following orders:
(1) The jury be discharged without verdict.
(2) The defendant pay the plaintiff’s costs on a party/party basis up to and including 16 February 2010, including any reserved costs, the costs of transcript, and the costs of this application ; such costs to be taxed in default of agreement.
(3) Otherwise the proceeding be dismissed.
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