Pihler v GENDI - [2000] WADC 272

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: PIHLER -v- GENDI [2000] WADC 272

CORAM: DEPUTY REGISTRAR HARMAN

HEARD: 13 SEPTEMBER 2000

DELIVERED : 30 OCTOBER 2000

FILE NO/S: CIV 4504 of 1999

BETWEEN: VESNA ANE PIHLER
Plaintiff
AND
SOAD GENDI
Defendant

Catchwords:

Practice and procedure - Western Australia - Practice under the Rules of the Supreme Court of Western Australia - Application under O 66 r 1 for the plaintiff to be deprived of either the whole or part of her costs of the action and for the defendant's costs - Failure of the plaintiff to seek to negotiate a settlement prior to commencing action

Legislation:

Motor Vehicle (Third Party Insurance) Act 1943

Rules of the Supreme Court of Western Australia

Result:

Dismissed

Representation:

Counsel:

Plaintiff: Mr T N Cullity
Defendant: Mr J Staude

Solicitors:

Plaintiff: Trewin Norman & Co
Defendant: Jackson McDonald

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

Nil

Case(s) also cited:

Buyquick.Com Ltd v Foxgold Pty Ltd [2000] WASC 216
Dobb v Hucket (1993) 10 WAR 532
Bakaj v Talna Pty Ltd, unreported; DCt of WA; Library No 4901; 10 May 1996

DEPUTY REGISTRAR HARMAN: The plaintiff obtained judgment by consent at the pre-trial conference. According to the parties that judgment contemplates that the defendant had the right to apply in relation to costs.
By the application presently before the Court the defendant seeks orders pursuant to O 66 r 1(2) of the Rules of the Supreme Court that the plaintiff be deprived of her costs wholly or in part and/or be ordered to pay the defendant's costs of the action either wholly or in part.
The subrule is as follows:
"If the Court is of the opinion that the conduct of a party either before or after the commencement of the litigation or that a claim by a party for an unreasonably excessive amount has resulted in costs being unnecessarily or unreasonably incurred it may deprive that party of costs wholly or in part, and may further order him to pay the costs of an unsuccessful party either wholly or in part."
It is appropriate to record that O 66 r 1(1) provides that costs are discretionary and that, in effect, subject to subrule (2) the Court will generally order that the successful party recovers its costs. The plaintiff was successful in the action. Where subrule (2) has effect it is intended to and does operate as a penalty. The onus is on the applicant.
The action is conducted on behalf of the defendant by the Insurance Commission of Western Australia, the insurer of motor vehicles for the purposes of the Motor Vehicle (Third Party Insurance) Act 1943. The evidence upon which the applicant relies is expressed in the affidavit of its officer Mr Principe. The significant features of the evidence are as follows:
1.The Commission had generated a policy designed to encourage settlement of claims prior to the commencement of litigation. That policy was reduced to writing and was published. He identifies a copy of the policy dated 13 April 1999.
2.The policy refers to the prospect of the Commission resorting to the application now under consideration.
3.He identifies a letter written to the plaintiff’s solicitors by the Commission on 13 April 1999 concerning what it describes as its "Informal Conference Policy".
4.The writ issued in December 1999.
5.Prior to that date the plaintiff did not invite an offer of settlement from the Commission.
6.Prior to that date the plaintiff did not provide the Commission with sufficient details to enable it to formulate an offer of settlement.
7.The particulars of the plaintiff’s pleaded loss valued that loss at $102,000.
8.The parties compromised the claim in the sum of $27,000.
9.His belief that the claim would "have been amenable to settlement" prior to the issue of the proceedings.
10.The Commission was denied the opportunity of making an informed offer prior to the commencement of the proceedings.
Insofar as the rule may apply to a claim of an unreasonably excessive amount, although the evidence that relates to the quantum of the claim and compromise were canvassed at the hearing, the applicant did not expressly seek to rely upon that part of the subrule. However as the evidence was provided and was otherwise canvassed, it is not inappropriate to make some comment.
By her particulars of claim the plaintiff valued different features of her contended loss. I accept that those values may be considered to have been wide of the mark as determined by either the compromise or otherwise, however there is no objective measure against which they may be judged.
There may be many competing considerations that produce a willingness to compromise a particular claim at a particular value on a particular day. Hopefully one such consideration will not be the fact that the party has previously assigned a different value to loss. The particulars of loss to which the defendant refers are not amenable either to any rigorous analysis or for the purposes of the application of the subrule, any useful analysis.
The rule otherwise may have application in circumstances where undefined conduct has resulted in costs being unnecessarily or unreasonably incurred. The relevant conduct to which the defendant refers is the plaintiff’s failure to engage the Commission in negotiations prior to commencing the action. That fact is conceded. The issue is whether that failure has resulted in costs being unreasonably or unnecessarily incurred. The determination of that issue involves consideration of the prospect of settlement had the plaintiff engaged in pre-action negotiations.
It is appropriate to consider whether the plaintiff ought to have sought to so engage the defendant. There is no requirement that a party possessed of a claim should seek to obtain redress by way of negotiation. Such a party is also possessed of a cause of action recognised by the Court. There is no restriction on access to the Court. Nonetheless, it is obvious that a claimant may choose first to negotiate. It is a matter of reflecting upon whether the fact that some claimants will seek to negotiate ought to bind all claimants to that course of conduct. In my opinion that ought not to be the case.
During the course of submissions the applicant sought to draw upon the Professional Conduct Rules of The Law Society. The relevant rule expressed in the Commission’s policy is as follows:
"A plaintiff shall, when in his client's best interest, endeavour to reach a solution by settlement out of Court rather than commence or continue legal proceedings."
There is no evidence that would suggest that it was in the plaintiff’s best interests to endeavour to reach a solution by settlement out of Court. There can be no doubt that where there may be disparity in the power, influence and financial strength of parties, each step taken by the relatively disadvantaged party in progressing a claim towards an objective determination will tend to redress any such imbalance. There is at least a prospect that the "best offer" prior to the commencement of the action would be bettered at some stage after the action was commenced.
In any event in my opinion that rule has no impact other than in the context in which it is expressed to apply, that is the relationship between solicitor and client. Whatever effect the rules may have or were intended to have, it was not to benefit the other party to an action. Any breach of that rule does not determine that the costs of commencing and continuing the proceedings were unnecessary or unreasonable. For the purposes of this analysis, the rule does not determine the plaintiff ought to have sought to engage the defendant.
It is appropriate to consider whether, and to what extent, the applicant is assisted either by the Commission’s policy or its letter. On the evidence of the publication of the policy, I might infer that it is something more than an internal document of the Commission. Unfortunately there is nothing to indicate what the deponent means when he uses the word "publication". There is nothing to indicate that it was published to either the plaintiff or her solicitor.
There is some evidence as to the process of generation of the policy. I do not know whether it is intended to convey that the plaintiff’s solicitor participated in that process either directly or indirectly. I do not understand what it is that I should draw from the reference to the Court’s involvement in the process as outlined by the deponent.
I accept that the relevant letter was sent to the plaintiff’s solicitor. It does not refer to the policy in the sense of it having been reduced to the written form now provided to me. The letter would appear to express similar sentiments to those expressed in the policy.
Whether or not anything more than the letter came to the attention of the plaintiff’s solicitor, there is no suggestion he is bound to follow the mechanisms expressed in the policy. I do accept that for the policy to provide its intended benefits the Commission depends upon claimants’ solicitors engaging in those mechanisms. It is a matter of reflecting upon whether the Court has a role in enforcing compliance with the policy.
There is nothing new about pre-action settlements. Some parties so resolve their differences; others make little or no attempt. Parties are differently motivated and a party’s motivation may change over time. The benefits of settlement do not need restating by me, they are patently obvious. It is equally obvious that parties may do themselves a disservice by settling either their claims or their actions. The best that the defendant can do is to contend that it would have made a reasonable offer of settlement and what is described as a commensurate offer in relation to costs judged by the costs that may have been recovered by the plaintiff in the event that an action had proceeded to a pre-trial conference. In my opinion those observations are not amenable to any rigorous analysis. The reality is that such statements emanating from the Commission will always be viewed in the context of its past dealings including the history of its offers of settlement prior to commencement of proceedings. Even if it could be demonstrated that only one claimant had received a better offer from the Commission subsequent to the commencement of proceedings than was made prior to the commencement of proceedings it would be inappropriate to conclude that a plaintiff's best interests were served by a compromise reached by settlement prior to litigation. Each case is the matter of judgment for either the plaintiff or his solicitor or both of them. It is not for the defendant and it is not for the Court to seek to determine what is in the interests of the plaintiff.
As the plaintiff's counsel submitted, it is not for the plaintiff to effectively control what may transpire to be his solicitor’s enthusiasm for bringing an action. That proposition reverses the reality. A claimant approaches a solicitor in order to receive advice from a person familiar with the processes associated with the resolution of disputes. The plaintiff is guided by the solicitor's opinion. It is unrealistic to consider that the claimant has the capacity to assess that opinion in order to determine whether it is appropriate to commence upon litigation.
It is significant that although the policy contemplates costs commensurate with an action where settlement is achieved, there is silence as to costs in the event of failure. Those costs could include some or all of the costs associated with any lengthy submission, the preparation for any conference and the conference itself. Those costs could be significant. In the absence of agreement or order those costs would not otherwise be recoverable.
As to the latter prospect I would suggest that despite the existence of the policy and both the prospects and consequence of failure it would be difficult for the Court to justify an exercise of discretion to award those costs against the Commission. In my opinion the Commission is in no better position in the circumstances of this case.
It is of no consequence that the Court may consider that either the policy or the Commission's attitude otherwise is reasonable. Whilst the Court may have an interest in allocating its resources in a particular manner and even of encouraging parties to resolve issues without recourse to it, in my opinion it is inappropriate to sanction a party for doing no more than exercising its freedom to engage the Court in the process of seeking redress from the defendant. I might add that although it may be easy to portray some benefit to the Court and/or the community in the prospect of there being less litigation, that does not mean that it is appropriate for the Court to sweep aside considerations that properly bear upon the exercise of discretion.
Even if that was not my view of the plaintiff’s conduct, it is difficult to see that by failing to engage the defendant that costs have been unreasonably or unnecessarily incurred. The defendant has not provided any evidence upon which such a determination could be made. Even Mr Principe offers no evidence to the effect that the Commission would have made an offer of $27,000 prior to the commencement of the action. That may be because the plaintiff may counter as it has with her solicitor’s evidence that the Commission’s initial offer was $12,520. It would be easy to portray such an analysis as unfair to the Commission. In my opinion it is no more unfair than that suggested by the Commission. It simply contends that the parties may have been able to resolve their differences at some figure. That may be so but there is no suggestion that $27,000 would have been offered at any earlier time. Even if there had been such evidence, there would be no basis to determine that the plaintiff would have even been amenable to accept that offer at an earlier time. In my opinion the applicant’s case does not demonstrate that any costs have been unnecessarily or unreasonably incurred.
In my opinion the defendant has not discharged the onus.