Potts v Frost (No 2)
[2012] TASSC 32
•4 June 2012
[2012] TASSC 32
COURT: SUPREME COURT OF TASMANIA
CITATION: Potts v Frost (No 2) [2012] TASSC 32
PARTIES: POTTS, Joshua Andrew
v
FROST, Darren Stephen Ian
FILE NO/S: 219/2002
DELIVERED ON: 4 June 2012
DELIVERED AT: Hobart
HEARING DATE: 13 December 2011
JUDGMENT OF: Porter J
Procedure – Costs – Departing from the general rule – Conduct of parties – Offer of compromise – Validity of offer – Claim for damages for personal injuries – Term of offer to plaintiff that no proceedings to enforce judgment to be taken while defendant acting in accordance with statutory obligations as to repayments – Term did not seek to preclude plaintiff from right to statutory interest on judgment – Any ambiguity not sufficient to invalidate offer.
Hendrie v Rusli [2000] WASCA 420 at [8]; Misani v Welshpool Engineering Pty Ltd (In liq) [2003] WASC 263 (S); Mohamed v State of Victoria [2007] VSC 538, applied.
Aust Dig Procedure [576]
Procedure – Costs – Departing from the general rule – Conduct of parties – Offer of compromise – Validity of offer – Term of offer that no proceedings to enforce judgment to be taken while defendant acting in accordance with statutory obligations as to repayments – Term made the offer of compromise not one in respect "of a claim" within the meaning of the rules – Offer of no effect under the rules – Consideration of offer as Calderbank offer.
Supreme Court Rules 2000 (Tas), r280.
Aust Dig Procedure [576]
Procedure – Costs – Departing from the general rule – Conduct of parties – Offer of compromise – Statutory post-judgment interest not to be taken into account when assessing whether a judgment was more or less favourable than the terms of an offer.
Aust Dig Procedure [576]
REPRESENTATION:
Counsel:
Plaintiff: C H Hobbs
Defendant: K E Read
Solicitors:
Plaintiff: Ware & Partners
Defendant: Dobson Mitchell & Allport
Judgment Number: [2012] TASSC 32
Number of paragraphs: 44
Serial No: 32/2012
File No 219/2002
JOSHUA ANDREW POTTS v DARREN STEPHEN IAN FROST
REASONS FOR JUDGMENT PORTER J
4 June 2012
Introduction
Following the trial of this action for damages in negligence, the plaintiff succeeded on liability and was awarded damages of $1,840,335: [2011] TASSC 55. Judgment was delivered on 5 October 2011 and formally entered for that amount on 10 October 2011. This is an application by the defendant for an order for costs in his favour. The order sought relates to only part of the costs of the action.
The judgment sum was less than a formal offer of compromise made by the defendant on 29 June 2010, in the sum of $2 million. The final judgment sum was arrived at by the reduction of assessed damages of approximately $2.93 million by 30% for contributory negligence, and the deduction of benefits paid by the Motor Accidents Insurance Board of approximately $209,000.
On 19 October 2011, I made an order that the defendant pay the plaintiff's costs of the action up to and including 29 June 2010 on a party and party basis. The present argument is whether an order should be made in the defendant's favour for costs on a party and party basis after that date, or whether the plaintiff should be given his costs, on the same basis.
The relevant rules
Rule 280 of the Supreme Court Rules 2000 (SCR) relevantly provides that a party to any proceedings may make to another party "an offer of compromise of a claim of that other party". The offer may be made by offering to pay a nominated sum of money. Rule 289(2) provides as follows:
"289 Costs in relation to failure to accept offer
(1) …
(2) Unless the Court or a judge otherwise orders, a plaintiff is entitled to an order for costs against the defendant, up to and including the day on which an offer of compromise was served, on a party and party basis and the defendant is entitled to an order for costs against the plaintiff in respect of the claim after service of the offer on a party and party basis if —
(a)the defendant has made the offer in accordance with this Part; and
(b)the plaintiff has not accepted the offer at the time of the judgment; and
(c)the judgment is no more favourable to the plaintiff than the terms of the offer."
The defendant's offer
The offer made on 29 June 2010 was expressed to be in "in full satisfaction of the plaintiff's claim … for personal injuries and other loss and expenses suffered by the plaintiff as a result of the alleged negligent driving of the defendant … ." It was said to be served in accordance with Part 9 of the SCR, and the operative part was in the following terms:
"Take notice that the defendant offers to compromise and settle the plaintiff's claim on the following terms:
(a)The defendant offers to consent to judgment being entered for the plaintiff in terms that the plaintiff recover against the defendant the sum of $2,000,000.000 together with costs to be taxed according to Schedule 1 and Rule 837 of the Supreme Court Rules 2000.
(b)If any benefits have been received by the plaintiff from the Department of Social Security or Centrelink in the period since 8th January 2002, and if any amount is repayable to the Department of Social Security or Centrelink as a result of the acceptance of this offer, that repayment is to be made by the defendant out of the judgment sum.
(c)If any amount is repayable to Medicare Australia as a result of the acceptance of this offer, that repayment is to made by the defendant out of the judgment sum.
(d)No proceedings to enforce the judgment referred to in paragraph (a) or to obtain any interest will be taken by the plaintiff while the defendant is acting in accordance with its obligations under the Health and Other Services Compensation Act 1995 or the Charges Act 1995 or the Society Security Act 1991." [sic]
The parties' arguments
The defendant says that the judgment is no more favourable than the terms of the offer to the plaintiff, and relies on the "presumptive entitlement" to an order in his favour under the second part of r289(2). As to this presumption see for instance MGICA (1992) Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236 at 240; Clark v State of Tasmania (1999) 9 Tas R 54[1] at 59 [16]. In Clark at 57 [10], Underwood J (as he then was) referred to comments in Maitland Hospital v Fisher[No 2] (1992) 27 NSWLR 721 at 724, as explanatory of "the general philosophy behind offers of compromise rules ...". (Maitland concerned a rule similar to SCR r289(1).)[2] With my modifications to make it of general application as suggested by Underwood J, it was said in Maitland that the objects of the rules included:
· to encourage the saving of private costs, and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise which amount to a realistic assessment of the claim;
· the saving of public costs which are necessarily incurred in litigation which events demonstrate to have been unnecessary;
· the protection of the party who has made the offer, which protection is deemed appropriate because notionally the real cause and occasion of the litigation is the attitude adopted by the party who has rejected the compromise.
[1]Clark v State of Tasmania (No 2) [1999] TASSC 130.
[2] 289(1) Unless the Court or a judge otherwise orders, a plaintiff is entitled to an order for costs against the defendant taxed on a solicitor-client basis if —
For the most part, the plaintiff's submissions focus on what is said to be the unreasonable operation of paragraph (d) of the offer, although the arguments are not confined to what may arise from that proposed term of settlement. In essence, the plaintiff's submissions are that:
· the offer of compromise did not comply with r280 because paragraph (d) sought to preclude the plaintiff from his entitlement to statutory interest, which entitlement was subject to and dependent on the award in respect of the claim, and accordingly was not one made to compromise "the claim" of the plaintiff;
· if the offer was valid, the judgment is not one which is: "no more favourable to the plaintiff than the terms of the offer" because the sum awarded attracts statutory interest from the date of judgment;
· in any event, the condition proposed in paragraph (d) was "objectionable, unfair and unjust" in that it required the express waiver of the plaintiff's entitlement to statutory interest, the effect of that being (as I understand it) that it cannot be said that the plaintiff acted unreasonably in rejecting the offer;
· in the event that the offer is held not to comply with r280 and that it is to be regarded as a Calderbank offer, the defendant has no presumptive entitlement to the order sought, and in the circumstances of the case – that the judgment was no more favourable than the offer, and the effect of paragraph (d) – the plaintiff should have his costs after 29 June 2010.
The effect of paragraph (d) of the offer
Because much of the plaintiff's arguments directly depend on, or involve, the construction of paragraph (d), I will deal with this issue first. The plaintiff says that paragraph (d) clearly and unambiguously imposed a condition that the plaintiff waived his entitlement to post-judgment interest whilst the defendant dealt with the statutory obligations under Commonwealth legislation. The defendant says that quite plainly on its face, all that the paragraph proposed was "a moratorium on payment of the judgment monies and interest", leaving the entitlement to accumulating post-judgment interest unaffected. The plaintiff strongly maintained his argument throughout, and made no submissions as to the effect on non-acceptance of the offer were I to hold against him on the construction point. Before going on, I note that I have no evidence as to how the condition was actually interpreted by the plaintiff or his advisers at the time of its receipt and in the period before the offer expired.
Although paragraph (d) could, on one view, have been more happily expressed, I must say that I struggle to see how it can be reasonably interpreted as suggested by the plaintiff. It is quite plain that the term seeks to prevent the plaintiff from taking proceedings during the relevant period. The proceedings referred to are ones to enforce the judgment of $2 million and to obtain any interest. The forbearance sought relates to enforcing the judgment and obtaining interest. Paragraph (d) thus refers to the taking of proceedings to obtain interest, and does not say anything in relation to the plaintiff's entitlement to the interest accrued during the period referred to.
The plaintiff argues that if the right to accruing interest was not intended to be suspended, then there would have been no need for the paragraph at all because the statutory provisions accommodate that situation in any event.
The relevant provisions of the Social Security Act 1991 (Cth) and the Health and Other Services (Compensation) Act 1995 (Cth) operate in a similar manner. I do not need to set out the somewhat complicated provisions of each scheme. In very general terms, a notice is given to a "compensation payer" as to an amount to be paid by way of recovery of Centrelink or Medicare payments. The compensation payer is not liable to pay "compensation" (which includes a payment of damages) until compliance with the notice or until it ceases to have effect. Payments pursuant to notices are taken as a discharge of a liability to pay the compensation to the extent of the payment: see ss1184B and 1184C of the Social Security Act, and ss30 and 31 of the Health and Other Services (Compensation) Act.
Whilst the Social Security Act is silent as to post-judgment interest where liability to pay compensation is suspended, ss33 and 33M of the Health and Other Services (Compensation) Act, respectively operate to make the compensation payer not liable for interest on any sum which is withheld by virtue of a notice, (s21(1)(b)), or advanced to Medicare, (s33B).
Whilst it might usually be expected that the liability to make payment of a damages award would be suspended from the date of the judgment until the discharge of the Commonwealth liability, as I would see the schemes, that may not always be the case. Further, the question of interest accrued on amounts paid under the Social Security Act scheme is an open one, and the operation of the provisions giving relief as to interest under the Health and Other Services (Compensation) Act does not cover all contingencies.
Be all that as it may, the defendant accepts that what was sought by paragraph (d) was an effective stay of proceedings whilst the defendant discharged its statutory obligations, "although it sought nothing more than the law imposed … where … the charge must be paid before the balance damages sum is payable by the compensation payer to the plaintiff". As to the particular point under consideration, I am not persuaded that the mere fact that paragraph (d) might bring about a position achieved by operation of law in any event, means that the words are to be given a construction which they cannot reasonably bear.
The plaintiff submits that the ambiguity of paragraph (d) is such that the defendant should not be permitted to rely on it. I interpret that as a submission that the uncertainty is such that it does not amount to an offer, or that the plaintiff did not act unreasonably in rejecting it, thus displacing the presumptive entitlement in the defendant's favour. It is true that an offer must be in unambiguously clear terms, with no reasonable doubt as to the nature and extent of what is being offered: Toomey v Scolaro's Concrete Constructions Pty Ltd (No 4) [2002] VSC 28 at [20]; Grbavac v Hart [1997] 1 VR 154 per Tadgell JA at 160. An offer which is unclear about what is being offered may not be one which it is unreasonable to reject.
The plaintiff further submits, on the authority of In the Marriage of Harris (1987) 90 FLR 79 at 83, that where an offer is ambiguous or unclear there is no obligation on the offeree to seek to clarify the terms, at least in the sense that the offeree may be disadvantaged on the issue of costs as a consequence of failing to do so. However, as the defendant submits, whilst there may be no obligation to seek clarification, if there is any doubt about how an offer is to be interpreted it may be wise for clarification to be sought, and an amendment made to the offer if necessary: Hendrie v Rusli [2000] WASCA 420 at [8]; Misani v Welshpool Engineering Pty Ltd (In liq) [2003] WASC 263 (S) at [34]. Not to do so may imperil the party's interests.
In this case, as I have said, I do not think that the construction of paragraph (d) argued for by the plaintiff is reasonably open, at least to the extent that made rejection reasonable. Any ambiguity which was in fact perceived and which may have impacted on the plaintiff's ability to assess the offer, was one which could have been readily cured by an inquiry: Mohamed v State of Victoria [2007] VSC 538 at [37]. But I think the term is readily understood as the defendant intended, and I am really not able to see any ambiguity or lack of clarity as suggested by the plaintiff.
Whether the offer was one of compromise of a "claim"
It will be recalled that r280 enables a party to any proceedings to make an offer of compromise of a claim "Claim" is not defined the Supreme Court Civil Procedure Act 1932, but it is in r179 of the SCR, as including "a counterclaim and a cross-application." That is not particularly helpful in terms of the present point, but I think the word plainly refers to a remedy sought or right asserted in the proceedings: West v Wake Price & Co v Ching [1956] 3 All ER 821 per Lord Devlin at 829. There may be one claim based on several causes of action, or several claims based on one or more causes of action. Under the rule, the offer may be directed to one claim of several: Herbert v Tamworth City Council(No 4) [2004] NSWSC 394
For the purposes of dealing with the submission, it is necessary to set out the provisions which create the entitlement to interest on the judgment. Section 164 of the Supreme Court Civil Procedure Act relevantly says that "All judgments and orders of the Court or any judge .., whereby any sum of money, … shall be recovered by or shall be payable to any person shall have the same effect, and may be enforced by the same writs and process, as a judgment in an action at Common Law had, and could be enforced by, immediately before the commencement of this Act …".
Section 165 of the Act is in the following terms:
"165 Judgments to carry interest
Every such judgment and order as is mentioned in section 164(1) shall carry interest at the rate of 5 per centum per annum, or such other rate as may be prescribed by the Rules of Court, from the time of the trial or inquiry, or, if there has been no trial or inquiry, from the time of signing or entering up judgment; and the amount of such interest shall be stated in the body of, and may be levied under, a writ of execution on such judgment."
The "time of the trial" referred to in s165 means the date when judgment is delivered: The Board of Management of the Agricultural Bank v Brown [1958] Tas SR 22. That date, as I have noted, is 5 October 2011.
SCR, r887A(1), relevantly provides as follows:
"887A Interest on judgment or order
(1) Unless the Court at the time of giving judgment otherwise orders, a judgment or order under section 164(1) of the Act carries interest from the time of the trial or inquiry or, if there has not been a trial or inquiry, from the time of signing or entering up judgment at —
(a)…; or
(b)the prescribed rate of interest."
The prescribed rate of interest applicable to this case is 10.75%.
For the reasons which follow, I take the view that at least so far as first instance proceedings are concerned, post-judgment interest does not fall within what might be encompassed by "a claim" within the meaning of r280(1). There is authority for the proposition that an action in which judgment is given is at an end as far as the ascertainment of the parties rights are concerned, but is still pending for the purposes of enforcing the judgment, that being governed by matters of practice: Boswell v Coaks (1887) 57 LJ Ch 101 per Cotton LJ at 105, Lindley LJ at 105 – 106. Some further assistance might be gained from the field of private international law. In John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 Callinan J at 574 [192] said that laws relating to (among other things) the recovery processes following judgment should be regarded as procedural. On the other hand, post-judgment interest accrues on the judgment sum, and it is that sum which is determined by the application of substantive laws relating to "the existence, extent or enforceability of remedies, rights and obligations": Rogerson per the plurality judgment at 554, [102].
The statutory entitlement to interest accruing on the judgment sum until payment, exists unless the power of the Court to otherwise order under r887A is successfully invoked. Although discretionary in that sense, the provisions otherwise operate without the need for any court intervention. The period for which interest accrues is fixed by statute, and the rates prescribed outside of the curial process. There is no need to plead any entitlement to post-judgment interest, or any facts upon which the entitlement is based. Post-judgment interest does not form part of what it is that the Court determines as part of the action.
Where pre-judgment interest has been claimed, an offering party would need to take into account that claim in formulating an offer: Murphy v Murphy [1963] VR 610; Hadzigeorgiou v O'Sullivan [1983] 1 Qd R 55. Where pre-judgment interest has been claimed and is awarded and an offer of compromise has been made, SCR, r289(4) requires the Court or judge to disregard any amount of interest awarded in relation to the period after the day on which the offer was served. However, as I have said, post-judgment interest is not part of that which the court has to resolve in the proceedings up until the point of judgment.
In the context of an offer – bearing in mind an offer may relate to a claim as I have discussed – in Birmingham and District Land Co Ltd v London and North-Western Railway Co (1887) 57 LT 185 at 197 Kekewich J said:
"The rule which I have always adopted, … is, that an offer made after litigation must, if it is to have any effect to avoid costs by an unsuccessful party, amount in substance to an offer of everything which the court eventually holds the successful party entitled to." [My emphasis.]
There is an obvious practical difficulty in the suggestion that post-judgment interest falls within what might be encompassed by a claim in first instances proceedings within the meaning of r280(1). It relates to the subject-matter which I deal with next in these reasons. When a court is to determine whether a judgment is or is not more favourable than an offer, it is to look at the substance of the matter. This approach must be taken where non-monetary claims and offers are involved: Timbs v Clift [1998] 2 Qd R 100 at 107 – 108; Assaf v Skalkos [2000] NSWSC 935 at [87] – [100].
In reality, it is not possible to take into account in determining whether a judgment is or is not more favourable than the terms of the offer, matters which affect any entitlements subsequently accruing on the judgment, or to how the judgment is to be enforced or satisfied. On the other hand, an offer to settle proceedings the subject of an appeal, may well involve an adjustment of interest accrued on the judgment: Manly Council v Byrne (No 2) [2004] NSWCA 227. (The same applies to the costs of the trial; they are part of the "claim" in the appeal proceedings: Barakat v Bazdarova [2012] NSWCA 140 at [40]). [3]
[3]I should perhaps say something about costs components of offers of compromise made in first instance proceedings. In this context, post-judgment interest and costs are quite different. In the first place, there is no default position in relation to costs. In all cases costs are in the Court's discretion. In this State, there is no requirement for an offer to be exclusive of costs; compare for instance r20.26(2) of the Uniform Civil Procedure Rules 2005 (NSW). SCR, r280(1)(c) enables an offeror to include an offer to pay or accept costs on a specified scale. I express no concluded view, but it is open to question whether an offer under r280 expressed to be inclusive of costs is non-compliant with the rules. The fact that a Calderbank offer is inclusive of costs does not necessarily make it ineffective, but it is a weighty factor to be taken into account in the exercise of the discretion. This is on the basis that such an offer may create unfairness to the offeree, and made cause difficulties in comparing the offer with the outcome. The effect of such an offer depends on the circumstances of the case. See the discussion in Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [136] – [145].
The effect of my conclusion that the offer was not one in respect "of a claim" and hence not within r280, is not that the offer is invalid; it merely has no effect under the rules: Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194 per Ipp JA at [24] (Mason P and McColl JA agreeing). The defendant's presumptive entitlement to costs under r289(2) does not apply, but the general discretion as to costs is enlivened. Assuming that the offer is to be treated as a Calderbank offer, it may be taken into account in deciding what the interests of justice require. The better view seems to be that Calderbank offers do not give rise to any prima facie presumption if the offer is not bettered: Clark v State of Tasmania (above)[4] at 58 – 59 [14]; Grbavac v Hart (above); Leichhardt Municipal Council v Green [2004] NSWCA 341. I will deal later in these reasons with the offer as a Calderbank offer.
Was the judgment no more favourable than the terms of the offer?
[4]Clark v State of Tasmania (No 2) [1999] TASSC 130.
As the existence of this issue is not wholly dependent on the validity of the offer under the rules, and will have to be considered in the discussion about Calderbank offers, I will deal with it now. The plaintiff's argument is in the following terms, which I have taken from the written submissions:
"Whilst the monetary award of damages in the sum of $1,840,335.00 is less than the proposal made in paragraph (a) of the Offer of Compromise 29th June 2010 in the sum of $2,000,000.00, the former sum will attract statutory interest at 10.75% per annum from date of Judgment 5th October 2011 to date of payment together with the same rate of interest on costs from the date once quantified. Hence, to that extent the Judgment 5th October 2011 is more favourable to the Plaintiff than the terms of the offer …" [sic].
It was also said that the result was more favourable than the result because the term "sought to modify" the plaintiff's entitlement to interest.
No authority is cited for the basic proposition, and I must say that I find it difficult to understand. It seems to have been put on purely conceptual grounds. It seems to be suggested that simply because interest on the judgment sum would accrue until payment (as it will on the quantified costs from the date of the order of 19 October 2011), then the judgment is more favourable to the plaintiff than the terms of the offer. Going as it does to a matter of general principle, the submission is untenable and must be rejected.
I also observe that the facts of what occurred after judgment were not acknowledged, let alone explained in the context of the submission. I was told by the defendant's counsel that the judgment sum was paid to the plaintiff on 19 October 2011. I was told that the interest component was $10,298.38 (a figure a little higher than my calculations produce), so that the total of the judgment sum together with interest actually accrued is still substantially less than the offer. I accept that, as the plaintiff submits, the point in time to which regard is to be had is the time at which the offer was made, and that some delay in finalisation might be contemplated. However, I cannot see how that assists with this argument.
By its very nature, and in any event for the reasons I have given, statutory post-judgment interest cannot to be taken into account when assessing whether a judgment is more or less favourable than the terms of an offer. On that basis, the judgment in this case is no more favourable to the plaintiff than the terms of the offer. I do not think anything further needs to be said. I will deal with the question of whether the terms of the offer made its rejection reasonable, when dealing with the Calderbank considerations.
The effect of the offer as a Calderbank offer
The plaintiff's submissions under this heading were contingent on a finding that the offer of compromise failed to comply with r280, and was therefore of no effect under the rules. I have held that to be the case. It has been said that whether or not an offer intended to take effect under the rules but which is ineffective for non-compliance, operates as a Calderbank offer, depends on the intention of the offeror as revealed by the terms of the offer. The offer may disclose an intention that it should take effect only if it complies with the rules, or it may disclose a general intent to make an offer, irrespective of whether it takes effect under the rules: Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) (above) per Ipp JA at [27]; Dean v Stockland Property Management Pty Ltd(No 2) [2010] NSWCA 141 at [31].
There is some debate about whether to be effective as a Calderbank offer, a purported but invalid offer under the rules must actually contain a statement to that effect: Old v McInnes [2011] NSWCA 410 per Meagher JA at [106] (Giles JA agreeing); but see Beazley JA at [21] – [26]. However, I would have thought that with some qualifications, an intention that such an offer have that effect could usually quite safely be inferred. That approach would be subject to any express statement that the offer only take effect if valid under the rules, and to the precise terms of the offer.
In this case, the plaintiff accepts that if the offer did not comply with the rules, it can be treated as a Calderbank offer. That was the position adopted by the offeree party, and noted by the court without comment, in Vieira v O'Shea (No 2) [2012] NSWCA 121 at [7] – [8]. Having regard to the plaintiff's attitude here, which does seem justified given the terms of the defendant's offer and the purported reliance on the rules, there is no need for me to consider the point further.
As I have noted, where a Calderbank offer is more favourable to the offeree than the judgment, there is of no presumptive entitlement to costs in favour of the offeror. (The plaintiff attempted to argue that the offer cannot be shown to be more favourable than the judgment, and I have already dealt with that proposition.) Although there is no presumptive entitlement, an "informal" offer must operate against the backgrounds of the Court's discretion which is to be exercised presumptively in favour of an order that costs follow the event. One way to view an offer of compromise is to treat it as a basis for the Court otherwise ordering; an alternative view is that it changes the proper characterisation of the "event" or outcome. On the latter view, the party who fails to accept the offer and obtains no better result in the judgment is, from the date of the offer, treated as the unsuccessful party. See Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [7].
The rationale for rules relating to offers of compromise which was explained in Maitland Hospital v Fisher (No 2) (above) at 724, has been accepted as relevant to informal offers of compromise: Grbavac v Hart (above) per Hayne JA at 165. However, with a Calderbank offer, there is a broad range of considerations to be taken into account as to what consequences the offer may have: Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd [2005] NSWSC 481 at [31]; Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 at 442. Relevant factors include the difference between the offer and the outcome, the timing of the offer in relation to the trial, and the period for which consideration is permitted. Primarily, there is a broad inquiry into whether the offer was unreasonably rejected.
In this case, the only issue going to reasonableness or otherwise of the rejection was that of the construction of paragraph (d). The same questions of the meaning of the term, and the need for clarity and absence of ambiguity arise in this context. I have resolved these in the defendant's favour. The plaintiff did not argue that if I were to be against him, and take the view that paragraph (d) would have operated so as only to stay enforcement proceedings, the term was nonetheless objectionable and unfair to the extent that the plaintiff's rejection of it was not unreasonable. In any event, I would take the view that because the term might only achieve little more than is provided for by operation of law, it could not provide a reasonable basis for rejecting the offer. Because of the view I have taken as to the construction point, I need say no more.
The plaintiff did not seek to argue that paragraph (d) invalidated the offer because it sought something that could not be obtained by way of court order. Rule 887A does provides a means by which that could have been achieved, but only after judgment. In any event, there is authority for the proposition that at least in relation to a Calderbank offer, such a factor does not disentitle a party from a favourable exercise of the Court's discretion: Commonwealth v Gretton [2008] NSWCA 117 per Beazley JA at [93], (Mason P agreeing).
Outcome
As is by now abundantly clear, the plaintiff's arguments as to the outcome, in the main, depended on a construction of paragraph (d) of the offer which I have rejected. The offer made was a true offer of compromise in the circumstances of the case. Both the plaintiff and the defendant were seriously injured when a motor bike they were riding ran off the road. The plaintiff alleged that he was the pillion passenger. Whether he was or not, was an issue in the trial. There were allegations of the plaintiff's contributory negligence in riding on the bike in the particular circumstances which included the consumption of alcohol by both men, and in failing to wear a helmet.
The damages claimed were very substantial, with several heads of damage involving contentious legal and factual points. The offer was made about five months before the trial commenced, and there is no suggestion the plaintiff was not then in a position to properly consider it. It called for careful consideration and its acceptance would have completely finalised the action. I am satisfied that it is proper that the plaintiff pay the defendant's costs of the action on a party and party basis from 30 June 2010, and I so order.
(a)the plaintiff has made an offer of compromise in accordance with this Part; and
(b)the defendant has not accepted the offer at the time of the judgment; and
(c)the judgment is no less favourable to the plaintiff than the terms of the offer.
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