Prasad v Woolworths Limited (No 2)
[2017] NSWDC 437
•13 April 2017
District Court
New South Wales
Medium Neutral Citation: Prasad v Woolworths Limited (No 2) [2017] NSWDC 437 Hearing dates: 13 April 2017 Date of orders: 13 April 2017 Decision date: 13 April 2017 Jurisdiction: Civil Before: P Taylor SC DCJ Decision: (1) The defendant pay the plaintiff’s costs up to and including 7 March 2017.
(2) The plaintiff pay the defendant’s costs from and including 8 March 2017.Catchwords: COSTS - party/party - offer of compromise - Calderbank offer - whether offer open for a reasonable period - small difference between judgment and offer - failure of offeror to admit liability - liability not genuinely in dispute Legislation Cited: Uniform Civil Procedure Rules 2005, Pt 42, r 20.26, r 42.13A Cases Cited: Prasad v Woolworths Limited [2017] NSWDC 79 Category: Costs Parties: Premila Prasad (plaintiff)
Woolworths Limited ACN 000 014 675 (defendant)Representation: Counsel:
Solicitors:
Mr A Parker (plaintiff)
Mr R Gambi (defendant)
Compensation Partners Pty Ltd (plaintiff)
File Number(s): 2016/37789 Publication restriction: None
Judgment
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The defendant, Woolworths, seeks indemnity costs, relying upon an offer of compromise made under the Uniform Civil Procedure Rules 2005. The offer was for a sum of $300,000 plus costs, which is slightly more favourable to Mrs Prasad, the plaintiff, than the $293,000 judgment awarded (see Prasad v Woolworths Limited [2017] NSWDC 79).
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Woolworths, in the alternative, seeks that if the offer of compromise rules do not apply to the offer, the offer should be treated as a Calderbank offer. It claims that it is entitled to indemnity costs because the rejection of the offer by Mrs Prasad was unreasonable.
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The only issue about whether the offer of compromise was a complying offer under the rules is whether it was open for a reasonable period. This is a requirement imposed by r 20.26(5)(b), which provides that:
“20.26 Making of offer
…
(5) The closing date for acceptance of an offer:
(a) in the case of an offer made two months or more before the date set down for commencement of the trial—is to be no less than 28 days after the date on which the offer is made, and
(b) in any other case—is to be such date as is reasonable in the circumstances.”
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Thus in the final two months before a trial, the rules do not impose a specific period for which the offer must remain open. This does not mean that it is reasonable for an offer to remain open for any period no matter how small. For example, the 28-day period applying to an offer made two months before the trial would expire about one month prior to the trial. There is force in the submission that if a later offer is made, expiring at a date earlier than a month before the trial, it might nevertheless be an unreasonable period judged against the statutory provisions. That is to say that an offer made later should not expire earlier than an earlier offer was required to remain open. That, however, is not the case here.
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The offer was made 22 days before the trial and was to remain open for one week. I think in the last month before a trial, at least in this case, one week is a reasonable period. Costs are likely to be incurred in the period shortly before the trial. A defendant may be incurring costs during this period for which there is no prospect of recovery if the plaintiff accepts the offer.
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In its reference to costs, the offer of compromise was slightly more generous than the prima facie rule applicable in the event that r 42.13A applies. That rule governs the costs order in the event that an offer is accepted and no provision for costs is made, and requires that, in this case, the plaintiff would be entitled to an order for costs up until the time the offer was made.
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The offer provides for the plaintiff to receive the costs, which I would infer would be the costs of the proceedings. In that event, during the period the offer was open, the plaintiff's costs would remain payable by the defendant up until the offer was accepted. It seems reasonable that a defendant should not be required to keep an offer of compromise open for a lengthy period shortly prior to trial and thereby be at peril in respect of both its costs and the plaintiff's during the period the offer is open.
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No submission sought to explain why a seven‑day offer period is unreasonable. It might be an unreasonably short period, but there was no evidence from Mrs Prasad that she was unable to consider the offer or that for some other reason a seven‑day period was insufficient. In the absence of that evidence and because of its chronological proximity to the trial, and where nothing of significance happened in the seven days during which the offer was open, the offer being made open for seven days was an offer open for a reasonable period in the circumstances as required by r 20.26(5)(b).
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As the offer was a complying offer of compromise, there is no need to consider the offer as a Calderbank offer.
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Mrs Prasad also submits that the rejection of the offer was not unreasonable because of:
the period it was open;
the small difference between the amount of the offer and the judgment sum; and
the circumstance that Woolworths did not admit liability.
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As to (a), I have already found that the offer was open for a reasonable period. In the absence of any evidence about the difficulties of Mrs Prasad in reasonably considering and accepting the offer, I do not accept that the shortness of the offer’s duration is a reason why it was not unreasonable for the plaintiff not to accept it.
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The second matter is that the difference between the offer and the judgment is a small amount. That of itself does not mean that it was unreasonable not to accept the offer. The fact that other offers could be imagined which would be more unreasonable to reject does not mean that an offer slightly larger than the judgment sum awarded should not reasonably have been accepted.
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The third matter concerns the failure of the defendant to admit liability. As to that matter, like both of the matters before it, these are not matters that impact upon the prima facie rule under r 42.15A, that the defendant is entitled to a costs order in circumstances where the pre‑conditions for such an order are fulfilled, namely that the defendant made an offer at least as favourable to the plaintiff as that provided for in the judgment and which was otherwise a complying offer. Questions of unreasonableness go to the residual discretion that the Court retains to award a different order for costs than that provided, in this case by r 42.15A.
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For the reasons I have already given, I do not consider that a different order should be made by reason of the shortness of the period or the small difference between the judgment and the offer.
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As to the question of the failure to admit liability, the judgment records in para 10 that little was said, and perhaps nothing of substance, against the defendant being liable. The circumstance that liability was dealt with in paras 10 to 17 of the judgment indicates that the matter still required consideration by the Court, and I would infer, time and consideration by Mrs Prasad, both at trial and in preparation, including in the few weeks prior to the trial.
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I accept Woolworths’ submission that the circumstance that liability remained in contest did not unduly prolong the trial. Further, the defendant is quite entitled to keep liability in issue. But in this case that decision seems to be for tactical reasons rather than because there was always a real contest on liability. That is a matter that should be considered in respect to the appropriate order for costs, and in particular, whether the special order under Pt 42 should be available to the defendant, notwithstanding that it lost on an important issue that remained in contest, when it did not appear genuinely to have an alternative submission, even if it did not unduly prolong the length of the trial.
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For this reason, the defendant should not obtain the costs that relate to liability on an indemnity basis. The proper order for costs that should apply, because of the offer of compromise, is that the defendant should have an order for costs from the day following the day of the offer, but, for the reason I have given, on the ordinary basis only.
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So the orders of the Court are that:
The defendant pay the plaintiff’s costs up to and including 7 March 2017.
The plaintiff pay the defendant’s costs from and including 8 March 2017.
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Decision last updated: 09 August 2018
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