Preti v Sahara Tours (No 2)
[2008] NTCA 3
•3 June 2008
Preti v Sahara Tours & Anor (No 2) [2008] NTCA 3
PARTIES: PRETI, NATALE
v
SAHARA TOURS PTY LTD
(ACN 050 989 216)
AND:
PARKS AND WILDLIFE COMMISSION
TITLE OF COURT: COURT OF APPEAL OF THE NORTHERN TERRITORY
JURISDICTION: CIVIL APPEAL FROM THE SUPREME COURT EXERCISING TERRITORY JURISDICTION
FILE NO:AP 7 of 2007
DELIVERED: 3 June 2008
HEARING DATES: 25, 26 & 27 February 2008
JUDGMENT OF: MILDREN, THOMAS & RILEY JJ
APPEALED FROM: SOUTHWOOD J
CATCHWORDS:
APPEAL – Costs – Application of Supreme Court Rules r 26.08
Cases referred to:
Cleere v Matic Service (No 2) [2005] NSWCA 176
Equuscorp v GlengallanInvestments Pty Ltd [2006] QCA 414
Ettingshausen v Australian Consolidated Press Ltd (1995) 38 NSWLR 404
Hillier v Sheather (1995) 36 NSWLR 414
Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721
Moore v Woodforth (No 2) [2003] NSWCA 46
Sands & McDougall Wholesale Pty Ltd (in liq) v Commissioner of Taxation (Cth) (No 2) [1999] 2 VR 114
Wills v Bigmac Pty Ltd and Ford Motor Co Australia Ltd FCA, Heerey J, unreported, 9 December 1994REPRESENTATION:
Counsel:
Appellant:R Meldrum QC with S Gearin
Respondents: M Grant QC with J Kelly
Solicitors:
Appellant:Morgan Buckley
Respondents: Povey Stirk
Judgment category classification: B
Judgment ID Number: Ril0809
Number of pages: 13
IN THE COURT OF APPEAL
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWINPreti v Sahara Tours & Anor (No 2) [2008] NTCA 3
No. AP 7 of 2007
BETWEEN:
NATALE PRETI
Appellant
AND:
SAHARA TOURS PTY LTD
(ACN 050 989 216)
Second Respondent
AND:
PARKS AND WILDLIFE COMMISSION
Third Respondent
CORAM: MILDREN, THOMAS & RILEY JJ
REASONS FOR JUDGMENT
(Delivered 3 June 2008)
Mildren J
I agree with Riley J.
Thomas J
I agree with the reasons expressed by Riley J on the issue of costs. I agree that the appellant should be awarded 90% of the costs of the appeal.
Riley J:
Introduction
On 7 April 2008 this Court allowed an appeal from the decision of the trial judge to award damages of CHF 186,136.00 against the second respondent and third respondent arising out of the death of Mauro Santo Preti. The deceased died at Ellery Creek Big Hole in Central Australia when his head hit a submerged obstacle after he lost his balance and dived into the water. The proceedings were taken on behalf of members of his family pursuant to the Compensation (Fatal Injuries) Act. Following the appeal, the judgment in favour of the appellant was increased to CHF 323,416.80. The issue now to be determined is the nature of the costs orders to be made in relation to the appeal and the proceedings below.
There were five grounds of appeal and the appellant was successful in relation to two of those grounds:
(a)The first ground of appeal was that the learned judge erred in finding the deceased guilty of contributory negligence. This Court concluded that there was clear evidence supporting the finding that the deceased was guilty of contributory negligence and the appeal on this ground was dismissed.
(b)The second ground of appeal related to the finding by the learned trial judge that the damages should be reduced by 50% as a result of the contributory negligence of the deceased. This Court determined that his Honour erred in so finding and concluded that a just and equitable apportionment of responsibility would be for the respondents to bear 80% and the appellant 20%.
(c)The third ground of appeal was that the learned trial judge erred in failing to award damages to the parents of the deceased. This Court allowed that ground of appeal and awarded a sum of CHF 32,000 to the parents.
(d)The fourth ground of appeal was a challenge to a finding by the learned trial judge regarding the number of hours of voluntary service provided by the deceased to his parents. This Court determined that the conclusion of the learned trial judge reflected the best that could be determined on the basis of the evidence available to him and rejected the ground of appeal.
(e)The final ground of appeal related to the validity of the offer of compromise made in Australian dollars by the respondents to the appellant. The appellant argued that, to be valid, the offer was "required" to be made in Swiss francs (CHF). The learned trial judge ruled that the offer of compromise was validly made under the Supreme Court Rules and this Court concluded that he was correct in so determining. The ground of appeal was dismissed.
The costs of the trial
The costs order made by the learned trial judge was that the plaintiff pay the defendants’ costs after 12 October 2005 being the date upon which the defendants’ served an offer to compromise the plaintiff’s claim in the sum of $200,000. The amount of the offer exceeded the amount of the judgment (CHF 186,136.00) and his Honour therefore applied r 26.08(3) of the Supreme Court Rules which provides:
"(3) Where an offer of compromise is made by a defendant and not accepted by the plaintiff and the plaintiff obtains a judgment on the claim to which the offer relates not more favourable to him than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall be entitled to an order against the defendant for the plaintiff's costs in respect of the claim up to and including the day the offer was served taxed on the standard basis and the defendant shall be entitled to an order against the plaintiff for the defendant's costs in respect of the claim after the offer of compromise taxed on the standard basis."
Following the appeal the judgment in favour of the plaintiff was increased to CHF 323,416.80 which exceeds the amount of the offer made on 12 October 2005. However, as the respondents pointed out, a second offer of compromise was made on 2 June 2006 in the sum of $450,000. The amount of the judgment awarded to the plaintiff on appeal was not more favourable than the second offer of compromise. It was therefore submitted that, unless the Court exercises its discretion to award costs otherwise than in accordance with the Rules, the respondents should be awarded costs of the trial from 2 June 2006 pursuant to r 26.08(3).
Rule 26.08(3) provides a discretion to the court to make a different order than that referred to in the rule. The learned author of Williams: Civil Procedure Victoria has observed[1] that the party upon whom the offer of compromise was served carries a heavy burden; the presumption as to liability for costs which arises under the rule is not easily displaced. In relation to the equivalent rule of the New South Wales Supreme Court Rules 1970 the Court of Appeal in Maitland Hospital v Fisher (No 2)[2] said:
"Litigation is inescapably chancy. The purpose of the rule is to put a premium on realistic assessment of cases. It is not to demand perfect foresight which is denied even to judges. That is why a discretion is retained, under the rule, for the court to order otherwise than as the rule provides. But the ordinary provision is expected to apply in the ordinary case. It has added a new duty to the functions of legal practitioners advising litigants. It is a duty which is both protective of the interests of litigants and of the public interest in the prompt and economical disposal of litigation. It is the duty of courts, allowing for exceptions in particular cases, to give effect to the purpose of the rule."
In Wills v Bigmac Pty Ltd and Ford Motor Co Australia Ltd[3] Heerey J said:
"... an important element in facilitating proper consideration of a payment in is certainty as to the costs consequences. It would in my opinion require compelling and exceptional circumstances before a court "otherwise orders". Were this not so, applicants might be inhibited in accepting otherwise reasonable offers because of uncertainty as to the costs consequences. The effectiveness of O.23 in promoting settlement of that litigation would be diminished."
Kirby P referred to those observations in Hillier v Sheather[4] and declined to accept that circumstances must be "compelling" before the court might "otherwise order" in relation to the equivalent District Court Rules in New South Wales. He went on to say:
"It is enough to say that the case needs in some way to be exceptional. It must be exceptional because the general rule is that provided for in the rule itself. To gain relief, an exceptional exempting order must be made."
The respondents submit that there are no exceptional circumstances in the present case. On the other hand the appellant contends that the failure of the respondents to express the offers of compromise in Swiss francs and for the respondents to have made those offers in Australian dollars was a matter which ought properly be borne in mind in applying the discretion reserved to the Court to make an order inconsistent with the prima facie provisions of the rule. The appellant relied upon the following observations which appear in the judgment of this Court in the principal proceedings:
"It can be seen that the court retains a discretion to make a costs order inconsistent with the provisions of the rule. In the event that those provisions would lead to an injustice the court has a discretion to make another order. In so doing it is open to the court to consider whether it would be unfair to a party for the rule to have its normal application. The concerns raised by the appellant as to possible difficulties arising from fluctuations in currencies may, if necessary, be addressed in that way."
The appellant submitted that the "expressed desire" of the appellant to obtain a verdict in Swiss francs "should be weighed in the question of whether the costs of the trial would be awarded to the appellant". The submissions made firstly to the trial judge and then in the course of the appeal were again restated in support of this argument. The appellant referred to the uncertainty surrounding currency fluctuations and the concern that delay in obtaining approval of the settlement and in payment of the judgment sum may have led to losses for the appellant. It was, therefore, submitted that it was reasonable for the appellant to have rejected the offer.
The same arguments had been presented to the trial judge and rejected by him. He noted that the exchange rate was not volatile at any relevant time. The terms of the offer were clearly stated and could be readily understood by the appellant and the appellant's legal advisers. There was no impediment to an acceptance of the offer and, in the event of a failure to comply on behalf of the defendants, the obtaining of judgment in terms of the offer and enforcing the judgment. The learned trial judge determined that there was no just reason for the court to exercise its discretion and make an order for costs otherwise than in accordance with r 26.08(3). The same observations apply in relation to the offer made on 2 June 2006.
The members of the family on behalf of whom the proceedings were conducted included a person under a disability and, therefore, it was necessary for the approval of the court to be obtained before an offer of compromise could be accepted. It was submitted on behalf of the appellant that, because approval of the compromise was required, time would pass after the conditional acceptance of the offer of compromise and this would result in the appellant, including the infant plaintiff, being required to run the risk of an adverse fluctuation in currency. This submission ignores two important matters. Firstly, that an approval of compromise is able to be obtained on short notice. Secondly, it ignores the fact that no acceptance of an offer of compromise made in relation to a person under a disability is binding until the court has approved the compromise (r 26.06). In the event of an intervening significant adverse fluctuation in the currency making the offer unacceptable the appellant was able to withdraw from acceptance.
In any event, it is apparent that the offer of compromise of 2 June 2006 in the sum of $450,000 was not to be accepted by the appellant. On 4 July 2006 the appellant made his own offer of compromise in the sum of CHF 575,000. This offer was consistent with a formulated claim of the same date prepared and presented on his behalf. That offer was not accepted by the defendants and, on 19 July 2006, they filed a further offer to compromise in the sum of $500,000 plus costs. The plaintiff did not accept that offer of compromise. Clearly the appellant was not prepared to settle for the sum of $450,000 whether that sum be expressed in Australian currency or Swiss currency. Fluctuations in currency were not the concern.
In those circumstances the second and third respondents should have their costs of the proceeding from 2 June 2006.In my opinion the orders of the court in relation to the trial should be the same as those made by the learned trial judge dated 29 May 2007 save that the second and third defendants should pay the plaintiff's costs of the proceeding incurred prior to 2 June 2006 and the plaintiff should pay the second and third defendants’ costs incurred on and after 2 June 2006 as agreed or in default as taxed.
The costs of the appeal
The principal issue argued on the appeal was the measure of the contributory negligence of the deceased. In relation to that issue the appellant was substantially successful and he seeks an order for costs in his favour.
In reply the respondents also sought an order for costs in their favour and initially argued that r 26.08(3) of the Supreme Court Rules has continued application to the costs of the appeal. It was submitted that the appellant, having not been awarded a judgment more favourable than the second offer of compromise made during the trial, the rule requires that, unless the court otherwise orders, "the defendant shall be entitled to an order against the plaintiff for the defendant’s costs in respect of the claim after the offer of compromise taxed on the standard basis".
Reliance was placed upon the decision of the New South Wales Court of Appeal in Ettingshausen v Australian Consolidated Press Ltd[5] where it was held that an offer of compromise under the equivalent New South Wales provision does not cease to have effect once the claim to which it relates has been the subject of a complete trial, but continues to have costs consequences for any appeal or subsequent retrial in respect of the claim. However, in subsequent written submissions the respondents conceded that, in a number of jurisdictions, courts have held that similar rules do not apply to the costs of an appeal where an offer was made in the proceeding below which is more favourable than the final result for the party to whom the offer was made.
Indeed, in the later New South Wales case of Cleere v Matic Service (No 2)[6] the Court of Appeal considered a matter very similar to the circumstances of this matter. In that case an unsuccessful respondent contended that despite the appellant’s significant success on the appeal the respondent should have an order for indemnity costs of the appeal because the final judgment was less than the amount offered by the respondent in an offer of compromise made during the course of the trial. In so arguing the respondent relied upon the decision of Ettingshausen v Australian Consolidated Press Ltd (supra). In declining to make an order that the appellant pay the costs of the appeal on an indemnity basis the Court of Appeal in Cleere v Matic Service (No 2) (supra) referred to the earlier observations of Mason P and Meagher JA in Moore v Woodforth (No 2)[7] that:
"13. Ettingshausen established that a pre-trial offer of compromise is not exhausted once the trial comes to an end. The offer is made in relation to the claim itself and the claim may not be determined until after the appeal.
14.But Ettingshausen does not establish that the Court of Appeal is bound to apply provisions such as Pt 39A r 25(6) of the District Court Rules to the costs of the appeal itself. The leading case is Fotheringham v Fotheringham (No2) (1999) 46 NSWLR 194. It establishes that the rejection of an offer of compromise made at first instance is a relevant factor to consider on the question of costs in an appeal; but the Court of Appeal retains a discretion as to costs."
In the Queensland Court of Appeal decision in Equuscorp v GlengallanInvestments Pty Ltd[8] the Court followed a line of decisions within the jurisdiction and determined that the relevant rule did not apply to offers to settle in appeals either by continuing operation of a pre-trial offer or by making a fresh offer after judgment.
Similarly in Victoria, it was held in Sands & McDougall Wholesale Pty Ltd (in liq) v Commissioner of Taxation (Cth) (No 2)[9] that the relevant provision in that jurisdiction applied to costs at first instance and did not include the costs of any appeal. It was held that the Court of Appeal could deal with the costs of the trial pursuant to the rule but not the costs of the appeal. However, the existence of an offer under the rule might be relevant to the general discretion as to the costs of the appeal.
In my view the provisions of r 26.08 are directed to the trial at first instance and not to an appeal. The terminology used suggests that to be the case. The rules provide that an offer of compromise may be served "at any time before verdict or judgment" and may be accepted within the time specified in the notice or before "a verdict or judgment in respect to which the offer relates" whichever event is sooner. Where a party to an accepted offer of compromise fails to comply with the terms then the other party may, inter alia, obtain judgment in the terms of the accepted offer. The terms of r 26.08 provide that the rule applies to an offer of compromise “which has not been accepted at the time of verdict or judgment”. It is, to my mind, clear that "the Court" referred to in r 26.08(2) and (3) is the court at first instance. Further support for this conclusion is obtained from sub rule (4) which refers back to sub rule (3) and relates to an offer of compromise "served on the first or a later day of the trial".
In the circumstances of the present case r 26.08 has application to the awarding of costs in relation to the trial at first instance but not the costs of appeal. However, as the respondents contend, the making of the offer is a relevant factor to be taken into consideration when determining the question of costs on appeal.
The issues of whether the deceased was guilty of contributory negligence and, if so, to what extent, were necessarily presented as part of the same argument. The appellant was substantially successful in relation to this argument and, as a result, achieved a significant increase in the damages awarded. The appellant was also successful in obtaining an award of damages for the parents of the deceased. The appellant should have the costs of the appeal in relation to these matters. Other issues were argued but they were of lesser significance. The respondents were successful on two discrete issues being the challenge to the validity of the offer of compromise and the challenge to the hours of voluntary services as assessed by the learned trial judge. In my view justice would be served by awarding the appellant 90% of the costs of the appeal and I would so order.
I would invite the parties to present minutes of order for the consideration of the Court.
_________________________________
[1] I 26.08.30
[2] (1992) 27 NSWLR 721 (at 725)
[3] FCA, Heerey J, unreported, 9 December 1994
[4] (1995) 36 NSWLR 414 at 422
[5] (1995) 38 NSWLR 404
[6] [2005] NSWCA 176
[7] [2003] NSWCA 46
[8] [2006] QCA 414
[9] [1999] 2 VR 114
0
1
0