Roads and Traffic Authority of New South Wales v Turner and Anor [No 2]

[2008] NSWCA 241

New South Wales

Court of Appeal

CITATION:	Roads and Traffic Authority of New South Wales v Turner and Anor [No 2] [2008] NSWCA 241
JUDGMENT DATE:	7 October 2008
JUDGMENT OF:	Hodgson JA; Tobias JA; Handley AJA
DECISION:	(1) Order 5 made by this Court on 2 April 2008 is vacated and there is substituted an order that the defendants pay the plaintiff's costs of the action on the ordinary basis up to 26 May 2005, and pay his costs on an indemnity basis thereafter. (2) Notice of Motion otherwise dismissed. (3) The first respondent, the plaintiff in the action, is to pay the costs of the appellant and the second respondent of the Notice of Motion.
CATCHWORDS:	COSTS - Offer of compromise by plaintiff before trial - Judgment reduced on appeal - Reduced judgment greater than offer - Effect of offer on costs of appeal
CATEGORY:	Consequential orders
CASES CITED:	Ettinghausen v Ettinghausen (1995) 35 NSWLR 404 Fotheringham v Fotheringham [No 2] (1999) 46 NSWLR 194
PARTIES:	Roads and Traffic Authority of New South Wales (Appellant) Terry John Turner (First Respondent) Australia Associated Motor Insurers Limited (Second Respondent)
FILE NUMBER(S):	CA 40792/06
SOLICITORS:	Hunt & Hunt (Appellant) Carroll & O'Dea (First Respondent) McLachlan Chilton (Second Respondent)
LOWER COURT JURISDICTION:	Supreme Court - Common Law Division
LOWER COURT FILE NUMBER(S):	SC 20307/04
LOWER COURT JUDICIAL OFFICER:	Latham J
LOWER COURT DATE OF DECISION:	28 November 2006

CA 40792/06
SC 20307/04

HODGSON JA
TOBIAS JA
HANDLEY AJA

7 October 2008

ROADS AND TRAFFIC AUTHORITY OF NEW SOUTH WALES v TURNER AND ANOR [No. 2]

COSTS – Offer of compromise by plaintiff before trial – Judgment reduced on appeal – Reduced judgment greater than offer – Effect of offer on costs of appeal.

HEADNOTE

The plaintiff made an offer of compromise before the trial of $900,000.00. He recovered judgment for $1,211,257.87 which was reduced on appeal to $969,030.24. The plaintiff sought orders for indemnity costs of the trial and appeal. HELD: The plaintiff was entitled to an order for indemnity costs of the trial, but the successful appellant, the defendant in the action, was entitled to an order for the costs of its successful appeal.

ORDERS

(1) Order 5 made by this Court on 2 April 2008 is vacated and there is substituted an order that the defendants pay the plaintiff’s costs of the action on the ordinary basis up to 26 May 2005, and pay his costs on an indemnity basis thereafter.

(2) Notice of Motion otherwise dismissed.

(3) The first respondent, the plaintiff in the action, is to pay the costs of the appellant and the second respondent of the Notice of Motion.

CA 40792/06
SC 20307/04

HODGSON JA
TOBIAS JA
HANDLEY AJA

7 October 2008

ROADS AND TRAFFIC AUTHORITY OF NEW SOUTH WALES v TURNER AND ANOR [No. 2]

Judgment

1 THE COURT: The Court gave judgment in this matter on 2 April [2008] NSWCA 48. The appeal was allowed and the judgment in favour of the plaintiff was reduced to $969,030.24 and costs but entered against both defendants and contribution of 25% was ordered in favour of the appellant against the second defendant AAMI. The plaintiff and the second defendant were each ordered to pay half the appellant's costs of the appeal. The Court granted liberty to apply in respect of any claim for indemnity costs.

2 The plaintiff filed a Notice of Motion, which was later amended, seeking a variation of these orders both for the trial and the appeal. On 27 May 2005, well before the trial, the plaintiff made an offer of compromise to both defendants in the sum of $1,200,000 with a 25% deduction for contributory negligence to be reflected in a judgment for the plaintiff for $900,000 and costs. The offer was not accepted by either defendant.

3 At the trial the plaintiff recovered judgment against the RTA for $1,211,257.87 and the trial judge made an order for indemnity costs against it. Although the judgment was reduced on appeal to $969,030.24 and entered against both defendants it was still substantially above the offer of compromise. In these circumstances there is no reason why the plaintiff should not have an order for the costs of the trial on an indemnity basis as from 27 May 2005 and Order 5 made by this court on 2 April 2008 should be varied accordingly.

4 The plaintiff also sought a variation of the order for the costs of the appeal. It was submitted that the defendant should pay his costs of the appeal on an indemnity basis or in the alternative on the ordinary basis because the plaintiff had still recovered substantially more than his offer. His fallback position was that he should not be ordered to pay any part of the appellant's costs in this Court.

5 This Court's general practice has been to treat an offer of compromise before the trial as highly relevant to the costs at first instance. Thus a final outcome at trial, on appeal, or at a new trial which is no less favourable than the offer would normally attract an order for indemnity costs of the trial or trials: Ettinghausen v Ettinghausen (1995) 35 NSWLR 404.

6 On the other hand there is no general rule that an offer of compromise before the trial automatically affects the order for costs to be made in this Court where an appeal succeeds but the plaintiff still recovers substantially more than his offer: Fotheringham v Fotheringham [No. 2] (1999) 46 NSWLR 194. Prima facie the costs of a successful appeal follow the event: UCPR Pt 42.1. The RTA was substantially successful against both the respondents and prima facie should have an order for costs such as that made by this court on 2 April. An offer of compromise made before the trial is still a relevant consideration but it will have much greater relevance where the appeal fails.

7 An appeal is a fresh proceeding which creates a fresh opportunity for compromise. Any offers made before the trial will have lapsed and fresh offers can be made in the appeal which reflect the narrower and more focused issues.

8 A defendant in the position of RTA, faced with a judgment for $1,200,000, may be advised that the judgment is excessive, but it has little or no chance of having it reduced below the amount in the plaintiff's pre-trial offer. Such a defendant should be entitled to have that judgment reduced on appeal without having to face an order for indemnity costs based on a pre-trial offer no longer open for its acceptance.

9 The amount at issue at this trial was $1,200,000 more or less, but the only significant issue on the appeal against the judgment was whether the plaintiff was guilty of contributory negligence, and if so the appropriate apportionment. It might be said therefore that the issue on this part of the appeal involved a claim by the RTA that the plaintiff’s damages should be reduced by a figure between 33-1/3% and 10%. In these circumstances the plaintiff's pre-trial offer of compromise, whether considered as such, or as a type of Calderbank offer, can have little weight in considering the proper order for costs in this Court.

10 The plaintiff did not make any offer of compromise of the contributory negligence issue raised in the appeal. In our judgment the RTA having secured an apportionment of 20% for the plaintiff’s contributory negligence, involving a reduction in the judgment of $242,257.56, is entitled to an appropriate order for costs against the plaintiff respondent who was substantially unsuccessful on this issue. We therefore confirm the order made on 2 April that the plaintiff pay one half of the RTA's costs of the appeal.

11 This court ordered AAMI to pay one half of the RTA's costs of the appeal. AAMI seeks the vacation of that order and the substitution of an order that there be no order as to the costs of the appeal against it. As a result of its appeal against AAMI the RTA obtained 25% contribution resulting in a verdict on its cross claim for $242,257.56 and 25% of the plaintiff's costs of the lengthy trial. In our judgment the submissions of AAMI fail to disclose any reason for varying the order made on 2 April that it pay one half of the RTA's costs of the appeal.

12 The plaintiff has obtained a variation of the order for costs made by this court on 2 April in respect of the costs of the trial but that order was not opposed by either defendant. He was entitled to that variation because he ultimately recovered substantially more than the amount he had offered. The plaintiff failed to obtain any other variation of the orders for costs made on 2 April.

13 The application for an order for indemnity costs in respect of the trial without more would have been disposed of by consent orders. The costs of the present stage of the proceedings have been incurred because the plaintiff sought different orders for the costs of the appeal. In these circumstances the plaintiff should pay the costs of both defendants of the Notice of Motion. The following orders are made:

(1) Order 5 made by this Court on 2 April 2008 is vacated and there is substituted an order that the defendants pay the plaintiff’s costs of the action on the ordinary basis up to 26 May 2005, and pay his costs on an indemnity basis thereafter.

(2) Notice of Motion otherwise dismissed.

(3) The first respondent, the plaintiff in the action, is to pay the costs of the appellant and the second respondent of the Notice of Motion.

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