Roads and Traffic Authority of NSW v Refrigerated Roadways Pty Ltd (No 2)

[2009] NSWCA 336

New South Wales

Court of Appeal

CITATION:	Roads and Traffic Authority of NSW v Refrigerated Roadways Pty Ltd (No 2) [2009] NSWCA 336
HEARING DATE(S):	(On Written Submissions)
JUDGMENT DATE:	16 October 2009
JUDGMENT OF:	McColl JA at 1; Campbell JA at 2; Sackville AJA at 27
DECISION:	Order 3 made on 22 September 2009 varied by requiring Respondent to pay Appellant's costs in court below on indemnity basis from date of expiry of term in which Offer of Compromise could be accepted. Indemnity costs of the appeal not ordered. Respondent to pay 50% of Appellant's costs of Notice of Motion filed 29 September 2009.
CATCHWORDS:	COSTS – indemnity costs – whether indemnity costs for the trial ought to be ordered for a “walk away” offer made in the middle of a trial – date from which indemnity costs should be ordered when defendant had not had a chance to examine certain evidence at time the offer was made – indemnity costs on appeal when there was a failure to make a fresh offer or renew previous offer of compromise on appeal – PROCEDURE – variation of order following entry of judgment – statutory authority to reopen entered orders – time limits on variation
LEGISLATION CITED:	Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005
CATEGORY:	Consequential orders
CASES CITED:	Deputy Commissioner of Taxation v Meredith (No 2) [2008] NSWCA 133; (2008) 72 ATR 425 Hancock v Arnold (No 2) [2009] NSWCA 19 Monie v The Commonwealth (No 2) [2008] NSWCA 15 Roads and Traffic Authority of NSW v Refrigerated Roadways Pty Ltd [2009] NSWCA 263 Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd (No 2) [2008] NSWCA 205
PARTIES:	Roads and Traffic Authority of New South Wales (Appellant) Refrigerated Roadways Pty Ltd (Respondent)
FILE NUMBER(S):	CA 40270/08
COUNSEL:	J Maconachie QC; P Perry (Appellant) R Sheldon (Respondent)
SOLICITORS:	Crown Solicitor's Office, Sydney (Appellant) Bartier Perry, Sydney (Respondent)
LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	4508/04
LOWER COURT JUDICIAL OFFICER:	Hungerford ADCJ
LOWER COURT DATE OF DECISION:	2 June 2008
LOWER COURT MEDIUM NEUTRAL CITATION:	Refrigerated Roadways Pty Ltd v Roads and Traffic Authority of NSW [2008] NSWDC 91

CA 40270/08
DC 4508/04

McCOLL JA
CAMPBELL JA
SACKVILLE AJA

16 OCTOBER 2009

ROADS AND TRAFFIC AUTHORITY OF NEW SOUTH WALES v REFRIGERATED ROADWAYS PTY LTD (No 2)

Judgment

1 McCOLL JA: I agree with Campbell JA.

: The Court delivered judgment in this matter on 22 September 2009: Roads and Traffic Authority of NSW v Refrigerated Roadways Pty Ltd [2009] NSWCA 263. The Respondent had recovered a judgment against the Appellant (“the RTA”) in District Court proceedings. The orders made in the Court of Appeal on 22 September 2009 were:

“1. Appeal allowed.
2. Set aside the judgment and orders in the court below.
3. In lieu thereof, order that the proceedings be dismissed with costs.
4. Order Respondent to pay Appellant’s costs of the appeal.”

3 By Notice of Motion filed 29 September 2009, the RTA sought to have the costs orders varied in two respects. The first was that the order for costs in the court below should become:

“The respondent is to pay the appellant’s costs of the proceedings in the Court below on a party and party basis in respect of the proceedings under to and including 22 November 2007. In respect of those proceedings after 22 November 2007, the respondent is to pay the appellant’s costs on the basis of an indemnity.”

4 The second was that the order for costs of the appeal should be varied to become an order for costs of the appeal “on the basis of an indemnity”.

Power to Vary the Costs Orders

5 Because there was no order that delayed the entering of judgment in accordance with the orders that were pronounced on 22 September, those orders would have been recorded in the Court’s computer system, in the ordinary course of things, on the day on which the orders were pronounced. Thus that is the date the orders were entered: Uniform Civil Procedure Rule 36.11. Under UCPR 36.16(3A) a Notice of Motion for the varying of a judgment or order must be filed within 14 days after the judgment or order has been entered, if the Court is to set aside or vary the judgment or order in the same way it can set aside or vary an order that has not been entered. Subject to one or possibly two exceptions, that 14 day time limit is a stringent, sudden-death one – it is incapable of being extended under UCPR 1.12, the provision most commonly used to extend times laid down in the rules: UCPR 36.16(3C) (see generally Deputy Commissioner of Taxation v Meredith (No 2) [2008] NSWCA 133; (2008) 72 ATR 425 at [6]-[16]; Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd (No 2) [2008] NSWCA 205 at [6]-[10].

6 In Hancock v Arnold (No 2) [2009] NSWCA 19 at [9]-[12], the Court contemplated the possibility that a costs order could be varied notwithstanding that no Notice of Motion was filed within 14 days after the order was entered in the Court’s computer system, if there had been an oral application to vary it within the 14 day period, and if either UCPR 36.16(3) or section 14 Civil Procedure Act 2005 were invoked. UCPR 36.16(3) provides:

“(3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it:
(a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or
(b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief.”

7 In the present case, one of the orders sought by the Notice of Appeal was:

“Respondent to pay the Appellant’s costs of the appeal and in the court below.”

8 Uninstructed by argument, I would have thought that the order for costs pronounced in this matter on 22 September 2009 was one that “determines any claim for relief”, and thus that UCPR 36.16(3) was not applicable.

9 Section 14 Civil Procedure Act provides:

“In relation to particular civil proceedings, the court may, by order, dispense with any requirement of rules of court if satisfied that it is appropriate to do so in the circumstances of the case.”

10 I would respectfully agree that section 14 may provide a means by which, in a particular case, such as where an oral application had been made within the 14 day period, the stringency of the 14 day time period might be ameliorated. However, whether any such amelioration is offered in any particular case is completely dependent upon the Court’s discretion. If a party to litigation wants to use the making of offers of compromise or writing of a Calderbank letter as a basis for applying to vary a costs order that has been pronounced, the prudent course to adopt is still filing of a Notice of Motion within the 14 day period.

11 In the present case, that prudent course was followed, so the Court has power to vary the costs orders if it is appropriate to do so.

The Offer of Compromise – Costs in the Court Below

12 13 September 2007 was the fourth hearing day of the case in the court below. At the start of that day’s hearing, counsel informed the judge that the RTA had various relevant documents in its possession that the Respondent had not seen. It was not suggested that failure to bring the documents to light any earlier was exclusively the fault of one side. Both counsel accepted that an adjournment was a practical necessity. The judge also recognised that practical necessity. The hearing was adjourned to continue in February 2008.

13 On 22 November 2007 the Appellant sent both a Calderbank letter, and an Offer of Compromise, each of which offered a verdict for the defendant and that the parties should bear their own costs. That offer was expressed to be open for 28 days.

14 No submission was made that anything turns on the difference between a Calderbank letter and an Offer of Compromise, so far as the present case is concerned.

15 At the time the RTA’s Calderbank letter and Offer of Compromise were served, the solicitor for the Respondent had not inspected the approximately 15 folders of documents which had emerged after the commencement of the District Court proceedings. He inspected those documents on 27 and 28 November 2007, and received copies of them under cover of a letter of 13 December 2007. The 28 days for which the offer was open expired on 20 December 2007.

16 The transcript of 13 September 2007 shows that 10 of the volumes of documents in question were in court that day. We have not been informed when the other five volumes came to light. In any event, all the relevant documents had been inspected, and copies of them had been received, before the offer expired.

17 The Respondent submits that there was little compromise involved in a “walk away” offer. I do not agree. By the time the offer was made the RTA had incurred the pre-trial costs involved in taking statements from numerous witnesses, collating numerous documents, and qualifying experts. It also had incurred the costs of four days hearing.

18 The Respondent also submits that the RTA knew what was contained within the documentary material of the 15 folders at the time the offer was made, but the Respondent did not, and there is an unfairness in obtaining a costs benefit from the inequality of their respective knowledge concerning this material at the time of making the offer.

19 I agree. However, by the time the offer was due to expire any inequality of knowledge concerning the material had dissipated.

42.15A applies when an Offer of Compromise is made by a defendant, but not accepted by the plaintiff, and the defendant obtains a judgment on the claim that is more favourable to the defendant than the terms of the offer. That is the present situation:

“(2) Unless the court orders otherwise:
(a) the defendant is entitled to an order against the plaintiff for the defendant’s costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and
(b) the defendant is entitled to an order against the plaintiff for the defendant’s costs in respect of the claim, assessed on an indemnity basis:
(i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, …”

21 In my view, the terms of the offer reflected a genuine compromise in the circumstances. The late production of the documents has the effect that it would not be reasonable to require payment of indemnity costs from the day following the day on which the offer was made. Instead, those costs should be payable from the last day on which acceptance of the offer was open, so far as the hearing in the court below is concerned.

Costs of the Appeal

22 By the time the appeal was instituted the offer had expired. The RTA made no Offer of Compromise and served no Calderbank letter concerning the appeal proceedings.

23 In Monie v The Commonwealth (No 2) [2008] NSWCA 15 at [71], I said:

“So far as the costs of the appeal are concerned, there is an additional reason why no order for indemnity costs should be made. It is that the Calderbank offer in question was made at the outset of the second trial, had expired by the time the appeal was instituted, and was not renewed for the purpose of the appeal. An offer of compromise made under court rules at first instance can be a relevant factor to consider on the question of costs on appeal, even if that offer has no statutory effect under the rules on the costs of an appeal: Ettingshausen v Australian Consolidated Press Ltd (1995) 38 NSWLR 404 at 410 per Gleeson CJ and Priestley JA; Fotheringham v Fotheringham (No 2) [1999] NSWCA 21; (1999) 46 NSWLR 194 at [33], 205 per Stein JA. There is no reason of principle why any different situation should apply concerning a Calderbank offer made at first instance. Such an offer operates as one factor able to be taken into account in exercise of the court’s discretion: Estate of Virgona v De Lautour (No 2) [2007] NSWCA 323 at [10]. However, the failure to renew for the purpose of an appeal a Calderbank offer that had been made for the purpose of trial is well recognised as a factor that tends against an award of indemnity costs for the appeal: Brymount Pty Ltd t/a Watson Toyota v Cummins(No 2) [2005] NSWCA 69 at [29]-[30]; Baresic v Slingshot Holdings Pty Ltd (No 2) [2005] NSWCA 160 at [21]; Stuart Pty Ltd v Condor Commercial Insulation Pty Ltd (No 2) [2006] NSWCA 379 at [10]-[17]. One factor that particularly tends to disincline an appeal court from making an order for costs of an appeal because of a Calderbank offer made for trial is if (as happened here) the Calderbank offer was not still open for acceptance when the appeal was instituted or before significant costs had been incurred in the appeal: Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194 at [8] to [9].”

See also at [4] per Beazley JA, with whom Mason P agreed.

24 In my view, in the present case the failure of the RTA to make any offer of compromise or Calderbank offer once the appeal had been instituted is a reason for denying it an order for indemnity costs concerning the appeal.

Costs of This Application

25 As the RTA has obtained only one of the two orders it sought, and those orders were discrete, in my view it should have 50% of the costs of the present application.

Orders

26 I propose the following orders:

(1) That the orders of the Court made 22 September 2009 be varied by replacing order 3 with an order reading:

“In lieu thereof, order:
(a) that the proceedings be dismissed.
(b) that the Respondent pay the Appellant’s costs of the proceedings in the court below on a party and party basis in respect of the proceedings up to and including 20 December 2007. In respect of those proceedings after 20 December 2007, the Respondent is to pay the Appellant’s costs on the basis of an indemnity.

(2) Respondent to pay 50% of the Appellant’s costs of the Notice of Motion filed 29 September 2009.

: I agree with Campbell JA.

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