Senton v Steen

[2014] ACTSC 249

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Senton v Steen

Citation:

[2014] ACTSC 249

Hearing Date:

18 June 2014

DecisionDate:

26 September 2014

Before:

Master Harper

Decision:

1. The defendant pay the plaintiff’s costs up to 28 January 2009 as between party and party.

2. The defendant pay the plaintiff’s costs from 29 January 2009 on a solicitor-and-client basis.

Category:

Costs

Catchwords:

COSTS – Calderbank offer by plaintiff before trial – offer by plaintiff to settle for figure below award of damages by the court after reduction for contributory negligence – no evidence of terms of retainer between plaintiff and plaintiff’s solicitors – order for party-and-party costs up to date of expiry of Calderbank offer and solicitor-and-client costs after that date.

Parties:

Trevor Videan Senton by his litigation guardian the Public Advocate of the Australian Capital Territory (Plaintiff)

Francis James Steen (Defendant)

Representation:

Counsel

Mr AJ Bartley SC and Mr SJ Longhurst for the plaintiff.

Mr WM Fitzsimmons for the defendant.

Solicitors

Porters (plaintiff)

Curwoods by their Canberra agents Moray & Agnew

File Number(s):

SC 802 of 2006

1. The plaintiff in this action applies for an order for costs on a more favourable basis than the usual one where costs follow the event. 

1. The plaintiff’s claim was for damages for personal injury arising out of a motor vehicle collision at Cowra in New South Wales on 24 June 2004.  The plaintiff had been crossing the road when he was struck by the defendant’s vehicle.  He suffered severe brain damage and brings the proceeding by a litigation guardian, the Public Advocate of the Australian Capital Territory.

1. Proceedings were commenced in 2006.  I heard the evidence about liability first, and in August 2012 ordered that judgment be entered for the plaintiff for damages to be assessed, those damages to be reduced by 30% for contributory negligence.  Subsequently I heard the evidence as to damages.  On 9 April 2014 I published reasons for arriving at an award of damages, not including the expense of fund management, of $1,769,504.00.  I stood the matter over for submissions about fund management expenses and costs. 

1. Following my liability judgment an appeal to the Court of Appeal was instituted by the defendant, on whose behalf it was argued that I should have allowed a higher percentage for contributory negligence.  An issue arose as to whether that appeal should have been to a single judge or to the Court of Appeal.  I was informed that argument about that issue had taken place and that the decision had been reserved but not delivered by the time of my decision as to damages. 

1. The outstanding issues came before me for hearing on 18 June 2014.  I was informed that the funds management component had been agreed at $108,600.00.  The effect of this was that after reducing the total damages by 30%, the plaintiff would be entitled to judgment for $1,323,516.25.  I directed the entry of judgment accordingly, and later  the same day ordered a stay of execution provided that the defendant paid $800,000.00 into court within 21 days.  My understanding is that a notice of appeal to the Court of Appeal has been filed by the defendant, making any decision about the earlier liability appeal unnecessary. 

1. On the question of costs, I was informed that on 18 December 2008 the solicitors for the plaintiff had made an offer by letter expressed to be without prejudice save as to costs, of $1,200,000.00 plus costs.  The letter stated that if the plaintiff obtained a more favourable outcome at trial, an order would be sought for costs on an indemnity basis from the date of the letter, which was to be open for 28 days.  Because of the time of year, the defendant had some difficulty getting instructions about the offer within that time, and the plaintiff agreed to extend the time for acceptance of the offer to 28 January 2009.

1. Senior counsel for the plaintiff submits that, the plaintiff having obtained a better outcome than the offer, the court should make an order for costs which is more favourable to the plaintiff than the usual party-and-party order.  During oral submissions, senior counsel for the plaintiff conceded that any such offer should take effect from the date of expiry of the offer, that is 28 January 2009, and should be on a solicitor-and-client basis rather than an indemnity basis, in circumstances where I have not been provided with any information as to the terms of the retainer between the litigation guardian and the solicitors for the plaintiff.

1. Counsel for the defendant submits that his client (in reality the compulsory third-party insurer of the defendant’s vehicle) did not behave unreasonably or imprudently in not accepting the offer at the time. 

1. A perusal of the court file reveals that by January 2009 the solicitors for the plaintiff had filed a statement of particulars.  The solicitors for the defendant had filed a defence.  A certificate of readiness was not filed until March 2010.  Amended statements of particulars were filed in July 2011 and September 2011. 

1. By letter dated 30 January 2009 the solicitors for the defendant rejected the plaintiff’s offer and made a counter-offer of $265,000.00 plus costs.  In an open letter of the same date they said that they did not concede that the plaintiff had any entitlement to general damages for non-economic loss.  The injuries having been sustained in NSW, the law of that State applied to the assessment of damages.  That law included a statutory requirement that the plaintiff go through a process of medical assessment.   General damages were recoverable only where the plaintiff was assessed as having suffered a whole-person impairment at a specified percentage level.

1. Subsequent to the rejection of the plaintiff’s offer both sides served medical reports and reports by accident reconstruction experts.  A certificate of readiness was filed in March 2010.

1. In February 2011 the solicitors for the defendant made an offer of $475,000.00 plus costs, and on the same date, in a separate letter, made an offer to settle the issue of contributory negligence at 33.33%.

1. Thereafter the solicitors for both parties continued to serve further medical reports and reports by accident reconstruction experts.

1. In August 2012 the solicitors for the defendant made a further offer of $700,000.00 plus funds management fees plus costs.  This was within a month after my decision on liability.

1. The Court Procedures Rules 2006 require the parties to serve copies of expert reports they propose to rely on, in the case of the plaintiff, at least 28 days before filing of the certificate of readiness, and in the case of the defendant, within 14 days of service of the plaintiff’s reports: r 1241. At the end of January 2009 neither party had been under any obligation to serve expert reports. There is no obligation on either party to serve statements of other witnesses before trial.

1. The comparison of the figure offered with the ultimate judgment amount is not complicated in the present case by any question of interest, for the reason that the NSW legislation governing the assessment of damages provides that, at least on the facts of this case, the plaintiff has no entitlement to interest on past losses.

1. Although there is no specific reference in the Court Procedures Rules to what have generally become known as Calderbank offers, their efficacy in laying the ground for orders as to costs has been recognised since the decision of the full court (Miles CJ, Gallop and Higgins JJ) in Quirk v Bawden (1992) 112 ACTR 1. In circumstances similar to the present case, the plaintiff in that matter made an offer to settle for a figure a little lower (in that case about 7% lower) than the amount awarded by the court. Master Hogan ordered the defendant to pay the plaintiff’s costs on the usual party-and-party basis up to the date of expiry of the offer, and after that date on an indemnity basis. An appeal by the defendant against the costs order was unsuccessful. In the principal judgment of the full court, Higgins J set out the principles to be applied. His Honour referred to the genesis of the principle in Calderbank v Calderbank [1975] 3 WLR 586, and its extension beyond the family law jurisdiction in Cutts v Head [1994] Ch 290. His Honour referred to a number of decisions in Australian courts where the principle had been accepted and applied. His Honour said:

There is much to be said for encouraging, at an early stage in the litigation, the serious consideration of offers of settlement.  The savings to the parties and to the community from such a process, if successful, is well demonstrated.   .   .Accordingly, I believe that this court should apply an appropriate costs sanction where a party has declined to accept, or to make, as the case may be, a reasonable offer of settlement.  It may, in some cases, be sufficient to deprive an otherwise successful party of all or part of the costs that otherwise would follow the event.  In other cases, it may be appropriate to award some or all costs of an action on a more favourable than usual basis to a party who has been put to the expense of continuing litigation that ought reasonably to have earlier settled.

1. His Honour went on to say that it was not sufficient for a special costs order merely to show that a plaintiff had offered to settle for a figure which was exceeded by the judgment.  It was necessary to show that the refusal by the defendant of the offer was unreasonable.  It might be enough to avoid a special order if the defendant had engaged, reasonably, in a proper attempt to settle the matter.

1. His Honour also made clear that in such a case, a plaintiff would be expected to make some concession, rather than insisting on everything he claimed. 

1. His Honour noted that litigation, particularly in the area of personal injury, admitted of a range of outcomes, and that the outcome to be reflected in the final judgment was a matter on which the parties might reasonably differ.  Indemnity costs should not be used to inhibit either party from litigating an issue reasonably in contention between them. 

1. His Honour said that in the end the matter was one for the discretion of the trial judge.  It was necessary for the court to be satisfied that the defendant had failed to act reasonably in declining to accept the plaintiff’s offer.

1. In Quirk, Higgins J was satisfied that the plaintiff had made a reasonable offer of compromise.  It was apparent that the offer had represented a genuine compromise when it was made, with a not insignificant discount below the plaintiff’s full entitlement.  His Honour was satisfied that there had been no serious attempt by the defendant to consider the offer, no counteroffer, and no complaint that the basis for the offer was unexplained.

1. Quirk v Bawden remains good law in this Territory and has been followed many times.  In the present case there is no complaint that the time given for consideration of the offer was inadequate, or that there was anything unclear about its terms. 

1. The defendant complains that the offer was made at a time prior to the exchange of expert reports, and well before the filing of the statement of particulars upon which the action went to trial for the assessment of damages. 

1. I acknowledge that a Calderbank offer may be made by a plaintiff at a time when it is unreasonably early for the defendant to consider it.  That is to say, the defendant may not know enough about the claim by the plaintiff, either as to liability or as to quantum, to be able to make a properly informed decision as to whether the offer is a reasonable one.

1. Although it did not happen in this case, it seems to me that it might well be relevant to a costs application of this kind if the defendant, at some time after the expiry of the offer, and by then having more information about the case, seeks to revisit the offer.  One can envisage that it may be seen as unreasonable on the part of a plaintiff to decline to reconsider settling for the figure in the original offer in such circumstances.  It seems to me that it will not always be possible to decide whether or not to exercise the court’s discretion as to costs in the context of a Calderbank offer, purely on the basis of the circumstances existing at the time the offer was made, expired or was rejected.  Subsequent events might in some circumstances be relevant to the exercise of the discretion.  However, in the present circumstances, although the defendant later made a Calderbank offer as to liability which was far from unreasonable, and indeed pitched very close to the court’s decision, the defendant never sought to revisit the Calderbank offer of December 2008 as to quantum, or to negotiate anywhere near the vicinity of that figure.

1. The early resolution of litigation is to the significant benefit of the community as well as the parties to the litigation.  Early settlement at a fair figure is to be encouraged.  I am satisfied that on the facts before me, the defendant’s rejection of the Calderbank offer of December 2008 should enliven my discretion to depart from the usual order that costs follow the event, and to give the plaintiff some benefit flowing from the attempt on his behalf to achieve an early settlement, and the unreasonable failure of the defendant to engage with it.

1. The defendant should pay the plaintiff’s costs up to 28 January 2009 as between party and party, and from 29 January 2009 on a solicitor-and-client basis. 

I certify that the preceding twenty eight [28] numbered paragraphs are a true copy of Reasons for  Judgment of his Honour Master Harper.

Associate:

Date: 26 September 2014