Stanizzo v State of New South Wales
[2020] NSWSC 717
•11 June 2020
Supreme Court
New South Wales
Medium Neutral Citation: Stanizzo v State of New South Wales [2020] NSWSC 717 Hearing dates: On the papers Date of orders: 11 June 2020 Decision date: 11 June 2020 Jurisdiction: Common Law Before: Harrison J Decision: The State’s notice of motion dated 13 May 2020 seeking a variation of my costs order made on 30 April 2020 is dismissed with costs.
Catchwords: COSTS – indemnity costs – offer of compromise – whether offer to settle reasonable – whether offer to settle contained a real element of compromise – whether offer to settle was an invitation to capitulate Cases Cited: East West Airlines Ltd v Turner [2010] NSWCA 159 Category: Costs Parties: Vincent Francis Stanizzo (Plaintiff)
State of New South Wales (Defendant)Representation: Counsel:
Solicitors:
M Rollinson (Plaintiff)
N Newton and T Buterin (Defendant)
VF Stanizzo Lawyer (Plaintiff)
Crown Solicitor's Office (Defendant)
File Number(s): 2016/296293 Publication restriction: Nil
Judgment
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HIS HONOUR: By its notice of motion dated 13 May 2020, the State of New South Wales seeks an order that, in lieu of the order I made on 30 April 2020 for the payment of its costs, Mr Stanizzo be ordered to pay costs on an indemnity basis from and after 31 January 2019. The orders sought are based upon the contention that the State served a letter dated 30 January 2019 offering to settle the proceedings on terms that were no less favourable to the State than the ultimate result. The letter was as follows:
“Offer of Compromise
The defendant offers to compromise the whole of these proceedings on the following terms:
1. Judgment in favour of the defendant.
2. The defendant to pay the plaintiff the sum of $90,000 for his costs and disbursements of the proceedings.
3. This offer shall be open for acceptance until 5:00pm on 1 February 2019 only and is thereafter withdrawn.
4. This offer is made in accordance with Part 20 Rule 20.26 of the Uniform Civil Procedures Rules 2005 (NSW).”
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The offer was not accepted.
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Mr Stanizzo opposes the order upon the bases that the offer was not reasonable and so was not a true offer of compromise and further that the date for acceptance of the offer was not reasonable in the circumstances.
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In support of the first basis, Mr Stanizzo contended that, having regard to the history of the proceedings, it must have been obvious that his costs at that time far exceeded the sum offered so that the offer was in fact no better than an invitation to capitulate. He submitted that the offer was of a type that contained no real element of compromise when viewed in the context that his claim in the proceedings was not frivolous or vexatious or, by implication, was not without reasonable prospects of success: East West Airlines Ltd v Turner [2010] NSWCA 159.
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Clearly enough, determination of whether or not an offer of compromise is desultory or insulting, in the sense that it is based upon an entirely one-sided assessment of the risks confronting the person making the offer and suggests that the recipient should capitulate, is open to more than one view. A well- informed plaintiff offeree with reasonable expectations of a successful outcome might be expected to view a settlement offer differently to an equally well-informed defendant offeror with corresponding expectations. An offer of a payment of $90,000 for costs might seem inadequate to Mr Stanizzo who expected to win and recover substantial damages but more than generous to the State that considered he could not succeed in establishing one or more of the necessary disputed elements of his cause of action. The amount of money offered might seem unacceptably low to Mr Stanizzo on the one hand but more than he could ever hope to recover according to the State on the other hand.
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The issue of whether an offer is merely an offer to capitulate necessarily draws not upon subjective considerations influenced more by hope than reality but upon a hard-headed, dispassionate and objective assessment of the likely outcome in the proceedings. An offer by a defendant to the plaintiff to give up a valuable claim for little or nothing is not the same as if the plaintiff’s claim is questionable. Additionally, and significantly, predicting a litigious outcome is notoriously difficult and rarely if ever a matter of certainty, far less empirical measurement. The reasonableness or otherwise of any offer has to be viewed prospectively, without the benefit of hindsight or knowledge of the ultimate outcome in the proceedings.
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Inherent in this analysis is the need to recognise that, in this case, the State’s ability to assess or to predict the probable outcome in the proceedings in January 2019 was no better or worse than Mr Stanizzo’s. The fact that the State’s decision to offer to settle on the terms contained in its letter was ultimately vindicated by its success in the proceedings says nothing about the reasonableness of the offer at the time it was made.
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In my opinion, the reasonableness of an offer of compromise, and hence determination of the question of whether or not the offer was genuine, is best tested by asking whether it would have been difficult to reject, not whether it would have been difficult to accept. In January 2019, it seems to me that the State’s offer would not have been difficult for Mr Stanizzo to reject as it offered him nothing that was really of any value. It would have required him to forego any prospect of an award of damages for malicious prosecution while still leaving him (presumably but hardly surprisingly) considerably out of pocket in respect of his costs and disbursements. Nor would Mr Stanizzo’s anticipated vindication as a person who had been wrongfully prosecuted have been achieved by acceptance of the State’s offer. The pain and sacrifice for Mr Stanizzo caused by accepting the offer would have been entirely disproportionate, in relative terms, to that suffered by the State in parting with $90,000 and bearing its costs of the proceedings up to that time. It would be entirely different if the State’s offer had been in the least bit tempting, or in the language I have used, difficult for Mr Stanizzo to reject. I also consider, having regard to the history of the matter, including the events that spawned the litigation in the first place, that it would be unreasonable for the State now to seek to rely upon an offer that it must reasonably have appreciated Mr Stanizzo was almost certain to reject. The State should not be permitted to engineer a costs outcome by foisting upon Mr Stanizzo the consequences of what was in fact quite reasonable behaviour on his part at the time.
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In my opinion, the State’s offer was indeed an offer to capitulate. It was not a genuine offer of compromise. There should be no consequences for Mr Stanizzo for having chosen to reject it, notwithstanding the outcome of the proceedings.
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In these circumstances, it becomes unnecessary to consider whether the time within which the offer remained open for acceptance was reasonable.
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In my opinion, the State’s notice of motion dated 13 May 2020 seeking a variation of my costs order made on 30 April 2020 should be dismissed with costs.
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Decision last updated: 12 June 2020
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