Stewart v Tsueneaki

[2012] ACTSC 159

ROD STEWART v AOKI TSUENEAKI
[2012] ACTSC 159 (19 October 2012)

PRACTICE AND PROCEDURE – costs – claim for damages for personal injury – Calderbank offer – whether effective – offer rejected – plaintiff recovering greater amount on hearing – defendant ordered to pay costs after expiry of offer as between solicitor and client
PRACTICE AND PROCEDURE – stay of proceedings after judgment pending appeal – appeal from assessment of damages for personal injury – applicable principles – factors to be taken into account – stay ordered conditionally on payment of part of judgment sum and on prompt prosecution of appeal

Court Procedures Rule 2006 (ACT) r 5301(1)

Kennedy v CCB (ACT) Pty Ltd [2012] ACTSC 120
Kemp v Ryan [2012] ACTCA 12
Lewincamp v ACP Magazines Ltd (No 3) [2008] ACTSC 81
Federal Commissioner of Taxation v Myer Emporium Ltd (No 1) (1986) 160 CLR 220
Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681
Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685
Cellante v G Kallis Industries Ltd [1991] 2 VR 653
Griffiths v Australian Postal Commission (1987) 87 FLR 139
Transpacific Cleanaway Pty Ltd v Cairns [2012] NSWCA 294

No.  SC 187 of 2009

Judge:             Master Harper
Supreme Court of the ACT

Date:              19 October 2012

IN THE SUPREME COURT OF THE     )
  )          No.  SC 187 of 2009
AUSTRALIAN CAPITAL TERRITORY           )

BETWEEN:ROD STEWART

Plaintiff

AND:AOKI TSUENEAKI

Defendant

ORDER

Judge:  Master Harper
Date:  19 October 2012
Place:  Canberra

THE COURT ORDERS THAT:

1. the defendant pay the plaintiff’s costs up to and including 10 August 2010 as between party and party.

1. the defendant pay the plaintiff’s costs subsequent to that date as between solicitor and client.

1. the judgment directed on 24 August 2012 to be entered be stayed until further order on condition that the defendant pays to the plaintiff the sum of $236,646.00 and prosecutes the appeal from that judgment without delay.

1. The defendant pay the plaintiff’s costs of the application in proceeding dated 6 September 2012.

1. On 24 August 2012 I delivered judgment for the plaintiff in this action for damages for personal injury, for $336,646.00, following a defended hearing.

1. On 6 September 2012 the defendant filed a notice of appeal.  Although liability was in issue at the trial, the appeal is as to quantum of damages only.

1. I have since heard submissions from counsel as to costs, and an application by the defendant for a stay of execution of my judgment pending the hearing and determination of the appeal.

Costs

1. The plaintiff seeks the usual order for costs up to the date of a rejected Calderbank offer, and thereafter costs on a more generous basis.  Counsel for the plaintiff initially sought an order for those costs on an indemnity basis but indicated during submissions that his client would be content with an order that those costs be assessed as between solicitor and client.

1. There were a number of offers made by the plaintiff and the defendant during the period leading up to the hearing, and during the hearing itself.  The hearing occupied three days in November 2010 but was unable to be completed at that time. It resumed in mid-December 2010 and went for a further two days.

1. Counsel for the defendant concedes that an order for costs on a solicitor-and-client basis should follow the rejection of a Calderbank offer conveyed by the plaintiff’s solicitors by letter of 29 November 2010, sent by facsimile on that date and expressed to remain open until 6 December 2010. 

1. The plaintiff seeks the special order in respect of the rejection of an offer made by letter dated 12 July 2010, sent by fax and expressed to be open for twenty-eight days.  The defendant argues that the July offer did not meet the criteria for an effective Calderbank offer and should be ignored. 

1. It is enough to say that both of the plaintiff’s offers were for less than the amount of the judgment.  It is unnecessary for me to set out in these reasons the precise amounts of the offers, and undesirable that I should do so because of the possibility that the appeal will be allowed and damages assessed afresh, either by the Court of Appeal or by another judicial officer on remittal. 

1. In December 2009 the parties attended before the then Deputy Registrar, who set the matter down for hearing before me on 28 June 2010.

1. On 16 June 2010 the solicitors for the plaintiff filed, without leave, an amended statement of particulars.  For the reasons which I explained in Kennedy v CCB (ACT) Pty Ltd [2012] ACTSC 120, the plaintiff was not entitled to file an amended statement of particulars without leave, and the document should not have been accepted for filing in the registry in the absence of leave or the consent of the defendant.

1. On 22 June 2010 the solicitors for the defendant filed an application in proceeding returnable on 25 June, asking that the hearing date be vacated and that the plaintiff pay the costs thrown away.  It is unnecessary for present purposes to go into the arguments about the vacation of the hearing date in any detail.  The difficulties arose from medical reports served close to the hearing and from changes in the plaintiff’s case emerging from the amended statement of particulars.  The application came before me on 25 June.  By then the parties were agreed that the hearing should be vacated.  I so ordered, and stood the matter over to 23 July for argument about the costs of the application and the costs thrown away.

1. By 23 July the parties had reached agreement, and on that date I made a consent order that the plaintiff pay the defendant’s costs thrown away by reason of the vacation of the hearing date.

1. It was during this period that the earlier of the offers relied on by the plaintiff was made.  On 12 June 2010 the plaintiff’s solicitors wrote in the following terms:

We are instructed to settle this matter for the sum of $X plus costs.  This offer is made pursuant to the principles of Calderbank v Calderbank and if the plaintiff proceeds to a hearing and obtains a judgment for a greater sum the plaintiff will rely upon this letter to seek indemnity costs.  The offer will remain open for a period of twenty-one days.

The letter was headed “without prejudice save as to costs”.

1. On 15 July the defendant’s solicitors responded in the following terms:

We refer to your Calderbank offer dated 12 July 2010, received on 13 July 2010.

We note that the issue of costs of the adjourned hearing remains outstanding.  Therefore we are not in a position to properly consider your offer.

It is our client’s view that it has a strong argument to recover its costs thrown away, and it would appear that your offer makes no account for this.

We look forward to your clarification as soon as possible as to whether your offer intends for the defendant to waiver its entitlement to any costs ordered to the paid by the plaintiff [sic].

There was no further correspondence between the parties in relation to the offer before the commencement of the hearing.  The defendant’s solicitors made a Calderbank offer on 29 November 2010.  On the same date the plaintiff’s solicitors rejected that offer but made another offer in Calderbank terms of a somewhat lower amount than their July offer.  The defendant does not complain of any shortcoming with that letter. 

1. The defendant’s argument is that because the July offer was made on a date between the vacation of the hearing date and the resolution of the dispute between the parties as to the costs thrown away, the letter was unclear and was unable to be accepted so as to result in a binding contract between the parties.

1. In Kemp v Ryan [2012] ACTCA 12, the Court of Appeal dismissed an appeal from a decision in which I had declined to make a special costs order sought on the basis of a rejected Calderbank offer. I had found that the email conveying the offer was ambiguous and unclear, and that it was not capable of acceptance so as to result in a binding contract between the parties. Their Honours set out the principles to be applied. For a Calderbank offer to be effective, the precise terms of the judgment which would be entered if it were accepted must be clear.

1. It does not seem to me that there was anything unclear about the letter from the plaintiff’s solicitors of 12 July 2010.  If the defendant had accepted it, judgment would have been entered for the plaintiff for the amount offered plus costs.  The costs of the application to vacate the hearing date and the costs thrown away by the vacation were to be determined by the court, on a set date.  It is clear to me that acceptance of the offer would not have deprived the defendant of its entitlement to seek an order for those costs.

1. In any event, the costs thrown away were dealt with by consent order on 23 July 2010, well within the twenty-eight-day period for acceptance of the offer. If the defendant had accepted the offer after that interlocutory costs order had been made, the order would have stood, entitling the defendant to set off the costs so ordered, when quantified, against the costs of the action which would have followed acceptance of the Calderbank offer.

1. I am satisfied that the plaintiff’s offer of 12 July 2010 was an effective Calderbank offer, and that adequate time was allowed for acceptance.

1. The offer represented, particularly when considered at that time, a realistic compromise when compared with the amount subsequently awarded.

1. It has been frequently said that the court encourages parties to avoid litigation and to save costs.  It should be added that there is a strong public interest in the saving of court time.  The present trial occupied five days of court time, which is greatly in demand and for which parties must wait lengthy periods. 

1. The appropriate order is that the defendant pay the plaintiff’s costs as between party and party up to the date of expiry of the July offer (I would calculate time from the date of receipt of the offer, 13 July 2010, so that the date of expiry was 10 August 2010), and assessed as between solicitor and client after that date.

1. The costs order in favour of the defendant made by consent on 23 July 2010 remains in force, and the defendant will be entitled to set those costs off against the costs recoverable by the plaintiff.

Stay of execution

1. The defendant filed a notice of appeal to the Court of Appeal on 6 September 2012.  The appeal is limited to quantum, and specifically to the amounts awarded for general damages for pain and suffering and loss of enjoyment of life, and damages for loss of earning capacity.  On the same date the defendant made the present application, having offered to “advance” to the plaintiff 50% of the judgment sum. The offer was rejected and no counteroffer made.

1. To use the words of Besanko J in Lewincamp v ACP Magazines Ltd (No 3) [2008] ACTSC 81, “it is not appropriate for me to weigh the strength of the grounds of appeal”.

1. I note that the application was not accompanied by any evidence, for example an advice of counsel, that there are strong or even fair prospects of the appeal being successful.  I take account of the fact that in Lewincamp, Besanko J proceeded on the assumption that there were some prospects of the appeal in that matter being successful, where the respondent plaintiff had accepted through its solicitor that the grounds of appeal were arguable. (Lewincamp was a defamation action in which liability had been in issue and was to be in issue on appeal).

1. The relevant provisions as to the power to grant a stay in the present circumstances are found in subrule 5301(1) of the Court Procedures Rule 2006 (ACT), which provides:

An appeal to the Court of Appeal in a civil proceeding does not operate as a stay of the order appealed from unless –

(a)    a territory law provides otherwise; or

(b)   the Court of Appeal or the court otherwise orders.

1. There is some inconsistency in the decided cases as to what an applicant needs to demonstrate in order to justify a stay. In Federal Commissioner of Taxation v Myer Emporium Ltd (No 1) (1986) 160 CLR 220 at 222 Dawson J expressed the opinion that the normal rule is that after judgment a litigant is entitled to the fruits of the litigation and that special circumstances are required to justify a departure from that rule. Similarly in Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681 at 684 Brennan J described the jurisdiction to grant a stay as “extraordinary” and exercisable only in “exceptional circumstances”. It may be that those decisions should be seen as limited to appeals to the High Court of Australia where there has already been an intermediate appeal.

1. At State level, the New South Wales Court of Appeal said in Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685 that it was not necessary for an applicant for a stay to show special or exceptional circumstances and that it was sufficient for the applicant to demonstrate a reason or an appropriate case to warrant the exercise of the discretion in its favour. That approach was referred to with apparent approval by Besanko J in Lewincamp. 

1. The Court of Appeal in Victoria took a contrary view in Cellante v G Kallis Industries Ltd [1991] 2 VR 653, that an applicant had to show special or exceptional circumstances. In this Court, Miles CJ said in Griffiths v Australian Postal Commission (1987) 87 FLR 139 at 141 that it was “misleading and probably putting it too high” to say that special circumstances were required before the Court would grant a stay. His Honour thought that the distinction between the NSW and Victorian lines of authority was more apparent than real, and that whilst the applicant had the onus of establishing grounds for a stay, the discretion to grant a stay was wide and aimed at achieving justice in all the circumstances.

1. Stays have been granted where it has appeared that the respondent would be unable to refund the judgment sum if the appeal succeeded, for example in Alexander v Cambridge Corporation Ltd.  The court also said in Alexander that on an application for a stay the court does not estimate the applicant’s chances of success but can assess whether the applicant has an arguable case.

1. Griffiths was a quantum appeal from an assessment of damages for personal injury by Kelly J.  For the purposes of the application, Miles CJ read the reasons for judgment and some of the transcript of evidence.  He formed the view that even if the appeal was successful it was unlikely that the damages would be reduced to less than half of the amount awarded, and ordered a stay conditional upon the defendant paying to the plaintiff an amount of approximately half the award, and a further condition that the defendant prosecute the appeal without delay.  Miles CJ made it clear that the usual order in such circumstances was that the defendant applicant should pay the costs of the application for the stay.  There was in that case some evidence that the plaintiff was in financial difficulty and would suffer disadvantage if he had to wait until the appeal had been heard before any of the judgment sum was paid to him.

1. In Lewincamp, Besanko J was satisfied that the plaintiff had the resources to repay the judgment amount if the appeal was successful.  The plaintiff had given an undertaking to pay a proportion of the judgment sum into a mortgage offset account on which he could draw on demand to repay the judgment if necessary.  The proposal was that out of the damages the plaintiff would pay his solicitors and counsel, each of whom provided the court with an undertaking to repay the amounts received if ordered to do so by the court.  There was no evidence of any hardship.  Besanko J assumed that there was some prospect of the appeal being successful, and noted that there was no suggestion by the defendant that the appeal would be nugatory in the absence of a stay.

1. His Honour was not persuaded that the defendant had identified any sound reason for a stay.  It was not sufficient to rely on the lack of hardship to the plaintiff, the desirability of maintaining the status quo, or the fact that the appeal was likely to be heard fairly promptly.  All of the matters identified by the defendant, in his Honour’s view, even when taken together, fell well short of supporting the grant of a stay. 

1. Upon the present application, the plaintiff, no doubt on advice in the light of the decision of Besanko J in Lewincamp, has put on an affidavit as to his financial position, including the fact that he maintains a mortgage offset account with his bank secured over his home in Canberra and a beach house.

1. The assets are owned, I assume jointly, by the plaintiff and his partner.  He says that their home in Canberra has a value of $800,000.00. He says that he obtained this figure from a named person with a firm of estate agents.  The amount owing on the mortgage over the house is presently some $456,000.00, leaving $344,000.00 equity. 

1. He says that the bank valuation of the beach house in November 2011 was $370,000.00, with $275,000.00 owing on the mortgage.  He says that he and his partner have a credit balance of some $182,000.00 in a mortgage offset account with their bank, which I take to be an asset to be set off against the amounts said to be owing on the mortgage of the two properties.  He then says that he has personal property in the form of home contents and vehicles worth about $200,000.00 and that he and his partner have superannuation worth more than $500,000.00.

1. Counsel for the application took me to a brief decision of Macfarlan JA in Transpacific Cleanaway Pty Ltd v Cairns [2012] NSWCA 294, in which his Honour noted that the court usually granted a stay of a judgment at first instance pending appeal where there was a risk that the respondent to the appeal would be unable to repay the money without difficulty or delay if the appeal were to succeed. His Honour noted that the respondent in the appeal before him had put on evidence that he was co-owner of a house said to be valued at $1,555,000.00 subject to a mortgage to secure an outstanding amount of $706,000.00. The house was the home of the respondent, his partner and their child. There was no evidence as to their relative shares in the house, and his Honour said that as the estimate was not one of a registered valuer it carried little if any weight. His Honour also regarded it as relevant that the respondent had not given evidence that he had any particular need for the judgment monies before the disposition of the appeal. In the circumstances his Honour ordered a stay of the judgment below without any condition as to part payment.

1. In the present case the defendant applicant is prepared to agree to payment of half the judgment sum, which would be $168,323.00, as a condition of a stay.  A question arises as to whether I am satisfied that the plaintiff could readily repay an amount of that magnitude in the event that the appeal is successful and he is required to do so.

1. Having regard to the plaintiff’s age, I cannot take his superannuation into account.  Nor can I be satisfied that, if a forced sale were necessary, the beach house or the Canberra house would bring the prices which I accept the plaintiff has been told about by his bank and estate agent.  I am prepared to assume for the purposes of the application that the plaintiff and his partner are joint tenants in both properties.

1. Notwithstanding the approach adopted by Besanko J in Lewincamp, it seems to me that the longstanding practice of the court in appeals from judgments for damages for personal injury has been to grant a stay on payment of part of the judgment sum.

1. In the present case, there is no evidence that the plaintiff has any urgent need of the money. On the contrary, his evidence is that he and his partner are in a strong financial position with ready access to substantial funds, and that each of them is in employment. 

1. As against that, the defendant has not sought to satisfy the court that it has strong prospects of success in the appeal.

1. It seems to me appropriate to adopt generally the approach taken by Miles CJ in Griffiths, and to ask the question by how much is it feasible that the award of damages might be reduced if the appeal is successful. 

1. Adopting that approach, and balancing the various considerations, I propose to make orders which would permit the appellant defendant to retain $100,000.00 of the damages pending the determination of the appeal. 

1. There will be an order that the order made on 24 August 2012 be stayed until further order, conditionally upon the defendant paying to the plaintiff the sum of $236,646.00 and prosecuting the appeal without delay.

Costs

1. The usual position is that an applicant for a stay comes to the court seeking a departure from the usual operation of the Rules, and should pay the costs of the application.  The position may be different where, prior to making the application, the applicant has in correspondence asked the respondent to agree to the orders sought.  Here the applicant offered payment of half the judgment sum as a condition of a stay.  The respondent, reasonably as I have found, did not accept this condition.  There is accordingly no basis for departure from the usual order that the applicant pay the respondent’s costs of the application for the stay.

1. There has been no separate application in proceeding in relation to costs, but the plaintiff has been successful in its submissions about costs and the defendant has not.  It seems to me that there is no need for me to make any additional order about the costs of the oral applications for costs orders, which will be recoverable by the plaintiff as part of the general costs of the action. 

I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.

Associate:

Date:                19 October 2012

Counsel for the plaintiff:  Mr RP Clynes
Solicitors for the plaintiff:  United Legal
Counsel for the defendant:  Mr SM Whybrow
Solicitors for the defendant:  Moray and Agnew
Date of hearing:  28 September 2012
Date of judgment:  19 October 2012