Thiess Contractors (NZ) Ltd v Howtrac Rentals Pty Ltd (No 2)
[2002] VSCA 220
•20 December 2002
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 8288 of 1998
| THIESS CONTRACTORS (N.Z.) LTD. | |
| Appellant | |
| v. | |
| HOWTRAC RENTALS PTY. LTD. | Respondent |
(No. 2)
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JUDGES: | CALLAWAY, BUCHANAN and VINCENT, JJ.A. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 28 October 2002 | |
DATE OF REASONS: | 4 December 2002 | |
DATE OF ORDERS: | 20 December 2002 | |
MEDIUM NEUTRAL CITATION: | [2002] VSCA 220 | |
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Costs - Offer of compromise - R. 26.08(3).
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr J.H. Karkar, Q.C. | Deacons |
| For the Respondent | Mr G.H. Golvan, Q.C. Mr J.D. Wilson | Giannakopoulos & Solicitors |
CALLAWAY, J.A.:
BUCHANAN, J.A.:
VINCENT, J.A.:
On 4th December 2002 we published our respective reasons for judgment in Thiess Contractors (N.Z.) Ltd. v. Howtrac Rentals Pty. Ltd.[1] The submissions the parties desired to make in relation to consequential orders, including costs, could not be conveniently heard at that time. We directed that written submissions be filed and exchanged. In consequence we have had the assistance of detailed written submissions signed by counsel. Having considered them, we shall make the following orders:
[1][2002] VSCA 195 ("Thiess v. Howtrac").
1.Leave to amend the notice of appeal and leave to appeal against paragraph 3 of the judgment given by the Honourable Justice Gillard on 22nd December 2000 are refused.
2.The appeal is allowed with costs.
3.Paragraphs 1 and 2 of the said judgment are set aside and in lieu thereof it is ordered that:
(a)There be judgment for the plaintiff in the sum of $1,334.11.
(b)The defendant pay the plaintiff's costs of the proceeding (including reserved costs) up to and including 4th July 2000, and the plaintiff pay the defendant's costs of the proceeding (including reserved costs) after 4th July 2000, all on a party and party basis.
The following are our reasons, briefly expressed, for making those orders.
The Court will also grant to the respondent an indemnity certificate pursuant to s.4 of the Appeal Costs Act 1998. That should appear in the "Other Matters" part of the orders.
Quantum
The parties submitted competing calculations, copies of which are attached to these reasons. The document headed "Calculation of Plaintiff's Entitlement to 28 October 2002 if Appeal is Allowed"[2] was prepared by junior counsel for the appellant ("Thiess"). The document marked "A" was prepared by counsel for the respondent ("Howtrac"). The differences between them derive mainly from Howtrac's proposal that the judgment should speak as at the date of the judgment given by Gillard, J., namely 22nd December 2000. We consider that the ordinary practice of giving judgment as at the date the Court of Appeal makes its orders should be followed. We did not intend to convey the contrary by saying that the effect of our orders should be to vary the judgment below by omitting the component for standby charges and interest on that amount.[3] We have therefore adopted Thiess's calculations,[4] substituting interest from 9th February 2001 to 20th December 2002, the date of our orders,[5] being the sum of $244.44, in the second-last line.
[2]The date appears to be a mistake.
[3]Thiess v. Howtrac at [31]; see also [3].
[4]The figures 736 and 42 are correct in the 14th and 18th lines, but the end dates should be 29th December 2000 and 9th February 2001 respectively.
[5]As previously explained, orders were not made on 4th December 2002. All that happened on that date was that we published our reasons.
Counterclaim
Paragraph 3 of Gillard, J.'s judgment ordered that Thiess pay Howtrac's costs of the counterclaim (including reserved costs) on a solicitor and client basis. A good deal of the written submissions was directed to that order. We do not consider that it is within the scope of the notice of appeal and accordingly we do not propose to disturb paragraph 3 of the judgment below.[6]
[6]A question is raised in Thiess's submissions as to the effect of paragraph 3. Having regard to our view of the scope of the appeal, we express no opinion on that question. Whatever effect paragraph 3 had before, it will continue to have.
The first two paragraphs of the notice of appeal read:
"TAKE NOTICE that the appellant ('Thiess') intends to appeal to the Court of Appeal against the judgment of the Honourable Mr Justice Gillard made 21 December 2000 [sic] in favour of the respondent ('Howtrac').
Thiess appeals from that part of the judgment which held that Howtrac was entitled to $701,417.40 on account of standby charges as part of its entitlement to hire charges under the hire contract the subject of the judgment."
None of the grounds of appeal related to the counterclaim. The notice concluded as follows under the heading "Orders Sought":
"Thiess seeks orders that the judgment and orders in respect of the entitlement to standby charges be set aside and in lieu thereof it be adjudged that Howtrac was not entitled to any of the $701,417.40 standby charges which it claimed."
Given the wording of the notice of appeal, we are also disposed to think that leave to appeal against paragraph 3 would have been necessary.[7] It is too late to amend the notice of appeal and to obtain leave to appeal if leave is needed. To do so would raise a completely separate issue. In so concluding we do not overlook the terms of the offer of compromise referred to in [8] below or the need to draft the notice of appeal without disclosing that an offer of compromise was made.
[7]Cf. Etna v. Arif [1992] 2 V.R. 353 at [66].
It should not be inferred that we would have disturbed paragraph 3 if the notice had been differently expressed and leave to appeal had been granted.
Offer of Compromise
On 4th July 2000 Thiess served an offer of compromise under Part 2 of Order 26. It offered to pay $450,000 in settlement of "all the Plaintiff's claims in this proceeding and all the Defendant's counterclaims in this proceeding". It is common ground that the amount ultimately recovered by Howtrac, in the light of the decision of this Court, will be less than $450,000 and that Rule 26.08(3) applies. It provides:
"(3)Where an offer of compromise is made by a defendant and not accepted by the plaintiff, and the plaintiff obtains a judgment on the claim to which the offer relates not more favourable to him than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall be entitled to an order against the defendant for his costs in respect of the claim up to and including the day the offer was served taxed on a party and party basis and the defendant shall be entitled to an order against the plaintiff for his costs in respect of the claim thereafter taxed on a party and party basis." (Emphasis added.)
The difference between the parties is that Thiess contends that the ordinary consequences of non-acceptance of an offer of compromise made by a defendant should follow and Howtrac contends that the Court should order otherwise. Howtrac proposes that, in lieu of paragraph 2 of Gillard, J.'s judgment, it should be ordered that Thiess pay Howtrac's costs of the proceeding (including reserved costs) on a party and party basis.
Howtrac relies on evidence, both documentary and testimonial, that Thiess made claims on the Electricity Corporation of New Zealand ("ECNZ") in respect of standby charges, not only payable to Howtrac but which Thiess said it had paid, and that those claims were paid by ECNZ. The learned trial judge conditionally characterized Thiess's conduct in that regard as "arguably false and deceitful" and "arguably deceptive".[8] His Honour said that, if post-contract conduct were admissible, Thiess's conduct would be "telling evidence in favour of the Howtrac contention".[9] The documentary evidence had been discovered prior to service of the offer of compromise and the witness statement of ECNZ's project director in relation to these matters was served only three days later.
[8]Reasons of Gillard, J. at [309] and [314]; see also [300].
[9]Ibid. at [312]; see also [290] and [297].
The essence of Howtrac's contentions is captured in the following two paragraphs of its written submissions:
"16.It would not have been reasonable or justifiable in the circumstances where Thiess has itself asserted to its principal ECNZ to the knowledge of Howtrac that it had an obligation to pay standby to Howtrac, that it had paid standby to Howtrac at AUD $60/hr, and Thiess was actually paid a substantial sum by ECNZ to compensate for Howtrac standby claims, for Howtrac then not [to] pursue its standby claim against Thiess. To do so would have permitted Thiess to take and retain for itself compensation paid to it by ECNZ for reimbursement of Howtrac's standby costs, which Thiess claimed it had actually paid to Howtrac as standby costs incurred by reason of the variation.
17.It is difficult to conceive of more compelling special circumstances to justify the exercise of a special discretion as to costs than the fact that Howtrac discovered that Thiess itself was asserting to its principal (ECNZ) that it had an obligation to pay standby costs to Howtrac and had included in its compensatory claim for delay costs, standby costs which it claimed that it actually paid to Howtrac at the rate of AUD $60/hr, whilst retaining the Howtrac standby payment for itself. It is submitted that no reasonable contractor in these circumstances would have been prepared to forego its claims for recovery of standby costs by accepting the offer of compromise made by the appellant on 4 July, 2000 when its entitlement to claim standby is admitted by Thiess itself."
This Court did not have to consider Thiess's correspondence with ECNZ.[10] For the purpose of these reasons we assume, without deciding, that the evidence is to be understood as Howtrac contends. Even so, in our opinion, the Court should not exercise its discretion to displace the ordinary operation of Rule 26.08(3). The evidence concerning Thiess's claims on ECNZ is no different from any other factor that leads a party reasonably to conclude that it will do better by not accepting an offer of compromise.[11] In a sense it is weaker, because the evidence was not admissible to construe the contract. If ECNZ has a claim against Thiess for overpayment, as to which we express no opinion, that is a matter between Thiess and ECNZ. We draw no inference of bad faith against Howtrac, but we do not lose sight of the fact that it made a claim for charges to which it was not entitled and to which, we think, with unfeigned respect to the learned trial judge, it was plainly not entitled once the contract is understood.
[10]Thiess v. Howtrac at [30].
[11]Cf. N.S.W. Insurance Ministerial Corporation v. Reeve (1993) 42 N.S.W.L.R. 100 at 102E-F and Morgan v. Johnson (1998) 44 N.S.W.L.R. 578 at 582.
It was also submitted that the circumstances that led Gillard, J. to order that Thiess pay Howtrac's costs of the counterclaim on a solicitor and client basis were relevant to our discretion under Rule 26.08(3). As we have already indicated, we consider the counterclaim and his Honour's order as to its costs to be a completely separate issue from the dispute between the parties concerning standby charges.
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Please note - The Annexures are not in electronic form.
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