Tufunga v Transport Accident Commission (Ruling)
[2013] VCC 8
•5 February 2013
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Revised Not Restricted Suitable for Publication |
DAMAGES AND COMPENSATION LIST
GENERAL DIVISION
Case No. CI-12-02803
| TALIUI TUFUNGA | First Plaintiff |
| and | |
| LESIELI TUFUNGA | Second Plaintiff |
| v | |
| TRANSPORT ACCIDENT COMMISSION | Defendant |
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JUDGE: | HIS HONOUR JUDGE SMITH | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 25 January 2013 | |
DATE OF RULING: | 5 February 2013 | |
CASE MAY BE CITED AS: | Tufunga & Anor v Transport Accident Commission (Ruling) | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 8 | |
RULING AS TO COSTS
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Subject: LEGAL COSTS
Catchwords: Offer of Compromise – where accepted by plaintiffs – whether costs awarded to the plaintiffs should be made in respect of any period after the date of acceptance of Offer of Compromise
Legislation Cited: Supreme Court (General Civil Procedure) Rules 2005 – Order 26.03
Cases Cited: Henderson v Simon Engineering (Australia) Pty Ltd [1988] VR 867; Malliaros v Moralis [1991] 2 VR 501; Parish v Wu (No 2) [2010] VSC 64; Bray v Deutscher Klub (Darwin) Incorp & Anor [1993] NTSC 62; Elliott v The Age Co Ltd [2006] VSC 52
Ruling: The defendant to pay the plaintiffs’ costs of the proceeding and of this application.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr H Gill (Solicitor) | Robinson Gill |
| For the Defendant | Ms A Wood | Solicitor for the Transport Accident Commission |
HIS HONOUR:
1 This is an application brought by the plaintiffs in respect of costs relating to a proceeding brought pursuant to PART III of the Wrongs Act 1958.
2 On 13 June 2012, the proceeding was commenced by Writ. Thereafter, the following occurred:
· 26 July 2012 – An Offer of Compromise was served by the defendant.
· 21 August 2012 – A Notice of Acceptance of the Offer of Compromise was served by the plaintiffs. (The amount offered by the defendant has since been paid.)
· 21 August 2012 – The plaintiffs’ solicitors wrote to the Transport Accident Commission proposing the following orders:
(a) The defendant pay the plaintiffs’ costs of the proceeding;
(b) The proceeding be otherwise dismissed.
· 11 October 2012 – The defendant offered to pay the plaintiffs’ costs up to the date of the acceptance of the Offer.
3 As at the date of the Offer of Compromise, the solicitor handling the case for the plaintiffs was away on leave. A request was made by the plaintiffs’ solicitors for the time for acceptance of the Offer to be extended for a short period until her return. Nothing turns on this. Such request was agreed to by the defendant’s solicitors. For the purposes of this application, I shall proceed on the basis that the Offer was accepted by the plaintiffs within the period for which it was open to be accepted.
4 Rule 26.03(7) provides:
“26.03 Time for making, accepting etc. offer
…
(7)Upon the acceptance of an offer of compromise in accordance with paragraph (4), unless the Court otherwise orders, the defendant shall pay the costs of the plaintiff in respect of the claim up to and including the day the offer was served.
… .”
5 The wording of the Rule makes it clear that the Court retains a discretion as to the order for costs in the event that an offer of compromise is accepted. This application concerns the exercise of that discretion.
6 At the hearing of the application the defendant maintained its position that it would consent to an order that it pay the plaintiffs’ costs up to the date of acceptance of the Offer. The plaintiffs submit that there should be an order that the defendant pay their costs of the proceeding. The dispute relates only to costs incurred by the plaintiffs after the acceptance of the Offer.
7 The plaintiffs submit that, following that date, further costs have been incurred. I accept that, following such an acceptance of an offer of compromise, there would inevitably be further costs incurred by the plaintiffs relating to:
(a) confirmation of the settlement of the claim;
(b) correspondence relating to the actual payment of the settlement sum to an address or a nominated bank account;
(c) dispersal of the settlement sum to the plaintiffs;
(d) correspondence and/or advice concerning the division of the settlement sum between the two plaintiffs (there was no evidence that this was an issue, but potentially it may involve further legal services);
(e) the quantum of party-party costs claimed;
(f) negotiations between the parties as to the quantum of party-party costs;
(g) advice to the plaintiffs concerning those negotiations, and advice concerning any offer of costs made by the defendant and the adequacy of any such offer;
(h) advice as to whether an application should be made to this Court or the Costs Court concerning costs;
(i) advice concerning progress or results of such further applications.
8 The defendant submits that there should be no order for costs associated with such matters. The plaintiffs submit that they should be entitled to the reasonable party-party costs of such legal services.
9 Notwithstanding that the Costs Court has jurisdiction to award costs relating to a summons for taxation brought before it, both parties were in agreement that, if the order was as sought by the defendant, the Costs Court would not make any award of costs incurred after the date of acceptance of the offer, unless directed by the Court to do so. The plaintiffs would have to bear those costs.
10 On the face of it, such a result would be unjust for the plaintiffs. The plaintiffs concede that the amount in question will not be substantial. Mr Gill, who appeared for the plaintiffs, agreed that this was something of a test case. I was told that the issue is raised in many cases involving the acceptance of offers of compromise and that larger amounts are at stake overall. The issue here is one of principle, not quantum.
11 In the event that a proceeding such as this proceeds to verdict, costs would normally follow the event. The successful party would usually be entitled to costs of the proceeding. Inevitably some of those costs (probably a small percentage) would be incurred after the date of verdict.
12 Similarly, if a claim settled at any time before verdict by acceptance of an offer of settlement (not involving a formal offer of compromise made pursuant to Order 26), on a “plus costs” basis, the recipient would normally be entitled to “costs of the proceeding”.
13 If, in these circumstances, a plaintiff might not be entitled to all costs calculated on a party-party basis, this would not be conducive to resolution of such proceedings out of court. This would appear to be contrary to the basic principles upon which Order 26 is based.[1]
[1]See Malliaros v Moralis [1991] 2 VR 501 at 505, per McGarvie J.
14 The Order is plainly designed to promote settlements of proceedings. Normally, unless a plaintiff receives a result more favourable than an offer of compromise made, costs will generally only be up to the date of the offer or, in the case of an offer made during a trial, the morning after the offer was made. Where such an offer is rejected, such a penalty would usually be considered to be just.
15 Likewise, if an offer of compromise was made in the course of a trial and a plaintiff elected to delay acceptance of the offer for several days whilst the trial proceeded, it would not seem at all unjust that, upon later acceptance of the offer, costs should only be awarded up until the date of the offer or the morning afterwards, or up to a date by which the plaintiff would have had sufficient time to properly consider such offer.
16 However, I cannot imagine that it was intended that a plaintiff who accepts an offer of compromise early in the proceeding, and many months before trial, would receive anything less than all of the reasonable costs of the proceeding – calculated on a party-party basis, and taxed by the Costs Court, if necessary.
17 In Henderson v Simon Engineering (Australia) Pty Ltd,[2] Murphy J said:
“It would seem to me that when O.26 of the new rules was made it was hoped that its terms would remove some, if not all, of the formality which may have been seen in the decisions in this Court to attach to the corresponding rules which preceded them. This, of course, applied in particular to the earlier rules relating to ‘Payment into Court’.
The attempt in the new O.26 to deal but broadly with all contingencies serves to emphasise that the Court (when considering the issue of costs as I am now doing) will approach the matter attempting to give effect to the spirit of the rule, rather than by slavishly applying its words as a code, within the precise terms of which an applicant must bring himself, before becoming entitled to a favourable exercise of the Court's discretion on the issue of costs.”
[2][1988] VR 867 at 871-2,
18 The parties referred me to Malliaros v Moralis.[3] There, McGarvie J said:
“In my opinion, R26.03 (7) is a rule which operates effectively within the area in which it intends to operate - that is up to the time of service of the offer. It does not make provision for the costs after service of the offer. Many considerations may be relevant to that period and the position is left to the ordinary discretion of the trial judge as to costs: see Supreme Court Act 1986, s24 (1), and R6302. It has to be remembered that the rules provide for offers of compromise by plaintiff or defendant.”
[3][1991] 2 VR 501, at 504
19 At page 505, McGarvie J acknowledged that, according to normal practice, a defendant would also be liable for costs made after acceptance of an offer, such as costs incurred in arguing questions of costs after the trial.
20 Although McGarvie J ordered that the defendant pay the plaintiff’s cost up to and after the offer of compromise, it is important to note that he was there dealing with a plaintiff’s offer of compromise made in the course of a trial and the defendant’s delay in accepting it. Here, the facts are quite different.
21 I was also referred to the decisions of Parish v Wu (No 2)[4] and Bray v Deutscher Klub (Darwin) Incorp & Anor,[5] further decisions dealing with acceptance by a defendant of a plaintiff’s offer of compromise. In both cases, there was a delay between the plaintiff’s offer and the acceptance of the offer by the defendant during the running of the trial. In both cases, the court awarded costs to the plaintiff up to the date of acceptance of the offer by the defendant. In neither case did the Court address the issue raised in this application.
[4][2010] VSC 64
[5][1993] NTSC 62
22 Similarly, in Elliott v The Age Co Ltd,[6] where, during the course of a defamation trial, the plaintiff took fourteen days to accept the defendant’s offer of compromise, it was ordered the defendant pay the plaintiff’s costs up to a date ten days after the offer was made, on the basis that that was a reasonable time to consider and obtain advice concerning it. Again, no application was made in respect of costs incurred after the acceptance of the offer.
[6][2006] VSC 52
23 These decisions emphasise that the manner in which the Court will exercise its discretion under Rule 26.03(7) will vary according to the facts of the case.
24 In all the circumstances, I consider that my discretion should be exercised in favour of the plaintiffs. I consider it would be unjust if, as a consequence of their acceptance of the defendant’s Offer of Compromise, they were not entitled to costs incurred in the period following in respect of necessary legal services provided on their behalf relating to matters directly flowing from their acceptance of the Offer. It would fall to the Costs Court to determine whether costs incurred after the acceptance date were reasonable or whether they, in fact, are party-party costs.
25 I propose to make the following Orders:
(a) The defendant pay the plaintiffs’ costs of the proceeding, including any reserved costs and the costs of this application, such costs to be assessed by the Costs Court in default of agreement.
(b) The proceeding be otherwise dismissed.
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