Ziliotto v Dr Hakim (No 2)
[2012] NSWSC 1079
•19 September 2012
Supreme Court
New South Wales
Medium Neutral Citation: Ziliotto v Dr Hakim (No. 2) [2012] NSWSC 1079 Hearing dates: 3 September 2012 Decision date: 19 September 2012 Jurisdiction: Common Law Before: Davies J Decision: I vary the costs order made on 24 July 2012 and order as follows:
The Defendant is to pay the Plaintiff's costs on an ordinary basis up to and including 7 April 2011 and thereafter the Plaintiff is to pay the Defendant's costs on an indemnity basis.
Catchwords: COSTS - Offer of Compromise - Offer provides for payment of a specified amount "plus costs as agreed or assessed" - whether the Offer complies with r 20.26 UCPR - conflicting decisions of Court of Appeal - whether Offer conflicts with costs rule - Offer complies with r 20.26 - adjournment - Defendant entitled to costs thrown away by reason of the adjournment - scope of "costs thrown away". Legislation Cited: Supreme Court (General Civil Procedure) Rules 2005 (Vic)
Uniform Civil Procedure Rules 2005Cases Cited: Ambulance Service of NSW v Worley (No 2) [2006] NSWCA 236; (2006) 67 NSWLR Associated Confectionery (Aust) Ltd v Mineral and Chemical Traders Pty Ltd (1991) 25 NSWLR 349
Balta v Sew 'N' Save Pty Ltd (No 1) (1980) 28 SASR 385
Caine v Lumley General Insurance Ltd (No. 2) [2008] NSWCA 109
Dean v Stockland Property Management Pty Ltd (No. 2) [2010] NSWCA 141
Edelman v Badower [2010] VSC 427
Erect Safe Scaffolding (Australia) Pty Ltd v Sutton & Anor (No 2) [2008] NSWCA 289
In the matter of Cheal Industries Pty Ltd - Fitzpatrick v Cheal [2012] NSWSC 932
Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85,
Macquarie Radio Network Pty Ltd v Arthur Dent (No 2) [2007] NSWCA 339
Maitland Hospital v Fisher (No.2) [1992] 27 NSWLR 721
Old v McInnes and Hodgkinson [2011] NSWCA 410
Pritchard v Trius Constructions Pty Limited [No 2] [2011] NSWSC 1114
Rail Corporation NSW v Vero Insurance Ltd (No.2) [2012] NSWSC 926
San v Rumble (No 2) 2007] NSWCA 259; 48 MVR 492,
South Eastern Sydney Area Health Service v King [2006] NSWCA 2
The Nominal Defendant v Hawkins [2011] NSWCA 93; (2011) 58 MVR 362
The Uniting Church v Takacs (No 2) [2008] NSWCA 172
Trustee for the Salvation Army (NSW) Property Trust v Becker (No. 2) [2007] NSWCA 194
Vieira v O'Shea (No 2) [2012] NSWCA 121Texts Cited: Dal Pont GE, Law of Costs, 2nd Ed (2009) LexisNexis Butterworths, Australia Category: Costs Parties: Stella Maris Ziliotto (Plaintiff)
Dr Claude Hakim (Defendant)Representation: Counsel:
B Gross QC & BCA Bradley (Plaintiff)
M Windsor SC & F Lalic (Defendant)
Solicitors:
P K Simpson & Co (Plaintiff)
Avant Law Pty Ltd (Defendant)
File Number(s): 2009/297666
Judgment
On 24 July 2012 I gave judgment for the Plaintiff in the sum of $1,373,035 and ordered that the Defendant pay the Plaintiff's costs.
On 7 April 2011 those acting for Dr Hakim sent a letter to the Plaintiff's solicitors. The letter was marked "Without prejudice except as to costs". The letter simply said:
We enclose by way of service, Offer of Compromise dated 7 April.
The Notice of Offer of Compromise said this:
The Defendant offers to compromise these proceedings on the following terms:
1. Verdict and judgment in favour of the Plaintiff in the sum of $2,250,000 plus costs as agreed or assessed.
2. This offer is made in accordance with Rule 20.26 of the Uniform Civil Procedure Rules 2005 and will remain open for a period of 28 days from the date of this offer.
By reason of the service of the Notice of Offer of Compromise the Defendant now seeks that the costs order I made be varied so as to provide:
The Defendant pay the Plaintiff's costs on an ordinary basis up to and including 7 April 2011 and thereafter the Plaintiff pay the Defendant's costs on an indemnity basis.
The Plaintiff resists the Defendant's application because she says that the Defendant has not made an offer that complies with UCPR 20.26. The Plaintiff relies on what was said in the Court of Appeal in Old v McInnes and Hodgkinson [2011] NSWCA 410 at [105].
The Defendant says that the offer complies with r 20.26 particularly having regard to the decisions of the Court of Appeal in Vieira v O'Shea (No 2) [2012] NSWCA 121 and the judgment of Garling J in Rail Corporation NSW v Vero Insurance Ltd (No.2) [2012] NSWSC 926.
The Defendant says in the alternative that if the offer does not comply with r 20.26 the letter of 7 April 2011 should be regarded as a Calderbank offer.
There was a further subsidiary matter argued. That concerned what was covered by an agreement that costs thrown away by reason of the Plaintiff obtaining an adjournment in June 2011.
1. Did the Offer comply with r 20.26?
The answer to this question involves an examination of a number of decisions of the Court of Appeal and a consideration of Garling J's judgment in Rail Corporation NSW v Vero Insurance which examined those decisions of the Court of Appeal.
The convenient starting point is Old v McInnes.
The offer made in Old was an offer by the First Defendant to the Plaintiff to compromise the Plaintiff's claim on the following terms:
1. Judgment for the Plaintiff against the First Defendant in the sum of $8,190.00.
2. First Defendant to pay the Plaintiff's costs as agreed or assessed.
There was a further offer made by Mr McInnes which also contained the term that the First Defendant was to pay the Plaintiff's costs as agreed or assessed.
Meagher JA (with whom Giles JA agreed) first set out UCPR r 20.26(2) which provides:
(2) An offer must be exclusive of costs, except where it states that it is a verdict for the defendant and that the parties are to bear their own costs.
Meagher JA then went on to say:
[105] ... Neither of the offers made on behalf of Mr McInnes was "exclusive" of costs or within the exception in r 20.6(2). Each provided that Mr McInnes should pay Mr Old's costs "as agreed or assessed". For that reason, neither was an offer in fact "made under rule 20.26" for the purposes of UCPR r 42.13 and accordingly each was of no effect for the purposes of the Offer of Compromise regime under the UCPR: Trustee for the Salvation Army (NSW) Property Trust & Anor v Becker (No. 2) at [22]-[24]; Dean v Stockland Property Management Pty Ltd & Anor (No. 2) [2010] NSWCA 141 at [16]-[29].
I should briefly say something about the two cases upon which Meagher JA relied for his conclusion in para [105] because of the approach by the Defendant to the authority represented by Old v McIness.
Trustee for the Salvation Army (NSW) Property Trust v Becker (No. 2) [2007] NSWCA 194 reaffirmed that an Offer of Compromise expressed to be inclusive of the costs of the proceedings did not comply with r 20.26. The result was not that the offer was invalid but that it had no effect under the Rules. The offer made in that case was that the appeal be dismissed, that the costs of the Appellants be paid out of the estate of the Deceased on a party-party basis and that the costs of the First Respondent be paid out of the estate of the Deceased on an indemnity basis. That offer was held to be an offer that was inclusive of the costs of the proceedings - see at [25].
In Dean v Stockland Property Management Pty Ltd (No. 2) [2010] NSWCA 141 the offer was that the appeal be allowed and that the proceedings be sent back for a retrial, that each party was to pay its own costs of the appeal and that the costs of the first trial were to follow the event of the second trial.
The Court discussed what had been said in Associated Confectionery (Aust) Ltd v Mineral and Chemical Traders Pty Ltd (1991) 25 NSWLR 349 at 350-351 where it was held that a defendant's offer of compromise of a money sum inclusive of costs was ineffective because it conflicted with the Rule that entitled the Plaintiff to tax its costs if the offer was accepted. It was said that the perceived rationale was that without a taxation of costs it could not be determined whether the Offer of Compromise was more or less favourable than the result because it was not known how much of the money sum should be attributed to costs - see at [18].
The Court then noted that the continued reasoning of inconsistency between an offer and the provisions of UCPR with respect to costs was recognised in Becker (No. 2). It could be argued, the Court said, that r 20.26(2) means that an offer involving payment of a money sum must not be inclusive of costs - see at [22]-[23].
The Court then went on to say this:
[25] However, there are also arguments for the meaning that an offer of compromise can not involve costs at all.
[26] The governing reasoning is inconsistency between an offer of compromise and the provisions of the rules with respect to costs. An offer of compromise involving costs will not necessarily be of no effect by force of r 20.26(12), because the costs will not necessarily be inconsistent with a plaintiff's (or defendant's) entitlement to an order for costs. But even in cases not involving payment of a money sum, such as the present case, there will be the inconsistency. And the language of the rule does not confine exclusivity to only some kinds of offers of compromise. The phrase "exclusive of" means "excluding, not compromising of"; "that excludes"; or "so as to exclude" (Colonial Mutual Life Assurance Society Ltd v Australian and Overseas Telecommunications Corporation Ltd (1993) ANZ Conv R 347). On a natural reading, the requirement that an offer of compromise be exclusive of costs means that it may not involve costs at all.
[27] As r 20.26(2) has been applied, the rationale has not governed its reach. It has been held that an offer of a money sum and an identified sum for costs falls foul of r 20.26(2): Penrith Rugby League Club Ltd Trading as Cardiff Panthers v Elliot (No 2) [2009] NSWCA 356; Tarabay v Fifty Property Investments Pty Ltd [2009] NSWSC 951. And it has been held that a non-monetary offer also involving costs falls foul of it.
[28] In Frisbo Holdings Pty Ltd v Austin Australia Pty Ltd (No 2) [2010] NSWSC 298 Hislop J held that a defendant's offer of a verdict and judgment for the defendant with the plaintiff to pay 50 per cent of its costs offended the rule. In Trustee for the Salvation Army (NSW) Property Trust & Anor v Becker (No 2) Ipp JA, with whom Mason P and McColl JA agreed, said at [24]-[25] that r 20.26(2) reflected the law as stated in Associated Confectionery (Aust) Ltd v Mineral and Chemical Traders Pty Ltd. It was held that an offer of compromise of dismissal of the appeal and an order that the costs be paid out of the estate of the deceased had no effect under the Rules because, applying the approach there stated, no effect could be given to it because it "was inclusive of the costs of the proceedings".
[29] Rule 20.26(2) may have a broader operation than either inconsistency between an offer of compromise and the provisions of the rules with respect to costs, or the rationale to which we have referred, would justify. However, in the absence of submissions in opposition to the second respondent's reliance on r 20.26(2), we consider that we should follow Trustee for the Salvation Army (NSW) Property Trust & Anor v Becker (No 2). The offer was of no effect for the purposes of the offer of compromise regime under the UCPR.
In Vieira v O'Shea (No 2) [2012] NSWCA 121 the plaintiff made an Offer of Compromise to accept $215,600 with the defendant to pay the plaintiff's costs. The Court (comprising Basten and Meagher JJA and Handley AJA) said:
[7] In written submissions in support of the motion, the appellant conceded that the offer did not comply with the UCPR because it was not "exclusive of costs". It is true that the offer was not stated to be exclusive of costs: the statement as to costs could have been understood as indicating that the offer was indeed not inclusive of costs, but was otherwise otiose as the same costs consequences followed from the application of the rules. (Somewhat opportunistically, the solicitors for the first respondent submitted that a later offer of compromise did not comply with the rules because it was not stated to be exclusive of costs and therefore should be presumed to be inclusive.) The UCPR are to be construed by reference to their apparent purpose. A mere reference to costs in an offer otherwise compliant with Part 20, Div 4 will not take the offer outside the rules unless the reference operates inconsistently with the relevant costs rule: Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141, (Giles JA, Handley AJA, Whealy J) at [26]-[29]. The offer, if accepted, entitled the offeror to his costs: the offer did not seek to vary the effect of UCPR r 42.13A. (emphasis added)
The Defendant drew particular attention to the highlighted passage in para [7]. In Rail Corporation NSW v Vero Insurance Ltd (No. 2) [2012] NSWSC 926 Garling J considered the various cases in the Court of Appeal to which I have referred. In that case the solicitor for the plaintiff served a Notice of Offer of Compromise providing for a verdict and judgment for the plaintiffs in the sum of $2,600,000 with the defendant to pay the plaintiff's costs and disbursements as agreed or assessed. The case went to hearing and Garling J gave judgment for the first plaintiff in the sum of $5,392,327.14 and for the second plaintiff in the sum of $166,270.15.
When the plaintiffs sought costs on an indemnity basis from the date of service of the Offer the defendant submitted that the Offer did not comply with r 20.26 UCPR.
Having made reference to Maitland Hospital v Fisher (No.2) [1992] 27 NSWLR 721 at 724, Becker (No. 2), Dean v Stockland Property Management and Old v McInnes, Garling J drew particular attention to what was said by the Court of Appeal in Vieira at [7] and said:
[73] It is to be observed that the discussion by the Court, in this case, suggests that, contrary to what the Court said in Old, a reference to costs does not mean that the offer is not a complying offer, unless the reference to costs is inconsistent with the relevant costs rules. It is also to be observed that the phrase "reference to costs" is seen as an apt description of a term of an offer that the defendant pay the plaintiff 's costs.
His Honour then considered seven other cases in the Court of Appeal decided between 2006 and 2011 which involved Offers of Compromise that contained a term "plus costs" or with a similar meaning. Those cases were Ambulance Service of NSW v Worley (No 2) [2006] NSWCA 236; (2006) 67 NSWLR, Macquarie Radio Network Pty Ltd v Arthur Dent (No 2) [2007] NSWCA 339, San v Rumble (No 2) [2007] NSWCA 259; 48 MVR 492, The Uniting Church v Takacs (No 2) [2008] NSWCA 172, Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85, The Nominal Defendant v Hawkins [2011] NSWCA 93; (2011) 58 MVR 362 and Erect Safe Scaffolding (Australia) Pty Ltd v Sutton & Anor (No 2) [2008] NSWCA 289
In none of those cases was the Offer of Compromise held to be ineffective for the purposes of r 20.26 by reason of the reference to "plus costs". None of those cases was referred to in Old v McInnes.
Garling J's analysis of the Court of Appeal authorities led him to conclude as follows:
[85] It is, with respect, to the various decisions of the Court of Appeal, difficult to identify a consistency of approach to the issue of whether an Offer of Compromise complies with r 20.26 if it includes a term which provides for the payment of costs by one party to the other.
[86] All of the authorities, and the explicit language of the UCPR make it clear that if a monetary offer is expressed to be "inclusive of costs" it does not comply with the UCPR. So much may be accepted. It is not relevant in this case.
[87] But, what if the offer contains a sum of money which is plainly exclusive of costs, and the notice of offer also refers to an offer of costs which is not inconsistent with the costs regime?
[88] This was not held in Dean to be a non-complying offer, nor seemingly in Vieira. Nor in many of the other decisions to which reference has been. Yet, without extensive reasoning or explanation, it was accepted as such in Old.
[89] Since no clear or consistent guideline is available by which it is clear that I am bound, it is necessary to have regard to the underlying principles of statutory interpretation and to engage in a purposive construction of the relevant provisions of the UCPR.
[90] In so doing, for the reasons which follow, I would conclude that the offer in this case is one which complies with r 20.26 of the UCPR.
[91] Firstly, it is obviously in the Court's interests that parties can engage in the Offer of Compromise process so as to settle the litigation in which they are engaged in a simple and straightforward way, and one which provides a certainty of outcome.
...
[93] Secondly, it is manifestly desirable that an offer should contain each of two elements, namely, a monetary component (if that be the appropriate term), and a separate clause which deals with costs. It is only by specifically referring to each of these two elements that certainty can be achieved from the perspective of either the offeror or the offeree.
...
[97] Thirdly, when interpreting r 20.26 of the UCPR, it is my opinion that the gravamen of the rule requiring an offer to be "exclusive of costs", is designed to prevent an offering party expressing the offer as "inclusive of costs". There is an obvious reason why preventing this is desirable. That is because if an offer is not accepted, and ultimately the offeree obtains a more beneficial result, or at least contends that it has, then a court will not be in a position to make such a judgment without engaging in an assessment of the costs due at the time the offer was made. This is an expensive, and an unnecessary and unproductive exercise in determining, hypothetically, something for which there is no obvious benefit.
[98] By making the monetary verdict exclusive, that is, not inclusive, of costs, the UCPR facilitates the later comparison of whether or not a party is "better off" as a consequence of the ultimate judgment when compared with the offer that was made.
[99] In all of those circumstances, I would hold that the offer in this case is a complying offer and accordingly, the costs regime provided for by the UCPR ought apply with the consequence that the defendant should pay indemnity costs as and from the date the offer was made, namely 31 March 2011.
I respectfully agree with the conclusions to which Garling J came.
The Plaintiff urged upon me that I should follow the approach of Ward J in In the matter of Cheal Industries Pty Ltd - Fitzpatrick v Cheal [2012] NSWSC 932 where her Honour considered herself bound to follow Old v McInnes. I note, however, that the seven cases to which Garling J referred in the Court of Appeal were not referred to by Ward J, nor was Vieira v O'Shea.
The Plaintiff further urged that if there was a conflict between Old v McIness and Vieira I should follow Old v McIness because the ratio of that case was directly in point whereas in Vieira what the Court of Appeal said at [7] was strictly obiter by reason of the concession by the offeror that the Offer did not comply with UCPR because it was not "exclusive of costs". Had Old v McIness and Vieira been the only two cases dealing with the point the Plaintiff's submission would have been a powerful one. However, it fails to take account of the seven other cases in the Court of Appeal where an Offer of Compromise that included a provision which can be described as a "plus costs" provision was held to be in accordance with r 20.26.
In my opinion, the approach of Garling J in Rail Corporation is the correct one in the difficult circumstances of apparently conflicting decisions of the Court of Appeal. In particular, I agree that it is necessary to take a purposive construction to r 20.26 and to the words "exclusive of costs". The Court of Appeal based some of its decisions on the conflict between r 20.26 (or its earlier equivalent) and r 42.13A (or its earlier equivalent). There is no conflict between an offer which is said to be "plus costs as agreed or assessed" and r 42.13A except, arguably, for the fact that the court is given the power to order otherwise. However, if the Court otherwise ordered there would be no difficulty ascertaining that the result was not more favourable than the offer. It is that difficulty which drove the reasoning in Associated Confectionery at 350-51 and a number of other cases: see also the discussion in Dean v Stockland at [18]-[29].
I am strengthened in that view by the decision of Hoeben J in Pritchard v Trius Constructions Pty Limited [No 2] [2011] NSWSC 1114 at [36]-[38]. I accept that at the time Pritchard was decided Old v McInnes had not been decided. However, Hoeben J had regard to both Dean and Becker (No. 2) upon which Old v McInnes was based and to the issue of inconsistency of the rules.
Accordingly, the Offer made by the Defendant complied with r 20.26. The Plaintiff obtained a verdict less favourable than the Offer. I do not consider that there are exceptional circumstances to justify departing from the general rule provided by r 42.14(2): South Eastern Sydney Area Health Service v King [2006] NSWCA 2 at [83] and Caine v Lumley General Insurance Ltd (No. 2) [2008] NSWCA 109 at [35].
Calderbank offer
If I am wrong in my view of whether the Offer was one that satisfied r 20.26 I should say something briefly about whether the Offer could be regarded as a Calderbank offer.
The covering letter enclosing the Offer of Compromise said nothing about the Offer being treated as a Calderbank offer of it did not comply with the Rules as amounting to an Offer of Compromise. In such circumstances it cannot be regarded as a Calderbank offer in the alternative.
In Pritchard Hoeben J said:
[40] In Becker the unsuccessful offer of compromise was held to operate as a Calderbank offer. This was because the offer had in terms indicated that as an alternative, the principles in Calderbank v Calderbank (1975) 3 WLR 586 were being relied upon. That was not the case here. The offer was silent as to any alternative basis other than a reliance upon Pt 20 r 26 UCPR.
[41] Dean is directly relevant. In that case a document purporting to be an offer of compromise concluded with the words "this offer is made in accordance with Pt 20 r 26 of the Uniform Civil Procedure Rules". It made no reference to any other basis on which the offer was being made.
[42] The court held that whether a document operates as a Calderbank offer depends upon the intention of the offeror as revealed by the terms of the offer. It said:
[33] ... The offer was explicitly an offer of compromise under R 20.26. Unlike the offer considered in Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2), it was not said that it was intended to operate as a Calderbank offer if it was ineffective under the rules. The statement in the letter that the offer would be relied on in support of an application for indemnity costs did not go beyond affirming that costs would be claimed under the offer of compromise regime in the rules.
[34] The intention must be made clear. It would be unfair for a party to be subject to the consequences of a Calderbank offer if it was not made clear that the offer should be treated as such. A party receiving an offer of compromise apparently made under the rules should be entitled to decide whether or not to accept according to the offer of compromise regime in the rules, including deciding whether or not it is an effective offer of compromise.
[43] It follows from the reasoning in Dean that if the offer did not comply with Pt 20 r 20.26 UCPR, it could not in the alternative operate as a Calderbank offer.
The result is the same in the present case.
Costs thrown away
By reason of the view I have reached about the Offer of Compromise the issue of the costs of the adjournment does not strictly arise. However, in deference to the submissions made I will state my views about this matter against the chance that I am in error regarding the Offer of Compromise.
When the Plaintiff gave evidence she indicated that she intended to divorce Tony and move away from his house where she had been living. The architects the occupational therapists and rehabilitation experts had addressed the matter on the assumption that the Plaintiff would remain living with Tony in his house. This necessitated the Plaintiff applying for an adjournment on the third day of the hearing. The basis for it was put by Senior Counsel for the Plaintiff in these terms:
It has become evident yesterday that a real drawback for joint experts is if in fact they are considering for the first time in the witness box matters that they hadn't previously addressed in their reports or their joint reports, namely, a revised scenario, that is, about the plaintiff living separately from the house in her own home and not with him. That has ramifications in many ways which covers a number of the heads of claim. It would appear, we will be submitting in due course, I will submit it on instructions as an adjournment application or as part of our duty to report to the court about concerns we have in assisting the court with proper case management or reporting it anyway, regardless of the instructions from the client, that the joint experts who are rehabilitation physicians do not appear to really have addressed sufficiently, in fact at all, the scenario of the plaintiff not being at home in her usual home with Tony but instead being divorced and living in separate accommodation where she doesn't have Tony's assistance.
...
On instructions and raising the issue and what we would be looking for, can I say there ought be an adjournment to enable joint assessment, that is meeting the plaintiff, to be conducted by both pairs of experts, that is rehabilitationists and the OTs, and they can then prepare in effect their joint reports, including setting out their reasoning, but where they are specifically directed to deal with the consequences of the plaintiff living alone.
There was then this exchange:
HIS HONOUR: What I think you are saying is you need an adjournment to get a new joint report from the rehabilitation specialists.
GROSS: Yes.
HIS HONOUR: But what I'm wondering, in the light of other things you have said, is whether the reports even from the OTs, the joint reports adequately deal with the position as now seems likely.
GROSS: We would submit they don't. First of all can I say ordinarily occupational therapists should be taking into mind when they are assessing matters what rehabilitation physicians have to say. Their numbers don't have to be the same, I can accept that, but nevertheless the diagnosis of the medical needs of the plaintiff by rehabilitation physicians from both sides is important.
The hearing of the matter then resumed on 7 December 2012 with a further joint report from the rehabilitation experts of 2 September 2011, a further report from the architects of 23 November 2011 and a further report from the occupational therapists of 19 September 2011. These joint reports addressed the further information that had come to hand as a result of the Plaintiff's evidence given during the first two days of the hearing.
The Defendant sought an order that the Plaintiff pay the costs thrown away by reason of the adjournment. Before an order was made the Plaintiff agreed to pay the Defendant's costs thrown away by reason of the adjournment. However, the parties were unable to agree as a matter of principle on what those costs should be.
The Defendant says that the following costs as a matter of principle should be included in the order for costs thrown away:
1. Clair Cheel - cancellation fee and costs incurred with respect to further conclave;
2. Michael Hesse - attendance at court on 22 June 2011 and costs incurred with respect to further conclave;
3. K-U Services Pty Ltd (cost consultant to Michael Hesse) - assisting with further conclave;
4. Dr Dalton - costs incurred with respect to further conclave;
5. Cab charges (Avant Law Pty Ltd);
6. Avant Law Pty Ltd legal fees; AND
7. Michael Windsor SC
On the other hand, the Plaintiff points to what is said in Dal Pont, Law of Costs paragraph [1.23] as follows:
'Costs of the day' and 'costs thrown away'
Where an order is made for 'costs of today' or 'costs of the day', it is not intended that work not actually done on the day in question should necessarily be disallowed on party and party taxation, it is for the taxing officer to dissect the work claimed for in the bill to see if it reasonably related to the hearing on that day The Northern Territory court rules define 'costs of the day' as including all costs thrown away, and an allowance for work actually done by counsel on the day but not the fee payable to counsel on brief This is consistent with the understanding of the phrase at general law. This highlights the close relationship between an order for 'costs of the day' and one for 'costs thrown away', the latter dictating that the beneficiary of the order receives the costs incurred for work done but wasted as a result of the other party's error or failure to comply with the procedure set by the rules. A typical example is in respect of costs for seeking an indulgence from the court.
There is scarcely any other guidance as to what is embraced by the expression "costs thrown away". The matter is discussed in Edelman v Badower [2010] VSC 427 in connection with the meaning of rule 63.17 Supreme Court (General Civil Procedure) Rules 2005 (Vic) which provides that a party who amends a pleading shall "pay the costs of and occasioned by the amendment". Mukhtar AsJ said:
[30] According to Quick on Costs there are differing views whether the phrase "costs of and incidental to" really mean anything more than "costs of" because it is doubtful whether the words "of and incidental to" would allow more than what was allowed by the word "of". The authors say that ordinarily the costs occasioned by an amendment are such costs as would not have been included had the pleading been delivered originally in the form of the amendment. That would include costs of work done in preparing pleadings rendered useless by the amendment. Yet, there is support for the view that "of and occasioned by the amendment" could not include costs incurred prior to the date of the amendment order. That is, r 63.17 is really concerned with prospective or consequential costs. That might be based on the thinking that an amendment is a substitution for the original pleading and therefore relates back to the commencement of the action. To add to the controversy, I am aware that in practice not much attention is given to this, and it is not uncommon for practitioners and Judges to regard r 63.17 as being the same thing as costs thrown away, that is looking to past costs.
[31] Despite its widespread usage, the term "costs thrown away" is not to be found in the rules. An order for costs thrown away is regarded as compensation for work already done but wasted as a result of the other party's error or failure to comply with the procedure set by the rules: see Dal Pont, Law of Costs. It is an instance of a party seeking the court's indulgence to accurately formulate its pleading which, in an ideal world, it should have got right in the first place.
The Plaintiff emphasises that it is costs wasted that have already been incurred which constitute 'costs thrown away', whereas what the Defendant is claiming includes future costs.
In one sense the arguments of the parties were partly addressed to what the appropriate order was or should have been by reason of the adjournment. However, the matter must be determined by deciding what costs are recoverable as being costs "thrown away" in respect of the adjournment because that is what the Defendant sought and that to which the Plaintiff agreed.
The enquiry must be directed to what costs were expended which would not have been expended had it not been for the adjournment and what prompted the need for the adjournment. I agree with Mukhtar AsJ's analysis that "costs thrown away" is looking to past costs - compensation for work already done and wasted because of the adjournment, or amendment or error. It does not refer to costs which have not yet been incurred even though they would not have been incurred but for the adjournment.
A more appropriate order in respect of an adjournment brought about by similar circumstances as the present adjournment might have been "costs of and occasioned by" the adjournment (to pick up the words of r 63.17 of the Victorian Supreme Court Rules), and see Balta v Sew 'N' Save Pty Ltd (No 1) (1980) 28 SASR 385 at 388. Such costs would be likely to include further preparation work by counsel as a result of the need to re-visit the case before the date on which the hearing resumes. Similarly, they may include the costs of further meetings of experts to prepare revised reports resulting from the adjournment and why it was necessary.
However, because attention must be focussed on costs already expended and costs which would not have been expended had it not been for the adjournment, the following matters would be included as costs thrown away:
(1) The costs of any conclaves which, by reason of the further evidence, reached conclusions no longer relied on. In the present matter that would include the costs of the penultimate conclaves of the architects, the rehabilitation specialists and the occupational therapists;
(2) Attendance fees and cancellation fees for any expert who had come or arranged to come to court to give what, as a result of the further evidence, would have to be regarded as incomplete evidence;
(3) The costs of the day of the adjournment including solicitors' and counsel's fees;
(4) Legal fees associated with the conclaves and reports from the experts which are rendered irrelevant by the further evidence which was the cause of the adjournment.
(5) Legal fees associated with preparation of the matter based on the evidence or material which has become irrelevant by reason of the further evidence.
What is not included in "costs thrown away" are the following:
(6) The costs of further conclaves of, or reports from, experts based on the new evidence;
(7) The costs of solicitors and counsel having to re-prepare the case at the time it is due to resume after the adjournment.
Had it not been for the indemnity costs order which I intend to make from 7 April 2011 I would have ordered the Plaintiff to pay the Defendant's costs thrown away by reason of the adjournment granted on 22 June 2011. Any such order would now be entirely subsumed in the order for indemnity costs from 7 April 2011.
Conclusion
Accordingly, I vary the costs order made on 24 July 2012 and order as follows:
The Defendant is to pay the Plaintiff's costs on an ordinary basis up to and including 7 April 2011 and thereafter the Plaintiff is to pay the Defendant's costs on an indemnity basis.
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Decision last updated: 20 September 2012
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