District Court New South Wales Medium Neutral Citation: Devic v AMP Capital Investors Limited (No 2) [2022] NSWDC 444 Hearing dates: Not applicable Date of orders: 05 October 2022 Decision date: 05 October 2022 Jurisdiction: Civil Before: Weinstein SC DCJ Decision: Order (3) of the principal judgment is varied so that the plaintiff is to pay the defendant's costs on the usual basis up to 21 June 2021 and the defendant's costs on an indemnity basis thereafter. Catchwords: COSTS – indemnity costs order against plaintiff – rule 42.15A UCPR – Calderbank letter sent by defendant - whether it was reasonable for plaintiff to reject Calderbank offer – evidence available at the time of the offer – whether Covid-19 delays result in greater costs for plaintiff - whether indemnity costs order punitive Legislation Cited: Uniform Civil Procedure Rules 2005 Cases Cited: Devic v AMP Capital Investors Limited [2022] NSWDC 371 Dunstan v Rickwood (No 2) [2007] NSWCA 266 Hillier v Sheather (1995) 36 NSWLR 414 Leach v The Nominal Defendant (No 2) [2014] NSWCA 391 Morgan v Johnson (1998) 44 NSWLR 578 Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 Uniting Church in Australia Property Trust (NSW) t/as Northaven Retirement village v Takacs (No 2) [2008] NSWCA 172 Category: Costs Parties: Jelena Devic (Plaintiff) AMP Capital Investors Limited (Defendant) Representation: Solicitors: Brydens Lawyers (Plaintiff) McCabes (Defendant) File Number(s): 2020/249647 Publication restriction: None JUDGMENT 1. On 26 August 2022, I gave judgment for the defendant against the plaintiff in Devic v AMP Capital Investors Limited [2022] NSWDC 371 (the principal judgment). I made the following orders: (1) Verdict and judgment for the defendant; (2) The exhibits are to be returned; (3) The plaintiff is to pay the defendant's costs of the proceedings on the ordinary basis unless a party is able to demonstrate an entitlement for some other costs order; (4) Liberty to apply on seven (7) days' notice if further or other orders are required, including as to costs. 1. The defendant seeks a variation to order (3) as follows: (a) The plaintiff to pay the defendant's costs, as agreed or assessed, on an ordinary basis up to and including 21 June 2021; and (b) The plaintiff to pay the defendant's costs, as agreed or assessed, on an indemnity basis from 22 June 2021. 1. For the following reasons, I make the variation to order (3) of the principal judgment as sought by the defendant. The Calderbank letter and Offer of Compromise 1. The defendant relies upon a Calderbank letter and an Offer of Compromise annexed to the letter, both dated 21 June 2021, sent by its solicitor to the plaintiff's solicitor by email on that day. (I observe that at the time of the offer there were two defendants to the action, but nothing turns on that fact.) The offer contained in both documents was an offer by the defendants to compromise the whole of the claim by way of: (1) Judgment for the plaintiff against the defendants in the sum of $25,000; and (2) The defendants to pay the plaintiff's costs as agreed or assessed. (the offer) 1. The Offer of Compromise was purportedly made in accordance with r20.26 of the Uniform Civil Procedure Rules 2005 (UCPR). The Calderbank letter sets out brief reasons why the defendant made the offer. 2. Indeed, in the Calderbank letter, the defendant's solicitor states that its case at a recent settlement conference (based entirely on liability) could be summarised as follows:- "1. As John Dr Cooke [sic] states, the kerb was appropriately delineated and posed no risk to patrons of the Casula Mall exercising reasonable care and keeping a proper lookout. Thousands of patrons have safety [sic] traversed the area each year without issue. 2. Alternatively, the subject kerb was an obvious risk within the meaning of s 5F of the Civil Liability Act 2002 (NSW), and persons such as the plaintiff exercising reasonable care for their won[sic] safety would have observed and paid attention to it before commencing walking onto the car park roadways surface including the pedestrian crossing area." 1. The Offer of Compromise included the terms set out at paragraph 4 above. The defendant's solicitor said in the Calderbank letter that the offer "is open for acceptance for 14 days in light of the pending Hearing, in accordance with r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW)." The temporal requirement (a departure from the usual 28-day period prescribed for in the UCPR) was repeated in the Offer of Compromise. The defendant's submissions 1. By way of written submissions dated 12 September 2022, the defendant submits that its offer was compliant with rule 20.26(3)(a)(i) of the UCPR, and that because the plaintiff achieved a significantly less favourable outcome at trial, it has a prima facie entitlement to costs being awarded on an indemnity basis from 22 June 2021. No submission was made by the plaintiff that the defendant had not complied with rule 20.26(3)(a)(i). Further, it was not suggested that the 14-day period in which the offer was left open was unreasonable (see r 20.26 (5)). The plaintiff did submit that during that period, she was continuing to investigate the extent of her injuries (to which see below). In any event, in my view, taking into account that the trial was to commence 1 month from the date of the Calderbank letter, the 14-day period was reasonable in the circumstances. 2. The defendant submits that its Offer of Compromise was a genuine offer of compromise and not merely made to trigger the costs consequences under the rules: Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368. It says the offer represents a real compromise, because: 1. The offer provided for the plaintiff to receive $25,000 (being some 40% of the amount that would have been awarded to the plaintiff) together with her costs (on a party/party basis) up to the date of the offer, as agreed or assessed; 2. As at the date of making the offer, the proceedings had been on foot for 9 months (the Statement of Claim having been filed on 27 August 2020) and both parties had served their evidence. At the date of the offer, the defendant had incurred significant legal costs; and 3. The additional compromise contained in the offer was that AMP Capital was willing to forego potential recovery of what would have been a significant amount of costs in the event of its success and was therefore offering to forego something of substance: Leach v The Nominal Defendant (No 2) [2014] NSWCA 391. 1. The defendant submits that the plaintiff's legal representatives were as capable as the defendant(s) in assessing potential damages and the risk of not succeeding against the defendant(s), and points to the text of the Calderbank letter accompanying the Offer of Compromise. 2. The defendant submits that the court would find no reason to depart from the usual order in UCPR 42.15A(2). The plaintiff's submissions 1. In written submissions dated 19 September 2022, the plaintiff says that an indemnity costs order would occasion a substantial injustice to the plaintiff and that I should exercise my discretion to "order otherwise" (see r 42.15A(2) extracted below) for the following reasons: 1. The plaintiff's decision not to accept the defendant's offer was based on the evidence available to her at the time of the offer; and 2. The plaintiff would be required to pay greater than usual legal costs due to delays caused by the hearing proceeding by Audio Visual Link (AVL) because of the Covid-19 pandemic lockdown through no fault of her own; and 3. In the circumstances, an indemnity costs order would be punitive Decision not to accept the offer was based on the evidence available at the time 1. In her submissions, the plaintiff provided a chronology of events at about the time of the defendant's Calderbank letter. She submits that at that time she was undergoing ongoing investigations with respect to her injuries, including from Dr Bassel Hassan (a neurologist), so that at the time of the Offer of Compromise she had not fully ascertained the extent of her disabilities. The plaintiff was also then awaiting an outstanding expert opinion from Dr Davis commenting on the report of Dr Mitchell served and relied upon by the defendant. 2. In the plaintiff's submission, she was entitled to assess the offer based on the evidence available at that time, and that it was reasonable then for her to reject the offer. The plaintiff would be responsible for greater legal costs because of delays caused by Covid-19 1. The plaintiff says that she will have to pay greater legal costs because of the lengthened proceedings due to the Covid-19 lockdown and the requirement for the hearing to proceed by way of AVL. The hearing estimate was originally 3 days, but in fact took several days longer. The plaintiff relies on my comments during the hearing that the lengthened nature of the proceedings was not the fault of either party, and submits that it would be unjust to order her to pay costs on an indemnity basis when those costs would have been substantially less had the proceedings not have been conducted during lockdown. An indemnity costs order against the plaintiff would be punitive 1. The plaintiff submits that in the circumstances outlined above, granting the order sought by the defendant would be punitive. The plaintiff relies on the statement of McColl JA in Dunstan v Rickwood (No 2) [2007] NSWCA 266 at [44], : A court should only depart from the general rule and award indemnity costs where the conduct of the party against whom the order is sought in "plainly unreasonable"; Sydney City Council v Geftlick [2006] NSWCA 280 at [90] per Tobias JA, Mason P and Hodgson JA agreeing. Indemnity costs orders should be reserved for the most unreasonable actions by unsuccessful Plaintiffs: Leichardt Municipal Council v Green [2004] NSWCA 341 per Santow JA (at [57]). 1. I observe that in that case, the court was considering neither an Offer of Compromise pursuant to the UCPR nor a Calderbank letter and has no relevance in the present case. Consideration 1. The defendant relies on rule 42.15A of the UCPR to assert its entitlement to the order sought. That rule provides as follows: (1) This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim no less favourable to the defendant than the terms of the offer. (2) Unless the court orders otherwise— (a) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and (b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, assessed on an indemnity basis— (i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and (ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made. 1. This rule confers a conditional entitlement to indemnity costs unless the court exercises the discretion to order otherwise: Hillier v Sheather (1995) 36 NSWLR 414. Exercise of the discretion to "order otherwise" depends on satisfaction that the particular circumstances are sufficient to justify a departure from the rule: Morgan v Johnson (1998) 44 NSWLR 578 at [581]-[582] per Mason P. The reasonableness of the offeree's rejection is a relevant, but not determinative consideration: Uniting Church in Australia Property Trust (NSW) t/as Northaven Retirement village v Takacs (No 2) [2008] NSWCA 172. 2. In my opinion, the offer contained in the defendant's Calderbank letter of 21 June 2021 and mirrored in the Offer of Compromise represents a real compromise for the reasons submitted by the defendant (outlined above) and was reasonable in all the circumstances. In my view, the defendant has demonstrated a prima facie entitlement to the order it seeks. 3. I now deal with each of the plaintiff's submissions in turn. 4. First, as to the chronology relied upon the plaintiff in submissions, some of it was not in evidence in either the substantive or these proceedings. In particular, I refer to events said to have occurred on 30 June 2021 and 8 July 2021. Further, there is no evidence that Dr Hassan is a neurologist. That the plaintiff believed that she was not in a stable condition at the time of the offer, which I note was made about 30 days before the first day of hearing, is also not in evidence. There is no evidence that the plaintiff's solicitors apprised the defendant's solicitors of the plaintiff's belief that her condition had not yet stabilised. In fact, nothing turned on the report of the MRI tendered in the proceedings or the report in reply of Dr Davis. I observe that one of the findings in the principal judgment is that the plaintiff's condition was stable at about the time of the defendant's Calderbank letter. No attempt by the plaintiff to accept the offer after its expiry has been put before me. I reject the plaintiff's submission that it was reasonable for her to reject the defendant's offer based on the evidence available to her at the time. On the contrary, in my opinion taking into account that liability was the significant issue in the case, it was unreasonable for the plaintiff to reject the defendant's offer. 5. Secondly, the plaintiff says she will be required to pay greater legal costs due to the delays occasioned by the hearing taking place via AVL during the Covid-19 pandemic lockdown. As I said in the principal judgment, I accept that Covid-19 caused delays to the proceedings, and I reiterate that neither the parties nor the court are to blame. However, the additional costs which were incurred because of Covid-19 were equally incurred by the defendant. An indemnity costs order will not cover the entirety of the costs incurred by the defendant. In my opinion, the existence of the pandemic in these circumstances would not cause me to exercise my discretion as submitted by the plaintiff. 6. As to the plaintiff's final point, that an indemnity costs order would be punitive, I observe that the rule exists to encourage parties to compromise their claims. As I have said, I am satisfied the offer was reasonable and that it was unreasonable for the plaintiff not to accept it. Taking into account the purpose of the rule, I reject the plaintiff's submission that an order for indemnity costs would be punitive. 7. I am not satisfied there are particular circumstances sufficient to justify a departure from rule 42.15A of the UCPR and the defendant is therefore entitled to the costs order it seeks. Orders 1. I make the following order: 1. Order (3) of the principal judgment is varied so that the plaintiff is to pay the defendant's costs on the usual basis up to 21 June 2021 and the defendant's costs on an indemnity basis thereafter. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 October 2022