BEYDOUN v CHILD and ORS SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY and POWELL JJA, COLE J 26 April 1996, 26 April 1996 [1996] NSWCA 47 Costs — Offers of compromise — District Court — Acceptance of- Consequence of — Discretion of Court otherwise to order — Offers made during course of hearing — Offers accepted after conclusion of hearing but before Judgment — Whether discretion enlivened — Whether discretion validly exercised. Powell JA These are appeals, by leave, against orders for costs, made originally on 13 March 1992, and confirmed on 8 April 1992, by Smyth DCJ when dealing with the costs of three sets of proceedings which had been brought by the present appellant against the owners of three motor vehicles which had been involved in motor accidents in which the appellant was injured. The first proceeding was a proceeding concerning an incident which occurred in 1981 at a time when the appellant was seated in a stationary motor vehicle, and that motor vehicle was struck by a vehicle which was exiting a driveway on the opposite side of the road. The injury which the plaintiff sustained appears to have been a minor whiplash injury, the amount of damages which was ultimately assessed in the sum of $6,500. The second incident occurred in 1982 but the appeal papers do not disclose the circumstances in which the appellant came to be injured. Be that as it may, it would seem that his injuries were not extensive, for, ultimately, the appellant accepted in respect of that claim an offer made pursuant to the provisions of Pt19A of the District Court Rules for a sum of $21,000 plus out-of-pockets. The third incident occurred in 1987. Again, the circumstances in which it occurred are not revealed by the appeal papers, but it seems clear enough that the appellant's injuries in that incident were rather more substantial, for, ultimately, he accepted an offer of $125,000 plus out-of-pockets in respect of that claim The three actions were heard together before Smyth DCJ, the hearing occupying some 33 days However, it is clear that, of that 33 days, only a comparatively small amount of time was directed to the claims based on the incidents in 1981 and 1982, the greater part of the 33 days hearing time being devoted to the claim based on the third incident. It seems fairly clear that a substantial, if not by far the greater part of the time occupied by the hearing of that claim was directed towards consideration of whether or not as the appellant claimed, he had sustained brain damage, in which event one would assume the amount claimed for damages would have been substantially higher than the amount ultimately accepted. After the hearing had proceeded for about 10 days, there were made by the respondent, offers of compromise in respect of the 1982 incident and the 1987 incident For present purposes it is sufficient to record that the offers contained, in each, case a term which provided for "costs to be assessed or taxed" In the event the trial continued for the greater part of the 28 days during which, for the purposes of the District Court Rules (Pt19A R3) the offers were required to remain open. However, at the conclusion of the hearing, and after the learned 2 UNREPORTED JUDGMENTS trial judge had entertained the submissions of counsel and, as it would seem, had expressed, in rather strong terms, his views as to the claims made in respect of each of the 1982 and 1987 incidents each offer was accepted. That fact appears to have been announced to his Honour on the following day when there was argument as to whether or not it was open to the appellant to accept the offers and what consequences flowed from certain disputed terms in the offers. Having expressed his view that it was open for the appellant to accept the offers in each of the later cases, his Honour then continued, as follows: "T note the Offer of Compromise made by the defendant and I note the Notice of Acceptance by the plaintiff. There will be a judgment in terms of the Offer of Compromise: that is a verdict in the sum of $125,000, plus out of pocket expenses, plus costs. In matter 6113/84 a similar position applies. There will be verdict for plaintiff in the sum of $21,000 plus out of pocket expenses, plus costs and judgment accordingly. On of the main issues litigated over the last seven weeks was whether the plaintiff sustained organic brain damage. In my view, the plaintiff would have failed on that issue. In my view, the plaintiff would have failed on that issue, but would have established that he did have psychological damage and other personal injuries directly arising from the accident of 21 July 1987. The Court time taken up in relation to 21 October 1981 and 26 May 1982 was relatively minor in the context of this case. The real issue between the parties was what, if any, intellectual capacity the plaintiff sustained as a result of the impact of 21 July 1987 and whether there was economic loss. On these matters, had I given judgment the plaintiff would have failed and I make a value assessment that the proper order for costs is as follows: Defendant to pay 65% of the plaintiff's costs and the plaintiff to pay 35% the plaintiff's costs." Because the appellant had, by that time, been made the subject of a management order under the provisions of the Protected Estates Act 1983, it became necessary for an application later to be made to his Honour to approve of the compromise in each case. His Honour dealt with that matter on 8 April 1992 and approved the settlement in each case. The transcript record of the proceedings of 8 April 1992 records the following after the conclusion of his Honour's judgement: "HALL: As I understand your Honour's orders for costs your Honour envisages that one hill will be taxed for all three matters so if that could be noted your Honour that the parties do not oppose that, it just makes it clear. (HIS HONOUR) I certify that there were two counsel for the plaintiff I direct one bill of costs be prepared in relation to the three matters because they were heard together. HALL: It is my submission that costs are covered. The order for costs that your Honour could make is limited by Pt19 and in particular by R9(2) Pt10 and that tule does not entitle them to make any order that the plaintiff pay any portion of the costs of the defendant where an offer of compromise is accepted. Your Honour can reduce the plaintiff's costs but you cannot order the plaintiff to pay the costs of the defendant. The only discretion inferred (sic) is to limit the costs recoverable by the plaintiff." The provisions of Ptl9A R9 of the District Court Rules as they were as at the date of trial - they have since been amended - were, so far as is relevant, in the following terms: - URJ BEYDOUN v CHILD and ORS (Priestley JA) 3 "9(1) Subject to SubR(2) upon the acceptance of an offer of compromise in accordance with R3(4), unless the Court otherwise orders, the defendant shall pay the costs of the plaintiff in respect of the proceedings up to and including the day the offer was accepted and the plaintiff shall be entitled to tax those costs without any order of the Court. (2) On application by the defendant (a) the Court; or (b) on taxation of a bill of costs in the proceedings, the taxing officer, may if it or he thinks fit order that the costs payable under SubR1 shall be the costs of the plaintiff in respect of the proceedings up to and including the day the offer was made or any day between that day and the day the offer was accepted. " As will be apparent from what I have earlier recorded, no application appears at the time to have been made by counsel for the respondents for an order pursuant to the provisions of R9(2) of Ptl19A of the District Court Rules. In that event it seems to me that, even accepting that SubR2 conferred on his Honour, in an appropriate case, a discretion "otherwise to order', the pre-condition to his so doing was not fulfilled and, for that reason alone, it seems to me that his Honour's order must be set aside and the rule allowed to take its course. But, even if the discretion had been properly enlivened, there would have been a very real question as to whether or not it would have been a proper exercise of that discretion to order that the appellant receive less than his costs up to and including the date of acceptance of the offer. It would clearly have been a matter which would weigh heavily in the exercise of that discretion, that the offer provided - and it is to be remembered that the offer was to stay open for twenty-eight days - that the appellant would receive his costs of each of the two actions in question, either as assessed or taxed. But let it be assumed that, in the event supposed, that was not a matter which precluded the exercise of the discretion, and that the terms of R9(2) did not limit the exercise of the discretion to fixing the costs by reference to a nominated day, it seems to me that the manner in which his Honour exercised his discretion, both in relation to the matter which went for trial, and in relation to the matters the subject of the offers which were accepted, in an unacceptable way. So far as the first proceeding was concerned, it was an action in which the plaintiff succeeded on the relevant issues, so that, prima facie, he was entitled to his costs and those costs were to be taxed on a party and party basis. So far as the other proceedings were concerned, it seems to me that, while it would have been legitimate for his Honour to reduce the appellant's costs by reference to some nominated day upon the basis that time had been wasted, it was not open to his Honour, both, to reduce the appellant's costs, and, to order the appellant to pay a portion of the respondent's costs in each of those proceedings. In those circumstances it seems to me inevitable that the appeals should be upheld, and that, in each case, the orders made by his Honour set aside, and, in the first proceeding, the respondent ordered to pay the appellant's costs, and, in the second and third proceedings, the provisions of Ptl9A R9(1) allowed to operate. For the purpose of removing any doubt about the matter the consequence of the rules operating in the second and third proceedings would be that the appellant is entitled to his costs of the second and third proceedings. It would follow then that the respondent should pay the appellant's costs of the appeals. Priestley JA I agree. 4 UNREPORTED JUDGMENTS Cole JA I also agree. (Mr Hall applied for an order pursuant to s85(3) of the District Court Act that the costs payable by the respondent in respect of the hearings in the District Court should carry interest as from the date of entry of judgment in that Court. Discussion then ensued. The transcript then continues.) PRIESTLEY JA: We do regard this is a matter that could be of some significance in money terms, and we are not really prepared to act on a factual basis that emanates in a way where we cannot be fully confident of the facts. We are not casting any aspersions on either you or your instructing solicitor, we simply would wish this matter to be decided on evidence if it is going to be the subject of dispute. The parties can agree between themselves and file a consent order if they can agree; if they cannot agree we will reserve liberty to your side to apply to Powell J on such evidence as may be seen fit to be adduced for the order that you seek as from the date which you nominate, any date for that application to be heard before Powell J can be arranged between your instructing solicitor and his associate and your opponent. That reserves your rights completely Mr Elkaim. (Mr. Elkaim then applied for the Court to direct the taxing officer in the District Court that, although the provisions of Ptl9A R9(2) had since been amended, he would be entitled to apply the provisions of R9(2), as they then were, on the taxation of costs.) I think we will leave that to any further argument between the parties. I am not sure that we ought to give those directions anyway, but if you can persuade Powell J to do so we leave it to him. I do not think I need repeat the liberty I have reserved unless you would like to me to try and clarify it further. The orders that we make today are: 1. The appeals are upheld. 2. The orders earlier indicated by Powell J are made. 3. Liberty is reserved to the appellant in the terms that I have already announced. Counsel for the Appellant: GB Hall QC and MJ Maxwell Solicitors for the Appellant: Gerard Malouf and Partners (North Parramatta) Counsel for the Respondent: MA Elkaim Solicitors for the Respondent: Solicitor for the Government Insurance Office (Parramatta)