Industrial Relations Commission of New South Wales in Court Session CITATION: Peter English v Aradlay Insurance Brokers Pty Limited [2005] NSWIRComm 393 APPLICANT: Peter English PARTIES: RESPONDENT: Aradlay Insurance Brokers Pty Limited (ACN 003 884 142) FILE NUMBER(S): IRC 5193 of 2002 CORAM: Schmidt J CATCHWORDS: Costs - Calderbank offers - application for indemnity costs - order refused - respondent did not act unreasonably in refusing offer in circumstances - respondent to bear applicant's costs, as agreed or assessed Industrial Relations Act 1996 LEGISLATION CITED: Bell & Berg v Macquarie Bank Limited [2003] NSWIRComm 21 Peter English v Aradlay Insurance Brokers Pty Limited [2004] NSWIRComm 280 Peter English v Aradlay Insurance Brokers Pty Ltd [2005] NSWIRComm 253 CASES CITED: Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 Wong v State Street Global Advisers Australia Limited and Anor [2004] NSWIRComm 273 HEARING DATES: 10/14/2005 DATE OF JUDGMENT: 11/02/2005 APPLICANT: Mr P Coleman of counsel SOLICITORS: Carroll & Associates LEGAL REPRESENTATIVES: RESPONDENT: Mr J Dawson, solicitor SOLICITORS: Carneys Lawyers JUDGMENT: - 6 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: Schmidt J 2 November 2005 Matter No IRC 5193 of 2002 PETER ENGLISH v ARADLAY INSURANCE BROKERS PTY LIMITED Application under section 106 of the Industrial Relations Act 1996 JUDGMENT [2005] NSWIRComm 393 1 Judgment was given in this matter on 22 September 2004 (Peter English v Aradlay Insurance Brokers Pty Limited [2004] NSWIRComm 280). The contract between Mr English and Aradlay Insurance Brokers Pty Limited was found unfair and was varied to require the payment of long service leave, together with an order for interest. Claims in respect of notice of termination and redundancy were refused. As to costs, it was said at [96]: The usual order as to costs would be that the respondent pay the applicant's costs, as agreed or assessed. If the parties are unable to agree, they have liberty to approach. 2 Mr English appealed the decision, seeking orders in respect of notice and redundancy. The appeal succeeded in respect of redundancy and failed in respect of notice. (See Peter English v Aradlay Insurance Brokers Pty Ltd [2005] NSWIRComm 253.) 3 Mr English now seeks an order for costs, the parties having been unable to agree on the appropriate costs order, given offers of settlement made prior to the hearing in September 2004. The orders sought by the applicant are: 1. The Respondent pay the Applicant's costs on a party/party basis up to and including 10 September 2004. 2. The Respondent pay the Applicant's costs on an indemnity basis from 11 September 2004. 4 It is the respondent's contention that there should be no departure from the usual costs order, in the particular circumstances. 5 On 10 September, which was the Friday before the hearing was to commence on 13 September, Mr English offered to settle his claim for $30,000 plus $30,000 costs. The offer was sent at 4.13pm. It was open until 1pm on Monday, 13 September. 6 On 10 September, the respondent also made an offer of settlement for $20,000. The offer was received at 5.05pm. It was open until noon on 13 September. That day, a further offer of $35,000 in respect of costs was made, with the whole offer kept open until 4pm. 7 The parties had been negotiating a settlement for some time. Given that on the day before the hearing, it appeared they were only $5,000 apart, it was plainly most regrettable that an agreement was not reached. It was not and the hearing proceeded. 8 The parties agreed that the value of the long service leave order made was $7,320 plus $2,004 interest (presumably to the date of judgment on 22 September). They also agreed that the value of the redundancy order later made on appeal was $27,888.46, plus interest of $9,716.64 (presumably to the date of the appeal judgment). The result, after the hearing at first instance was $9,324 and after the appeal, $46,929.10. The parties' respective cases 9 The case for the applicants, put by Mr Coleman of counsel, was that the applicant was entitled to the order sought, having been considerably more successful in the proceedings than the offer of $30,000, for which he would have been prepared to settle. They were entitled to rely on the Calderbank letter in which the offer had been made - see Wong v State Street Global Advisers Australia Limited and Anor [2004] NSWIRComm 273 at [19] and Bell & Berg v Macquarie Bank Limited [2003] NSWIRComm 21. 10 The case for the respondents put by Mr Dawson, solicitor, was that the offer should not be treated as if it were an offer of compromise made under Part 23 of the Rules. The practical effect of the time at which the offer was made was that the respondent had half a business day in which to consider it, at a time when the hearing was imminent. It was not unreasonable in all the circumstances then prevailing, for the offer to have been refused. 11 Of relevance was that the respondent had themselves made an offer that day. The difference was of the order of 8%. This, too, reflected on the reasonableness of the respondent's conduct. In all of the circumstances, there should be no departure from the usual costs order. 12 The observations of the Court of Appeal in Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 725 were relied on: The rule [referring to Part 52 R 17 SCR] does no more than to oblige litigants, and those advising them, to consider realistically, upon the best information available to them, the prospects of success and the likely outcome of the litigation. Where, in the particular circumstances, the litigant or its advisers misjudge the prospects of success or miscalculate the outcome, their mistake may be warranted on the material which they had available. Alternatively, it may be no more than a miscalculation in a case with large imponderables where the course they took was nonetheless perfectly reasonable. Litigation is inescapably chancy. The purpose of the rule is to put a premium on realistic assessment of cases. It is not to demand perfect foresight which is denied even to the judges. That is why a discretion is retained, under the rule, for the Court to order otherwise than as the rule provides. Consideration 13 The parties accepted that the principles applying in situations such as this, where Calderbank offers are made, are those discussed in Wong and the cases there referred to. As I observed: 19 The law as to the consequences of a refusal of a Calderbank offer is well settled. Costs are in the discretion of the Court under s181 of the Act. A Calderbank offer provides a basis upon which the discretion might be exercised differently from the usual way, namely with costs ordered in favour of the successful party, on a party/party basis. In such a case, the party who has refused the offer will need to show that it was not unreasonable to have refused the offer in the circumstances prevailing, if the party making the offer is more successful at the trial. Otherwise, an indemnity order in favour of the party making the offer will follow. 20 Here, there is no doubt that the applicant bettered all of the offers at trial. The respondents, however, argued that the onus fell upon the applicant to show that it was unreasonable for the respondents to have refused the offers. This argument was advanced by an examination of case law in the Federal Court and the Court of Appeal, which I do not find it necessary to revisit. I adhere to the views which I have earlier reached about this question in cases such as Hairman v FileNET Corporation Pty Ltd [2002] NSWIRComm 76 and Burgess & Ors v Mount Thorley Operations Pty Limited [2003] NSWIRComm 22. In any event, I agree with the observations of the Court of Appeal in Jones v Bradley (No 2) [2003] NSWCA 258 at [9], that the asserted differences between the two lines of authority dealt with in the submissions are more apparent than real. 14 I also noted at [36]: There is no doubt that it is in the public interest that parties continue to try to settle their differences on sensible terms, even as a trial approaches, when Offers of Compromise under the Rules may no longer be made. Many cases settle at that time, precisely because the parties are then sensibly bending their thoughts and endeavours to what lies between them. 15 In this case, the offer and counter-offer made expired on the day before the hearing, having been made late the preceding Friday afternoon. Indeed, at that stage, given the respondent's Calderbank offer, it could have sought a costs order, or could have argued that the applicant should have a limited order in his favour, given his limited success. The time during which the applicant's offer was available for acceptance was short, understandably, given the imminent hearing. 16 Can the respondent's rejection of the offer in the circumstances then prevailing, now properly result in the exercise of a discretion in their favour? I have difficulty with so concluding, given the lateness of the offer and the time then available for it to be considered. 17 Also relevant is that at first instance, the offer was not bettered and so this application would not then have been available. The outcome of the appeal, which must of course be considered, was that the claim for notice pressed was unsuccessful, but the claim for redundancy pay succeeded. As a result, the final outcome of the proceedings was that the applicant was more successful than the offer which he was prepared to accept the day before the trial. 18 What cannot be overlooked, however, is that this result flowed from a view of the evidence taken by the Full Bench, which differed from that which I took, in relation to the question of whether Mr English took up employment with Elders Insurance Limited ('Elders'), or its franchisee, Golf n Gear Pty Limited ('Golf n Gear'), after the termination of his employment with the respondent. I concluded that Mr English had not established that the employment was with Golf n Gear and so declined to exercise a discretion in favour of the applicant in relation to redundancy pay. The Appeal Bench took a different view on the evidence. 19 At the time that the parties were making their offers, they were approaching the negotiations on the basis that evidence would be given at the hearing by Mr Cameron, who had represented Elders in the negotiations with Mr English and had sworn an affidavit which had been filed in the proceedings. He finally was not able to give evidence at the trial. It follows, however, that the parties' negotiations were being advanced in a different context to the evidence finally led at the hearing, with which the judgment at first instance and on appeal were dealing. What that evidence was, is not known. It may have supported the applicants' case, or that of the respondent's. 20 This situation puts in context the observations made by the Court of Appeal in Maitland, quoted above. Given the time at which and the circumstances in which the applicant's offer was made, I am unable to conclude that in this situation, where the offer was available for consideration for only a short time, just before the trial was to commence, that the discretion to depart from the usual costs order may now properly be exercised in favour of the applicant, as a matter of justice between the parties. I am unable to conclude that the respondent acted unreasonably in refusing the offer, in all the circumstances then prevailing. Orders 21 For all of the reasons given, I order that the respondent bear the applicant's costs, as agreed or assessed. ------------------------ DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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