New South Wales Court of Appeal CITATION : OXLADE v GOSBRIDGE PTY LTD & ORS (NO 2) [1999] NSWCA 165 FILE NUMBER(S) : CA 40068/97 HEARING DATE(S) : 26 March 1999 JUDGMENT DATE : 3 June 1999 PARTIES : HEATHER OXLADE v GOSBRIDGE PTY LTD & ORS (No 2) JUDGMENT OF : Mason P at 1; Fitzgerald JA at 10; Sheppard AJA at 13 LOWER COURT JURISDICTION : District Court LOWER COURT FILE NUMBER(S) : DC 10092/94 LOWER COURT JUDICIAL OFFICER : Delaney ADCJ COUNSEL : D A Wheelahan QC/ M A Elkhaim (Appellant) H J Marshall, D Wilson (Respondent) SOLICITORS : McCourts (Appellant) Thurlow Fisher (Respondent) CATCHWORDS : COSTS - Offer of compromise - District Court Rules Part 19A - Discretion to "otherwise order" DECISION : Costs order amended THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40068/97 DC 10092/94 MASON P FITZGERALD JA SHEPPARD AJA Thursday 3 June 1999 HEATHER OXLADE v GOSBRIDGE PTY LTD & ORS (No 2) JUDGMENT 1 MASON P: This appeal was allowed for reasons given on 18 December 1998. The respondents were ordered to pay the appellant's costs of the appeal. 2 The appellant was the defendant in the District Court. She had commenced third party proceedings against the respondents seeking contribution or indemnity from them with respect to her potential liability to the plaintiff. She failed in the District Court. On appeal, this Court set aside the orders made in the proceedings on the Third Party Notice. In lieu thereof, it was ordered that there should be a verdict for the defendant (ie the appellant) against the first, second and third third parties (ie the respondents) in the sum of $26,666 with costs. The appellant seeks a variation of that costs order referable to the proceedings below to the effect that her costs be paid on an indemnity basis from 21 November 1995. That was the date on which the appellant made an offer of compromise in accordance with Pt 19A of the District Court Rules which the respondents did not accept, and which the appellant bettered in the upshot of her successful appeal. 3 The appellant is to be regarded as a plaintiff and the respondents are to be regarded as defendants for the purpose of applying the particular cost rule, found at the relevant time in Pt 19A r9(5). It provided: Where an offer is made by a plaintiff and not accepted by the defendant, and the plaintiff obtains a judgment on the claim to which the offer relates no less favourable to him than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall be entitled to an order against the defendant for his costs in respect of the claim from the date on which the offer was made, taxed or assessed on an indemnity basis, in addition to his costs in respect of the claim incurred before that date, taxed or assessed on a party and party basis. 4 The principles touching the discretion to "otherwise order" are discussed in Morgan v Johnson (1998) 44 NSWLR 578. 5 The respondents contend that r9(5) should not be applied and/or that the Court should "otherwise order" because the unaccepted offer was a composite one. It was in the following form: The Defendant offers to compromise the Plaintiff's claim and the claim against the Third Parties in the following manner: 1. By making payment of the sum of $70,000 plus costs in answer to the Plaintiff's cause of action against the Defendant provided that the Third Parties accept the offer of compromise set out in paragraph 2. 2. A verdict for the Third Parties in the third party proceedings with no order for costs in answer to the Defendant's cause of action against the Third Parties provided that the Plaintiff accepts the offer of compromise set out in paragraph 1. 3. The offer to compromise the Plaintiff's claim and the proceedings against the Third Parties are inter-dependent. 4. This offer shall be open for a period of twenty-eight (28) days only. This offer is made in accordance with Part 19A of the District Court Rules. 6 Copy of this letter was served upon the present respondents under cover of a letter dated 21 November 1995. The plaintiff in the proceedings below accepted the offer on 8 December 1995. The respondents did not learn of the plaintiff's acceptance until 22 December 1995. The respondents did not accept the appellant's offer within the 28 day period prescribed by Pt 19A or at all. Accordingly, the offer lapsed. (Much later in the proceedings a consent judgment in the sum of $80,000 inclusive of costs was entered in favour of the plaintiff against the defendant. The appellant recovered from the respondents in the appeal a sum representing one third of this liability.) 7 The respondents submit that the conditional nature of the offer and the uncertainty as to the plaintiff's attitude to the offer under which they laboured until 22 December 1995 meant that the respondents could not address the appellant's offer until the prescribed 28 day period had expired. I disagree. Each of the offerees was free to respond as he, she or it thought appropriate. Unless all responded favourably there would be no concluded agreement. But there was no reason why a response could not be made. The terms of the offer were clear. Had the respondents accepted, the litigation would have come to an end and the trial in the District Court would not have been necessary. It is therefore appropriate to apply the rule. 8 Alternatively, the respondents submit that they were not unreasonable in failing to accept the offer of compromise because the case was not an easy one. They refer to the remarks of Sheppard AJA referring to the "paucity of the evidence led by the Appellant in relation to the question of breach of duty and causation". Bearing in mind that lying behind the rule is the common knowledge that "litigation is inescapably chancy" (Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721 at 725), I do not think that the difficulty of the case provides a basis for rebuffing the rule in circumstances where continued stony silence was the response of the respondents to the appellant's overture. 9 I propose that Order 3 announced on 18 December 1998 be amended by the addition of the words "(such costs to be paid on an indemnity basis from 21 November 1995)" after the word "costs". 10 FITZGERALD JA: I agree with the President, and add only one observation. 11 The appellant's offer to the respondents permitted them to escape further involvement in the litigation and any possibility of liability in return for their payment of their own costs to the time of the offer if the plaintiff accepted the amount offered to him by the appellant. That was a simple, apparently generous offer, which did not require the respondents to assess the plaintiff's prospects against the appellant or any matter other than whether they preferred to pay their own costs or fight the litigation and attempt to defeat the appellant and obtain an order that she pay their costs. 12 By default, they made the latter choice, which, as events had demonstrated, was the wrong choice. This was an exceptionally clear case for the application of Part 19A r9(5). 13 SHEPPARD AJA: I agree with Mason P. *************************** 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.