McKerlie v State of New South Wales (No. 2) [2000] NSWSC 1159

New South Wales Supreme Court

CITATION : McKerlie v State of New South Wales (No. 2) [2000] NSWSC 1159 CURRENT JURISDICTION: Common Law Division FILE NUMBER(S) : SC 20662/97 HEARING DATE(S) : 8 December 2000 JUDGMENT DATE : 8 December 2000

PARTIES : Colin Robert McKerlie (Plaintiff) State of New South Wales (Defendant) JUDGMENT OF : Dunford J

COUNSEL : N/A (Plaintiff) Mr D Dickinson (Defendant) SOLICITORS : Colin Robert McKerlie (Plaintiff) IV Knight (Defendant) CATCHWORDS : PROCEDURE - costs - appeal from Master - indemnity costs Tickell v Trifleska Pty Ltd & Anor (1990) 25 NSWLR 353 Hobartville Stud Pty Limited v Union Insurance Co Ltd (1991) 25 NSWLR 358 CASES CITED : Macquarie Bank Limited v National Mutual Life Association of Australasia Ltd (unreported - Comm D - 27 July 1994) Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425 Calderbank v Calderbank [1976] Fam 93 Bishop v State of New South Wales (unreported - Dunford J - 17 November 2000) DECISION : Application for indemnity costs dismissed.

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION DUNFORD J Friday, 8 DECEMBER 2000 20662/97 - COLIN ROBERT MCKERLIE v STATE OF NEW SOUTH WALES (No. 2) JUDGMENT (On Application for Indemnity Costs)

1 HIS HONOUR: I delivered judgment in this case on 31 October last dismissing an appeal from Master Harrison in proceedings in which the plaintiff claimed damages for what I ultimately categorised as constructive dismissal from his employment by the State. The plaintiff was unsuccessful before Master Harrison and again before me. 2 Pursuant to liberty reserved on that occasion, the defendant has now made application for an order that the costs which I ordered to be paid by the plaintiff be assessed on an indemnity basis. 3 The plaintiff has not appeared, but evidence has been given of efforts to notify him, his former solicitors filed a Notice of Ceasing to Act on 2 February 2000, and gave as his last known address, "Common Room Chambers, First Floor, 538 Hay Street, Perth, Western Australia." The defendant's solicitor's letter notifying the plaintiff of today's application was sent to that address through the Document Exchange, but subsequent information has indicated that he is no longer at that address, and that his land telephone line to that address has been disconnected. An attempt was made to contact him on a mobile telephone number, provided by someone, but he did not respond, although a message was left. It is the responsibility of a party to proceedings to have an address for service in this State: SCR Pt 9 r 6; and the plaintiff having failed to notify of any other address for service, I consider the defendant is entitled to rely on the last known address furnished by the former solicitors. 4 The grounds on which the application was made is that the claim was hopeless from the beginning, as has been shown by what has transpired, and secondly the defendant relies on a "Calderbank" letter written on 18 May 1999. At that stage the original Statement of Claim had been struck out by order of Master Malpass with leave to replead, and the plaintiff had been ordered to pay the costs of that application. 5 That letter drew attention to s 55 of the Public Sector Management Act 1988 and, in effect, offered to settle the proceedings on terms that the plaintiff's action be dismissed with no order as to costs, and that the previous order for costs be vacated. As I have said, subsequently an application by the defendant for summary judgment was successful before Master Harrison, and I subsequently dismissed an appeal from the Master's orders. 6 Orders for indemnity costs following the rejection of the offer of compromise pursuant to SCR Pt 52A r 22 and "Calderbank" letters are becoming increasingly frequent. However, in my view such order should not be made as a matter of course, and certainly should not be made where there is no offer of a real or genuine compromise: Tickell v Trifleska Pty Ltd & Anor (1990) 25 NSWLR 353; Hobartville Stud Pty Limited v Union Insurance Co Ltd (1991) 25 NSWLR 358. 7 I have been referred to the judgment of Cole J in Macquarie Bank Limited v National Mutual Life Association of Australasia Ltd (unreported - Comm D - 27 July 1994) and also to Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425. 8 In relation to Multicon Engineering Pty Ltd v Federal Airports Corporation I note that part of the offer involved a payment of $3 million, although there does not appear to have been any offer of a significant cash settlement in Macquarie Bank Limited v National Mutual Life Association. In Calderbank v Calderbank (1976) Fam 93 itself there was a genuine offer of compromise in relation to a particular house. 9 Mr Dickinson for the defendant submits that this offer did involve a genuine compromise in the release of an existing order for costs, and the chance for the plaintiff to avoid possible liability for further costs. I do not regard this as an offer of a significant compromise. The plaintiff was claiming damages in respect to the termination of his employment and he was not offered any sum for that. 10 I dealt with a similar application on 17 November last in the matter of Bishop v State of New South Wales (unreported - Dunford J - 17 November 2000) a defamation case where the plaintiff had been wholly unsuccessful and there was no existing order for costs, but the effect of the offer required the plaintiff to abandon his proceedings and avoid the risk of an anticipated order for costs. In refusing the application I said: "There was not in any real sense an offer to compromise the proceedings, but merely an offer to induce the plaintiff to abandon his claim; and in my view orders for indemnity costs should not be used to defer persons from bringing proceedings which they feel they are entitled to bring, even if those proceedings are ultimately unsuccessful. It is different if there is a compromise involved, such as by offering part of what the plaintiff claims or can reasonably expect to receive if successful." 11 I have not overlooked the fact that in this case not only was the plaintiff unsuccessful before Master Harrison but he then persisted in the proceedings by appealing to a judge, where he was similarly unsuccessful. For similar reasons I do not believe that a party who has a right to appeal under the relevant Act or Rules should be deterred from exercising that right by the threat of an application for indemnity costs. Different considerations apply if genuine offers of compromise are involved such as payment of part of the substantive amount in dispute, and such offers are rejected, but I do not regard an offer in relation only to costs as an offer of a genuine compromise. 12 For these reasons the application is dismissed, and as the plaintiff has not appeared, there will be no order for the costs of this application. 13 The application is dismissed and I make no order as to costs. oOo