New South Wales Court of Appeal CITATION : Adams v Kennedy & Ors [2001] NSWCA 7 FILE NUMBER(S) : CA 41034/98 HEARING DATE(S) : 7 February 2000 JUDGMENT DATE : 8 February 2001 PARTIES : James Adams v Gary Kennedy, Anthony Bordin, Robert Krause and The State of New South Wales JUDGMENT OF : Priestley JA at 1; Sheller JA at 1; Beazley JA at 1 LOWER COURT JURISDICTION : District Court LOWER COURT DC 77/97 FILE NUMBER(S) : LOWER COURT His Honour Judge Delaney JUDICIAL OFFICER : COUNSEL : Appellant - A.B. Shand QC / B. Kinsella Respondents - B. Donovan QC / C. Lonergan SOLICITORS : Appellant - James Fuggle Solicitors, Lismore Respondents - I.V. Knight, State Crown Solicitor CATCHWORDS : Judgment on costs following delivery of judgment on 26 June 2000 LEGISLATION CITED : District Court Rules, Part 19A, Part 39A rule 25(4) CASES CITED: Fotheringham v Fotheringham (1999) 46 NSWLR 194 DECISION : Judgment on costs following delivery of judgment on 26 June 2000 THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41034/98 DC 77/97 PRIESTLEY JA SHELLER JA BEAZLEY JA Friday, 22 December 2000 ADAMS v KENNEDY & ORS 1 THE COURT: When the court reserved judgment in this appeal, we were asked not to make any costs orders until the parties had a chance to make submissions about them after considering our reasons for judgment. Accordingly, when judgment was delivered no costs orders were made and the parties were directed to file written submissions on costs. 2 In the written submissions for the plaintiff/appellant it was stated that in the District Court proceedings the appellant had served upon the respondents an offer of compromise dated 30 April 1998 pursuant to Pt 19A of the District Court Rules, in the sum of $150,000 plus costs. 3 It appears from the notice of appeal that the dates of hearing of the trial were 23, 24 and 25 September 1998 and 16 and 17 November 1998, judgment being delivered on 4 December 1998. The trial judge awarded the appellant $40,000. 4 In the appeal, the court held that the trial judge should have found that the appellant had established more causes of action than he found. The court also increased the damages to $160,000. 5 For the appellant it was submitted that he should have an order for indemnity costs of the appeal, and also indemnity costs of the District Court action from 30 April 1998. (The correct term so far as concerns the District Court is not indemnity costs but solicitor and client costs: District Court Rules Part 39A r 25(4).) 6 For some reason the submission for the appellant did not mention that by letter dated 2 August 1999, an offer was made on behalf of the appellant to accept a further $200,000 plus costs in full settlement of his claim. This should have been drawn to the court's attention because of its obvious relevance to the question of what costs orders should be made. (I do not suggest the fact was deliberately withheld from the court, since it was known to both parties.) 7 However, it did not come to the court's attention until after the court received the respondents' submissions on costs. In these submissions the only ground of opposition to the orders sought by the appellant was that "they should not be awarded ... as the award of the Court of Appeal did not 'beat the offer of compromise' filed in relation to these Court of Appeal proceedings". 8 This rather obscure reference to the appellant's second offer caused the court to enquire from both parties what it was that was being referred to. The Crown Solicitor then forwarded a copy of the compromise offer dated 2 August 1999 to the court. From the solicitor for the appellant a further submission was received asserting that the operative offer of compromise remained that of 30 April 1998 and that this was acknowledged in a letter from the Crown Solicitor dated 20 May 1999, which was already before the court. 9 We do not agree with this latest submission of the solicitor for the appellant, at least so far as concerns the application for indemnity costs of the appeal. In our opinion the offer made in the letter of 2 August 1999 superseded the pre-trial offer of 30 April 1998, and we do not think that the Crown Solicitor's letter of 20 May 1999 bears the interpretation contended for on behalf of the appellant. 10 Turning first to the question of the costs of the trial, our opinion is that the case alleged by the appellant prior to the trial either was or should have been well known to the respondents' legal advisers. That case, if accepted, would clearly justify the court in awarding very substantial exemplary damages. The appellant's factual case was, in substance, accepted by the trial judge. 11 Although the trial judge's assessment of the appellant's damages was much lower than the appellant's offer of compromise, for the reasons stated for upholding the appellant's appeal on damages, the court thought the trial judge's assessment was much too low, and we think the appellant's pre-trial offer was not unreasonable. In our opinion, the respondents, by not accepting it, left themselves at risk in the matter of the eventual costs orders. 12 It was not contended for the respondents that this court did not have power to make the orders sought by the appellant. No doubt this was because of the line of cases leading to this court's decision in Fotheringham v Fotheringham (1999) 46 NSWLR 194. This decision in our opinion applies to the District Court Rules in their operation upon offers made after 1 January 1998. 13 In regard to the costs of the trial, we think the sequence of events in the case was such that the court should uphold the appellant's submissions, and that we should order the respondents to pay the appellant's costs of the District Court action, such costs, from 30 April 1998 to be solicitor and client costs. 14 As to the costs of the appeal, we agree with the submissions for the respondents: the appellant should not have indemnity costs because his judgment sum was less than that for which he offered to compromise. 15 The court accordingly makes the following costs orders: 1. The respondents are to pay the appellant's costs of the trial, and from 30 April 1998 those costs are to be solicitor and client costs. 2. The respondents are to pay the appellant's costs of the appeal. ********** 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.