New South Wales Court of Appeal CITATION : Diamond v Simpson (No 2) [2003] NSWCA 78 HEARING DATE(S) : 09/04/03 (on costs) JUDGMENT DATE : 9 April 2003 JUDGMENT OF : Stein JA at 1; Ipp JA at 15; Young CJ in Eq at 19 DECISION : Costs order of lower court not disturbed. First respondent to pay 66% of the appellant's costs of the appeal. CATCHWORDS : Costs of Appeal- Rejection of pre-trial offer of compromise- Does offer at trial continue to have cost consequences for an appeal- Supreme Court Rules Pt 52A r11- Discretion as to costs- Damages appeal- 16 heads- Appellant succeeds on half- Substantial reduction. (D) LEGISLATION CITED : Supreme Court Rules Part 52A r11 Ettingshausen v Australian Consolidated Press Ltd (1995) 38 NSWLR 404 CASES CITED : Fotheringham v Fotheringham (No 2) (1999) 46 NSWLR 194 Moore v Woodforth (No 2) [2003] NSWCA 46 Robert Diamond (Appellant) PARTIES : Calandre Simpson by her Tutor William Charles Simpson (1st Respondent) Trustees of the Sisters of St Joseph (2nd Respondent) FILE NUMBER(S) : CA 40962/01 COUNSEL : P L G Brereton SC (Appellant) L A Levy SC and Ms J Lonergan (1st Respondent) SOLICITORS : Blake Dawson Waldron (Appellant) Turtons (1st Respondent) LOWER COURT Supreme Court - Common Law Division JURISDICTION : LOWER COURT 12791/87 FILE NUMBER(S) : LOWER COURT Whealy J JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40962/01 STEIN JA IPP JA YOUNG CJ in EQ Wednesday, 9 April 2003 Robert DIAMOND v Calandre SIMPSON (by Her Tutor William Charles SIMPSON & Anor) (No 2) Judgment on Costs 1 STEIN JA: The Court is in a position to give judgment on the costs issue now. I will give the first reasons of the Court and my brothers will then give their reasons. 2 When judgment was published in this appeal on 7 April 2003 orders were made but the question of costs of the appeal was stood over for argument this morning. The Court has received brief written submissions and heard oral submissions. 3 One matter that I will deal immediately with is that the Court ordered that the judgment of Whealy J be set aside except as to costs. That was a reference to the costs order his Honour made on trial as between these parties. 4 On behalf of the appellant, Mr Brereton SC seeks to recall that order. As far as we know the orders have not been entered, so we have allowed argument to proceed on that basis. We have given consideration to the submissions of Mr Brereton and also Mr Levy SC on behalf of the first respondent, and have concluded that his Honour's costs order in relation to the trial should not be disturbed. We are not persuaded, on balance, why this court should intervene. 5 Turning to the question of costs of the appeal, I will not repeat the arguments put by both sides, but they reduce themselves to these: the first respondent submits that the appellant should pay her costs of the appeal on an indemnity basis, and, as a fallback position, there should be an apportionment as to costs of the appeal that the appellant should receive. Mr Levy suggests 40%. The appellant submits in essence that he should have an order in his favour for the costs of the appeal because he was largely successful. 6 I need to mention some figures to put the matter in context. The trial judge awarded a verdict of $14.2 million. I should say that the sums I will mention are round sums and not mathematically correct figures. An offer of compromise had been made on 24 November 2000 by the first respondent to settle in the sum of $10.5 million plus costs. There was an offer made pre trial by the appellant, also on 24 November 2000, of $8.5 million. 7 On the appeal the appellant raised many issues, as the judgment reveals. The appellant had submitted that the amount of the verdict should be reduced to $9.2 million. I note that this was a figure in excess, by $700,000, of the offer the appellant had made earlier. 8 In the result, the success on the appeal reduced the first respondent's verdict to $11 million or slightly less. This meant that in monetary terms the appellant had reduced the amount of the original verdict by $3.2 million. Of course, it is obvious that $11 million is more than $10.5 million. 9 Part 52A Rule 11 of the Supreme Court Rules is relevant, as of course is the normal rule in costs, that costs follow the event for a successful party. 10 What Ettingshausen v Australian Consolidated Press Ltd (1995) 38 NSWLR 404 makes clear, and the Court of Appeal affirmed in Fotheringham v Fotheringham (No 2) (1999) 46 NSWLR 194, is that an offer of compromise made at trial continues to have costs consequences for an appeal, and remains a relevant factor to consider on the costs of an appeal. 11 One additional matter relevant to consider is that neither party made further offers over and above I have mentioned of $10.5 million and $8.5 million respectively made in November 2000. In particular, the appellant made no further offer notwithstanding that, at the very best if it succeeded on every single issue of the large number of issues that it ran in the appeal, it would still fall short by $700,000 of the only offer that it had made that we are aware of. 12 In my opinion that the law provides that an offer of compromise made at trial continues in existence for the purposes of consideration as a factor on the appeal, presents to a potential appellant a risk which must be taken into account. The underlying reason for the rules relating to offers of compromise, and this is exemplified by Ettingshausen, is to encourage parties to, very strongly consider compromise and to avoid further litigation if they are able to do so. 13 As Fotheringham makes clear, the relevant rule in Part 52A Rule 11 contains a discretion. When taking into consideration all of the relevant circumstances that I see as going into the discretion, including the result of the case in monetary terms and the result of the case in terms of issues, as well as the other factors I have already mentioned, I would conclude on balance that the discretion should not be exercised in favour of the appellant. 14 The order for costs which I favour is the one sought and submitted for by the first respondent, that is that the appellant pay the costs of the appeal on an indemnity basis. I understand that this is not the view of my brethren, so I need to add since I am not in the majority, what costs order I would favour as an alternative on an apportionment of costs. In those circumstances I would accept and agree with my brothers that that the apportionment of costs on the appeal should be 66 per cent in favour of the appellant. 15 IPP JA: I propose only to deal with the costs of the appeal. As the presiding judge has pointed out, the appellant was successful by some $3.2 million in the appeal. In my opinion that is a far more significant factor in the present context than the fact that the appellant did not succeed in reducing the judgment to an amount below $10.5 million, being the first respondent's offer of compromise served on 24 November 2000. 16 In my opinion the circumstances presently at issue are very close to those discussed in Moore v Woodforth (No 2) [2003] NSWCA 46 where the costs of the appeal were awarded to the appellant. 17 In the present matter there were some issues on which the appellant was not successful. They were not insignificant. In my opinion some regard has to be had to the appellant's failure in regard to those issues in determining the amount of the costs to be awarded. 18 In my opinion on a broad basis, fairness will be done if the appellant is awarded 66 per cent of the costs of the appeal, and that is the order which I propose. 19 YOUNG CJ in EQ: I found the matter of costs a very difficult one, particularly bearing in mind what the presiding judge said as a part of Fotheringham at paragraph 33 on page 205, which appears to have been accepted by all the other judges in that case with perhaps the exception of Powell JA. I further consider that this is a very unusual case in which there were 32 distinct items of damage, of which half were at issue, and on half of those one side succeeded and half failed and the same can be said of the other side. Putting all the matters together I agree with Ipp JA that the appropriate order is that the first respondent should bear 66 per cent of the costs of the appeal. 20 STEIN JA: Accordingly, the order of the Court is that the first respondent pay 66 per cent of the appellant's costs of the appeal, and receive a certificate under the Suitors Fund Act if otherwise entitled. 21 Liberty to apply on notice to the panel hearing other aspects of the appeal, Meagher JA, Ipp JA and Young CJ in EQ. ********** Last Modified: 04/14/2003 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.