New South Wales Supreme Court CITATION : State of New South Wales v Francis [2003] NSWSC 931 HEARING DATE(S) : 21/10/03 JUDGMENT DATE : 23 October 2003 JURISDICTION: Equity Division JUDGMENT OF : Burchett AJ at 1 DECISION : 1) That declaration sought be refused; 2) That plaintiff be ordered to pay the costs of the proceeding. CATCHWORDS : SETTLEMENT - whether "costs" of a District Court proceeding included, in particular Terms of Settlement, a costs order previously made in the Court of Appeal - effect of incorrect expression "counsels' fees" - effect of context LEGISLATION CITED : Limitation Act 1969 (NSW) PARTIES : State of New South Wales (Plaintiff) Adrian Francis (Defendant) FILE NUMBER(S) : SC 1065/03 COUNSEL : B Donovan QC / C. Lonergan (Plaintiff) S. Doctor (Defendant) SOLICITORS : I V Knight Crown Solicitor (Plaintiff) Richardson Burgin Steer (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BURCHETT AJ Date 1065/03 State of New South Wales v Adrian Francis JUDGMENT 1 BURCHETT AJ: In this proceeding, the State of New South Wales seeks declaratory relief in respect of an agreement to settle an action for damages for personal injuries brought in the District Court. At an early stage in the District Court proceedings, an interlocutory order was made by Robison DCJ extending time for the purposes of the Limitation Act 1969 (NSW). That order was the subject of an application for leave to appeal to the Court of Appeal which was dismissed with costs on 15 October 2001. The present dispute is as to whether the State of New South Wales is correct in contending that the costs order was absorbed in the settlement later reached. 2 By Offer of Compromise dated 30 October 2001, Mr Francis, as plaintiff in the District Court proceeding, made an offer in accordance with Pt 19A of the District Court Rules to accept "payment of the sum of $100,000 plus past and future out of pocket expenses plus costs to be agreed or assessed in answer to the cause of action". The Crown Solicitor responded to this offer immediately, that is to say on 31 October, in the following terms: "So that my client can properly consider your offer, could you kindly provide your estimate of past and future out of pocket expenses, and your costs to date." On 8 November, the request for particulars was reiterated, and on the same date the offer was extended "for a period of three weeks" pending their supply. Then, on 15 November 2001, the solicitors for Mr Francis wrote two separate letters to the Crown Solicitor. One letter stated: "We refer to the appeal hearing at the Court of Appeal on 15 October, 2001. We note the order as to costs. We now enclose our Tax Invoice for consideration and payment." Accompanying this letter was a document bearing the same date containing details of professional costs, GST calculated thereon, and disbursements including counsel's fees – in total a sum of $16, 043. It will be noted that this letter did not refer to the request for particulars originally made by letter of 31 October and reiterated by letter of 8 November; instead it began: "We refer to the appeal hearing at the Court of Appeal on 15 October, 2001." The second letter, by contrast, commenced: "We refer to your letter dated 8 November, 2001. We now provide particulars of the Offer of Compromise as follows…" Particulars were set out including sums for general damages, past economic loss, what was described as "buffer for future economic loss", past out of pocket expenses and future out of pocket expenses, followed by two items which it is necessary to set out ipsissimis verbis: " Legal costs (legal costs and Counsels' fees – inclusive of GST) $55,880.00 Legal disbursements (inclusive of GST) $14,000.00 $82,329.65 We look forward to receiving your response in the near future." It will be noticed that the figure of $82,329.65 is more than the addition of the other two figures set out in the above quotation from the letter; this is because amounts for past and future out of pocket expenses have also been added on. It will also be noticed that in the items I have quoted from the letter an apostrophe has been incorrectly added after the final 's' of the word which should have appeared as "Counsel's". 3 Thereafter, on 17 December 2001, the solicitor handling the matter in the Crown Solicitor's office, Ms Goodhand, made a telephone call to the office of the solicitor for Mr Francis and spoke to that solicitor's secretary. Notes of the conversation are in evidence. Ms Goodhand's note indicates that a message was left for the solicitor, and that: "I rang to advise offer $182,000 ONLY. She would tell him and get back to me." This note was followed by a further note made by Ms Goodhand bearing the same date: "Client accepts. $182,000. I to draft T.OS. [presumably, Terms of Settlement] by Wednesday." Also on the same day, Ms Goodhand wrote a letter to the solicitors for Mr Francis referring to "your letter dated 15 November 2001 [not, it will be noticed, "your letters" of that date] and the telephone conversation…today", and continued: "I confirm your acceptance of my client's offer in the amount of $182.000 in full and final settlement of the plaintiff's claim. I confirm that I will commence drafting Terms of Settlement, and hope to be in a position to forward a draft for your consideration on Wednesday 19 December, 2001." 4 The terms of settlement were actually forwarded on 20 December 2001, and were approved by the solicitor for Mr Francis. Relevantly, those terms referred to the proceeding in the District Court, specifying its number, in the usual way, and provided for a verdict for Mr Francis "in the amount of $182,000 inclusive of costs". They did not refer to the proceedings in the Court of Appeal, or the costs order there made. They were signed on behalf of each party and dated 21 December 2001. By a letter of the same date, Ms Goodhand undertook to "attend to filing with the District Court forthwith". In fact, the terms of settlement were filed in the District Court on 14 January 2002. 5 On 22 January 2002, the solicitors for Mr Francis wrote to the Crown Solicitor as follows: "We refer to our letter dated 15 November, 2001 enclosing our Tax Invoice for costs and disbursements with respect to the appeal. We look forward to receiving payment in the near future." The response from Ms Goodhand was a letter noting that it was her "understanding that the settlement money set out in the Terms of Settlement, filed on 14 January 2002, were [sic] inclusive of all costs in the proceedings". She commented on the reference in the letter of 15 November 2001 [incorrectly called a letter of 15 November 2002] to "Counsels' fees" as providing, in her contention, for the fees of both counsel. It does appear that there were in fact at least three counsel involved in the proceedings in the Court of Appeal, but it is not clear to me that there were not at least two counsel (whether together or successively) involved in the proceedings in the District Court. 6 The dispute was not resolved. No agreement could be reached upon the question whether the Terms of Settlement absorbed the costs order made in the Court of Appeal. Ultimately, the solicitors for Mr Francis proceeded to lodge a bill for taxation in the Court of Appeal, and the State of New South Wales commenced this proceeding for declaratory relief. It emerged in the evidence that Ms Goodhand, on a date she could not precisely recall but put between 17 and 21 December 2001, that is to say after the oral agreement but before the conclusion of the Terms of Settlement, had drawn a line through the letter of 15 November 2001 enclosing the Tax Invoice in respect of the costs in the Court of Appeal, writing over that line "N/A Settled" – which I take to refer to her understanding that the settlement covered these costs. Why, having thus actually adverted to this question at about the time of drafting the Terms of Settlement, she failed to insert therein after the words "inclusive of costs" some such clarification as "in the Court of Appeal as well as in the District Court" is somewhat puzzling. For if the matter was adverted to, however firmly Ms Goodhand's view was fixed in her own mind, it must have been apparent that there was room for argument to the contrary. 7 The case put forward on behalf of the State of New South Wales laid some emphasis on what was said to be the plural form of the expression "Counsels' fees". But the argument seems to me to place on a solecism a weight which it simply cannot bear. The natural reaction to the expression is to treat it, not even as an error on the part of the writer of the letter, but simply as a keyboard error. In Bryan Garner's Dictionary of Modern Legal Usage (2nd ed, 1995) at 229, the use of "counsels" as a plural form of "counsel" is described as not only a mistake, but a mistake peculiarly of non-lawyers, and in the same work at 674, the correct use of an apostrophe before the possessive "s" at the end of words of this kind is stated as a rule without exception. In any case, there is no real reason why the recipient of the letter should have assumed that Mr Francis had had the benefit of the services of only one counsel in relation to the proceedings in the District Court. 8 What seems to me to be a far more significant aspect of the matter is the fact that, on 15 November 2001, the solicitors for Mr Francis kept the issue of the Court of Appeal costs quite separate from the issues involved in the proposed compromise by making them the subject of a separate letter. While they furnished particulars of the compromise in a letter that referred to the latest request for those particulars, they wrote about the Court of Appeal costs in a letter that referred directly and only to the appeal hearing in the previous month. When the result was an acceptance, in round figures, of the Offer of Compromise, without any reference to the separate assessment of the Court of Appeal costs, in my opinion the agreement was simply not about those costs. Nothing in the formal terms of settlement, which were prepared on behalf of the State of New South Wales, effected any change in that position, or purported to do so. 9 The declaration sought should be refused, and the State of New South Wales should be ordered to pay the costs of the proceeding. ********** Last Modified: 10/30/2003 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.