New South Wales Court of Appeal CITATION: Elite Protective Personnel Pty Ltd & Anor v Salmon [2007] NSWCA 322 HEARING DATE(S): 22 March 2007 JUDGMENT DATE: 14 November 2007 JUDGMENT OF: Beazley JA at 1; McColl JA at 8; Basten JA at 120 DECISION: 1. Appeal allowed in part. 2.Set aside the judgment of Phelan DCJ of 14 September 2005. 3. In lieu thereof substitute a judgment for the respondent in the amount of $278,881.57. 4.Order the appellants to pay the respondent's costs of the trial on the ordinary basis. 5. Grant liberty to the parties to submit consent amended short minutes of order correcting order 3 within 14 days of judgment. 6. In the event the parties cannot reach agreement as to the quantum of order 3, grant liberty to the parties to submit written contentions concerning the correct calculation within 14 days of judgment. 7.Respondent to pay the costs of the appeal. CATCHWORDS: NEGLIGENCE – contributory negligence – plaintiff failed to leave nightclub when asked by security guard – plaimtiff's elbow broken by security guard in course of being ejected – whether failed to take reasonable care for his own safety – held no - NEGLIGENCE – contributory negligence – whether defence of contributory negligence available in the case of an intentional tort – principles discussed - DAMAGES – assessment – whether excessive award for non-economic loss and economic loss – awards flawed by primary judge's failure to appreciate significance of plaintiff's decision not to resume pre-injury work - damages re-assessed - COSTS – costs of trial – indemnity costs – Calderbank offer of settlement expressed to be inclusive of costs – whether such an offer can be the basis of an award of indemnity costs – no rule that offers inclusive of costs unable to be the basis of such an award – depends on circumstances of the case. Civil Procedure Act 2005 Law Reform (Miscellaneous Provisions) Act 1965 LEGISLATION CITED: Law Reform (Miscellaneous Provisions) Amendment Act 2000 District Court Rules 1973 Supreme Court Rules 1970 Uniform Civil Procedure Rules 2005 Associated Confectionery (Aust) Ltd v Mineral and Chemical Traders Pty Ltd (1991) 25 NSWLR 349 Baulderstone Hornibrook Engineering Pty Limited v Gordian Runoff Limited (Formerly GIO Insurance Limited) and Ors [2006] NSWSC 583 Berrigan Shire Council v Ballerini & Anor (No 2) [2006] VSCA 65 Calderbank v Calderbank [1976] Fam 93 Commissioner for Railways v Halley (1978) 20 ALR 409 Corby District Council v Holst & Co Ltd [1985] 1 WLR 427 Cowell v Corrective Services Commission of New South Wales (1988) 13 NSWLR 714 Cullen v Trappell [1980] HCA 10; (1980) 146 CLR 1 Cutts v Head [1984] Ch 290 DSE (Holdings) Pty Ltd v InterTAN Inc [2004] FCA 1251; (2004) 51 ACSR 555 Diamond v Simpson (No 1) [2003] NSWCA 67; (2003) Aust Torts Reports 81–695 Donnelly v Edelsten (1994) 49 FCR 384 Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 81 ALJR 1107 Flower v Ebbw Vale Street, Iron and Coal Co Ltd [1936] AC 206 Fontin v Katapodis [1962] HCA 63; (1962) 108 CLR 177 Franklins Limited v Burns; Burns v Franklins Limited [2005] NSWCA 54 GEC Marconi Systems Pty Limited v BHP Information Technology Pty Limited [2003] FCA 688; (2003) 201 ALR 55 Ghunaim v Bart [2004] NSWCA 28; (2004) Aust Torts Reports 81-731 Hanave Pty Ltd v LFOT Pty Ltd (formerly Jagar Pty Ltd) [1998] 1429 FCA (Federal Court of Australia, Moore J, 11 November 1998, unreported) Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 Horkin v North Melbourne Football Club Social Club [1983] 1 VR 153 House v R [1936] HCA 40; (1936) 55 CLR 499 W Jeffreys Holdings Pty Ltd v Appleyard and Associates (1990) 10 BCL 298 Jones v Bradley [2003] NSWCA 81 Jones v Bradley (No 2) [2003] NSWCA 258 CASES CITED: Joslyn v Berryman [2003] HCA 34; (2003) 214 CLR 552 Kalls Enterprises Pty Ltd (In LIquidation) & Ors v Baloglow & Anor (No 3) [2007] NSWCA 298 Leichhardt Municipal Council v Green [2004] NSWCA 341 M T Associates Pty Ltd v Aqua-Max Pty Ltd & Anor (No 3) [2000] VSC 163 Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705 Markisic v Commonwealth of Australia & Anor [2007] NSWCA 92 Maurici v Chief Commissioner of State Revenue [2001] NSWCA 78; (2001) 51 NSWLR 673 Messiter v Hutchinson (1987) 10 NSWLR 525 Metropolitan Meat Industry Board v Williams (1991) 24 NSWLR 54 Monie v Commonwealth of Australia [2007] NSWCA 230 Moran v McMahon (1983) 3 NSWLR 700 MPB (SA) Proprietary Limited v Gogic [1991] HCA 3; (1991) 171 CLR 657 New South Wales v Riley [2003] NSWCA 208; (2003) 57 NSWLR 496 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Plumb v Breen (Young J, 13 December 1990, unreported) Precision Plastics Pty Ltd v Demir [1975] HCA 27; (1975) 132 CLR 362 Rabay and Anor v Bristow [2005] NSWCA 199 SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 Semco Developments Pty Ltd v Graham [2005] VSCA 268 Skinner & Edwards (Builders) Pty Ltd v Australian Telecommunications Corporation (1992) 27 NSWLR 567 Smallacombe v Lockyer Investment Co Pty Ltd (1993) 42 FCR 97 The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] NSWCA 120 Tinyow v Lee [2006] NSWCA 247 Trustee for the Salvation Army (NSW) Property Trust & Anor v Becker & Anor (No 2) [2007] NSWCA 194 Venning v Chin (1974) 10 SASR 299 Wagstaff v Haslam [2007] NSWCA 28 White v Baycorp Advantage Business Information Services Ltd [2006] NSWSC 910 Woolworths Ltd v Lawlor [2004] NSWCA 209 Zorom Enterprises Pty Ltd v Zabow [2007] NSWCA 106 Elite Protective Personnel Pty Ltd - First Appellant PARTIES: Murray Epiha - Second Appellant Thomas Salmon - Respondent FILE NUMBER(S): CA 40002 of 2006 COUNSEL: Mr L King SC for the Appellants Mr H N Kelly SC with Mr S J Maybury for the Respondent SOLICITORS: Shearman Lawyers for the Appellants Stacks the Law Firm for the Respondent LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC 100 of 2002 LOWER COURT JUDICIAL OFFICER: Phelan DCJ LOWER COURT DATE OF DECISION: 14 September 2005 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40002/06 DC 100/02 BEAZLEY JA McCOLL JA BASTEN JA Wednesday 14 November 2007 Elite Protective Personnel Pty Ltd & Murray Epiha v Thomas Salmon Judgment 1 BEAZLEY JA: I have had the advantage of reading in draft the judgments of McColl JA and Basten JA. 2 I agree with the orders proposed by McColl JA and her reasons in respect of the issue of contributory negligence. I also agree with McColl JA and Basten JA that, in this case, the Court ought not to exercise its discretion and award indemnity costs and I wish to add some short remarks in relation to that issue. 3 The application for indemnity costs in this case was based not on an offer made under the Uniform Civil Procedure Rules (NSW) 2005 (the Uniform Civil Procedure Rules) but on an offer made in a letter dated 11 August 2004, being an offer to settle the claim in a sum of $300,000 inclusive of costs. The offer was open for a period of seven days. 4 The appellant resisted the application for indemnity costs, principally upon the basis that, being an offer inclusive of costs, it did not satisfy the requirements of a Calderbank offer: see Calderbank v Calderbank [1976] Fam 93. The time in which the offer was open for acceptance was also said to be unreasonable. 5 Leaving to one side the rules and principles that apply in the case of offers of compromise made under r 42.12 of the Uniform Civil Procedure Rules, I do not agree that an offer which is inclusive of costs cannot ever be the basis upon which the court exercises its discretion to award indemnity costs. The award of indemnity costs involves the exercise of a discretion. The application of an overarching 'rule' or 'principle' that only offers exclusive of costs could ground a favourable exercise of the court's discretion would operate as a fetter on that discretion and would introduce a rigidity to the making of so called Calderbank offers which has no basis in principle. 6 There is, however, as discussed in the judgments of McColl JA and Basten JA, some disputation in the authorities as to whether an offer that is inclusive of costs may be the basis upon which an indemnity costs order can be made. Notwithstanding a number of first instance decisions that state that an offer inclusive of costs does not operate as a Calderbank offer, there are authorities of this Court that an offer of compromise which is inclusive of costs may form the basis upon which the court awards indemnity costs. 7 As is apparent from the short remarks I have made, I consider that the proper approach to any such offer of compromise is to consider it according to its terms and determine whether, in all the circumstances, the court should exercise its discretion to award indemnity costs. Having said that, there may be difficulties in the path of a party who seeks indemnity costs when the application is based upon an offer inclusive of costs, as is examined and explained by Basten JA. 8 McCOLL JA: This is an appeal from a judgment of Phelan DCJ awarding Thomas Salmon, the respondent, $418,790 in respect of injuries he sustained during his forceful ejection from a nightclub on 24 September 2000 by Murray Epiha, the second appellant who was employed by Elite Protective Personnel Pty Ltd, the first appellant. 9 The appeal is confined to three issues: contributory negligence, quantum and whether the primary judge ought to have ordered the appellants to pay the respondent's costs on an indemnity basis from 12 August 2004. Contributory negligence 10 At trial the appellants alleged, unsuccessfully, that the respondent was guilty of contributory negligence on the grounds that he had drunk alcohol to an extent likely to impair his senses and judgment, had failed to act in an appropriate manner, had behaved in a provocative and aggressive manner, had engaged in a fight or altercation when he knew it was likely he would be involved in a confrontation which could result in physical harm to himself and had failed to take care for his safety. 11 On appeal the appellants complained only that the primary judge erred in not finding contributory negligence on the plaintiff's part given his repeated refusal to leave the nightclub premises when asked on a number of occasions by the second appellant/second defendant (ground 6 in the amended notice of appeal). It is not apparent that the contributory negligence case was put this way at trial. There was no particular of contributory negligence to this effect. The primary judge did not refer to such a complaint. The written submissions on appeal did not clearly address such a case, focussing on the respondent's state of inebriation. They did however conclude by posing, as a test for whether the respondent had been guilty of contributory negligence, the question: "how many sober people would not co-operate promptly with a bouncer?" 12 The respondent did not object to the way this ground of appeal was formulated and I shall assume that, even if this case was not run at trial, he does not regard himself as prejudiced by it being canvassed on appeal. 13 Although this ground of appeal focuses on a fairly short period on the evening, it is relevant to consider the circumstances which led to the respondent's eviction from the nightclub. 14 The respondent was getting married in October 2000. In September he arranged a celebration with a group of friends. The celebration started at about 5pm with a barbecue. The party then progressed to the nightclub which is where the respondent said he started to drink alcohol at about 9.30pm. Thereafter he appears to have consumed about 7 beers (only two of which were identified as schooners, the size of the others being unknown) until 3am, after that he had one and a half cans of pre-mixed rum and cola. 15 By 5am he said he was "merry/pretty sociable/not totally off [his] head". At about that time, a bouncer (the second appellant) approached him, said it was time to go, and suggested he and his companion, his cousin, "might have been too intoxicated". 16 The respondent remonstrated. He asked to be allowed to remain as it was his buck's night. He conceded in cross-examination that he had been asked to leave several times. He agreed that he was resisting the request to leave, albeit as I understand the judgment below, doing so verbally by attempting to persuade the second appellant to permit him to stay. 17 He turned to his cousin to say they had to leave when he "felt his right arm go up behind his back in a thrusting motion". It is common ground his arm had been seized by the second appellant. When he complained that his arm was being hurt, he said the second appellant responded by increasing pressure on his arm until he felt pain and heard a crack in his arm. The respondent's elbow was fractured. 18 There was some dispute as to what led to the respondent's ejection, and as to how it was carried out. The respondent claimed that he had not provoked the removal. His cousin, who was present at the nightclub and accompanied the respondent to hospital after the removal, supported his account. 19 The appellants did not dispute they removed the respondent from the premises. The second appellant did not give evidence. The appellants argued, on the basis of evidence from Mr Croucher, the manager of security present during the incident, that the respondent's removal was carried out professionally and with minimal force. The primary judge found Mr Croucher's evidence "unbelievable" and considered that his evidence suggested that he had little regard for the truth. He preferred the evidence of the respondent and his cousin. 20 The primary judge found that the respondent had not acted aggressively towards the security guard and that his attempt to dissuade the second appellant from removing him was an endeavour in persuasion rather than resistance. He also held that when his request was refused, the respondent turned to his cousin and said "We have to leave". 21 He found that the security guard then "took hold of [the respondent] in a hammer lock forcing his arm up behind his back and causing him pain…[and] that this was an intentional act on the part of the [second appellant] that caused immediate pain, and an appeal by the plaintiff to desist was ignored." 22 His Honour also held that the force the second appellant used was excessive and caused the respondent's elbow fracture and soft tissue damage. The second appellant was found liable for the intentional assault. The first appellant, as the second appellant's employer, was found vicariously liable for the second appellant's actions. The primary judge also found the first appellant directly liable because the second appellant did not follow its procedures for removing people from the premises. 23 The primary judge held, without apparent elaboration, that "contributory negligence has not been proved by the defendants in these circumstances". 24 It seems plain that the circumstances to which the primary judge was referring were the following. First, the circumstances in which he held the respondent had been removed. Secondly, he found that the respondent's conduct after he was evicted from the nightclub of asking for a card, going straight to the Police (to complain about the appellants' conduct) and then going to hospital did not suggest a level of alcoholic effect beyond self control or reason. His Honour accepted, as was common sense, that the respondent would have been affected by alcohol on the evening, but found that was not to the point of being grossly affected. He noted that the hospital notes did not suggest the respondent was affected by alcohol, a detail he concluded was normally recorded, if applicable. He also found the respondent was able to give a lucid account of his injury when he first attended the hospital. Finally, the respondent's wife gave evidence, which the primary judge plainly accepted, that when he returned home he was: "Angry and sore but did not seem drunk or anything like that." 25 As I have said the primary judge concluded that the second appellant intentionally assaulted the respondent. In the course of argument on appeal the Court raised the question whether contributory negligence was available in the circumstances having regard to the conclusion in New South Wales v Riley [2003] NSWCA 208; (2003) 57 NSWLR 496 (at [104], [107]) that contributory negligence is not available at common law to a claim for damages for an intentionally inflicted injury. 26 The respondent did not take this point at trial. Mr L King of Senior Counsel, who appeared for the appellants on appeal, but not at trial, was caught by surprise when it was raised by the Court and, not surprisingly, expressed no enthusiasm for pursuing it on the run. 27 It is unnecessary to do more than flag that the point may have been available to resist the contributory negligence plea, and to consider the appeal on the assumption the parties adopted, that contributory negligence was available as a defence. 28 Mr King argued that the trial judge ought to have approached the respondent's, and his cousin's, evidence on the basis that they were downplaying their states of sobriety. He took the Court to the respondent's cross examination at trial where he conceded that his behaviour in failing to accede promptly to the bouncer's request to leave prompted his removal from the premises. He also contended that the respondent's delay in acceding to the bouncer's request, accompanied by his action of turning away from the bouncer to speak to his cousin, was enough to prompt the bouncer to take physical action against him. 29 Mr King submitted the respondent ought to have been found guilty of contributory negligence to the extent of 33 1/3 per cent. 30 Mr H Kelly of Senior Counsel, who appeared for the respondent on appeal, with Mr S Maybury, but not the trial, submitted there was no basis for suggesting that either the respondent or his cousin were downplaying their states of sobriety. He pointed out that the respondent was restrained by the bouncer after a very short time and had, just prior to being grabbed by the bouncer, turned to his cousin and said words to the effect of "we've got to go". He contended that there was no evidence the respondent was uncooperative at any time. 31 A person is guilty of contributory negligence if he or she exposes him(her)self to a risk of injury which might reasonably have been foreseen and avoided: Joslyn v Berryman [2003] HCA 34; (2003) 214 CLR 552 at [16] per McHugh J. The question whether a person has been guilty of contributory negligence is determined objectively. The appellants bore the burden of proving that the respondent had been guilty of contributory negligence: Flower v Ebbw Vale Street, Iron and Coal Co Ltd [1936] AC 206 at 216; Commissioner for Railways v Halley (1978) 20 ALR 409 at 419; Joslyn v Berryman at [18] per McHugh J. 32 On the assumption to which I have referred, concerning the circumstances the primary judge took into account in dealing with contributory negligence, I can discern no error in his Honour's approach to this issue. The appellants' short point was that the respondent failed to take reasonable care for his own safety because he drank to a point where his state of inebriation affected his ability to react rationally (i.e. compliantly) with the second appellant. The primary judge held that the respondent was not adversely affected by alcohol. Further, he held that the respondent was trying to persuade the second appellant to permit his party to remain on the premises rather than resisting his order to leave. He also held that the respondent had told his cousin they had to leave virtually contemporaneously with the assault. These were findings which were clearly open on the evidence. 33 I can detect no error in the primary judge's approach to this issue. It might be expected that some force would be exerted on a patron who failed to leave premises. However, in my view a reasonable person would not expect even a sober pub or nightclub patron to foresee that failing to leave could lead to a bouncer using excessive force to remove the patron. 34 This ground of appeal should be rejected. Quantum 35 The appellants complain that that the primary judge erred in finding the plaintiff was no longer fit to work as a printer's labourer (ground 3), in failing to find that the plaintiff had commenced work on a casual basis as a printer's labourer with Wauchope Gold Print from 19 November 2002 until 4 August 2002 (ground 4) and in awarding the plaintiff excessive damages (ground 5). The Respondent's injuries 36 The section of the judgment below dealing with damages took the form of a recitation of the evidence without any clear indication, with limited exceptions, of the evidence the primary judge took into consideration in reaching his conclusion. This is undoubtedly because the evidence about the sequelae to the injury and its effect on the respondent's quality of life was to large degree uncontroversial. There was, however, a substantial controversy about the effect of the injury on the respondent's loss of earning capacity. 37 X-rays of the respondent's right arm showed a fracture of the coronoid process of the ulna. His arm was treated by rest in a sling for about four or five weeks. X-rays taken in 2002 showed a complete healing of the fracture without any observable anatomic derangement of the elbow. There was minor lipping of the non-articulus surface of the olecranon. 38 The respondent was born in November 1971 and was 29 at the time he was injured, and 34 at the date of trial. He left school after obtaining his School Certificate. He had worked consistently since leaving school. It was common ground that he had been a hard worker before his injury. 39 Before being injured he had been working as a labourer in a printing factory. He was required to load reams of paper weighing up to 30 kg to keep up printing production. He also had to keep ink up to the printing presses. He had been working between 60 and 72 hours a week. He had intended to do an apprenticeship with his then employer which would have qualified him as a printer. If he had obtained that qualification there would have been little heavy work involved in working as a printer. 40 After his injury he resigned from that position because he was unable to undertake the heavy lifting it entailed. He and his family moved to the Port Macquarie region to live with his wife's mother for financial reasons. 41 The respondent said that as a result of his injury, he could not do jobs involving heavy lifting or requiring regular use of his hands above his head. He accepted that he was able to work as a part-time printer carrying out the activities he had undertaken before his injury, albeit on a smaller scale. Indeed, he was employed as a casual printing machinist assistant by a printing firm in Wauchope from 19 November 2002 to 30 June 2004. The respondent said he had not continued to do that sort of work because he was able to make furniture and was trying to get a furniture business going. He had been undertaking that endeavour over the four years before trial.. 42 The primary judge recorded that the furniture business had not effectively got off the ground and was running at a loss, but did not record that the respondent was not pursuing his printing work because of his attempt to establish his furniture business. This omission is the subject of one of the appellants' complaints about his Honour's consideration of economic loss. 43 The respondent gave evidence, which the primary judge appears to have accepted, about the physical restrictions his injury imposed. He had difficulty lifting heavy objects and pushing a lawnmower. He said that he sometimes had difficulty driving a car because his arm might lock. He was unable to carry heavy shopping as he had previously. He used to be a surfer, but said he had problems resuming that sport because his arm would not let him lift his weight, presumably so he could stand on the surfboard. 44 He said he could not lie on his right side at night because of pain in his shoulder. He had to take painkillers every third night to have a good night's sleep. 45 Prior to the injury he had played sport with his children. Since the injury he had been unable to lift them. He could not throw a ball for them because he could not straighten his arm. 46 Dr M Shatwell, an orthopaedic surgeon, reviewed the respondent on several occasions from 2002 until the date of trial. In his final report of 28 February 2005, two months before the trial, Dr Shatwell observed that the respondent's right side pectoral muscles were slightly wasted and that there was significant wasting of his right upper arm. X-rays taken that day showed no change since 2002. There was no capsular calcification or loose body formation. Dr Shatwell observed a minor spur formation on the tip of the olecranon which he had observed previously, and also on the tip of the coronoid process which had not been visible on the view of the elbow taken in 2002. 47 Dr Shatwell took a history from the respondent of persistent stiffness in his elbow with loss of range of movement and pain. He observed that the respondent's right arm movement range appeared to have diminished over the two years from 2003. In Dr Shatwell's opinion the wasting of the respondent's right upper arm correlated with his history of diminished use. He accepted that the respondent had ongoing problems with his elbow with persisting pain and weakness. He attributed the respondent's diminished range of movement to thickening of the elbow capsule caused by forceful tearing of the anterior capsule from the region of the coronoid process. 48 In Dr Shatwell's opinion it was unlikely that the respondent would be able to carry out labouring work involving repetitive use of his right arm. He recommended that the respondent continue in light or skilled work avoiding further injury to his elbow. He thought it was highly unlikely that the respondent would be able to manage his pre-injury occupation as a printer's labourer. 49 Dr Shatwell gave evidence at the trial. In chief, he explained that the respondent had lost about 20 degrees full extension of his right forearm. He attributed that to scarring and contraction of the scar in the front of the elbow joint. He described the bony injury as "the tip of the iceberg, in comparison with the amount of soft tissue trauma to produce that bone injury." Dr Shatwell said he thought the respondent's disability was likely to be permanent having persisted for four years. 50 In response to a question from the trial judge, Dr Shatwell said that one or both of the respondent's upper arm muscles was damaged in the process of his elbow being damaged. 51 The appellants qualified Dr M Tarrant, also an orthopaedic surgeon, to review the respondent. He examined the respondent on two occasions, first in 2003 and again in April 2005, a fortnight before the hearing. 52 When the respondent presented to Dr Tarrant in 2003, Dr Tarrant recorded a history that the respondent's biggest problem related to pain, stiffness and weakness in his right elbow which prevented him from working. Dr Tarrant observed that there was little or no muscle wasting. In his view the respondent had minor loss of movement. He described the respondent's injury as fairly minor. As I understand his report he attributed the respondent's inability to find work to many factors, including the fact that the respondent had a substantial pre-existing injury of his left upper limb following microsurgery on the left ulna nerve leading to him developing an ulna claw hand. In addition the respondent had moved from Sydney to an area near Port Macquarie and Dr Tarrant surmised that factors such as geography and work availability affected his ability to work. In his April 2005 report, Dr Tarrant observed that the respondent lacked full extension of his elbow, more than he had before. He expressed the opinion that people did not present with a chronic disability after a coronoid fracture and, even with a soft tissue injury of the elbow, one would expect improvement. In Dr Tarrant's view the respondent would have a functioning elbow in the long run, after his claim had settled. 53 The primary judge accepted Dr Shatwell's evidence that the 20 degree loss of extension in the respondent's right arm was likely to be permanent, and, as I understand his reasons, accepted that the variety of limitations on his movements which the respondent described were consistent with that disability. 54 The primary judge also accepted that as a result of his injury, the respondent was no longer fit to work in the printing industry. His Honour concluded that, having regard to the industry the respondent had demonstrated in applying himself to work prior to his injury, his failure to get work thereafter was largely related to his right arm injury and that employers were "somewhat reluctant to engage somebody with his unfortunate history". 55 He summarised his conclusion about the respondent's earning capacity by saying: "That does not mean to say that the plaintiff is unable to work. Clearly enough he has been an enthusiastic worker and within his capabilities he would obviously be an asset in a large range of possible employments. Nevertheless it has to be said that in the very area that he proved himself in he is no longer fit to do that type of work." 56 The primary judge awarded the respondent $100,000 for general damages. With the limited exceptions I have identified, he did not state the findings on which this award was based. It must be assumed that he accepted the respondent's case at its highest. He allowed interest on general damages at two per cent per annum over 5 years, which he said gave a figure of $3500. On my calculation this figure should have been $10,000, but, as will become apparent, nothing ultimately turns on this error. 57 His Honour allowed the respondent $630 per week net for past economic loss for two years and, for the subsequent almost three years, he allowed 50 per cent of that sum, $315 a week. That led to the figures of $65,520 and $48,510 respectively, a total of $209,186. After deducting the sum of $8,344 in relation to the moneys the respondent had earned at the Wauchope printery, interest on past economic loss was $26,421. Past superannuation loss was allowed for the first two years at $825 per week gross at nine per cent ($7,722) and from 24 September 2002 until trial (154 weeks), $6,930. For future economic loss his Honour found the respondent's ability to earn income had been diminished by 25 per cent. Taking $630 per week as the base and after deducting 15 per cent for vicissitudes, and using the three per cent tables, produced a figure of $144,558. He allowed $21,866 for future loss of superannuation. 58 The effect of his Honour's approach was to allow the respondent total loss of earning capacity for the two years immediately after injury, 50 per cent loss of earning capacity for the next three years to trial and a 25 per cent diminution in earning capacity for the future. 59 The judgment refers to his Honour having used a multiplier of "107.8" to calculate future economic loss, however this was clearly a typographical error. The correct multiplier, allowing the respondent a remaining working life of 32 years until 65, was 1079.8 on the Furzer Crestani three per cent tables. 60 The primary judge's calculations led to a verdict and judgment of $418,790. He also ordered the appellants to pay the respondent's costs on an indemnity basis from 12 August 2004, an issue to which I will return. Submissions 61 The appellants submitted that an allowance of $100,000 for what was essentially a residual soft tissue injury was excessive. Rather, a range of $40,000–$50,000 was appropriate. 62 Mr Kelly submitted that in the circumstances of the respondent's age, his pre-existing disability in his left arm, the effect of this incident on his career, his marriage, his relationship with his children and his general sporting and activity level, $100,000 was an appropriate award for general damages. He argued, relying on Dr Shatwell's evidence, that the fact that an injury affects soft tissue does not diminish its long-term effect or seriousness. 63 As to damages for economic loss, the appellants argued that damages were liberal having regard, again, to the soft tissue nature of the injury. They also submitted it was necessary to take into account the fact that respondent was affected by a pre-existing disability in his non-dominant hand and that he chose to move away from Gosford, where he was within reach of both the large Sydney employment market and the moderately large Central Coast market, to an area further up the coast where the employment market was significantly diminished. 64 The appellants next submitted that the award of damages for economic loss depended on the primary judge's finding that the respondent could not work in his old occupation as a printer's labourer and had lost the capacity to earn the income of a printer's labourer. They argued that the primary judge failed to take into account adequately, or at all, the fact that the respondent had secured casual employment at the Wauchope printery for a period of two years after the incident. They contended that, taking this period in the printing business into account as well as the respondent's attempts to establish a furniture business, he had a greater earning capacity than that determined by the primary judge. They also argued that the fact he could work in his own furniture business demonstrated that the appellant could have sought employment elsewhere. Put another way, they argued that the respondent had deliberately taken himself out of the employment market, whether as a printer or generally, because of his attempt to establish a furniture business. 65 The appellants also submitted there was an internal inconsistency in the primary judge's reasons in that the variation from 50 per cent incapacity in the three years immediately before trial to 25 per cent for the future was not supported by the evidence nor by his Honour's reasons. 66 The appellants submitted that it appeared the primary judge had accepted Dr Shatwell's opinion it was "highly unlikely" that the respondent would be able to manage his pre-injury occupation. They argued that this opinion was flawed, however, because it was based upon the incorrect assumption that the respondent had been unable to obtain work in the printing industry since he was injured. 67 Taking these factors into account, the appellants argued that an allowance of $100 per week for past and future economic loss after the first two years after the injury was appropriate. 68 Mr Kelly argued the primary judge had taken into account the period the respondent had worked at the Wauchope printing business. He argued that the work the respondent did there was extremely light and was only available from time to time. 69 Mr Kelly drew attention to Dr Shatwell's opinion concerning the respondent's prognosis to which I have referred. He also relied on the fact that Dr Shatwell was not cross-examined as to his opinion concerning the respondent's work capacity. He submitted, accordingly, that the primary judge had been entitled to accept Dr Shatwell's opinions. Consideration: quantum 70 The assessment of non-economic loss is an evaluative process in respect of which minds may reasonably differ: Woolworths Ltd v Lawlor [2004] NSWCA 209 at [14]). An appellate court will not interfere with a trial judge's assessment of damages "simply because it would have awarded a different figure had it tried the case at first instance": Precision Plastics Pty Ltd v Demir [1975] HCA 27; (1975) 132 CLR 362 (at 369) per Gibbs J. 71 An appeal from an assessment of damages for non-economic loss in relation to personal injuries from a judge sitting without a jury is to be determined in the same manner as an appeal from the exercise of discretion by a trial judge. An error within the terms of House v R [1936] HCA 40; (1936) 55 CLR 499 at 504 – 505 must be identified: Franklins Limited v Burns; Burns v Franklins Limited [2005] NSWCA 54 at [49] per McColl JA (Beazley and Tobias JJA agreeing). 72 Accordingly, an appeal court may only alter the trial judge's decision if the judge acted on a wrong principle of law, misapprehended the facts or made "a wholly erroneous estimate of the damage suffered": Moran v McMahon (1983) 3 NSWLR 700 at 719 and 723 per Priestley JA, with whom McHugh JA agreed, Jones v Bradley [2003] NSWCA 81 at [117] per Santow JA (with whom Meagher & Beazley JJA agreed); see also Diamond v Simpson (No 1) [2003] NSWCA 67; (2003) Aust Torts Reports ¶81–695 at [15] – [17]; Ghunaim v Bart [2004] NSWCA 28; (2004) Aust Torts Reports ¶81-731 at [100]. 73 In my opinion the primary judge's conclusion both as to general damages and economic loss was flawed by his failure to appreciate the significance of the respondent's decision to undertake a furniture business. Not only did that endeavour indicate the respondent's capacity for physical work, it also took him out of the job market. The primary judge did not refer to, and therefore does not appear to have taken into account, the evidence that the respondent had not pursued work in the printing industry because of his dedication to his fledgling business. 74 The primary judge's assessment of both general damages and economic loss also appears to have been dependent upon his acceptance of Dr Shatwell's opinion that the respondent was no longer fit to do the sort of work he had undertaken prior to his injury. However, it does not appear Dr Shatwell was informed of the respondent's casual employment at the Wauchope printery. That period of employment was from 19 November 2002 to 30 June 2004, yet in Dr Shatwell's report of 17 December 2003 he recorded that the respondent had been unable to continue in his usual work although certified medically fit for light duties. In his final report of 28 February 2005 Dr Shatwell recorded that the respondent had been unable to get back to his usual work as a printer's labourer and had taken part-time work making furniture as a self-employed person. 75 This fact that the respondent had been able to secure work as a printer was a significant factor which it is apparent neither Dr Shatwell or the primary judge took into account. 76 I do not accept the respondent's submission that the primary judge was entitled to accept Dr Shatwell's opinion as to the respondent's physical limitations and loss of earning capacity, absent cross-examination of Dr Shatwell about the work the respondent had done in the printing industry. It was necessary that the respondent establish the factual substratum of Dr Shatwell's opinion. Even though that evidence was uncontradicted, the trial judge was not bound to accept it, and nor is this Court: Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705; (at [89]) per Heydon JA. That is particularly so where the expert's assessment is not at the core of his or her expertise (medical diagnosis and treatment) but in its application in areas of activity about which he or she must make imprecise assumptions. 77 In my view the primary judge's failure to appreciate the flaw which underlay Dr Shatwell's opinion demonstrates that he misapprehended the facts in a manner which clearly had a significant impact both on his award of general damages and his conclusion on economic loss. 78 It is clear that the respondent's activities are limited by the pain he continues to suffer in his arm. I accept that he is unable to perform the sort of heavy lifting he had undertaken prior to his injury and that that was, and will continue to be, a limiting factor in the future, not only in his employment, but in his life generally. The respondent has displayed sufficient initiative to start his own furniture business. He informed Dr Shatwell that he did no heavy lifting in this occupation and used a crane or lifting tackle, did no delivery work or fitting of heavy items. Nevertheless the fact that the respondent felt sufficiently well to undertake a business which involved repetitive use of his arms indicates, to my mind, a greater capacity than that revealed to Dr Shatwell. 79 I would also add that while it is apparent that originally the respondent moved out of the Sydney labour market because of the economic restraints imposed by his injury, he had not returned to that market, notwithstanding his demonstrated capacity to work in the printing industry in the casual employment he undertook with the Wauchope printery. Assessment of his damages must also be affected, therefore, by the fact that the respondent appears to have deliberately moved away from areas where he might have obtained more continuous employment in his former industry. 80 I accept the appellants' submission that a sum of $100,000 for a healed fracture with possibly residual soft tissue damage was excessive. In my view an appropriate award for general damages is $60,000, assessed at the date of this Court's award: Monie v Commonwealth of Australia [2007] NSWCA 230 (at [122] – [124]) per Campbell JA (Mason P and Beazley JA agreeing). Interest at two per cent per annum should be added to this sum, calculated to the date of judgment in this Court: MPB (SA) Proprietary Limited v Gogic [1991] HCA 3; (1991) 171 CLR 657; Metropolitan Meat Industry Board v Williams (1991) 24 NSWLR 54. 81 I turn to the issue of economic loss. The general principles concerning this head of damage were set out in Rabay and Anor v Bristow [2005] NSWCA 199 as follows: "[73] Compensation for loss of earning capacity is awarded because the diminution in an injured plaintiff's earning capacity 'is or may be productive of financial loss': Graham v Baker [1961] HCA 48; (1961) 106 CLR 340 at 347. It is incumbent upon the plaintiff to prove the loss for which compensation is claimed ( Todorovic v Waller [1981] HCA 72; (1981) 150 CLR 402 at 412) but, conversely, it is not incumbent upon the injured plaintiff to prove what employment he or she 'is not incapacitated from performing'. It is for a defendant which contends that the plaintiff has a residual earning capacity to adduce evidence of what the plaintiff is capable of doing and what jobs are open to such a person: H Luntz, Assessment of Damages for Personal Injury and Death (4th Ed) at 118 [1.9.20]. [74] The primary judge was entitled to take into consideration the fact that the respondent had an employment history which demonstrated a consistent pattern of full time employment in work which might fairly be described as having been of a heavy manual nature: Husher v Husher [1999] HCA 47; (1999) 197 CLR 138 at 143 per Gleeson CJ, Gummow, Kirby and Hayne JJ. [79] The assessment of damages for future economic loss involves reference to future or hypothetical events. It was described as 'the process of estimation of possibility' in Malec v JC Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 at 643 per Deane, Gaudron and Gummow JJ. This is, as Santow JA has pointed out, 'necessarily an imprecise matter of estimation, carried out within broad parameters …': Donald v McKeown [2004] NSWCA 285 at [38]." 82 When the respondent's complete employment history since the injury is examined it discloses a period of unemployment immediately post injury (which the appellants do not challenge), casual employment from approximately two years after injury to mid-2004 in the sort of work he was doing before he was injured and, overlapping that period, an attempt to establish himself in a furniture business. 83 That history does not reflect a 50 per cent loss of earning capacity. Indeed, as the appellants submit, the apparent reasons for the respondent's inability to obtain work appear to be related to the availability of printing jobs where he now lives and his decision to start his own business. 84 In my opinion the respondent established a limited loss of earning capacity, which I would assess at no higher than 20 per cent from two years after injury to the date of trial, and continuing. That is a figure of $19,656 ($126 per week x 156) to the date of trial. The $8,344 he earned at the Wauchope Printery should be deducted from this, leaving a net figure of $11,312. Interest should be added to this using the rates in Schedule 5 to the Uniform Civil Procedure Rules 2005: Kalls Enterprises Pty Ltd (In Liquidation) & Ors v Baloglow & Anor (No 3) [2007] NSWCA 298 (at [14] – [22]) per Giles, Ipp and Basten JJA. Averaging that rate over the seven years since the incident produces a rate of 10% and applying it as if the whole loss was sustained for half the period of the loss (Cullen v Trappell [1980] HCA 10; (1980) 146 CLR 1 at 19 per Gibbs J) leads to an amount for interest on past economic loss of $3841.50. 85 For the future the respondent claimed loss of earning capacity until age 65. Taking $630 as a starting point, as the primary judge did, deducting 15 per cent for vicissitudes, and allowing 20 per cent of that amount using the multiplier of 1079.8 on the three per cent tables, gives a figure of $109, 815.66. 86 The primary judge's figure of superannuation for the first two years, $7,722 is undisturbed, however for the remaining three years to trial, the figure of $2,287 (20 per cent of $825, at 9 per cent over 154 weeks) should be substituted. For future superannuation the figure of $9883.41 should be added. 87 The respondent's damages, therefore are: General damages $60,000 Interest on general damages $8500 Past economic loss $65,520 (24 September 2000– 24 September 2002) Past economic loss $11,312 (25 September 2003 to trial) Interest on past economic loss $3841.50 Future economic loss $109,815.66 Superannuation (24 September 2000–24 September 2002) $7,722 Superannuation (25 September 2002 to trial) $2,287 Future superannuation $9883.41 Total $278,881.57 88 If there is error in the calculations set out above the parties have liberty to file an amended consent order in the registry setting out the correct calculations, or to file their respective proposed orders and brief written submissions in support, within 14 days in the I hope unlikely event that they are unable to agree. Indemnity Costs 89 The appellants were ordered to pay the respondent's costs on a party/party basis up to 12 August 2004, the day after the respondent wrote a letter to the appellants he contended complied with that approved in Calderbank v Calderbank [1976] Fam 93, and thereafter on an indemnity basis. 90 The letter on which the respondent relied was dated 11 August 2004, was headed "without prejudice except as to costs", and offered to accept the sum of $300,000 inclusive of costs in full settlement of the matter. The offer was open for acceptance until 18 August 2004. There was no response from the appellants. The matter went to trial in April 2005. 91 After the primary judge delivered his reasons, having recovered well in excess of $300,000, the respondent sought indemnity costs on the basis of his 11 August 2004 letter. His Honour reserved the question, saying the matter could be mentioned before him the following Monday at 9am. The Court was informed that argument took place that day and the primary judge reserved his decision on the question. There was no transcript of the argument in the appeal papers. 92 By letter dated 10 October 2005, the Registrar of the District Court informed the parties' legal representatives that the primary judge "had ordered the appellants to pay the respondent's costs on a party/party basis to 12 August 2004 and thereafter on indemnity costs basis." His Honour gave no reasons for his decision. 93 The appellants challenged the order that they pay the respondent's costs on an indemnity basis. They argued that their failure to accept the Calderbank offer was reasonable in the circumstances. They relied on the fact that the offer was made inclusive of costs and, accordingly, they contended, did not constitute a Calderbank offer, that the case was complicated to assess in terms of liability and that they were only given one week to respond to the respondent's offer, with which was enclosed some previously unseen material, including tax returns and a letter from the respondent's employer. 94 The respondent submitted that it was not unusual for a Calderbank offer to be made inclusive of costs. He pointed out that his letter responded to the appellants' Calderbank offer which was inclusive of costs. As to the one week deadline, the respondent submitted that the appellants had made no request for extra time to consider the offer, despite the fact that it was made well before the trial took place. 95 Neither counsel referred to any authority to support their respective contentions. 96 Section 98(1) of the Civil Procedure Act 2005 relevantly provides that "[s]ubject to rules of court and to this or any other Act…(a) costs are in the discretion of the court, and … (c) the court may order that costs be awarded on the ordinary basis or an indemnity basis". The "ordinary basis" is set out in s 364 of the Legal Profession Act 2004: s 3, Civil Procedure Act. The discretion conferred by s 98 is unconfined, however it is appropriate that courts develop principles to guide the exercise of the s 98(1) discretion: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 (at [22], [35]) per Gaudron and Gummow JJ. Such principles have been developed to assist in determining the effect to be given to Calderbank letters. 97 A Calderbank letter is the appellation given to a letter which conforms to the structure of that deployed in Calderbank v Calderbank, namely one which is marked "without prejudice", makes an offer of settlement, and warns that the letter will be relied upon on the question of costs if and when that issue arises: Messiter v Hutchinson (1987) 10 NSWLR 525. "Calderbank offers" are well recognised means of making offers of settlement in circumstances where the party making the offer ultimately seeks a costs advantage if the offer is not accepted: Jones v Bradley (No 2) [2003] NSWCA 258 (at [5]). 98 The general principles concerning Calderbank offers were set out in Jones v Bradley (No 2) where the Court approved Giles JA's statement in SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 (at [37]) that: "The making of an offer of compromise in the form of a Calderbank letter … where the offeree does not accept the offer but ends up worse off than if the offer had been accepted, is a matter to which the Court may have regard when deciding whether to otherwise order, but it does not automatically bring a different order as to costs. All the circumstances must be considered, and while the policy informing the regard had to a Calderbank letter is promotion of settlement of disputes an offeree can reasonably fail to accept an offer without suffering in costs. In the end the question is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure …" 99 In Leichhardt Municipal Council v Green [2004] NSWCA 341 (at [46]) Santow JA (with whom Stein JA agreed) reviewed the authorities concerning Calderbank letters. His review demonstrated that such a letter would only justify an order for costs on an indemnity basis, rather than the ordinary basis, if it constituted a genuine offer of compromise, which it was unreasonable for the appellant not to accept: Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 (at [4]) per Handley, Beazley and Basten JJA. Among the issues germane to the question of the reasonableness of the offeree's conduct will be whether the offeree had an "appropriate opportunity … to consider and deal with the offer": Donnelly v Edelsten (1994) 49 FCR 384 (at 396) (Full Court of the Federal Court, Neaves, Ryan and Lee JJ). 100 There is a line of authority, commencing with Smallacombe v Lockyer Investment Co Pty Ltd (1993) 42 FCR 97, to the effect that a Calderbank letter expressed to be inclusive of costs will not warrant departure from the usual basis upon which a successful party's costs are calculated. Einstein J applied these authorities in Baulderstone Hornibrook Engineering Pty Limited v Gordian Runoff Limited (Formerly GIO Insurance Limited) and Ors [2006] NSWSC 583, saying: "[40] It has been held that a Calderbank letter which is expressed to be 'inclusive of costs', is insufficiently precise to qualify as a Calderbank offer, for the reason that the offeree is placed in a position of not being able to determine the appropriate amount to attribute to the substantive claim and the costs incurred in advancing it: Smallacombe v Lockyer Investment Co Pty Ltd (1993) 42 FCR 97 at 102; Hanave Pty Ltd v LFOT Pty Ltd (formerly Jagar Pty Ltd) [1998] 1429 FCA 11, BC9805993 ( Smallacombe Pty Ltd v Lockyer Investments Co Pty Ltd was referred to by Young J in Rosser v Maritime Services Board of New South Wales (No 3) (unreported, Supreme Court of New South Wales, 25 November 1997, Young J, BC9706221). [41] These authorities recognise the importance of isolating the costs component in such a way which is clear and capable of proper assessment independently of the principal claim, as part of a Calderbank letter." 101 Campbell J made the same point in White v Baycorp Advantage Business Information Services Ltd [2006] NSWSC 910, where he observed, applying Baulderstone: "12 Further, there is a line of authority whereby, when a plaintiff makes a claim for an order involving payment of money, it is not appropriate for that plaintiff to serve a Calderbank letter offering to settle its claim for a particular sum of money inclusive of costs: Smallacombe & Others v Lockyer Investment Co Pty Ltd (1993) 114 ALR 568 at 573; Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 at [22]-[24 ] Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Limited (formerly GIO Insurance Limited) & Ors [2006] NSWSC 583 at [40]-[41]. I agree with Einstein J, in the last-mentioned case, that the reason why in those circumstances the Calderbank offer is inappropriate is that, '… the offeree is placed in a position of not being able to determine the appropriate amount to attribute to the substantive claim', as opposed to the costs incurred in advancing it. In my view that principle is applicable in the present case, as damages was one of the elements of the claim which the plaintiffs made, and paragraph 5 of the Calderbank offer rolls together an amount offered to be paid for both damages and costs." 102 Gillard J did not apply Smallacombe in M T Associates Pty Ltd v Aqua-Max Pty Ltd & Anor (No 3) [2000] VSC 163. His Honour (at [125] – [126]) was of the view that a Calderbank letter could be expressed to be on an all-inclusive basis. He observed that many cases were settled on an "all in" basis and "[t]here is little difficulty in making an assessment of the likely amount of the claim and costs". 103 In an ex tempore judgment in DSE (Holdings) Pty Ltd v InterTAN Inc [2004] FCA 1251; (2004) 51 ACSR 555 (at [12]- [13]), Allsop J referred to Smallacombe, Hanave Pty Ltd v LFOT Pty Ltd (formerly Jagar Pty Ltd) [1998] 1429 FCA (Federal Court of Australia, Moore J, 11 November 1998, unreported) and Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602. He did not regard Smallacombe as having articulated "a definitive rule that in an application for costs, an offer that was an all inclusive sum could not, in any circumstances, be taken into account by a Court in considering whether thereafter indemnity costs should be awarded". 104 In Associated Confectionery (Aust) Ltd v Mineral and Chemical Traders Pty Ltd (1991) 25 NSWLR 349 Giles J (as his Honour then was) held that an offer to compromise proceedings by a payment of money expressed to be inclusive of the costs of the proceedings could not be given effect under the Supreme Court Rules 1970, Pt 52, r 17. This was because it was not possible to determine whether or not the result of the proceedings was more favourable or less favourable than the offer. 105 At the time Associated Confectionery was decided, the Supreme Court Rules were silent as to whether or not an Offer of Compromise could be inclusive of costs. The position is made clearer now by UCPR 20.26(2) which provides that "[a]n offer [of compromise] must be exclusive of costs, except where it states that it is a verdict for the defendant and that the parties are to bear their own costs." Thus, to the extent that the costs consequences of an unaccepted Calderbank letter can be influenced by the operation of the Court rules (see Leichhardt Municipal Council (at [46])), UCPR 20.26(2) supports the proposition that a Calderbank letter should not be expressed to be inclusive of costs. 106 There are decisions of this Court in which effect was given to a Calderbank letter in which the offer was expressed to be inclusive of costs. In Trustee for the Salvation Army (NSW) Property Trust & Anor v Becker & Anor (No 2) [2007] NSWCA 194 (at [25] – [29]) Ipp JA (with whom Mason P and I agreed) applied UCPR 20.26(2) and held that an Offer of Compromise was ineffective because it was expressed to be inclusive of costs. His Honour then said (at [28]) that "the offer of compromise was capable of being accepted by the appellant on the basis that it was an informal Calderbank offer and should be regarded as such an offer". There was no reference in Trustee for the Salvation Army to the Smallacombe line of authority and it is not, in my view, a decision which binds this Court to conclude a Calderbank letter expressed to be inclusive of costs is effective: see Markisic v Commonwealth of Australia & Anor [2007] NSWCA 92 (at [56]) per Campbell JA (with whom Handley AJA and Bell J agreed). 107 In Tinyow v Lee [2006] NSWCA 247 Santow JA (with whom Handley and Ipp JJA agreed) noted (at [9]) counsel's reference to M T Associates and DSE (Holdings). His Honour acknowledged (at [10]) that "[t]he vice of ["all up" offers inclusive of costs] is that they force the offeree to make some assessment of the likely party and party costs of the party making the offer". However his Honour was prepared to give the offer prima facie effect, because the appellant made a plausible case for the offeree's costs being capable of reasonable estimation. It does not appear from his Honour's reasons that the respondent resisted this factual proposition. His Honour did not refer expressly to the Smallacombe line of authority, albeit that he appeared to acknowledge its underlying premise. 108 There is divergent authority in Victoria on the effect of an all in Calderbank letter. Eames JA (with whom Chernov and Ashley JJA agreed) recognised the difficulty such letters might pose when a court came to consider the reasonableness of an offeree's refusal/non-acceptance in Semco Developments Pty Ltd v Graham [2005] VSCA 268 (at [28]). His Honour accepted submissions from counsel for the respondent (the plaintiff) that an "all in" offer made by a defendant might deny the defendant the right to rely on it in order to seek indemnity costs. His Honour said that "an 'all in' offer can embarrass a plaintiff attempting to determine whether to accept it, because the component elements of the offer are not known [and that] a court may have difficulty determining whether the 'all in' offer had been bettered". For reasons which are not, with respect, readily apparent from his reasons, his Honour distinguished the position where the "all in" offer was made by the plaintiff. Nevertheless he said the "all in" character of the plaintiff's offer in that case "meant that no direct costs consequences by way of an indemnity costs order could or did flow from it" in favour of the offeror. 109 In Berrigan Shire Council v Ballerini & Anor (No 2) [2006] VSCA 65 the Victorian Court of Appeal (Callaway, Chernov and Nettle JJA) considered a Calderbank letter expressed to be inclusive of costs on the basis of the principles relating to such letters articulated in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435. Hazeldene concerned a Calderbank offer to pay a specified sum plus costs. The Court (at [17]) listed M T Associates as a decision of the Trial Division in which Calderbank letters and the consequences that flow from them had been considered. It did not refer to Semco or Smallacombe or its progeny, nor the problems identified in Smallacombe and acknowledged in Semco concerning the difficulties of assessing the reasonableness of an offeree's refusal of an offer expressed to be inclusive of costs. There was no reference to Smallacombe or the issues it raises in Berrigan Shire Council. 110 I do not regard Hazeldene or Berrigan Shire Council as inconsistent with the Smallacombe line of authority. The point simply was not considered. 111 The Smallacombe line of authority has been developed by experienced trial judges whose views, in my opinion, should be accorded great weight. The underlying premise of such cases rests in the proposition that an offeree cannot be said to have acted unreasonably in not accepting an offer expressed to be inclusive of costs, because of the offeree does not have an adequate opportunity to consider the offer and because of the difficulties posed when a court comes to consider the reasonableness of the offeree's conduct in rejecting/not accepting it. In other words such an offer presents practical difficulties. 112 First, the recipient of such an offer would not know the likely party and party costs to date on taxation or assessment: see Smallacombe (at 102); Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2). Secondly, in considering the reasonableness of the offer at the time the question of its costs consequences arose, it would be necessary to indulge in a taxation, or assessment, of costs: Associated Confectionery (at 351). The Court should not be required to postpone the decision as to the basis upon which costs should be awarded while awaiting the outcome of that exercise. Nor should it be required either to speculate as to what the outcome of an assessment might be, nor arbitrate on a dispute between the parties on this topic. 113 In Smallacombe (at 102) Spender J opined that "all-in" offers "would not promote the finality of litigation, but fragment it", a proposition implicitly recognised by Cole J (as his Honour then was) in W Jeffreys Holdings Pty Ltd v Appleyard and Associates (1990) 10 BCL 298 when he said "[g]reat difficulty is encountered if offers are framed in Calderbank letters on an inclusive of costs basis. It leads to ex post facto and unsubstantiated estimates of what costs may have been at a given date". 114 In my view, the point was well made by Goldberg J in Dr Martens where his Honour said: "[24] If the purpose of a Calderbank letter is to offer to bring litigation to an end it should be couched in such terms as enable the offeree to make a carefully considered comparison between the offer made and the ultimate relief it is seeking in all its aspects. An offer inclusive of costs confuses this issue as it puts the offeree in a position of not being able to determine the appropriate amount to attribute to the money sum it is seeking. Although an estimate can be made of what the offeree's taxed party and party costs might be at the time of the offer, the offeree is not being offered the opportunity to have those costs assessed by taxation in default of agreement, in addition to being made an offer to settle its claim. As a matter of principle, if a party is to be put at risk of losing its costs, even if ultimately successful, by not accepting an offer made to settle or compromise the proceeding at a point of time prior to trial, that risk should only be imposed if the party is given the opportunity, at the time of the offer, to obtain its taxed costs to date in addition to the offer made, knowing that it has been able to make a careful comparative assessment of the value of the offer as against the ultimate relief sought to be obtained." In GEC Marconi Systems Pty Limited v BHP Information Technology Pty Limited [2003] FCA 688; (2003) 201 ALR 55 Finn J referred (at [34] – [36]) to the views expressed in the Smallacombe line of authority and in M T Associates Pty Ltd v Aqua-Max Pty Ltd (No 3) , and said he was not prepared to say that the Smallacombe approach was clearly wrong, particularly in the light of the views expressed by Goldberg J in Dr Martens at [24]. 115 I agree with Allsop J that Smallacombe does not lay down a "definitive rule" that an "all-in" Calderbank offer can never be considered on the question of indemnity costs. The Court cannot fetter the s 98 discretion by legal rules: Oshlack (at [35]). Smallacombe does, however, afford guidance as to the exercise of the s 98(1) discretion. It informs the question of the reasonableness of an offeree's refusal to accept an "all-in" offer. In my view it has a sound practical basis. While I accept each case should be considered on its facts, Smallacombe provides sound reasons to discourage offerors from drafting Calderbank letters on an "all-in" basis. 116 Further, Smallacombe reflects the policy considerations which, no doubt, led to the adoption of UCPR 20.26(2). Requiring Calderbank offers to be exclusive of costs prevents a court from becoming embroiled in collateral issues, such as the offeree's ability to assess the quantum of the costs component of an offer or the reasonableness of the opinion as to this issue an offeree formed at the time of rejection/non-acceptance. In this respect Calderbank offers which are exclusive of costs assist the Court in facilitating the just, quick and cheap resolution of the real issues in the proceedings: s 56(1) Civil Procedure Act. 117 For the foregoing reasons it was open to the appellant to argue that its conduct in not accepting the 11 August offer was not unreasonable. I would add that even if the offer had not been inclusive of costs, my prima facie view would have been that it did not, in the circumstances in which it was made, attract an indemnity costs order. It was open for acceptance for only one week at a time when there was no imminent trial. Further, the respondent's solicitors forwarded under cover of the same letter a quantity of economic loss material which it would have been necessary for the appellant's solicitors to assess. At the time the letter was sent Offers of Compromise were required to be open for a minimum of 28 days (Pt 19A r 3(3), District Court Rules 1973), a period no doubt believed to provide a reasonable time for consideration. Prima facie, I see no reason why litigants who choose not to avail themselves of the rules as to Offers of Compromise should be in a better position than those who do, if they radically foreshorten the period in which an offer is open for consideration. 118 The conclusion that the respondent's damages are less than the Calderbank offer makes it now irrelevant, save to the extent that it is necessary that the indemnity costs order should be set aside. Orders 119 I propose the following orders: 1. Appeal allowed in part. 2. Set aside the judgment of Phelan DCJ of 14 September 2005. 3. In lieu thereof substitute a judgment for the respondent in the amount of $278,881.57. 4. Order the appellants to pay the respondent's costs of the trial on the ordinary basis. 5. Grant liberty to the parties to submit consent amended short minutes of order correcting order 3 within 14 days of judgment. 6. In the event the parties cannot reach agreement as to the quantum of order 3, grant liberty to the parties to submit written contentions concerning the correct calculation within 14 days of judgment. 7. Respondent to pay the costs of the appeal. 8. Grant the respondent a certificate under the Suitor's Fund Act 1951 in relation to the appeal if otherwise qualified. 120 BASTEN JA: The circumstances which gave rise to this claim, and the issues agitated on the appeal, are comprehensively explained by McColl JA and need not be repeated here. Contributory negligence 121 As McColl JA has noted, there was no challenge to the availability of contributory negligence as a plea to a cause of action for assault, being an intentional tort. Nevertheless, the application of the defence requires attention to the circumstances of its operation. Those are defined by the Law Reform (Miscellaneous Provisions) Act 1965 (NSW) ("the 1965 Act"). Although the incident giving rise to the claim occurred on 24 September 2000, prior to the commencement of the Law Reform (Miscellaneous Provisions) Amendment Act 2000 (NSW) on 22 January 2001, the amendments made by that Act are applicable in this case, the proceedings not having been commenced, let alone determined, prior to the commencement of the amending Act: see Schedule 1, Part 2, cls 3 and 4. The operative provision of the 1965 Act, s 9(1), is in the following terms: " 9 Apportionment of liability in cases of contributory negligence (1) If a person (the claimant ) suffers damage as the result partly of the claimant's failure to take reasonable care ( contributory negligence ) and partly of the wrong of any other person: (a) a claim in respect of the damage is not defeated by reason of the contributory negligence of the claimant, and (b) the damages recoverable in respect of the wrong are to be reduced to such extent as the court thinks just and equitable having regard to the claimant's share in the responsibility for the damage." 122 Critical to the operation of this provision is the term "wrong" which is defined in s 8, as follows: " wrong means an act or omission that: (a) gives rise to a liability in tort in respect of which a defence of contributory negligence is available at common law, or (b) amounts to a breach of a contractual duty of care that is concurrent and co-extensive with a duty of care in tort." 123 In order to apply these provisions in the present case, it is also necessary to understand the legal relationship as between the plaintiff and the defendants. There was no attempt in the pleadings to identify any justification for the assault (and indeed battery) which was at the heart of the claim. Further, the focus at trial appears to have been primarily upon the act of the second defendant that caused the significant injury suffered by the plaintiff. It is not clear if consideration was given to whether the plaintiff would have had an action for assault if he had been physically removed from the premises without injury. The only passage in which the matter was expressly adverted to by the trial judge read as follows (Judgment, p 15): "I am satisfied that this was an aggressive action by the second defendant, that it was done intentionally, that it was done in his purported function as a security officer, that the force was excessive and caused the fracture to his elbow and extensive soft tissue damage. I am satisfied that the plaintiff was intentionally assaulted … ." 124 It may be inferred from this statement, which was not challenged on appeal because there was no challenge to the finding of liability, that the defendant was entitled to require the plaintiff to leave the premises and indeed the plaintiff appears to have accepted that he was required to leave. The tortious conduct therefore must have been the use of excessive force to achieve a lawful purpose. Where a person is present on premises used for public entertainment or recreation, he or she has an implied licence to remain on the property of another and participate in such activities as are permitted or offered. The next issue should have been to identify the circumstances in which such an implied licence could be lawfully revoked. In that regard, his Honour referred, in the course of recounting the evidence, to ss 103 and 125 of the Liquor Act 1982 (NSW): Judgment, at p 12. Section 103 empowers a licensee and his or her employee to "turn out, or cause to be turned out" of licensed premises any person who is "intoxicated, violent, quarrelsome or disorderly". When those powers are engaged, the licensee is permitted to use "such reasonable degree of force as may be necessary": s 103(3A). Section 125 requires the licensee not to have an intoxicated person on the premises. The operation of these provisions was discussed in Wagstaff v Haslam [2007] NSWCA 28 at [34]-[36] and in Zorom Enterprises Pty Ltd v Zabow [2007] NSWCA 106 at [37]. 125 It should be inferred that the finding that the second defendant's act was intentional and that the force was excessive was a finding that it was to that extent unjustified and tortious. As confirmed by Clarke JA in Cowell v Corrective Services Commission of New South Wales (1988) 13 NSWLR 714 at 743, in a case involving false imprisonment, "it is not a necessary element of assault (and battery) that the defendant intended to injure the plaintiff". 126 In State of New South Wales v Riley (2003) 57 NSWLR 496 at [104] Hodgson JA (Sheller JA and Nicholas J agreeing) stated that a defence of contributory negligence is "not available at common law to a claim for damages for an intentionally inflicted injury". On the other hand, his Honour further held that "where there are indirect and unintended consequences of the trespass, I think the better view is that the defence of contributory negligence is available in respect of those unintended consequences": at [107]. The defence was available in that case because the injury to the plaintiff's wrist occurred as a result of negligence in applying handcuffs or in the manner of driving the paddy wagon, during a period of false imprisonment: at [100]. These factual findings explain the availability of contributory negligence in those circumstances. 127 By adopting as its indicium of operation the availability of contributory negligence at common law, the 1965 Act requires continuing reference to the common law. The circumstances in which contributory negligence might operate in a case of trespass were discussed by Bray CJ in Venning v Chin (1974) 10 SASR 299 at 317-322. However, the circumstances of that case involved an unremarkable running-down case pleaded in trespass, and therefore give limited guidance. 128 The present case is far removed from either Riley or Venning on its facts. Furthermore, in determining whether contributory negligence is available at common law in the present circumstances, it may be necessary to consider questions of coherence in relation to provocation. That is because, in the context of an intentional tort, it is likely that the plaintiff's conduct could as readily be characterised as provocation as a failure to take reasonable care in his or her own interest. The availability of a defence of provocation is itself contentious: see Horkin v North Melbourne Football Club Social Club [1983] 1 VR 153 (Brooking J) and Fontin v Katapodis (1962) 108 CLR 177. In Plumb v Breen (unrep, NSWSC, 13 December 1990) Young J held that there was no defence of provocation in answer to a battery, but considered that a different conclusion might be reached in Queensland. However, absent statutory influence, there should not be a difference of approach to the common law in different Australian jurisdictions: see Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 81 ALJR 1107 at [135]. (In relation to provocation, see generally Trindade, Cane and Lunney, The Law of Torts in Australia (4th ed, OUP, 2007) at par 2.5.9.) 129 Apart from the doubts as to the availability of a defence of contributory negligence in the present circumstances, there are difficulties arising from the imprecision in the findings of liability. Thus, it appears that the trial judge accepted that the security guard was acting as agent of the licensee and that he had authority to direct the plaintiff to leave the premises. It may be inferred that he had some reason for taking that step. It was clear enough from his own evidence that the plaintiff was inebriated. It was also clear from his own evidence that he "was resisting the request to leave": Judgment, p 5. He "conceded that he had been asked to leave several times". The judge accepted this evidence. This evidence would have justified the second defendant using some degree of force to remove the plaintiff from the premises. However, having been gripped by the second defendant, the plaintiff did nothing to warrant the use of additional force and, being in the control of the second defendant at that point and not seeking to extricate himself from the grip in which he was held, cannot be said to have contributed in any relevant sense to the injury caused by the subsequent use of excessive force. 130 The trial judge was "not satisfied that contributory negligence has been proved by the defendants in these circumstances": Judgment, p 16. Given the inadequate findings in relation to liability and the doubts as to what circumstances were being referred to in this sentence, this does not involve an adequate consideration of the relevant issues. However, the appeal being by way of rehearing, it is sufficient to conclude that the Appellant has not made out a case for reduction of the damages on account of contributory negligence. Accordingly, this ground of appeal must be rejected. Assessment of damages 131 In relation to the challenges to various items in the award of damages, I agree with McColl JA that the Appellant has demonstrated error and that a judgment should be substituted. Indemnity costs 132 Because the damages to be awarded are significantly below the judgment at trial the trial judge's award of indemnity costs should be reconsidered. It is necessary to consider whether the reduced award, despite being below the plaintiff's inclusive offer made on 11 August 2004, nevertheless attracts a special order as to costs from that date. 133 It is common practice to refer to a written offer of compromise as a "Calderbank offer" or "Calderbank letter" if it does not conform to Court rules providing for such offers. However, the primary relevance of the decision in Calderbank v Calderbank [1976] Fam 93 was the approval it gave to the hybrid form of making an offer without prejudice (which could thus not be tendered as some form of admission against the party making the offer), whilst reserving the right to rely upon the offer in relation to questions of cost (making it an open offer for that purpose only). It has always been necessary to consider the operation of such offers against the background of the relevant rules of Court at a particular time. Thus the effectiveness of an offer depended upon providing an incentive to a party to settle in circumstances where costs normally follow the event and the quantum of such costs would not provide a full indemnity even to the successful party. Thus in a sense the purpose of an offer was to limit the range within which the other party could treat the outcome as successful. 134 Further, 30 (and even 20) years ago the operation of an informal offer needed to be consistent with rules providing a formal system for offers of settlement by payment into court, though available only to defendants. Indeed, there was some reluctance to pay any attention to informal offers of settlement where the provision for payment in was available but not availed of: see Cutts v Head [1984] Ch 290 and Corby District Council v Holst & Co Ltd [1985] 1 WLR 427 at 433, in each case in the judgment of Oliver LJ. A similar concern was raised by Rogers J in Messiter v Hutchinson (1987) 10 NSWLR 525 at 528. It was thought that the plaintiff should not be asked to risk accepting an offer from an impecunious defendant who did not put money into Court. (Whether the plaintiff would have been better off having incurred greater costs in order to obtain a judgment against the impecunious defendant is unclear.) However, Rogers J did not adopt that approach, preferring to take the view that, so long as it may "fairly be done, the Court should do nothing which would dissuade or discourage a party from making bona fide offers of settlement": at p 529B. 135 Subsequently, more detailed rules for offers of compromise have been introduced in courts exercising civil jurisdiction, with increasingly precisely defined consequences for costs orders: see now Uniform Civil Procedure Rules 2005 (NSW), Part 20, Div 4 (offers) and Part 42, Div 3 (costs). Even as the rules have become more sophisticated, there have remained gaps and the courts have encouraged parties to fill the gaps by making appropriate offers of settlement: see, eg, Skinner & Edwards (Builders) Pty Ltd v Australian Telecommunications Corporation (1992) 27 NSWLR 567 at 578C-D (Cole J). Of course, where a particular rule operates, an offer which does not comply with the rule may not have the desired effect: see, eg, Associated Confectionary (Aust) Ltd v Mineral and Chemical Traders Pty Ltd (1991) 25 NSWLR 349 at 350F-G and 351G (Giles J). However, except in a case of direct inconsistency, the courts have regularly acknowledged a degree of flexibility in assessing Calderbank offers which flexibility is not available under the rules: see Leichhardt Municipal Council v Green [2004] NSWCA 341 and The Anderson Group Pty Ltd v Tynan Motors Pty Ltd [No. 2] [2006] NSWCA 120 at [10]. Such flexibility is likely to promote the overriding purpose of the Civil Procedure Act 2005 (NSW), as defined in s 56. 136 It was contended in the present case that because the plaintiff's offer was "inclusive of costs" it was said not to constitute a Calderbank offer. However, that characterisation was inapt. It constituted an offer of settlement in unequivocal terms and could, in appropriate circumstances, form the basis of a special costs order if it were not accepted. Such an offer bears some similarity to the offer considered to be a relevant consideration in Maurici v Chief Commissioner of State Revenue (2001) 51 NSWLR 673 at [3] and [59] (Handley JA, Beazley JA agreeing at [62]), which involved an offer of a particular outcome, with each party to pay its own costs. (Although at [59] it is said that "the taxpayer bettered the offer at the trial", in fact the outcome appears to have been below the offer made by the Commissioner.) 137 This Court considered an offer stated to be "inclusive of costs" in Trustee for the Salvation Army (NSW) Property Trust v Becker (No. 2) [2007] NSWCA 194, being a judgment delivered on 10 August 2007. The Court accepted that such an offer could not have effect under the Uniform Civil Procedure Rules, because it did not comply with r 20.26(2). Nevertheless, as Ipp JA explained (Mason P and McColl JA agreeing): "[24] … The fact that an offer does not comply with Pt 20 r 20.26(2) does not render it invalid; it merely has no effect under the Uniform Civil Procedure Rules . [25] The offer of 8 November 2006 was inclusive of the costs of the proceedings. Accordingly, no effect can be given to it under the Uniform Civil Procedure Rules . [26] The next question that arises is whether the offer of 8 November 2006 takes effect as a Calderbank offer. [27] Calderbank offers are simply offers that do not comply with the relevant rules of court relating to the making of offers of compromise: Jones v Bradley (No 2) (at [5]). Whether an offer, intended to be an offer under the Uniform Civil Procedure Rules but which is ineffective because it does not comply with those Rules, operates as a Calderbank offer, depends upon the intention of the offeror as revealed by the terms of the offer. The offer may disclose an intention that it should take effect only if it complies with the Uniform Civil Procedure Rules . On the other hand, it may disclose a general intent to make an offer, irrespective of whether it takes effect under the Uniform Civil Procedure Rules or not. [28] The offer of compromise in this case provided that, if it was ineffective under the Uniform Civil Procedure Rules … the offer was to be treated as a Calderbank offer. … In my opinion, the offer of compromise was capable of being accepted by the appellant on the basis that it was an informal Calderbank offer and should be regarded as such an offer." (The case referred to at [27] was Jones v Bradley (No. 2) [2003] NSWCA 258, a judgment of the Court constituted by Meagher, Beazley and Santow JJA.) 138 A similar approach was taken by this Court in Tinyow v Lee [2006] NSWCA 247 at [10] (Santow JA, Handley and Ipp JJA agreeing). In Victoria, the general principles applicable to offers of compromise were discussed in Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No. 2) [2005] VSCA 298; (2005) 13 VR 435 (Warren CJ, Maxwell P and Harper AJA). Those principles were applied to an offer stated to be inclusive of costs in Berrigan Shire Council v Ballerini and Forestry Commission (NSW) (No. 2) [2006] VSCA 65 (Callaway, Chernov and Nettle JJA). The Court concluded that it was not unreasonable for the recipient to reject the offer that was made, but no member of the Court suggested that an offer inclusive of costs did not constitute a Calderbank offer: indeed, each accepted that it did. 139 As noted above by McColl JA, there have been a number of first instance decisions suggesting that an informal offer expressed to be "inclusive of costs" is insufficiently precise to permit consideration in relation to costs: at [100] and [101] above. In my view those authorities are inconsistent with the judgments of this Court and the Victorian Court of Appeal referred to above, and particularly the recent matter of the Salvation Army Property Trust. Nevertheless, they raise issues of principle going beyond a simplistic rejection of such offers as invalid or ineffective. 140 The starting point for that line of authority appears to be the judgment of Spender J in Smallacombe v Lockyer Investment Co Pty Ltd (1993) 42 FCR 97. What was (understandably) said to be "clearly not appropriate" in that case was the statement of an offer including any claim for costs together with the inconsistent statement that the costs would be agreed or subject to taxation: pp 98-99. Nevertheless, it is true that his Honour rejected the desirability of an "all-up offer": p 102. However, that comment appears to have arisen in a context where, the offer having been refused and judgment obtained, there was an issue as to the likely effect of the costs component of the offer, which could only be determined by proceeding to taxation. The fact that no costs order could be made upon the completion of the trial, without some further assessment of costs, would undoubtedly entitle the trial judge to disregard the offer in the circumstances of the case. 141 On the other hand, if a plaintiff made an offer in a particular amount, inclusive of costs, and received damages in excess of that amount the plaintiff has on any view bettered his or her offer and should have it considered in relation to the question of costs. There is no reason to generalise from a particular circumstance to a broad principle, thereby restricting the flexibility of courts in the future. Indeed, as cases such as White v Baycorp Advantage (supra [101]) and Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No. 2) [2000] FCA 602 demonstrate, offers of compromise may well not involve money judgments at all, but undertakings as to future conduct, which may be accompanied by a proffered sum on account of costs, whether or not so described. In White, Campbell J followed the views of Einstein J in Baulderstone Hornibrook (at [101] above). 142 In the Federal Court Goldberg J followed the reasoning of Spender J in Smallacombe and Moore J (to similar effect without further analysis) in Hanave Pty Ltd v LFOT Pty Ltd [1998] FCA 1429. Goldberg J stated in Dr Martens at [24]: "If the purpose of a Calderbank letter is to offer to bring litigation to an end it should be couched in such terms as enable the offeree to make a carefully considered comparison between the offer made and the ultimate relief it is seeking in all its aspects. An offer inclusive of costs confuses this issue as it puts the offeree in a position of not being able to determine the appropriate amount to attribute to the money sum it is seeking. Although an estimate can be made of what the offeree's taxed party and party costs might be at the time of the offer, the offeree is not being offered the opportunity to have those costs assessed by taxation in default of agreement, in addition to being made an offer to settle its claim." 143 With respect, I would not accept that reasoning. If a party in receipt of an offer wishes to know how far the sum offered will go in meeting its costs up to that time, all it has to do is ask its lawyers. In an age where lawyers are required to provide advance estimates of their fees and in circumstances where commercial services are billed on a monthly basis, it is unrealistic to suggest that the recipient of an inclusive offer will be confused or otherwise unable to assess the financial risk of proceeding with litigation. In any event, the offeree is likely to be liable for legal fees exceeding the costs recoverable from the other party. Most litigants, in considering offers, will want to know from their own lawyers, how much they will receive in the hand. Of course, if the offer is not left open for a reasonable time, that might itself make non-acceptance a reasonable course. However, an offeree which is genuinely seeking to assess its position, might be advised to seek more time, if it thinks that is reasonably required. 144 The suggestion that a Calderbank letter which is expressed to be inclusive of costs is "insufficiently precise to qualify as a Calderbank offer" requires to be addressed in particular circumstances. A defendant who fears that even if successful it will be unable to recover costs awarded against the plaintiff, may wish to make an offer in full and final settlement, without further disputation over costs. It may wish to place pressure on the plaintiff to consider the offer favourably by reserving an entitlement to use the offer in relation to costs if the matter proceeds to trial. There is no reason based on policy or principle which would preclude a defendant relying on such an offer only when it is said to be exclusive of costs. Such an inclusive offer will not cause the plaintiff embarrassment: its value will be that amount remaining to him or her after deducting costs already incurred, which the plaintiff's lawyer should be readily able to quantify. The disadvantage of an inclusive offer lies with the defendant if the matter proceeds to judgment. Where the judgment is equal to or above the inclusive figure, the defendant will have failed to better its own offer. However, if the judgment is below the offer there may be uncertainty because the offer included an unquantified element for costs incurred up to the time when it lapsed or was rejected. No doubt the figure for costs incurred to that time by the plaintiff could be resolved by some form of assessment, but if the calculation of the damages component is not clearly seen to provide a figure above the judgment, then the interests of justice will usually not be served by incurring further expense in assessing the costs element of an offer and the plaintiff would be entitled to his or her costs: see Smallacombe above at [140]. 145 Different considerations will arise if the plaintiff makes an inclusive offer, the matter proceeds to trial and the plaintiff obtains a judgment which is below the offer but arguably above the damages component. Again, applying the approach adopted in Smallacombe, the plaintiff will be unable to obtain a special order as to costs because he or she will be unable to establish (without an assessment of costs) that the offer has been bettered. On the other hand, if the plaintiff obtains a sum in excess of the offer, it is clear that the offer has been bettered and a special order for costs may be appropriate. Thus, if the plaintiff in the present case had retained a judgment in excess of $300,000, there would have been no reason to deny him the opportunity to seek a special order for costs merely because his offer was said to be inclusive of costs. 146 There may also be an issue about the reasonableness of the recipients conduct in refusing an offer. In this case the question concerns the conduct of the defendant: again different considerations may apply to a plaintiff in receipt of an offer. It is sometimes suggested that a plaintiff can act reasonably in refusing an offer made at any early stage of the proceedings, before his or her evidence (especially expert opinion) has been obtained. A plaintiff may commence proceedings without a real appreciation of the strengths and weaknesses of the case, or the likely quantum of damages. Further, a plaintiff may require time after commencing proceedings to undertake appropriate pre-trial preparation and collection of evidence. A demand for an early trial might be resisted on the basis that the plaintiff would not be ready. Nevertheless, it does not follow that where the plaintiff is uncertain as to the likely outcome, he or she can reject an offer without being at risk as to costs if the offer proves fair and reasonable. Delay is often thought to favour defendants, although that may depend in part on the likely rates of pre-judgment interest. But if true, it would provide support for a costs regime which encouraged early offers by defendants. Accordingly, the fact that a defendant's offer is made early in the proceedings should not by itself be given significant weight in assessing the reasonableness of the plaintiff in rejecting it. Nor should significant weight usually be given to what the plaintiff did or did not know at that stage. Were it otherwise, the more complex the litigation the less likely that the rejection of an early offer which proves to have been fair and reasonable, will have costs consequences. That tendency would diminish rather than enhance the purpose to be discerned from Calderbank offers and court rules. 147 Greater sympathy may be accorded a defendant who receives an offer early in proceedings where there has been no reasonable opportunity for it to assess its questions of liability or its likely exposure in damages. Such matters must be assessed on a case by case basis. Usually litigation will not be the first that the defendant hears of the claim. However, a defendant which receives an offer of settlement in circumstances where it reasonably requires more time to consider its position would no doubt be advised to respond to that effect and, if necessary, make a counter-offer in due course. 148 Any assessment of the reasonableness of a party's conduct in not accepting an offer must be made on a summary basis. Just as it is undesirable that further expense be incurred in an assessment of costs, it is equally undesirable that questions of reasonableness be allowed to justify the presentation of further evidence or additional hearing time. 149 In the present case, the fact that the offer was said to be open for only seven days may well be a factor suggesting that a failure to accept the offer was not unreasonable. However, it is but one circumstances to be considered and should not by itself lead to any prima facie conclusion. The absence of any request for an extension of time would be relevant in assessing reasonableness, as would the fact that the offer was made in response to an offer by the defendants which itself required acceptance within seven days. 150 However, the application in the present should fail because it is not clear that the plaintiff in fact bettered his offer. The proposed judgment is below the offer. The component of costs is unknown and, for the purpose of considering an application for indemnity costs, it is not appropriate to embark on an assessment of costs at the time the offer was made, as explained at [145] above. The outcome is not so close to the offer that one could say it clearly exceeded the damages component once some allowance had been made for costs to the time after which it was no longer open. Accordingly, the plaintiff should have his costs of the trial on the usual basis. Conclusions 151 I agree with the orders proposed by McColl JA. ********** 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.