New South Wales Court of Appeal CITATION: Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S): On the papers JUDGMENT DATE: 3 April 2006 JUDGMENT OF: Giles JA; Ipp JA; Tobias JA DECISION: Application for order refused CATCHWORDS: PROCEDURE – costs – application for indemnity costs of trial – Calderbank offer – principles LEGISLATION CITED: District Court Rules Part 39 Rule 1B Calderbank v Calderbank [1975] 1 All ER 333 CASES CITED: Leichhardt Municipal Council v Green [2004] NSWCA 341 Oshlack v Richmond River Council (1998) 193 CLR 72 SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 PARTIES: Evans Shire Council Norman Boyd Richardson FILE NUMBER(S): CA 40445/05 COUNSEL: A: J E Marshall SC / J Thornton R: H N Kelly SC / T McKenzie SOLICITORS: A: Phillips Fox, Sydney R: King Cain Solicitors, Bathurst LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC 21/02 LOWER COURT JUDICIAL OFFICER: Murray A-DCJ IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40445/05 GILES JA IPP JA TOBIAS JA 3 April 2006 EVANS SHIRE COUNCIL v NORMAN BOYD RICHARDSON (No 2) Judgment on application for indemnity costs 1 THE COURT: The judgment of the Court in this matter on the substantive issues argued on the appeal was delivered on 30 November 2005 when the Court granted the claimant leave to appeal, allowed the appeal, set aside the verdict and judgment of the primary judge in favour of the opponent, and in lieu thereof ordered that there be a verdict and judgment for the claimant. 2 As well as ordering the opponent to pay the claimant's costs of the appeal, it ordered the opponent to pay the costs of the proceedings at trial. On the application of the claimant's solicitor, at the time these orders were made, the claimant was granted leave to file submissions in support of an application for indemnity costs of the trial. The Court therefore directed that the claimant file those submissions on or before 6 December 2005, that the opponent's submissions in reply be filed by 9 December 2005 and that the Court would then determine the issue of indemnity costs on the papers. 3 The claimant's submissions were duly filed on 6 December 2005 but no submissions in reply were filed on behalf of the opponent. The Court was later informed that the opponent did not wish to file any such submissions. 4 The opponent was successful before the primary judge who found that he was entitled to damages in the sum of $10,100 for injuries sustained on Anzac Day 1999 when he tripped over a mound which, as his Honour held, the claimant had failed to remove in breach of its duty of care when exercising de facto control over the area where the mound was located. 5 The opponent instituted proceedings in the District Court by Ordinary Statement of Claim filed on 24 April 2002 in paragraph 1 of which he alleged that he was a lawful entrant to Stevens Park (the Park) which was owned, managed or controlled by the claimant. It was then alleged in paragraph 2 that at an Anzac Day ceremony organised by the Rockley Lions Club (the Club), on exiting the Park the opponent tripped over a mound of dirt and was injured. 6 In its Notice of Grounds of Defence filed on 4 November 2002 the claimant admitted that the Park was within the boundaries of the Shire but otherwise denied the allegations contained in paragraphs 1 and 2 of the Statement of Claim. 7 The matter was listed for hearing before the primary judge at Bathurst on Monday 15 November 2004. On 11 November 2004 (the previous Thursday), the claimant's solicitor sent a fax to the opponent's solicitor which was stated to be "Without Prejudice Save as to Costs" and which was in the following terms: "We refer to your facsimile of 10 November 2004 offering to resolve this matter in the sum of $5,000 plus costs. In our opinion the offer contained in your facsimile is defective as your client is not entitled to receive payment of his costs unless the Court has certified there was sufficient reason for bringing or trying the action in the District Court pursuant to Part 39 Rule 1B of the District Court Rules . We will object to any application for indemnity costs on this basis and will tender this letter in support of our objection should this occur. Nevertheless, we are instructed our client is prepared to resolve this matter on the basis of a Verdict in favour of the First, Defendant, Evans Shire Council, with each party to bear its own costs of the proceedings. This offer is made pursuant to the principles of Calderbank v Calderbank and is open for acceptance until 12 noon on 12 November 2004. We are instructed if this offer is not accepted by your client, there will be no further compromise of this matter on behalf of our client. Please obtain your client's instructions and provide us with your response." 8 It would appear that the opponent did not respond to this letter. As a consequence, the matter proceeded to a hearing before the primary judge on the following Monday. 9 The claimant now submits that, in the circumstances to which I shall refer, it was unreasonable for the opponent not to have accepted the offer contained in the facsimile of 11 November 2004 as a consequence whereof this Court should exercise its discretion to order the opponent to pay the claimant's costs of the trial before the primary judge on an indemnity basis as and from 11 November 2004. As the offer was open for acceptance until 12 noon on 12 November 2004, if any indemnity costs order was to be made by this Court it should, in any event, date from the expiration of the period within which the offer could be accepted. 10 As was pointed out in this Court's substantive judgment at [8], the issue with which the Court was confronted was whether the claimant exercised at least de facto control over the area where the mound was located such as to impose upon it a duty to exercise reasonable care for the opponent's safety. As summarised in that judgment, the primary judge at [23] found that the Park was Crown Land under the trusteeship of the claimant but that in 1990 the Club had assumed its care, maintenance and occupation. Furthermore, the area where the opponent fell was held to have been located in that part of Hill Street north, which was a non-dedicated Crown road in respect of which the claimant had neither statutory powers nor duties. 11 As we have indicated, the opponent pleaded and the claimant denied that he was injured when he tripped over the mound when exiting the Park which he alleged was owned, managed or controlled by the claimant. That denial of the claimant was given emphasis when the opponent's solicitor issued a subpoena to the claimant on 13 February 2004 seeking the production of "all records in relation to the maintenance of the lawns, gardens and surrounds of Stevens Park at Rockley in the year commencing 1 January 1998 to 25 April 1999 including records of lawn mowing, gardening, general maintenance, repairs, fencing or other work connected with the movement of power poles, fences or other construction or repair work." The claimant's reply to the subpoena on 1 April 2004 was that "The Lions Club of Rockley carries out the care and maintenance of Stevens Park and as a result Council does not have any records in relation to the maintenance of lawns, gardens and surrounds." 12 Although it appears that the opponent's case was that the mound was located at least on the edge of, but still within, the Park, he was on notice that the care and maintenance of the Park was the Club's responsibility. At this point there was no allegation that the mound on which the opponent tripped was located in Hill Street north, which was at all material times a non-dedicated Crown road. 13 When the opponent's counsel opened the case before the primary judge he did so upon the basis that the claimant owned the Park. When asked by his Honour whether the claimant "occupied and controlled the park" he was informed that it was only admitted that the Park was within the Shire boundaries and that there was a real question as to whether the mound over which the opponent tripped was within the Park at all. Counsel for the opponent submitted that the case was governed by "the normal principles of negligence … that an occupier has a duty of care in respect of premises including importantly the means of access and exit - or egress from the premises and that those duties of care - or the duty of care in the circumstances - would involve making the premises as safe as reasonable care and skill would make them." 14 Accordingly, the opponent's case was based squarely on an allegation that the mound was located in an area, be it the Park or just outside the Park, which was occupied and controlled by the claimant. 15 However, at the commencement of the second day of the hearing on Tuesday 16 November 2004, the opponent's counsel informed his Honour that there was a dispute as to whether the claimant owned the footpath or nature strip where the opponent fell and if that was generally disputed, it would be necessary for the opponent to seek the Court's indulgence to obtain a survey or real property search. 16 The claimant's counsel then informed his Honour that a road only came into the ownership or care and control of a council once it had been dedicated and that the opponent had been on notice since the filing of the claimant's defence that the onus was on him to prove that the land fell within the claimant's jurisdiction and/or that the claimant owned or had the care and control of the area where the mound was located. Thus, any application by the opponent for an adjournment to prove the contrary would be resisted. 17 The claimant therefore submitted that from the time its Notice of Grounds of Defence was filed, the opponent was on notice that the claimant denied it owned, managed or controlled the Park or its surrounds including the area where the opponent was injured. It had further denied that it had organised the Anzac Day ceremony which the opponent had attended but which the club had organised. 18 It is apparent from a reading of the relevant parts of the transcript before the primary judge that the opponent's legal advisors had simply assumed that the claimant would ultimately concede ownership or control over the area where the mound was located. Therefore, notwithstanding the claimant's denial in the Notice of Grounds of Defence and its response to the subpoena to which I have referred, the opponent had taken no steps to determine whether the mound was located within the boundaries of the Park or not and/or the nature or legal basis, if any, of the claimant's ownership or control over the area in question. 19 In these circumstances, it was submitted that the offer contained in the claimant's solicitor's fax of 11 November 2004 was one that it was unreasonable for the opponent to decline to accept given that, at the time the offer was made, it was clear that the opponent had no evidence in its possession which would enable it to prove that the claimant was the owner/occupier of the land where the opponent alleged that he had tripped. 20 The relevant principles applicable to the exercise of the Court's discretion to make an order for indemnity costs in circumstances such as the present were expounded in detail by Santow JA, with whom Bryson and Stein JJA agreed, in Leichhardt Municipal Council v Green [2004] NSW CA 341. In his judgment, Santow JA rejected (at [44]) the proposition that the fact that a Calderbank offer by a defendant was not accepted gives rise to a prima facie entitlement to costs on an indemnity basis. Rather, his Honour considered (at [46]) that a defendant must show that the plaintiff's rejection of the offer was "unreasonable" under the general law. In this respect, a court would, according to Santow JA (at [47]), be reticent to award indemnity costs following a defendant's offer of settlement in the nature of that the subject of the present offer. 21 After considering a number of authorities, including in particular that of the High Court in Oshlack v Richmond River Council (1998) 193 CLR 72 and this Court in SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSW CA 323, and acknowledging that the question of reasonableness in rejecting an offer depended on the circumstances of each case, Santow JA (at [57]) observed that, in the case in hand, there was no apparent "general delinquency" of the nature of that referred to in Oshlak on the part of the plaintiff sufficient to move the court to displace the general rule on costs. His Honour then added "Such costs orders should be reserved for the most unreasonable actions by unsuccessful plaintiffs." Such conduct on the part of a plaintiff would, for instance, be constituted by the peremptory dismissal of an offer of compromise such that an inference could be drawn that no bona fide consideration had been given by the plaintiff to early settlement of the claim. 22 In my opinion, the case for the claimant in the present matter for an order for indemnity costs would have been stronger had it been made at a point of time when, given that the claim was relatively small in any event, the parties had not reached the stage of preparing for trial with its inevitable expenditure of, and commitment to, significant legal costs. In other words, it would have been more appropriate for the claimant to have made a Calderbank offer shortly after 1 April 2004 being the date upon which it responded to the subpoena issued on 13 February 2004 that the care and maintenance of the Park was the responsibility of the Club and that the claimant therefore had no records relating thereto. 23 Furthermore, at that time there had been no suggestion by the claimant's solicitor to the opponent's solicitor that not only did the claimant not have responsibility for the care and management of the Park, but also that the mound over which the opponent had allegedly tripped was possibly outside the boundaries of the Park but within a non-dedicated Crown road (being Hill Street north) in respect of which the claimant did not have any statutory responsibilities. 24 Regrettably, the claimant's Calderbank offer was only in response to an offer made the day before by the opponent to resolve the matter in the sum of $5,000 plus costs. Further, the claimant's counter-offer was faxed to the opponent's solicitors some time on Thursday 12 November 2005 in circumstances where, firstly, the opponent was given only approximately 24 hours within which to consider and accept it and, secondly, the case was to commence the following Monday in Bathurst. 25 It is true that the opponent has not made any submissions in response to those of the claimant. In particular, there is no material which would guide the Court as to why the offer was ignored or, more accurately, not responded to. Of course, between the time the primary judge gave his decision and the hearing of the appeal the opponent had died. An order was made by this Court at the commencement of the hearing that the opponent's widow be appointed to represent his estate for the purpose of the proceedings. It may well be that the reason for there being no submissions in reply is the desire of the widow not to incur any further costs. However, it does not pay to speculate. 26 Nevertheless, even in the absence of submissions on behalf of the opponent's estate, the onus lies upon the claimant to establish to the Court's satisfaction that, in all the circumstances, the failure of the opponent to accept the offer in question was unreasonable. We are not satisfied that this is the case. 27 In our opinion, the circumstances in which the offer was made and its timing was such that we cannot be satisfied that it was unreasonable for the opponent not to respond to it. We are not, therefore, prepared to order that the opponent pay the claimant's costs before the primary judge as and from 12 November 2004 on an indemnity basis. It follows that the claimant's application for such an order is refused. ********** 11/07/2006 - Inserting date of judgment - Paragraph(s) Coversheet 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.