New South Wales Court of Appeal CITATION: PENRITH RUGBY LEAGUE CLUB LTD TRADING AS CARDIFF PANTHERS v ELLIOT (NO 2) [2009] NSWCA 356 HEARING DATE(S): On the papers JUDGMENT DATE: 3 November 2009 JUDGMENT OF: Ipp JA at 1; Basten JA at 1; Sackville AJA at 1 DECISION: Set aside Order 2(b) made on 18 August 2009 and substitute the following: "Order the plaintiff to pay the defendant's costs on a party and party basis until 29 October 2008 and on an indemnity basis thereafter". CATCHWORDS: COSTS – indemnity costs – offers of compromise – valid offer made by defendant/appellant prior to trial – damages awarded against defendant/appellant at trial – defendant/appellant successful on appeal – whether costs of trial payable by plaintiff/respondent on indemnity basis – Uniform Civil Procedure Rules 2005 (NSW), r 42.15A LEGISLATION CITED: Uniform Civil Procedure Rules 2005 (NSW), rr 20.26, Pt 20; 42.13, 42.15A, Pt 42 CATEGORY: Consequential orders Brymount Pty Ltd v Cummins (No 2) [2005] NSWCA 69 CASES CITED: Calderbank v Calderbank [1975] 3 All ER 333 Penrith Rugby League Club Ltd trading as Cardiff Panthers v Elliot [2009] NSWCA 247 SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 PARTIES: Penrith Rugby League Club Ltd trading as Cardiff Panthers – Appellant Yvonne Marie Elliot - Respondent FILE NUMBER(S): CA 40051/09 COUNSEL: R G Gambi - Appellant C A W Hart - Respondent SOLICITORS: HWL Ebsworth Lawyers – Appellant Bale Boshev Lawyers - Respondent LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC 210/07 LOWER COURT JUDICIAL OFFICER: Sidis DCJ LOWER COURT DATE OF DECISION: 28 November 2008 LOWER COURT MEDIUM NEUTRAL CITATION: Elliot v Penrith Rugby League Club Ltd trading as Cardiff Panthers [2008] NSWDC 271 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40051/09 DC 210/07 IPP JA BASTEN JA SACKVILLE AJA Tuesday, 3 November 2009 PENRITH RUGBY LEAGUE CLUB LTD TRADING AS CARDIFF PANTHERS v ELLIOT (NO 2) Judgment 1 THE COURT: The respondent instituted proceedings in the District Court seeking damages by reason of injury suffered by her in a fall in the car park of the appellant's premises on 4 September 2004. She alleged that her injuries had been caused by the negligence of the appellant. 2 The primary Judge found that the appellant had breached its duty of care to the respondent by failing to provide a system that ensured that automatically operated external lights were in fact functioning when it became dark. Her Honour awarded the respondent $114,601.00 in damages, plus costs. 3 On 18 August 2009, this Court delivered judgment upholding the appellant's appeal: Penrith Rugby League Club Ltd trading as Cardiff Panthers v Elliot [2009] NSWCA 247. The Court made orders setting aside the judgment and orders of the District Court and in lieu thereof entering judgment in favour of the appellant and ordering the respondent to pay the appellant's costs of the proceedings at first instance. The respondent was also ordered to pay the appellant's costs of the appeal. 4 On 25 August 2009, the appellant filed a Notice of Motion seeking the following orders: "1. The respondent be ordered to pay the appellant's costs on an indemnity basis from 13 November 2007, being the day following the day on which an offer was made to the respondent by the appellant in accordance with the Uniform Civil Procedure Rules 2005 , r 42.14. 2. Such further or other orders as [the Court] deems fit". 5 In its written submissions, the appellant states that it does not seek the costs of the appeal on an indemnity basis. Its application for indemnity costs is limited only to the costs of the proceedings in the District Court. 6 The appellant relies on two offers made to the respondent. The first offer was dated 12 November 2007 ("First Offer") and was expressed to be an offer made under Part 20 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"). The First Offer was in the following terms: "1. The [appellant] agrees to pay the [respondent] the sum of $5,000.00 for damages together with a sum of $8,000.00 for costs and disbursements. 2. The offer is open for acceptance by the [respondent] for a period of 28 days. 3. This offer is made under Part 20 of the [UCPR]". The First Offer was not accepted by the respondent. 7 A second offer of compromise was made on 22 October 2008 ("Second Offer"). The Second Offer was said to be made on a "Calderbank" basis: see Calderbank v Calderbank [1975] 3 All ER 333; Brymount Pty Ltd v Cummins (No 2) [2005] NSWCA 69, at [10]-[21], per Beazley JA (with whom Ipp and McColl JJA agreed). The appellant offered to settle the respondent's claim on the following basis: "● Damages of $25,000.00; plus ● $25,000.00 for costs and disbursements". 8 The letter containing the Second Offer gave a large number of reasons why, in the view of the author, the respondent's claim was doomed to fail. The Second Offer was said to be made in a genuine attempt to resolve the proceedings, on the basis that the respondent's claim had "no prospect of success". The letter advised that the appellant's costs to date equated to $50,000.00, but that the appellant was prepared to bear those costs if the Second Offer was accepted. The letter stipulated that the Second Offer had to be accepted no later than 4 pm on 29 October 2008. The Second Offer was not accepted. 9 In the appellant's written submissions on costs, it contended that it had a prima facie entitlement to an order for indemnity costs from 12 November 2007. This entitlement was said to arise under UCPR, Pt 42 r 42.15A. 10 UCPR, r 42.15A is in Div 3 of Pt 42 of the UCPR. Rule 42.13 provides that Div 3 applies to proceedings in respect of which an offer of compromise is made under r 20.26. In its reply submissions, the appellant conceded that the terms of the First Offer did not comply with r 20.26, in that it was not made "exclusive of costs" as required by r 20.26(2). 11 The appellant nonetheless contended that the First Offer was relevant to an exercise of the Court's discretion and could take effect as a Calderbank offer. However, the rejection of a Calderbank offer is not decisive as to the awarding of costs on an indemnity basis: Brymount Pty Ltd v Cummins, at [13]. The factors that are to be taken into account where a Calderbank offer has been made include: whether the rejection of the compromise offer was reasonable in the circumstances; whether the time frame within which the offeree had to consider the offer was reasonable; and whether the letter of compromise explicitly stated that the offer was made in Calderbank terms and clearly specified the consequences of refusal. Brymount Pty Ltd v Cummins , at [14], citing SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323, at [37], per Giles JA. 12 In our opinion, it was not unreasonable for the respondent to reject the First Offer. The offer purported to be made pursuant to the UCPR, but in fact did not comply with the requirements of r 20.26. Moreover, the First Offer was for a very small sum and no explanation was given for the costs offer. In addition, as the respondent points out in her written submissions on costs, the offer was made at a time when the respondent had served her expert's report on liability, but the appellant had not addressed the issues raised in that report. 13 The Second Offer falls into a somewhat different category. It was explicitly designated as a Calderbank letter and made clear that, in the event that the offer was not accepted, the appellant would seek an order for costs on an indemnity basis. The sum of $25,000.00 offered, in the circumstances, was a genuine offer of compromise. While the letter accompanying the Second Offer did not explain the calculation underlying the sum of $25,000.00 offered in respect of costs, the offer to pay what was clearly a significant portion of the respondent's costs materially increased the value of the offer to her. 14 The respondent contends that it was not unreasonable for her to reject the offer. She points out that the appellant's letter identified a very large number of difficulties in her case, many of which were not ultimately established. She also says that the time for acceptance was unduly short (in effect, six days). 15 It is true that the letter of 22 October 2008 overstated the flaws in the respondent's case. Nonetheless, the letter made a genuine offer of compromise that, if accepted, would have left the respondent in a very much more advantageous position than the result she ultimately obtained in the litigation. Bearing in mind that the trial was scheduled to begin on 11 November 2008 (less than three weeks after the Second Offer was made), the time specified for acceptance cannot be said to be unreasonable. 16 The absence of any reference in the notice of appeal to the appellant's intention to seek a special order for indemnity costs at the trial, if it succeeded on the appeal, does not prevent such an application being made on the basis of the offers of compromise made before the trial. 17 For the foregoing reasons, this Court should set aside Order 2(b) made on 18 August 2009 and substitute the following: "Order the plaintiff to pay the defendant's costs on a party and party basis until 29 October 2008 and on an indemnity basis thereafter". ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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