Supreme Court New South Wales Medium Neutral Citation: Collins v Clarence Valley Council (No 4) [2013] NSWSC 1735 Hearing dates: 17 to 21, 24 and 28 June 2013, and later written submissions Decision date: 27 November 2013 Jurisdiction: Common Law Before: Beech-Jones J Decision: (1) The Plaintiff pay the Defendant's costs of the proceedings on the ordinary basis up to and including 15 August 2012. (2) The Plaintiff pay the Defendant's costs of the proceedings on an indemnity basis from 16 August 2012. Catchwords: COSTS - offer of compromise - Uniform Civil Procedure Rules 2005 (UCPR) r 20.26 - compliance with UCPR - whether offer exclusive of costs - UCPR r 42.15A - whether Court should order otherwise. Legislation Cited: - Civil Liability Act 2002 - Uniform Civil Procedure Rules 2005 Cases Cited: - Bartlett v Coomber (No 2) [2008] NSWCA 282 - Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141 - Collins v Clarence Valley Council (No 3) [2013] NSWSC 1682 - Leichhardt Municipal Council v Green [2004] NSWCA 341 - Ofria v Cameron (No 2) [2008] NSWCA 242 - Vale v Eggins (No 2) [2007] NSWCA 12 - Whitney v Dream Developments Pty Ltd [2013] NSWCA 188 Category: Costs Parties: Dr Ann Page Collins - Plaintiff Clarence Valley Council - Defendant Representation: Counsel: C.T. Barry QC, M.P. Tanevski (Plaintiff) R.S. Sheldon SC, B.R. Wilson (Defendant) Solicitors: Johnston Vaughan (Solicitors) DLA Piper (Defendant) File Number(s): 2010/326308 Judgment 1On 15 November 2013 I published my principal judgment in the proceedings (Collins v Clarence Valley Council (No 3) [2013] NSWSC 1682). I entered a judgment for the defendant and dismissed the proceedings. At the time I heard brief submissions on costs. I ordered the parties to file any further submissions on that topic on or before 19 November 2013. 2The only matter in issue on costs was whether the refusal by the plaintiff to accept a purported offer of compromise made by the defendant to the plaintiff on or about 15 August 2012 warranted some special order for costs in the defendant's favour from that time. The offer was expressed to remain open for acceptance until 16 September 2012. The defendant offered to compromise the claim on terms that there be a verdict in its favour and "[e]ach part[y] ... bear its or her own costs". 3Immediately after judgment was pronounced Senior Counsel for the plaintiff, Mr Barry QC, submitted the offer did not comply with the rules concerning offers of compromise in that it made express provision as to costs. In so submitting he sought to rely on the judgment of the Court of Appeal in Whitney v Dream Developments Pty Ltd [2013] NSWCA 188. Uniform Civil Procedure Rules 2005 ("UCPR") r 20.26 deals with the content of offers of compromise. The relevant version of that rule is the one in force at the time the offer was made, being the form considered in Whitney. In Whitney an offer that expressly addressed the issue of costs was not found to be "exclusive of costs" for the purposes of UCPR r 20.26(2) and therefore did not constitute an offer of compromise under the rules (at [24] and [40] per Bathurst CJ, [46] per Beazley P, [47] per McColl JA, [52] to 53] per Barrett JA and [78] per Emmett JA). However that conclusion is of no present relevance because the requirement in UCPR r 20.26(2) that the offer be "exclusive of costs" is subject to an exception where the offer "states that it is a verdict for the defendant and that the parties are to bear their own costs". This was such an offer. 4Ordinarily it would follow from this finding that, by the operation of UCPR r 42.15A, the defendant would obtain an order for its costs of the proceedings on the ordinary basis up to and including 15 August 2012 and an order for costs on an indemnity basis on and from 16 August 2012. However Mr Barry QC pointed to four matters as warranting the Court "order[ing] otherwise" under UCPR r 42.15A(2). 5First, he contended that the offer made on 15 August 2012 did not represent a genuine compromise of the claim. In Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141 at [14] the Court of Appeal summarised the authorities concerning this proposition so far as they apply to offers of compromise: "An offer of compromise will only justify costs on an indemnity basis if it has a real element of compromise (Leichhardt Municipal Council v Green [2004] NSWCA 341; Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375). An offer which does not involve a real and genuine element of compromise will not be taken into account in relation to costs under the Rules (The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] NSWCA 120; (2006) 67 NSWLR 706). It has been said that indemnity costs will not be granted where the offer of compromise is designed simply to trigger the entitlement: for example, Tickell v Trifleska Pty Ltd (1990) 25 NSWLR 353 at 355 per Rogers CJ Comm D. An offer of compromise will always be intended to trigger the entitlement. The force of 'simply' is the need for a real element of compromise." 6However simply because a defendant proposes a resolution involving the entry of judgment in their favour with no order as to costs does not necessarily mean that the offer has no real element of compromise (Leichhardt Municipal Council v Green [2004] NSWCA 341 at [30] and [36] per Santow JA, with whom Bryson and Stein JJA agreed). Such a conclusion would be inconsistent with UCPR r 20.26(2). Instead the offer must be considered having regard to the circumstances in which it was made (Leichhardt Municipal Council at [27]). 7As at 2012 the proceedings had been on foot for two years. Pleadings had been filed and there had been a number of directions hearings. I expect that by that time substantial costs had been incurred by the Council. Further it had pleaded reliance on various provisions of the Civil Liability Act 2002 which represented a formidable hurdle for Dr Collins. Its case would have appeared strong, notwithstanding the poor state of the bridge at the time of Dr Collins' accident. Its offer represented some potential benefit to Dr Collins in terms of avoiding an exposure to a potential liability. In these circumstances, I do not consider its position to be relevantly different to the offer found by Santow JA to be genuine in Leichhardt Municipal Council at [40]. 8The second point made by Mr Barry QC was that the offer was "illusory". This contention adds nothing to the point just addressed. The two decisions he relies on as supporting the proposition that an "illusory" offer will not justify an order for indemnity costs both involved Calderbank offers and the application of the principle that an order for indemnity costs will not be made unless the refusal of the offer was unreasonable (Bartlett v Coomber (No 2) [2008] NSWCA 282 and Ofria v Cameron (No 2) [2008] NSWCA 242). In Bartlett at [7] Hodgson JA contrasted Calderbank offers with offers of compromise made under the rules. 9Third, Mr Barry QC submitted that the Court should "orde[r] otherwise" because most of the defendant's evidence was served after the offer was made. He referred to a number of authorities the most helpful to him being Vale v Eggins (No 2) [2007] NSWCA 12. In Vale the fact that, at the time the relevant offer was made by a defendant, he had in his possession a number of medical reports that had not been served led to the Court not ordering indemnity costs against a plaintiff who did not obtain a superior result to the offer (at [22] per Beazley JA, with whom McColl JA agreed at [26], contra Bryson JA). However Dr Collins' case did not fail because of the evidence served by the Council. The Court's conclusion that Dr Collins' accident was the result of a materialisation of an obvious risk did not depend on the Council's evidence. The finding that she did not overcome s 45 of the Civil Liability Act arose, not because of the evidence the Council in fact called, but because there was an absence of evidence from her to demonstrate actual knowledge on the part of the Council (see Collins at [109] to [121] and [129] to [145]). These were all matters raised on the pleadings filed well prior to the Council's offer. 10Fourth, Mr Barry QC submitted that the "proceedings had merit but involved complex issues many of which had been the subject of limited, if any, principled consideration". It cannot be denied that Dr Collins' case had "merit" (see Collins (No 3) at [7]). However the two principal issues upon which she lost, namely obvious risk and s 45, turned upon an analysis of Court of Appeal authorities that were decided well prior to 2012. 11None of these matters considered individually or collectively warrants the Court otherwise ordering. 12Accordingly the Court orders that: (1)The Plaintiff pay the Defendant's costs of the proceedings on the ordinary basis up to and including 15 August 2012. (2)The Plaintiff pay the Defendant's costs of the proceedings on an indemnity basis on and from 16 August 2012. ********** 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. Decision last updated: 27 November 2013