Supreme Court New South Wales Medium Neutral Citation: QBE Insurance (Australia) Ltd v Volokhova (No 2) [2014] NSWSC 779 Hearing dates: 10/06/2014 Decision date: 10 June 2014 Jurisdiction: Common Law Before: Harrison AsJ Decision: The plaintiff is to pay the first defendant's costs on an indemnity basis as from 23 January 2014. Catchwords: COSTS - offer of compromise made in accordance with r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) - indemnity costs pursuant to r 42.15A Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), rr 20.26, 42.15A Cases Cited: AAI Limited v Josipovic (No 2) [2013] NSWSC 1577 QBE Insurance (Australia) Ltd v Volokhova [2014] NSWSC 726 Category: Costs Parties: QBE Insurance (Australia) Ltd (Plaintiff) Oksana Volokhova (First Defendant) Josephine Snell (Second Defendant) Motor Accidents Authority of New South Wales (Third Defendant) Representation: Counsel: M Sofoulis (Solicitor - Plaintiff) M A Robinson SC (First Defendant) Solicitors: QBE In House Legal - Claims (Plaintiff) Monaco Solicitors (First Defendant) File Number(s): 2013/295399 Publication restriction: Nil EX TEMPORE Judgment 1HER HONOUR: Today I have just delivered judgment in QBE Insurance (Australia) Ltd v Volokhova [2014] NSWSC 726. I dismissed the summons and ordered that the plaintiff pay the first defendant's costs as agreed or assessed. 2Senior counsel for Mrs Volokhova sought an order that the costs be payable on an indemnity basis from 23 January 2014. This was on the basis that an offer of compromise was made. QBE does not oppose the orders sought; nevertheless, it is a matter for the Court. 3Senior counsel for Mrs Volokhova referred to the case of AAI Limited v Josipovic (No 2) [2013] NSWSC 1577, a decision of Campbell J, which is instructive. In AAI Limited, the claimant had acknowledged that the success of her application for indemnity costs depended upon both the compliance with r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and effective engagement with UCPR 42.15A, that the offer must be one to compromise any claim in the proceedings. 4UCPR 20.26 relevantly reads: "20.26 Making of offer (1) In any proceedings, any party may, by notice in writing, make an offer to any other party to compromise any claim in the proceedings, either in whole or in part, on specified terms. (2) An offer under this rule: (a) must identify: (i) the claim or part of the claim to which it relates, and (ii) the proposed orders for disposal of the claim or part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment, and (b) if the offer relates only to part of a claim in the proceedings, must include a statement: (i) in the case of an offer by the plaintiff, as to whether the balance of the proceedings is to be abandoned or pursued, or (ii) in the case of an offer by a defendant, as to whether the balance of the proceedings will be defended or conceded, and (c) must not include an amount for costs and must not be expressed to be inclusive of costs, and (d) must bear a statement to the effect that the offer is made in accordance with these rules, and (e) if the offeror has made or been ordered to make an interim payment to the offeree, must state whether or not the offer is in addition to that interim payment, and (f) must specify the period of time within which the offer is open for acceptance. (3) An offer under this rule may propose: (a) a judgment in favour of the defendant: (i) with no order as to costs, or (ii) despite subrule (2) (c), with a term of the offer that the defendant will pay to the plaintiff a specified sum in respect of the plaintiff's costs, or (b) that the costs as agreed or assessed up to the time the offer was made will be paid by the offeror, or (c) that the costs as agreed or assessed on the ordinary basis or on the indemnity basis will be met out of a specified estate, notional estate or fund identified in the offer. ... (12) A notice of offer that purports to exclude, modify or restrict the operation of rule 42.14 or 42.15 is of no effect for the purposes of this Division." 5And UCPR 42.15A reads: "42.15A Where offer not accepted and judgment no less favourable to defendant (1) This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim no less favourable to the defendant than the terms of the offer. (2) Unless the court orders otherwise: (a) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and (b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, assessed on an indemnity basis: (i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and (ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made." 6In AAI Limited, Campbell J at [28], [29] and [30] stated: "[28] ... Sub Rule 2 of r 20.26 provides, inter alia, that an offer 'must identify ... the proposed orders for the disposal of the claim' to which it relates. ... [29] To adopt the phrase of Barrett JA in Whitney v Dream Developments at [52], it is '[a]n essential characteristic of any r 20.26 offer' in its current form, that it must identify the proposed orders for the disposal of the claim. As Bathurst CJ said in Whitney at [40], an offer will not engage r 42.15A if it is 'not one compliant with r 20.26.' [30] ... I accept the insurer's argument that it was necessary for compliance with r 20.26 in form, as well as in substance, that an offer of compromise proposing a lesser amount of damages, in proceedings for judicial review of the decision of a claims assessor, also had to propose, as a minimum, an order setting aside the claims assessor's certificate. ..." 7In this offer of compromise [Ex A], the first defendant offered to compromise her claim in the following manner: "1. Verdict and judgment in favour of the first defendant in the sum of $1,019,324.00. 2. The certificate and reasons of the third defendant made on 2 August 2013 be set aside. 3. These proceedings otherwise be dismissed. 4. ..." 8This offer of compromise, compromises the amount of the verdict, but also deals with the orders for the disposal of the claim. It complies with UCPR 20.26 and has effective engagement with UCPR 42.15A. In other words, it does not suffer the same vice as the plaintiff did in AAI Limited. 9I make an order that the plaintiff pay the first defendant's costs on an indemnity basis as from 23 January 2014. ********** 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: 12 June 2014