Supreme Court New South Wales Medium Neutral Citation: Wright by his tutor Wright v Optus Administration Pty Limited (No 2) [2015] NSWSC 288 Hearing dates: 20 March 2015 Date of orders: 20 March 2015 Decision date: 20 March 2015 Jurisdiction: Common Law Before: Campbell J Decision: Orders in accordance with short minutes Catchwords: COSTS – indemnity costs – offer of compromise and Calderbank offer – no question of principle Legislation Cited: Civil Liability Act 2002 (NSW); Law Reform (Miscellaneous Provisions) Act 1946 (NSW); Workers Compensation Act 1987 (NSW) Cases Cited: Calderbank v Calderbank [1976] Fam 93; 3 WLR 586; TNT Australia Pty Ltd v Christie [2003] NSWCA 47; 65 NSWLR 1 Category: Procedural and other rulings Parties: Glenn Wright by his Tutor James Stuart Wright (plaintiff) Representation: Counsel: Mr Callaway (Plaintiff) Mr D F Villa (First Defendant) Mr W Reynolds (Cross Defendant) Solicitors: Firths The Compensation Lawyers (plaintiff) Hunt & Hunt (defendant) Sparke Helmore Lawyers (cross-defendant) File Number(s): 2009/297493 (Revised) Extempore Judgment 1. I gave judgment in this matter on 6 March 2015 reserving liberty to the parties to apply in respect of errors of calculation in my damages awards, and implicitly in relation to any special order as to costs to which any party considered himself or itself entitled. The matter has come back before me today for the entry of final orders, and the parties have pointed out that there were miscalculations in my assessment of damages, but counsel have been able to agree on what corrections should be made and what the amount of the final judgment should be, and I express my gratitude to them for that. Optus does not concede the "legal correctness" of my award. 2. There are still some outstanding issues. First, so far the parties have not been able to agree upon the amount of the indemnity plus interest that IPA is entitled to under s 151Z(1)(d) Workers Compensation Act 1987 (NSW). Both IPA and Optus are content that no monetary judgment should be entered today, and given the declaration I propose to make, have indicated that it is possible that no monetary judgment will be sought. I am content to leave that matter to the good sense of the parties. Doubtless, if one or other makes an application for the entry of a monetary judgment, further orders can be made at the appropriate time. 3. There are two applications for special orders as to costs. The first application is made on behalf of the plaintiff and relies upon an offer of compromise forwarded to Optus' solicitors under cover of a letter dated 6 November 2012. Optus acknowledges it received the offer of compromise on 8 November 2012, and I understand that counsel agree that, unless I am otherwise persuaded, the indemnity costs order will run from 9 November 2012. 4. The effect of the rules are that indemnity costs follow automatically unless the offeree persuades me that there are circumstances which justify making another order. Those circumstances need not necessarily be exceptional or special, but given that there is a strong presumption under the rules in favour of the offeror, they are to be compelling. 5. Mr Villa of learned counsel concedes that the plaintiff has bettered the offer of compromise by a wide margin. The only issue is whether there is some factor which displaces the automatic operation of the rules. The point he relies upon is that the plaintiff in fact won on a point not pleaded. 6. The plaintiff's case was pleaded and opened on two grounds. One was the personal negligence of Optus, and the second was vicarious liability for the negligence of a named employee, Ms Hedges. Mr Villa argues that properly understood, my reasons indicate that I found Optus liable vicariously for the negligence of a Mr Williams, not Ms Hedges. 7. An important point to recall, as I said in my principal judgment, is that Optus objected at the trial to any case being presented on the basis of Optus being vicariously liable for Mr Williams' negligence because that was outside the pleadings. Although ultimately it may not be for me to say, I do not regard my judgment against Optus as being founded upon being vicariously liable for Mr Williams' negligence, although certainly Mr Williams was Optus's man on the ground responsible for managing the difficult situation that arose involving Mr George. He also played the decisive part in putting Mr Wright in close physical proximity to Mr George who was behaving aberrantly, which, as I found, subjected people near him to an unreasonable risk of injury. However, I will not go through everything I have said in my judgment. 8. I regard my findings on liability as amounting to personal negligence on the part of Optus for breaching a duty which I found, on the basis of the reasoning in TNT Australia Pty Ltd v Christie [2003] NSWCA 47; 65 NSWLR 1, to be non-delegable. In essence, it was a failure to implement a safe system for managing the situation which arose on the day which constituted negligence. That case was well and truly run on the evidence before me and was open on the pleadings. 9. I reject the argument advanced on behalf of Optus. There being no other reason advanced as to why an indemnity costs order should not be made in favour of the plaintiff, I propose to enter such an order from 9 November 2012. 10. The second cost application relates to an application by IPA for indemnity costs. IPA relies upon two circumstances. The first is a Calderbank letter dated 4 January 2011, and the second is an offer of compromise under the rules dated 25 August 2011. 11. The considerations which inform the exercise of a special discretion in relation to costs vary depending upon whether a Calderbank offer on the one hand or an offer of compromise on the other excites the exercise of the discretion. 12. Mr Villa again very fairly accepts that the Calderbank letter, contrary to his solicitor's assertion at the time, in fact complies with the requirements of such offers as understood in the case law. He also accepts that the offer of compromise complies with the rules. 13. So far as the Calderbank letter is concerned, the onus lies upon IPA to persuade me that an indemnity costs order should be made. Having said that, I think it fair to view the arguments advanced by Mr Reynolds of counsel in the light of the answer advanced by Mr Villa. It is important to bear in mind, that, at the time each of the offers was made, IPA's claim for a statutory indemnity under s 151Z(1)(d) Workers Compensation Act had not been advanced. It was not advanced until sometime in 2012. 14. When the Calderbank offer was made in January 2011, there were mutual cross-claims seeking contribution or indemnity under the provisions of s 5 Law Reform (Miscellaneous Provisions) Act 1946 (NSW). By its Calderbank offer, IPA offered to bear its own costs of those cross-claims if Optus agreed to judgment in its favour. It has bettered the offer because I have found that IPA is not a tortfeasor liable in respect of the same damage (suffered by Mr Wright) as Optus. Indeed, IPA is not liable at all in my judgment. However, that it has bettered this offer is not enough. 15. What Optus says in response is that neither the Calderbank offer nor the offer of compromise offered to dispose of the whole controversy between IPA and Optus, because neither offer dealt with the very real prospect of IPA raising a claim for statutory indemnity under the Workers Compensation Act. Although no such claim had been advanced, it was something that Optus' lawyers understood, as all experienced litigators in this field would understand, as very likely to arise. 16. Agreeing to the offer that judgment be entered in favour of IPA on the cross-claims, so far as the Calderbank letter was concerned, would fail to dispose of the whole controversy likely to be raised between IPA and Optus. 17. As I asked Mr Reynolds during argument, in assessing whether it is reasonable to require Optus to pay IPA's costs on an indemnity basis because of its rejection of a Calderbank offer, it is appropriate for the Court to look at the reasonableness of the offer and its rejection at the time it was made and rejected, but through the lens of the actual outcome of the litigation. The actual outcome of the litigation involves a finding, and indeed a declaration, that IPA is entitled to its statutory indemnity, not claimed at the time the offer was made. I think this realisation makes Optus' point, and in the circumstances, I am not persuaded that I should order indemnity costs on the basis of the Calderbank letter. 18. Turning to the offer of compromise, at the time it was made, both cross ‑claims were on foot. The first cross-claim was brought by Optus against IPA, and the second cross-claim was brought by IPA against Optus. The offer of compromise only offered to compromise the first cross-claim. This is obvious from looking at the terms of the offer of compromise. In it, IPA styles itself as the cross-defendant, and in that capacity, and in that capacity only, offers the compromise with Optus whom it styles as the cross-claimant, in relation to the latter's cross-claim. 19. This would not have had the effect at that time of releasing IPA from the litigation or of releasing Optus from any further obligation to IPA. It still left it exposed to IPA's s 5 cross-claim and to what I have described as the very real prospect of having to meet the s 151Z(1)(d) claim for indemnity. 20. That is what happened, and looking at the reasonableness of the offer of compromise and its rejection through the lens of the outcome of the proceedings, it seems to me that it was reasonable for Optus to reject what I will refer to as the truncated offer to resolve one part only of the whole controversy between it and IPA. For those reasons, I refuse IPA's application for indemnity costs on both bases advanced. 21. (Note: Orders were made in accordance with short minutes of order handed up by counsel amending the orders pronounced on 6th March 2015 and giving effect to these reasons.) ********** 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: 23 March 2015