Supreme Court New South Wales Medium Neutral Citation: Dibbs v Emirates (No 2) [2015] NSWSC 1786 Hearing dates: On the papers Date of orders: 01 December 2015 Decision date: 01 December 2015 Jurisdiction: Common Law Before: Wilson J Decision: 1. The plaintiff is to pay the defendant's costs of the proceedings, such costs to be assessed on an ordinary basis up to and including 16 October 2014; 2. The plaintiff is to pay the defendant's costs of the proceedings, such costs to be assessed on an indemnity basis from and including 17 October 2014. Catchwords: COSTS – final orders – offer of compromise – Calderbank v Calderbank – indemnity costs Legislation Cited: Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005 Cases Cited: Associates Confectionery (Aust) Ltd v Mineral and Chemical Traders Pty Ltd (1991) 25 NSWLR 349 Calderbank v Calderbank [1975] 3 WLR 586 Dibbs v Emirates [2015] NSWSC 1332 Miwa Pty Limited v Siantan Properties Pty Ltd (No 2) (2011) NSWCA 344 Trustee for the Salvation Army (NSW) v Becker [2007] NSWCA 194 Texts Cited: Ritchie's Uniform Civil Procedure Rules (NSW) Category: Costs Parties: Michelle Leanne Dibbs (Plaintiff) Emirates (Defendant) Representation: Counsel: T. McKenzie (Plaintiff) D. Stanton (Defendant) Solicitors: Taylor & Scott Lawyers (Plaintiff) Norton White (Defendant) File Number(s): 2013/00162570 Publication restriction: None Judgment 1. On 11 September 2015 the Court made orders dismissing the plaintiff's amended summons of 2 September 2015 and entering a verdict for the defendant. The defendant sought an order for costs against the plaintiff. 2. A timetable was fixed for the parties to file submissions on the issue of costs, and the Court has now had the benefit of evidence and submissions from both parties. 3. The defendant submits that the usual orders of costs following the event should be made in its favour and, additionally, that indemnity costs should be payable from 17 October 2014, because an offer of compromise (or, alternatively, a "Calderbank" offer) was made on 16 October 2014. 4. The plaintiff opposes any order for indemnity costs, contending that the defendant's offer of 16 October 2014 complied with neither the relevant provisions of the Uniform Civil Procedure Rules (2005) ("UCPR") nor with the principles enunciated in Calderbank v Calderbank [1975] 3 WLR 586. Alternatively, it is submitted that the evidence was not complete as at 16 October 2014 and it was thus not unreasonable for the plaintiff to reject the offer made to her by the defendant. 5. The defendant relies upon an affidavit of Lara Dopson of 13 October 2015 as to the details of the offer of compromise made to the plaintiff. Ms Dopson deposes that the offer was made pursuant to r 20.26 of the UCPR and offered payment to the plaintiff in the sum of $75,000, plus costs as agreed or assessed on the basis that the plaintiff's claim against Emirates would be discontinued. The offer was stated to be open for 28 days and was not withdrawn during the specified period. 6. The offer was made in writing and proposed full and final settlement of the plaintiff's claim against the defendant. 7. The plaintiff did not respond to the offer, and it expired on 14 November 2014. 8. The matter proceeded to hearing over three days on 1, 2 and 3 September 2015. Judgment was delivered adverse to the plaintiff, with the Court concluding that liability had not been established and, even if it had, any damages payable to the plaintiff would have been very modest ($33,271) because of the extent and severity of a pre-existing injury the plaintiff had sustained. The sum that would have been awarded in such circumstances is substantially lower than that offered to the plaintiff by the defendant in October 2014. 9. The defendant submits that the general rule that costs should follow the event should apply until such point as the offer of compromise was made, after which indemnity costs should be awarded. 10. In her written submissions the plaintiff did not deal with the question of costs in the ordinary course and it may be taken that she concedes that the defendant is entitled to an order in its favour for costs as agreed or assessed. The area of dispute appears to be confined to the question of indemnity costs. 11. In that regard, the plaintiff contends that the offer of 16 October 2014 did not comply with the UCPR, and nor could the offer have provided a basis for a binding contract of the sort contemplated in Calderbank v Calderbank. 12. As to the purported non-compliance with the Rules, the plaintiff points to asserted procedural inadequacies in the offer of compromise, contending that the requirements of r 20.26 UCPR were not met. That rule is in the following terms, "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. (4) If the offeror makes an offer before the offeree has been given such particulars of the offeror's claim, and copies or originals of such documents available to the offeror, as are necessary to enable the offeree to fully consider the offer, the offeree may, within 14 days of receiving the offer, give notice to the offeror that: (a) the offeree is unable to assess the reasonableness of the offer because of the lack of particulars or documents, and (b) in the event that rule 42.14 applies to the proceedings, the offeree will seek an order of the court under rule 42.14 (2). (5) The closing date for acceptance of an offer: (a) in the case of an offer made two months or more before the date set down for commencement of the trial-is to be no less than 28 days after the date on which the offer is made, and (b) in any other case-is to be such date as is reasonable in the circumstances. (8) Unless the notice of offer otherwise provides, an offer providing for the payment of money, or the doing of any other act, is taken to provide for the payment of that money, or the doing of that act, within 28 days after acceptance of the offer. (9) An offer is taken to have been made without prejudice, unless the notice of offer otherwise provides. (10) A party may make more than one offer in relation to the same claim. (11) Unless the court orders otherwise, an offer may not be withdrawn during the period of acceptance for 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." 1. By reference to the rule above the plaintiff submits that: 1. The offer did not bear a statement that it was made in accordance with "these rules" as required by r 20.26(2)(d); and 2. The offer did not set out the proposed orders for the disposal of the claim as required by r 20.26(2)(a)(ii). 1. The submission relies upon a particularly narrow, even pedantic, construction of what is required by the Rules. 2. A copy of the defendant's offer of compromise forms part of the evidence filed by the defendant in support of its application for costs. 3. Its offer was accompanied by correspondence of 16 October 2014 referring to the enclosed "offer of compromise made pursuant to Part 20 of the Uniform Civil Procedure Rules". The offer document itself bore the statement "In accordance with Part 20 of the Uniform Civil Procedure Rules, the Defendant makes the following offer of compromise". 4. Whilst there was not specific reference to r 20.26, or to r 20.26(2)(d) on the documents, there was a clear statement accompanying and upon the offer document that the offer was made in accordance with the Rules. Since the document was titled "Offer of Compromise", and since Part 20 of the UCPR includes "Division 4, Compromise", it is clear that the defendant's offer was one made pursuant to Division 4 of Part 20 of the Rules, and was an offer seeking compromise. 5. The manner in which the defendant proposed to finalise the litigation was also clear, even without including a statement of the precise wording of the proposed orders for disposal of the claim (r 20.26(2)(a)(ii)). Had the plaintiff responded to the offer of compromise, some acceptable form of words could have been readily agreed by which the matter could have been put before the Court for consent orders to be made. 6. By that approach, the plaintiff would have received a more than adequate settlement, the parties would have been spared the expense and personal stress of litigation, and the Court's resources would have been conserved. 7. Offers of the type made by the defendant in October 2014 must be considered in the context in which litigants conduct civil litigation, that being a context requiring observance of s 56(3) of the Civil Procedure Act 2005, to assist the courts to facilitate the just, quick and cheap resolution of the real issues in the proceedings. 8. Here the defendant made an offer of compromise which was ignored by the plaintiff when made, and which the plaintiff now seeks to repudiate because of asserted non-compliance with the UCPR. Such a response is needlessly technical, and addresses minutiae rather than the real issues, that being, whether the defendant is entitled to indemnity costs given the chronology and history of the offer of compromise. 9. The plaintiff makes a similarly technical response to the defendant's asserted reliance upon the principles in Calderbank v Calderbank in support of the claim for indemnity costs, arguing that, in the absence of a statement of consent from the defendant to the filing of a notice of discontinuance, the terms of the defendant's offer were inadequate to support the existence of a binding contract. 10. The correspondence accompanying the defendant's letter of compromise contained the following statement: "If for any reason the offer does not comply with the requirements of the UCPR, the offer is intended to be made in accordance with the principles of Calderbank v Calderbank [1975] 3 WLR 586 and will be relied upon by the Defendant on the question of costs." 1. Again, the intention – and the genuine desire to resolve the claim expeditiously – is clear. 2. The defendant noted that its intent was to seek a resolution of the matter pursuant to the Rules, but sought to have any deficiency addressed by its offer taking effect as a Calderbank Offer. That approach is not unreasonable and an offer of compromise which does not comply with r 20.26 may have effect as such an offer: Trustee for the Salvation Army (NSW) v Becker [2007] NSWCA 194; Associates Confectionery (Aust) Ltd v Mineral and Chemical Traders Pty Ltd (1991) 25 NSWLR 349. 3. The plaintiff submits that the defendant's offer could not have grounded a binding contract since she could not have filed a notice of discontinuance without the consent of the defendant and, had she obtained consent and filed the notice, there would have been no enforcement option available to her should the defendant have defaulted. 4. Neither of these arguments carries any real weight. 5. The absence of any statement of consent in the Offer of Compromise or accompanying correspondence could have posed no real barrier to settlement of the matter. Since the discontinuation of the proceedings was the very mechanism suggested by the defendant to formally resolve the litigation (following payment by it of the offered sums, with costs also to be met) there could hardly have been any issue about its consent to that course. 6. Neither was there any real reason to suppose that the defendant would obtain discontinuance of the proceedings and then fail to pay the agreed settlement sum or costs, to the plaintiff's disadvantage. The Offer of Compromise was plainly a genuine attempt to resolve the matter without further expenditure of time and resources; there was nothing to suggest that the defendant would not do as it said it would if the offer was taken up. 7. Even had that occurred, there would have been no long-term disadvantage to the plaintiff, since the notice of discontinuance could have been readily set aside in such circumstances, with an order for costs adverse to the defendant being inevitable in such circumstances. 8. In my view, even if there were some issue of non-compliance with the Rules, the defendant's offer of compromise can be properly viewed as a Calderbank offer. See Trustee for the Salvation Army (NSW) v Becker [2007] NSWCA 194 at [27] – [28] on that point, where it was said, "Calderbank offers are simply offers that do not comply with the relevant rules of court relating to the making of offers of compromise: Jones v Bradley (No 2) (at [5]). Whether an offer, intended to be an offer under the Uniform Civil Procedure Rules but which is ineffective because it does not comply with those Rules, operates as a Calderbank offer, depends upon the intention of the offeror as revealed by the terms of the offer. The offer may disclose an intention that it should take effect only if it complies with the Uniform Civil Procedure Rules. On the other hand, it may disclose a general intent to make an offer, irrespective of whether it takes effect under the Uniform Civil Procedure Rules or not. The offer of compromise in this case provided that, if it was ineffective under the Uniform Civil Procedure Rules because different Rules applied in probate proceedings, the offer was to be treated as a Calderbank offer. As I have explained, the Uniform Civil Procedure Rules do apply to offers of compromise in probate proceedings, and the offer of compromise is ineffective under the Uniform Civil Procedure Rules as it does not comply with Pt 20 r 20.26(2)." 1. UCPR 42.1 provides, "42.1 General rule that costs follow the event Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs." 1. The Rules create a presumption that, subject to the Court's discretion, costs will ordinarily be awarded in favour of the successful party to the litigation. Awards of costs are made in favour of the successful litigant to compensate the party for costs incurred in prosecuting or defending a claim; where the successful litigant did all it could to resolve the litigation, but was opposed in that course by the losing party, it is ordinarily reasonable for indemnity costs to follow. That may be so even if there is some non-compliance with strict procedural requirements. 2. Pursuant to s 98 of the Civil Procedure Act 2005 (NSW) the Court retains the general discretion to award indemnity costs. 3. It is relevant to consider, 1. Whether there was a genuine offer of compromise, and 2. Whether it was unreasonable for the offeree not to accept it. (see also Ritchie's Uniform Civil Procedure Rules (NSW) at [42.13.26]). 1. In Miwa Pty Limited v Siantan Properties Pty Ltd (No 2) (2011) NSWCA 344, Basten JA adopted at [12] the following factors in determining whether the rejection of an offer was unreasonable, "a) The stage of proceedings at which the offer was received; b) The time allowed to the offeree to consider the offer; c) The extent of the compromise offered; d) The offeree's prospects of success, assessed at the date of the offer; e) The clarity with which the terms of the offer were expressed; and f) Whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting of it." 1. In the present matter it may be noted that, 1. The defendant's offer was made after the pleadings had closed, and it was clear at that stage that both liability and quantum were disputed. 2. The time for acceptance of the offer of 28 days appears to have been reasonable. 3. There is no reason to conclude that the offer of compromise was not a genuine one, and the terms – given the evidence ultimately placed before the Court by the plaintiff - appear to be more than reasonable. 4. The plaintiff's prospects of success as at the date of offer were as they were at the date of hearing, in that no further or better evidence emerged that went to the issue of liability. Such evidence as was outstanding, and which the plaintiff did not have access to in October 2014 went to the issue of quantum only. 5. The offer was clear. 6. The correspondence accompanying the offer clearly stated that the offer would be relied upon by the defendant on the question of costs, and the plaintiff was thus on notice of the issue of indemnity costs 1. In all the circumstances, I have concluded that the Court should make the orders sought by the defendant as to costs. orders 1. Pursuant to UCPR 42.15, 1. The plaintiff is to pay the defendant's costs of the proceedings, such costs to be assessed on an ordinary basis up to and including 16 October 2014; and 2. The plaintiff is to pay the defendant's costs of the proceedings, such costs to be assessed on an indemnity basis from and including 17 October 2014. ********** Amendments 01 December 2015 - Paragraph [4] case citation amended to read "3 WLR 586". Paragraph [37(c)] "appears" edited to read "appear". 02 December 2015 - Paragraph [26] "plaintiff" replaced with "defendant". 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