Court of Appeal Supreme Court New South Wales Medium Neutral Citation: NRMA Insurance for the Nominal Defendant v Al-Bayati (No 2) [2019] NSWCA 14 Hearing dates: On the papers Decision date: 15 February 2019 Before: Macfarlan JA; Barrett AJA Decision: Notice of motion filed on 28 November 2018 dismissed with costs. Catchwords: COSTS – application for leave to appeal dismissed with costs – offer of compromise and Calderbank letter – indemnity costs – discretion to "otherwise order" – element of compromise – all or nothing case – where offer is invitation to surrender – COSTS – exercise of general discretion – offer of compromise and Calderbank letter – indemnity costs – appeal proceedings – reliance on offer made in first instance proceedings. Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Commonwealth of Australia v Gretton [2008] NSWCA 117 County Securities Pty Limited v Challenger Group Holdings Pty Limited (No 2) [2008] NSWCA 273 Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 Robb Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170 Category: Costs Parties: Shahed Al-Bayati (Applicant on the motion) NRMA Insurance for the Nominal Defendant (Respondent on the motion) Representation: Counsel: Mr N Husani, Solicitor (Applicant on the motion) Mr J Mancuso, Solicitor (Respondent on the motion) Solicitors: Solicitors: Thomas Booler Lawyers (Applicant on the motion) Hall & Wilcox (Respondent on the motion) File Number(s): CA 2018/222259 Decision under appeal Court or tribunal: District Court Jurisdiction: Civil Date of Decision: 21 June 2018 Before: Strathdee DCJ File Number(s): DC 2017/116637 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. THE COURT: On 7 November 2018, the Court dismissed with costs the Nominal Defendant's application for leave to appeal against a judgment of $60,898.56 ordered on 21 June 2018 in favour of Ms Al-Bayati. By notice of motion filed on 29 November 2018, Ms Al-Bayati seeks an order that the costs awarded to her and against the Nominal Defendant be assessed on an indemnity basis. 2. In support of that application, Ms Al-Bayeti relies on both an offer of compromise made under rule 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) on 10 August 2018 and a Calderbank letter of the same date. Each conveyed an offer of settlement of the proceeding in this Court on the basis that the summons seeking leave to appeal be dismissed and that each party bear its own costs. 3. The Nominal Defendant accepts that a prima facie entitlement to assessment on an indemnity basis arises where a settlement offer is made but not accepted and the party to whom the offer was made achieves an outcome no more favourable to it than the offer. It refers, in relation to the formal offer under the rules, to rule 42.15A of the Uniform Civil Procedure Rules. The principle is the same in the Calderbank context. 4. However, the Nominal Defendant resists that outcome in the present case on the footing that neither document of 10 August 2018 conveyed an offer of real and genuine compromise. In each case, it is said, a document despatched some five hours after service of the summons seeking leave to appeal did no more than invite surrender or capitulation - albeit with each party left to bear its own costs. 5. While an offer that is in substance an invitation to surrender usually lacks the elements of "give and take" that characterise compromise, it can in certain circumstances result in the successful triggering of the indemnity costs mechanism under the rules: Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [31]. But for that to happen, the claim or defence must be something approaching the character of frivolous or vexatious: ibid quoting Robb Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170 at [20]. The overriding question goes to the reasonableness of the conduct of the recipient in not accepting the offer. Rejection or non-acceptance of an offer to capitulate cannot, in general, be unreasonable if the case sought to be advanced by the rejecting (or non-accepting) party has some colour of substance to it. 6. In this case, the Court found that the Nominal Defendant's proposed grounds of appeal raised arguments that "cannot be dismissed out of hand" and were "reasonably arguable". Leave to appeal was refused because the Nominal Defendant did not establish that it had "plainly suffered an injustice". The application for leave to appeal was therefore not devoid of prospects of success and the Nominal Defendant did not engage in relevant delinquency by persisting with the application for leave. 7. Ms Al-Bayati seeks to call in aid an offer of compromise and a Calderbank offer made by her in the court below. Because of those offers, the primary judge ordered that the costs of Ms Al-Bayati, as the successful plaintiff at trial, be assessed on an indemnity basis for a period after the offers had been made. 8. It is true that rule 51.49 of the Uniform Civil Procedure Rules permits this Court to have regard to any offer of compromise made in the court below. But, as was emphasised in Regency Media at [39], the appeal is a separate proceeding. The discretion as to costs must be exercised in relation to that separate proceeding. By the time that the the proceeding commences, there is a new landscape in which, to quote again from Regency Media (at [40]) "facts have been found, credibility issues resolved and the weight of evidence determined"; and (also at [40]): "Although there may be a challenge to such findings, the parties are nonetheless in a different position from that prior to trial and should assess their cases accordingly, if they intend to seek indemnity costs based upon an offer of compromise." 1. The primary judge was called upon to decide difficult factual issues. Accounts of witnesses about the motor accident differed in material ways. Once the findings of fact had been made, the factors that were at work in the assessment of settlement offers made in advance of trial no longer operated. In the circumstances of this case, what was reasonable or unreasonable in response to a settlement offer made before trial throws no light on the reasonableness or otherwise of offers in advance of the hearing of the summons seeking leave to appeal. 2. The party making an offer of compromise or Calderbank offer bears the onus of satisfying the court that it should exercise the costs discretion in its favour: Evans Shire Council v Richardson (No 2) [2006] NSWCA 61; Commonwealth of Australia v Gretton [2008] NSWCA 117 at [46]; County Securities Pty Limited v Challenger Group Holdings Pty Limited (No 2) [2008] NSWCA 273 at [31]. Ms Al-Bayati has not discharged that onus. 3. The notice of motion filed on 28 November 2018 is dismissed with costs. ********** 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: 15 February 2019