Costs Decisions
Recent case law May 2012
Click on the case name to be taken to the detailed version
| Decision / More Info | Legislation | The question raised | The new position |
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Peter Willis v Health Communications Network Ltd (No 2) NSW Court of Appeal 08/02/2008 Full Decision |
What costs were ultimately payable by the appellant and the respondent? What was the effect of the Calberbank offers? |
A court should only depart from the general rule [that is, that costs should be assessed on the ordinary basis: UCPR 42.2] and award indemnity costs where the conduct of the party against whom the order is sought is plainly unreasonable. Indemnity costs orders should be reserved for the most unreasonable actions by unsuccessful plaintiffs. The Court's jurisdiction to award costs on an indemnity basis is not confined by the making of an offer of compromise conforming with the [UCPR] or a Calderbank offer. Such an order may also be made where a party has refused a reasonable offer of settlement. Whether or not it was reasonable for a party to reject an offer of settlement will rarely be determined by a bald comparison between the offers made and the outcome. Rather, the question whether a party's attitude to settlement offers have been so unreasonable as to warrant an indemnity costs order requires careful analysis of the issues in the proceedings and the state of the evidence at the time the various offers were made. |
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Brookhollow Pty Ltd v R&R Consultants Pty Ltd & Anor New South Wales Supreme Court 30/01/2006 Full Decision |
Whether a Calderbank offer was unreasonably rejected. Whether a letter of compromise should disclose the winning point of the offeror's case. |
If a Calderbank Offer doesn't allow a reasonable time for consideration it may not be effective. It is not essential to disclose the "winning point". |
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If a registrar fails to endorse the date of sending on an Arbitrator's award, when does the time for the filing of a re-hearing application commence ? |
The Registrar is required by the rules to endorse the date of sending and time does not run unless such endorsement is made. |
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Supreme Court Rule 22 and 24 Part 52A |
At trial, D was found liable to the Plaintiff in a medical negligence claim. The hospital escaped liability. On appeal, liability was apportioned 50/50 between D and the hospital. As a result of offers made by D to the hospital during the course of litigation D sought indemnity costs from the hospital at the conclusion of Court of Appeal decision. |
D was entitled to indemnity costs from 16 March 2001 against the hospital. |
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Offers of compromise indemnity costs professional negligence |
When will the court order that the Plaintiff pay indemnity costs to a defendant? |
Where a case had no reasonable prospects of success, or where the Plaintiff has conducted the proceedings in such a way as to cause unreasonable delay and expense or has unnecessarily protracted the proceedings, the Court will order that the Plaintiff pay the Defendant’s indemnity costs. |
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Witnesses not called by Plaintiff at arbitration. Plaintiff lost. Sought re-hearing and called additional witnesses. P won on re-hearing. What cost order should be made? |
Plaintiff ordered to pay costs of arbitration. Defendant ordered to pay costs of re-hearing. |
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Supreme Court Rules Pt 52A, rule 43 43A. Supreme Court Rules Pt 52A, rule 43A |
When can a solicitor or barrister be personally liable for costs? |
Where a solicitor or barrister is responsible for costs being incurred improperly or without reasonable cause, the court will consider making the practitioner personally liable for those costs. |
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Offer of Compromise |
Does an Offer of Compromise at trial continue to have costs consequences for an appeal? |
Significant reduction of damages on appeal can circumvent expected orders flowing from pre-trial Offer of Compromise. |
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Recent developments in Case law Detailed versions
Click on the case name to be taken to the full judgment in .pdf format
| Decision / More Info | Legislation | The question raised | The new position |
|---|---|---|---|
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Peter Willis v Health Communications Network Ltd (No 2) [2008] NSWCA 2 08/02/2008 NSW Court of Appeal Mason P; Tobias JA; McColl JA District Court Finnane DCJ |
Uniform Civil Procedure Rules 2005 42.2, 20.26 |
The appellant, whose employment was terminated on 13 April 2005, litigated two claims both before the primary judge and the Court. He made the following claims: When his contract of employment was terminated he had in fact been made redundant and was therefore entitled, pursuant to that contract, to redundancy pay equivalent to 3.5 months salary (the redundancy claim). The respondent breached his contract of employment and failed to pay to the appellant's superannuation fund a 9% superannuation contribution with respect to the six months salary which he had received in lieu of notice when his employment was terminated (the superannuation claim). On 20 September 2005 the appellant instituted proceedings in the District Court. At this time the appellant's redundancy claim (including interest) was $63,507 and his superannuation claim (including interest) was $9,798, a total of $73,305. On 24 October 2005 to 21 March 2006 the respondent filed its defence denying both claims. By letter on 10 March 2006 solicitors for the respondent, having asserted that there was no basis with respect to either of the appellant's claims, offered to settle all matters in dispute by paying a superannuation contribution equal to what it would have paid had the appellant remained employed for up to six months after the date of the termination of his employment or to the date when he obtained alternative employment, whichever was the earlier. That offer was conditional upon the proceedings being dismissed with no order as to costs. The practical effect of this offer was that the respondent would pay to the appellant's superannuation fund the amount of the superannuation claim of $9,404. The respondent's offer was prefaced by its solicitors reciting that the redundancy claim was based on an alleged breach of his contract of employment, in that the respondent had failed to make a redundancy payment in accordance with its Redundancy Policy dated 9 August 2000. The offer was rejected on 21 March 2006. On 1 June 2006 the appellant's solicitors made an offer to the respondent to settle the litigation for the sum of $85,918 comprising $60,952.50, being the amount of the redundancy claim as alleged by the appellant in his Statement of Liquidated Claim plus interest to 31 May 2006 of $5,756.24 together with the sum of $19,210 being his legal expenses to the date of the offer. On 16 June 2006 that offer was rejected by the respondent's solicitors by letter. A counter-offer was made whereby the respondent offered to pay to the appellant or on his behalf the sum of $50,000 less applicable tax (if any) upon the condition that the proceedings were otherwise dismissed with no order as to costs. On 23 June 2006 the Respondent's offer was rejected by letter from his solicitors.At this date the appellant's claims, including interest, stood at $67,342 in respect of the redundancy claim; $10,390 in respect of the superannuation claim and costs of $19,210 a total of $96,942. On 7 July 2006 the respondent's evidence including affidavit and documentary evidence was filed. Also during this period a number of Calderbank offers were exchanged between the parties. What costs were ultimately payable by the appellant and the respondent? What was the effect of all the Calberbank offers? |
A court should only depart from the general rule [that is, that costs should be assessed on the ordinary basis: UCPR 42.2] and award indemnity costs where the conduct of the party against whom the order is sought is plainly unreasonable. Indemnity costs orders should be reserved for the most unreasonable actions by unsuccessful plaintiffs. The Court's jurisdiction to award costs on an indemnity basis is not confined by the making of an offer of compromise conforming with the [UCPR] or a Calderbank offer. Such an order may also be made where a party has refused a reasonable offer of settlement. Whether or not it was reasonable for a party to reject an offer of settlement will rarely be determined by a bald comparison between the offers made and the outcome. Rather, the question whether a party's attitude to settlement offers have been so unreasonable as to warrant an indemnity costs order requires careful analysis of the issues in the proceedings and the state of the evidence at the time the various offers were made. The respondent should pay part of the appellant's costs with respect to the superannuation claim, the appellant contending that it should be 20% of the costs both below and on appeal and the respondent contending that it should be no more than 10%. The latter submits that on the hearing of the application for leave to appeal a little over 80% of the transcript of the argument related to the redundancy claim and that approximately 75% of the written submissions filed by the parties in the appeal related to that claim. If those figures are accurate, then they contain a concession that approximately 20% of the relevant time was spent on the superannuation claim. The appellant's rejection of the respondent's offer contained in its solicitor's letter of 16 June 2006 was, in the circumstances unreasonable. If accepted, the appellant would be paid in full in respect of his superannuation claim and costs together with just over 30% of his redundancy claim when interest was included. It was unreasonable for the appellant to take the attitude that his success or otherwise in the proceedings was an all or nothing situation clearly it was not and never was. At a time when the appellant could have resolved the dispute by accepting what the court considered to be a reasonable offer for settlement at that time, the appellant acted unreasonably. It follows that the respondent was entitled to 80% of its costs at first instance on an ordinary basis up to and including 23 June 2006 and on an indemnity basis thereafter. Although the appellant was entitled to 20% of his costs with respect to his pursuit of the superannuation claim at first instance, those costs should be paid on an ordinary or party/party basis given the rejection by the appellant of the respondent's offer of 16 June 2006 which, if accepted, would have substantially exceeded the full amount of that claim together with the whole of his costs to that date. The costs of the appeal fell into a different category for no further Calderbank offer was made by the respondent after the institution of the appeal. It would have been open to the respondent to have renewed its offer of 16 June 2006 or to have at least offered to settle the appeal upon the basis that the superannuation claim would be paid in full as it ultimately was. Although the respondent is entitled to 80% of its costs of the appeal, those costs should be paid on an ordinary or party/party basis. The court set aside the orders for costs made by Judge Finnane in the proceedings at first instance. The appellant was ordered to pay 80% of the respondent's costs of the proceedings in the District Court on an ordinary basis up to and including 23 June 2006 and on an indemnity basis thereafter. The respondent was ordered to pay 20% of the appellant's costs of the proceedings in the District Court on an ordinary or party/party basis, such costs to be set off against each other.The appellant was ordered to pay 80% of the respondent's costs of the summons for leave to appeal on an ordinary or party/party basis the respondent was ordered to pay 20% of the appellant's costs of the summons for leave and the appeal on an indemnity basis, such costs to be set off against each other. |
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Brookhollow Pty Ltd v R&R Consultants Pty Ltd & Anor (No 2) [2006] NSWSC 200 30/01/2006 New South Wales Supreme Court Palmer J |
Whether a Calderbank offer that expired within 4 days but was made one week prior to hearing and 4 months after the initial Calderbank Offer was made was unreasonably rejected. Whether it is necessary for the Calderbank offer to refer to the reasons for which the offeror's case is ultimately successful in order to claim indemnity costs. |
A Calderbank Offer will not be unreasonably rejected when the time allowed for consideration of the offer is too short. However a Calderbank offer will be unreasonably rejected if the parties have had ample time to consider the prospects of success or failure and to formulate what parameters for settlement might reasonably be open. It is commonplace in litigation for issues to arise at trial which have not been pleaded or earlier considered. Prior to trial and even during the course of the trial, the ultimate consideration for settlement which must be taken into account is the price that a party is prepared to pay for a commercial settlement. If a party refuses all offers and his opponent is ultimately successful as a result of producing "the rabbit out of the hat", a claim for indemnity costs should not fail because the "winning point" was not earlier identified. Therefore it is not determinitive in the consideration as to whether an indemnity costs order should be made that the offeror in a Calderbank letter has set out the winning point in the offeror's case. |
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Walshe v Prest [2001] NSWCA 94 31/03/2004 NSW Court of Appeal Sheller, Santow and McColl JJA District Court Delaney DJC |
s63A(1) and (5) District Court Act Part 51 r 11 District Court Rules Part 51A r 9 District Court Rules Part51A r 10 District Court Rules Part 51A r 11 District Court Rules |
Proceedings between W and P went to arbitration in the District Court and the Registrar subsequently issued a notice of award, but did not endorse the date of sending on it. W filed an application for re-hearing but missed the statutory deadline by 1 day. W applied for leave to file a re-hearing application out of time but the District Court refused to grant leave. W appealed. • Whether the District Court Registrar was required by the rules to endorse the date of sending on the arbitrator’s award • Whether time began to run in relation to the period in which an application for re-hearing could be filed. • Whether the District Court had erred in not granting W leave to apply for a re-hearing. |
The Court held that part 51A rule 9(5) of the District Court Rules required the Registrar to endorse the date of sending on the arbitrator's award, and that pursuant to part 51A rule 10, time did not run intil that endorsement was made. The Court also held that the District Court judge had erred in failing to exercise his discretion in favour of W, and failed to have regard to the principle that a court will in the interests of justice correct errors or mistakes which occur in the conduct of litigation. The Court granted leave to appeal and allowed the appeal, and imposed heavy costs penalties against P's solicitors for opposing W's request application and appeal. |
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Diamond v Simpson (No 4) [2004] NSWCA 57 11/03/2004 Court of Appeal Meagher JA, Ipp JA, Young CJ in Eq Supreme Court - Common Law Division Whealy J |
Supreme Court Rule 22 and 24 Part 52A |
At trial, D was found liable to the Plaintiff in a medical negligence claim. The hospital who was also sued escaped liability. On appeal, liability was apportioned 50/50 between D and the hospital. As a result of offers made by D to the hospital during the course of litigation D sought indemnity costs from the hospital at the conclusion of the Court of Appeal decision. On 10 July and 31 October 2000 D had offered to accept 50% contribution from the hospital. The hospital argued in respect of this offer that this offer did not reflect any compromise and was not expressed pursuant to Part 22 of the Rules. D also made an offer to accept 30% contribution on 16 March 2001. The hospital argued in respect of this offer that this was a conditional offer as it required the hospital not to seek costs from the Plaintiff in relation to the discontinuance and this was an unreasonable condition. |
In a unanimous decision the Court rejected the hospital’s argument that the initial offer of 50% contribution did not involve a true compromise. The hospital and D each had a possibility of being found liable to the Plaintiff of between 0% to 100% and a 50/50 contribution was a compromise. It was not necessary for the hospital to have all of the facts which might come out at the trial in its possession when assessing the offer of contribution. In many cases Counsel and Solicitors have to evaluate chances whilst there was still a big X factor involved. In respect of the offer for 30% contribution made on 16 March 2001 the Court considered that one needed to consider all of the circumstances of the case and the reasonableness of the offeree’s conduct generally not just the narrow question of the reasonableness of the condition. In a case involving $10 million or more, the condition as to costs was a minor matter. It may have been reasonable for the offeree to have made a counter offer or sought to have the condition withdrawn, but it was not reasonable merely to reject the offer. The Court ordered that D was entitled to indemnity costs from 16 March 2001 against the hospital. |
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Notaras & Anor v Hugh & Ors [2003] NSWSC 919 17/10/2003 NSW Supreme Court Sperling J |
Offers of compromise indemnity costs professional negligence |
N sued H for professional negligence. Throughout the proceedings, N served evidence which was subsequently withdrawn and not relied upon at trial. H had been forced to obtain evidence to meet the evidence served by N. N lost. H served an offer of compromise, which was more favourable than the result achieved by N, and sought an order that N pay indemnity costs.. • Did the offer of compromise operate? • Should H be entitled to indemnity costs? |
The Supreme Court Rules relating to offers of compromise did not apply where a Defendant was wholly successfull. However, there was authority that allowed for an order for indemnity costs if the Plaintiff had conducted the proceedings in such a way as to cause unreasonable delay and expense or had unnecessarily protracted the proceedings. There had been no reasonable prospect of success, as N could not have proven on the evidence tendered that loss arose from the alleged negligence of H. N, by repeatedly serving and then withdrawing evidence, had caused unreasonable delay and expense. N was ordered to pay the H’s costs on an indemnity basis. |
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Howard v Telstra [2003] NSWCA 188 09/07/2003 NSW Court of Appeal Santow, Young, Davies JJ NSW District Court Robison DCJ |
District Court Rules Pt39Ar31 Arbitration (Civil Actions) Act 1983 s18 |
H suffered injury. Matter referred to arbitration. Only H gave evidence. Arbitrator found for Telstra stating that H’s case needed corroboration. H applied for re-hearing. At re-hearing H called 2 additional witnesses. Judgment was entered in favour of H. Telstra was ordered to pay costs up to and including the day before the arbitration but thereafter, H was to pay Telstra’s costs. H appealed arguing: 1. The costs order was perverse and unjustified. 2. There had been no forensic advantage sought to be gained by not calling the witnesses, and therefore the usual costs order should follow. |
It was appropriate for Robison DCJ to make a costs order which reflected his disapproval of H having not called witnesses at arbitration. It was, however, unjust to order that H pay the costs of Telstra both of the arbitration and the re-hearing. Court of Appeal ordered H pay Telstra’s costs of the arbitration and Telstra pay H’s costs thereafter. |
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Hickey v Davistown RSL Club Ltd [2003] NSWCA 110 10/04/2003 NSW Court of Appeal Mason P, Meagher and Santow JJA District Court Garling J |
Supreme Court Rules Pt 52A, rule 43 43A. Supreme Court Rules Pt 52A, rule 43A |
H argued with a friend over disputed poker machine winnings on the premises of D. After leaving the premises at closing time, the argument became violent and H injured himself. H sued D for negligence. The trial judge found there was no foreseeable risk of harm that the Club could be expected to avert. H appealed. • Prior to the appeal coming on for hearing, the NSW Court of Appeal handed down its decision in South Tweed Heads Rugby League Football Club Ltd v Cole, which clearly established that H would not succeed on appeal. H’s appeal continued. |
The appeal considered “hopeless” and was dismissed without submissions. The Court seemed intent on ordering that H’s solicitor and barrister pay his costs and the costs of D. Only by virtue of the Respondent indicating that they did not seek such an order was the Court convinced not to make serious enquiries regarding the circumstances of the Appeal continuing. |
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Diamond v Simpson (No 2) [2003] NSWCA 78 12/03/2003 Court of Appeal Stein JA, Ipp JA, Young CJ in Eq District Court Whealy J |
Offer of Compromise |
The trial judge awarded a verdict of $14.2 million. An offer of compromise was made on 24 November 2000 by the First Respondent (the Plaintiff at First Instance) in the sum of $10.5 million. An offer was made pre-trial by the Appellant in the sum of $8.5 million. On appeal the Appellant raised many issues and submitted that the amount of the verdict should be reduced to $9.2 million which was a figure in excess by $700,000.00 of the offer that they had made earlier. The appeal reduced the First Respondent's verdict to $11 million or slightly less. This meant that in monetary terms the Appellant had reduced the amount of the original verdict by $3.2 million. |
Issues: (i) Does the offer at trial continue to have costs consequences for an appeal? (ii) Discretion as to costs. Held: Ipp JA with whom Young CJ agreed, considered the fact that the Appellant succeeded by some $3.2 million on appeal as far more significant than the fact that the Appellant did not succeed in reducing the judgment to an amount below $10.5 million, being the First Respondent's offer of compromise served on 24 November 2000. In the circumstances, they decided that the Appellant be awarded 66% of the costs of the appeal. Stein JA in dissent considered that the law provided that an offer of compromise made at trial continued in existence for the purposes of consideration as a factor on the appeal and presented to a potential Appellant a risk that had to be taken into account. He noted the Supreme Court Rules contained a discretion which he considered in the circumstances ought not be exercised in favour of the Appellant and considered the Appellant ought pay the costs of the appeal on an indemnity basis. However, he acknowledged that he was in the minority and in the circumstances agreed with the apportionment of costs on appeal being 66% in favour of the Appellant. |
Law as at 20 May 2012