Samuel Shang Ren Bhnf Shuang Kui Ren v Biswanath Mukerjee and Australian Capital Territory [1997] ACTSC 19 (16 April 1997)

SUPREME COURT OF THE ACT

SAMUEL SHANG REN bhnf SHUANG KUI REN v. BISWANATH MUKERJEE and
AUSTRALIAN CAPITAL TERRITORY
No. SC440 of 1989
Number of pages - 3
Costs

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY MILES CJ

CATCHWORDS

Costs - plaintiff successful against second defendant only - Sanderson order in favour of first defendant - whether first defendant's costs should be on indemnity basis - pre-trial offer to second defendant by first defendant to contribute 30 per cent of plaintiff's damages and costs - ambiguity of offer - impossible to predict reduction in costs or length of hearing if offer accepted - costs awarded on party and party basis.

Quirk v. Bawden [1992] ACTSC 118; (1992) 112 ACTR 1 Henderson v. Simon Engineering (Australia) Pty. Ltd and Others (1988) VR 867

HEARING

CANBERRA, 18 December 1996 16:4:1997

Counsel for the plaintiff: Mr. F.D. Saccardo

Solicitors for the plaintiff: Bernard Collaery & Associates

Counsel for the first defendant: Mr. J. Ruskin

Solicitors for the first defendant: Blake Dawson Waldron

Counsel for the second defendant: Mr. B.D. Bongiorno, QC with Ms. P.M. Burton

Solicitors for the second defendant: ACT Government Solicitor

ORDER

THE COURT ORDERS THAT:
1. The second defendant pay the first defendant's costs (including the costs which the first defendant would otherwise be entitled to recover against the plaintiff) to be agreed or taxed on a party and party basis.

DECISION

MILES CJ
1. On 18 December 1996 I made formal orders after giving counsel the opportunity to speak to the effect of my findings published on 12 December 1996. All orders were agreed upon except the basis of the quantum of the first defendant's costs of the action. It was agreed that those costs should be paid by the second defendant in the form of a Sanderson order (i.e. the first defendant's costs recoverable against the second defendant are to include the costs which the first defendant might recover from the plaintiff if the usual order as to costs following the event were made). A Sanderson order is appropriate where the plaintiff, who has been successful against one defendant but not against another, is an infant. 2. Mr. Ruskin submitted that the costs recoverable by the first defendant from the second defendant, if not agreed, should be taxed on an indemnity basis and not on the usual party and party basis. The claim for indemnity costs was based on an offer of compromise in the contribution proceedings between the defendants made in a letter dated 13 June 1996 and hand delivered to the ACT Government Solicitor's Office in Canberra on that date. It was marked "Without prejudice save as to costs" and, formal parts omitted, was in the following terms: "We have received instructions from our client to propose a resolution in the proceedings between ourselves. We have instructions to propose that our client agree to pay 30%, and your client agree to pay 70%, of any award for damages and costs made in favour of the plaintiff by way of judgment and/or settlement. This is an important offer. It is made in accordance with the principles of Calderbank. If this offer is not accepted, and the Court ultimately finds that our client is liable to pay less than 30% of any award for damages in favour of the plaintiff, we propose to tender this offer in an application for indemnity costs and a Bullock order." 3. The significance of the date is that the offer came only a few days before the date fixed for the taking of evidence in London where the representatives of all parties were expected to marshal most of their forces. I was told that those representing the second defendant in London received it by facsimile on 18 June 1996. In any event, whilst the letter received a written acknowledgement on 20 June 1996, the offer was never accepted or rejected. 4. Mr. Ruskin submitted, quite correctly, that his client received a more favourable result than what was offered on his behalf in the letter, in that the plaintiff was wholly unsuccessful in the claim against the first defendant. The first defendant was not required to contribute to the plaintiff's damages at all. He further submitted that, in accordance with a virtual worldwide trend of authority, expressed most notably in this jurisdiction in Quirk v. Bawden [1992] ACTSC 118; (1992) 112 ACTR 1, his client should be awarded a costs advantage against the second defendant for the second defendant's failure to accept an offer from the first defendant which was markedly less favourable to the first defendant than the outcome of the case. The purpose of awarding a costs advantage in such situations is, as was said in Quirk v. Bawden, to try to contain the costs of litigation by putting a premium on a realistic assessment of the results of a case. 5. The difficulty with the second submission is that it is impossible to forecast what effect the offer would, or might have had, if it had been accepted. The terms of the offer are ambiguous in any event. The offer did not stipulate whether the agreement was to apply if the plaintiff was successful against only one defendant instead of against both defendants. 6. Further, an agreement between the defendants as to their respective shares of damage which would ultimately be awarded to the plaintiff would hardly have affected the course that the plaintiff was likely to take. In the absence of further agreement with the plaintiff the claims against both defendants would have proceeded. The same issues on liability would have been agitated and, in particular, the same doctors would have been called to give evidence on behalf of the respective parties and the same cross-examination would have ensued. Again, in the absence of an agreement with the plaintiff the same evidence on damages would have been called. At its highest, in my view, all that can be said about a hypothetical acceptance of the offer is that it might have set the scene for more productive negotiations with the plaintiff. It is impossible to assess, even in retrospect, whether such negotiations, if they had taken place, were likely to have resulted in a shortening of the trial or in the saving of costs. Whilst the making of the offer is to be commended (not forgetting that there may have been other efforts at compromise of which I know nothing), it is in all the circumstances too flimsy a foundation to make a special order as to costs which goes beyond the usual party and party basis. 7. I reach this conclusion more confidently after considering the decision of Murphy J in the Supreme Court of Victoria in Henderson v. Simon Engineering (Australia) Pty. Ltd. and Others (1988) V.R. 867 in which a similar but not identical situation arose. For present purposes the effect of the decision is summed-up in the head note as follows: "(2) The third defendant's offer to contribute could only shorten the litigation or lessen the costs if it eliminated the need as between defendants of being separately represented, or of calling or eliciting evidence from witnesses which laid blame upon the third defendant or which exculpated the third defendant and inculpated the first or second defendant. In the circumstances, acceptance of the offer would not have caused any material lessening of any costs incurred, and therefore the third defendant was not entitled to an order that the first defendant should pay or contribute to its costs or to its proportionate liability to pay the plaintiff's costs incurred after the date of the offer." 8. For clarity the order I propose to make is that the second defendant pay the first defendant's costs (including the costs which the first defendant would otherwise be entitled to recover against the plaintiff) to be agreed or taxed on a party and party basis. However, I will hear counsel on the exact terms of the order if they wish.