Cindy Marienne Jean Van Der Gevel v Australian Capital Territory and the Nominal Defendant [1997] ACTSC 91 (14 November 1997)

SUPREME COURT OF THE ACT

CINDY MARIENNE JEAN VAN DER GEVEL v AUSTRALIAN CAPITAL TERRITORY and THE NOMINAL DEFENDANT
No. SC 152 of 1995
Number of pages - 3
Costs

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

MASTER CONNOLLY

CATCHWORDS

COSTS - Variation of costs order - Attribution of costs between defendants - Calderbank letter in relation to costs - Award for costs on an indemnity basis - No Issue of Principle.

HEARING

CANBERRA, 7 November 1997 (hearing), 14 November 1997 (decision)

14:11:1997

Appearances

Counsel for the First Defendant: Mr C Erskine

Instructing Solicitors: ACT Government Solicitor

Counsel for the Second Defendant: Mr D Harper

Instructing Solicitors: Abbott Tout Harper Blain

ORDER

Order:

1. The Costs Order made in this matter on 31 October 1997 be varied to the following extent:

The first defendant pay the costs of the second defendant in relation to the issue of liability, from 15 September 1997 on an indemnity basis.

DECISION

MASTER CONNOLLY

This matter came before me by way of an application to vary the form of a costs order that I had made in the course of my decision dated 31 October 1997 in respect of Ms Van Der Gevel's personal injuries claim against the Australian Capital Territory and the Nominal Defendant. In that decision I awarded damages totalling $243,286.66 against the Australian Capital Territory and $121,643.34 against the Nominal Defendant, and ordered the defendants to contribute to the plaintiff's costs in a similar proportion, that is, that the Australian Capital Territory was to pay two-thirds of the plaintiff's costs and the Nominal Defendant to pay one-third of the plaintiff's costs.

The Nominal Defendant makes this application to vary that order on the basis of an offer made by the Nominal Defendant to the Australian Capital Territory by letter of 15 September 1997, that is a month before the hearing of the matter. In that letter, marked "without prejudice except in relation to costs", the Nominal Defendant offered to resolve the issue of apportionment of the plaintiff's damages between the two defendants on the basis that the Australian Capital Territory contribute 25% to any damages award and the Nominal Defendant contribute 75%. The letter continued

"Should your client not accept this offer, then in the event that the plaintiff succeeds against our client and that your client is ordered to pay contribution of 25% or more, an order will be sought that your client pay our client's costs in relation to the issue of liability from the date of this letter on an indemnity basis."

The letter also went on to seek agreement for a joint offer to settle the damages claim in the sum of $60,000. Damages were in fact awarded in the total sum of $364,930.

The Nominal Defendant argues that the letter of 15 September 1997 is in the recognisable form of a "Calderbank letter" and that, as the Australian Capital Territory was in fact found liable to contribute to the plaintiff's award in a proportion greater than 25%, it should be ordered to pay the Nominal Defendant's costs in relation to the issue of liability from the date of the letter on an indemnity basis. I was referred in support of this proposition to the decision of the Full Bench of this Court in Quirk v Bawden [1992] ACTSC 118; (1992) 112 ACTR 1 where the Court indicated that the use of these types of letters, which

"...put a premium on realistic assessment of cases"

could justify the exercise of the general discretion in relation to costs to make an award for costs on an indemnity basis.

Counsel for the Australian Capital Territory argued that the offer to resolve the question of apportionment of liability between the two defendants should be taken together with the proposal to join in a joint offer to settle the quantum of damages in the sum of $60,000, which was far below the sum ultimately awarded. He argued that, in these circumstances, the offer to resolve apportionment itself would have been unlikely to resolve the matter and avoid the need for a hearing. He referred me to a recent decision by Miles CJ in Ren v Mukerjee & Anor (unreported, matter SC 440 of 1989, decision 16 April 1997) in which the Chief Justice declined to make a costs order on an indemnity basis. In that matter the plaintiff had brought an action against two defendants. The plaintiff recovered against only the second defendant, and it was agreed that the first defendant's costs should be paid by the second defendant in the form of a Sanderson order (the plaintiff in the matter was an infant). Counsel for the first defendant argued that these costs should be on an indemnity basis because the first defendant had offered to settle the question of attribution of liability on the basis of the first defendant paying 30% of any damages and the second defendant 70%. This offer was contained in a Calderbank style letter delivered some days before the resumed hearing of the matter.

The Chief Justice declined to award costs on an indemnity basis. He referred to the principle of Quirk v Bawden as being in accordance with a virtual worldwide trend of authority, which is to contain the costs of litigation by putting a premium on a realistic assessment of the results of a case. He concluded that, as this is the purpose of an indemnity order, the offer in that case was unlikely to contribute to a shortening of the proceedings because in the absence of further agreement with the plaintiff the claims against both defendants would have proceeded. He said of the proposed offer in relation to attribution

"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."

In this case the hearing of the matter, on quantum and liability, extended over two days. Much of this evidence would have been necessary if the question of liability had been resolved, but certainly some savings in the calling of engineering experts (who gave evidence by phone) could have been expected, and the need to call a senior officer with responsibility for administering roadworks in the Australian Capital Territory could also have been expected to have been avoided. A two day trial would have become a matter of assessment only which could confidently have been predicted to have resolved itself within a single hearing day. It seems to me that in this respect the matter is materially different from the facts discussed by the Chief Justice in Ren, where he concluded that the offer in that case, even if accepted between the defendants, would have required the same issues of liability and quantum to be agitated at the trial. He noted that the offer in that case was ambiguous, as

"...it did not stipulate whether the agreement was to apply if the plaintiff was successful against only one defendant instead of against both defendants."

In this case the settlement of the issue of liability with an agreed apportionment of any damages to be awarded could have been expected to materially alter the length of the proceedings, and in that sense the purpose of exercising the discretion to award indemnity costs to encourage realistic offers of compromise to contain the costs of litigation would be justified.

I therefore vary the orders made on 31 October 1997 and order that the Australian Capital Territory as first defendant pay the costs of the Nominal Defendant, the second defendant, in relation to the issue of liability, from 15 September 1997 on an indemnity basis.