Dal Cortivo v Allen & Ors [2005] ACTSC 51 (5 July 2005)

Last Updated: 26 July 2005

LINCOLN DAL CORTIVO v JOHN ALLEN & ORS

[2005] ACTSC 51 (5 July 2005)

COSTS - whether failure to accept staggered Calderbank settlement offers from co-defendants is sufficient to require plaintiff to pay defendants' costs

Morrison v Cook (Unreported, Blackburn J, 13 October 1971)

Windbank v Bradley (Unreported, Fox J, 3 July 1970)

Mangan v Mendum (Unreported, Smithers J, 30 October 1970)

Quirk v Bawden (1992) 111 FLR 115

Colgate-Palmolive Company and Another v Cussons Pty Limited (1993) 46 FCR 225

Sheehy v Mitchell Crane Hire Pty Ltd (1991); 104 FLR 96

Dunne v Workcover Corporation of South Australia (Unreported, Supreme Court of South Australia, Doyle CJ, 2 November 1995).

Heywood v Miller [2005] ACTSC 12

Hart v McGlynn (Unreported, Gallop ACJ, Higgins and Crispin JJ, 13 July 1998)

Koser v GIO General Ltd (Unreported, Cooper J, 18 November 1997)

No. SC 645 of 2002

No. SC 646 of 2002

No. SC 97 of 2004

Judge: Higgins CJ

Supreme Court of the ACT

Date: 5 July 2005

IN THE SUPREME COURT OF THE ) No. SC 645 of 2002

) No. SC 646 of 2002

AUSTRALIAN CAPITAL TERRITORY ) No. SC 97 of 2004

BETWEEN: LINCOLN DAL CORTIVO

Plaintiff

AND: JOHN ALLEN

First Defendant

AND: TANIA KLEMKE

Second Defendant

AND: ROBERT ALLEN WATERS & CUSTOM SERVICE LEASING LIMITED

Third Defendant

ORDER

Judge: Higgins CJ

Date: 5 July 2005

Place: Canberra

THE COURT ORDERS THAT:

1. The first defendant, in matter No. SC 645 of 2002, pay the plaintiff's costs of and incidental to those proceedings up to, but not after, 1 October 2004.

2. The second defendant, in matter No. SC 646 of 2002, pay the plaintiff's costs of and incidental to those proceedings up to, but not after, 11 June 2004.

3. The third defendant, in matter No. SC 97 of 2004, pay the plaintiff's costs of and incidental to those proceedings up to, but not after, 18 August 2004.

1. In these three matters, I found a verdict in favour of the plaintiff in each case. The first matter produced a verdict of $17,096; the second, $22,382; the third, $13,952.

2. In each case an offer had been made by the relevant defendant (or its insurer); in each case, the defendant's offer was greater than the sum awarded to the plaintiff by the Court.

3. In the matter of Dal Cortivo v Allen the relevant "Calderbank" offer (that is, without prejudice save as to costs) of $34,485 and costs was made on 14 September 2004, to be accepted on or before 1 October 2004.

4. In the matter of Dal Cortivo v Klemke, the relevant offer was made on 28 May 2004, in the sum of $47,000 plus costs, to be accepted on or before 11 June 2004.

5. In the matter of Dal Cortivo v Waters and Anor the offer was made on 28 July 2004, in the sum of $20,000 plus costs, to be accepted on or before 18 August 2004.

6. The hearing commenced on 29 November 2004.

7. It will be observed that, at no point in this continuum was there simultaneously on the table an offer from each defendant, the acceptance of which would settle all the proceedings so as to avoid a hearing so far as the plaintiff was concerned. Apportionment of damages between each of the accidents was undoubtedly a difficult issue for all parties.

8. In Morrison v Cook (Unreported, Blackburn J, 13 October 1971) in the context of payment into court, Blackburn J awarded costs against a plaintiff who failed to achieve a verdict substantially the same as the payment in. This is because it was unjust to the defendant to require him to bear the cost of a hearing which ought not to have been required. His Honour considered the relative quantum of costs as opposed to the verdict to be irrelevant.

9. However, Fox J, in Windbank v Bradley (Unreported, Fox J, 3 July 1970) pointed out that the mere inadequacy of the verdict compared with the payment in did not require that a full costs penalty be exacted in favour of the successful defendant. He simply allowed no costs after the expiry of the time to accept the payment in. Smithers J, in Mangan v Mendum (Unreported, Smithers J, 30 October 1970) considered that a similar order was warranted where the difference between the payment in and the sum awarded was not great, the amount awarded could have been greater without error and the total sum was disproportionately small compared with the costs penalty which might be imposed.

10. In the case of a defendant unreasonably refusing to make or accept an offer of settlement, the only sanction is an order to pay costs on an indemnity basis. (See Quirk v Bawden (1992) 111 FLR 115).

11. Sheppard J discussed the "principles or guidelines" warranting a departure from the usual rule that costs follow the event and are awarded on the usual basis. See Colgate-Palmolive Company and Another v Cussons Pty Limited (1993) 46 FCR 225, 232-234. His Honour's final words are worth noting (at 234) -

It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.

12. In my view, that statement would, to an extent, qualify the view expressed by Blackburn J that the overall burden of the costs sanction compared with the verdict is irrelevant. I consider that Blackburn J's view is overly prescriptive. I prefer the other opinions that I have referred to above.

13. In Sheehy v Mitchell Crane Hire Pty Ltd (1991) 104 FLR 96, I considered that the legislative scheme involving compulsory insurance was relevant to the ordinary incidence of a costs order where a worker, though acting reasonably, was not successful. (Cited with approval by Doyle CJ in Dunne v Workcover Corporation of South Australia (Unreported, Supreme Court of South Australia, Doyle CJ, 2 November 1995).

14. Master Harper in Heywood v Miller [2005] ACTSC 12, considered a similar situation as the present; albeit in that case only one claim was involved. The Master noted that the plaintiff had no reasonable excuse for failing to accept the defendant's offer rather than proceeding to trial.

15. The relevant considerations the Master adverted to in adopting an order similar to that made by Fox and Smithers JJ were -

* The desirability of encouraging parties to resolve their differences by agreement rather than trial.

* The nature and time of the Calderbank offer and that such an offer should not be unreasonably rejected or ignored with impunity.

* To order the plaintiff to pay the defendant's costs after expiry of a Calderbank offer has been described as an "unusual order" by the Full Court in Hart v McGlynn (Unreported, Gallop ACJ, Higgins and Crispin JJ, 13 July 1998). Gallop ACJ described the order as an "unnecessary penalty" (see also Koser v GIO General Ltd (Unreported, Cooper J, 18 November 1997) per Cooper J).

* The impact on the respective financial position of the parties, that is, a defendant indemnified by insurance premiums compared with an injured plaintiff seeking damages to compensate for the loss and injury suffered.

16. I was urged to correct what was said to be an error in the Master's reasoning as expressed in that last paragraph. I do not consider that the Master was in error in considering that factor. It is not dissimilar to the legislative policy and scheme, including compulsory insurance, which I took into account in Sheehy. It is important, however, to firmly keep in mind that the award of costs is discretionary. The only imperative is that the resultant order not involve any "manifest error or injustice".

17. The purpose of the order for costs being made on a less than favourable basis is to serve the interests of justice in deterring parties from unreasonably ignoring or rejecting reasonable offers of compromise.

18. In the present case, the rejection by the plaintiff of the respective offers of settlement warrants an order that costs be paid on the ordinary basis up to but not after the date of expiry of the respective Calderbank offers.

19. I do not consider, in the circumstances, that the plaintiff's conduct, particularly given the staggered timing of the three offers, was so unreasonable as to warrant the additional sanction of an order for costs in favour of any of the defendants.

20. Therefore, in each case, the defendants will pay the plaintiff's costs. Unless the parties agree otherwise, the costs will be taxed on the usual basis, up to, but not beyond, the date on which the respective Calderbank offer expired.

I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Chief Justice Higgins.

Associate:

Date: 5 July 2005

Counsel for the plaintiff: Mr R Mildren

Solicitor for the plaintiff: Barker & Barker

Counsel for the first defendant: Ms E Reilly

Solicitor for the first defendant: Hunt & Hunt

Counsel for the second defendant: Mr M A M McDonagh

Solicitor for the second defendant: Sparke Helmore

Counsel for the third defendant: Mr S Pilkinton

Solicitor for the third defendant: Minter Ellison

Date of hearing: 17 May 2005

Date of judgment: 5 July 2005