Csik v Wong [2005] ACTSC 56 (15 July 2005)

Last Updated: 26 July 2005

ELIZABETH CSIK v COURTNEY ANNE WONG [2005] ACTSC 56 (15 July 2005)

COSTS - Calderbank offer by plaintiff - plaintiff recovering more than amount offered - relevant considerations - special order justified.

Supreme Court Rules 1937 (ACT), Schedule 3

Quirk v Bawden (1992) 112 ACTR 1

Calderbank v Calderbank [1975] 3 WLR 586

No. SC 620 of 2003

Judge: Master Harper

Supreme Court of the ACT

Date: 15 July 2005

IN THE SUPREME COURT OF THE )

) No. SC 620 of 2003

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: ELIZABETH CSIK

Plaintiff

AND: COURTNEY ANNE WONG

Defendant

ORDER

Judge: Master Harper

Date: 15 July 2005

Place: Canberra

THE COURT ORDERS THAT:

The defendant pay the plaintiff's costs up to and including 11 March 2005 as between party and party, and thereafter on an indemnity basis.

1. In this action, in which I delivered judgment on 17 June 2005, the plaintiff seeks a special costs order consequent on the defendant's rejection of a Calderbank offer.

2. I assessed the plaintiff's damages at $99,587.95, which I reduced by 10% to take account of her contributory negligence. I directed the entry of judgment in her favour for $89, 629.15, with the defendant to have credit for $395.00 representing treatment expenses paid by her insurer.

3. The plaintiff subsequently agreed to accept in satisfaction of the judgment an amount some $300 less than the judgment amount, reflecting an acknowledged error which I made in arriving at the total of past treatment expenses.

4. On 24 February 2005, the plaintiff's solicitors sent a letter by fax to the defendant's solicitors offering to settle for $80,000 plus costs. The offer was expressed to be a Calderbank offer, and to remain open until 5pm on 11 March 2005. The plaintiff's solicitors told the defendant's solicitors that if the offer was not accepted and the plaintiff recovered a greater amount, they were instructed to apply for an order that the defendant pay the plaintiff's costs from the date of the letter on an indemnity basis.

5. The defendant did not accept the offer, and I am informed, at no time made any offer to settle the plaintiff's claim. The trial was conducted with liability strongly in issue at all times, and counsel for the defendant submitted in his closing address that I should find judgment in favour of the defendant.

6. At a listing hearing on 5 October 2004, the action had been listed for hearing on 22 February 2005. The action was effectively not reached during that week, although counsel for the plaintiff briefly opened the case and tendered medical reports. The further hearing of the matter was adjourned to 30 May 2005, and proceeded on that and the following day. At the conclusion of the hearing I reserved judgment, which, as I have said, was delivered on 17 June 2005.

7. On 5 May 2005, the solicitors for the plaintiff served a report of Dr Stephen Stern, consultant psychiatrist, dated 11 March 2005. Dr Stern expressed the opinion that the plaintiff was suffering from an adjustment disorder with mixed anxiety and depressed mood, not requiring treatment. Until that point, no psychiatric reports had been served by the solicitors for the plaintiff, although the statement of particulars, filed on 18 August 2004, listed depression among the plaintiff's disabilities, and claimed future treatment expenses for counselling and anti-depressant medication. The solicitors for the defendant by letter of 12 May 2005 informed the plaintiff's solicitors that the defendant would object to the tender of Dr Stern's report on the ground of late service. In the event, there was no objection to its tender and counsel for the defendant did not require Dr Stern's attendance for cross-examination.

8. Counsel for the defendant submits that in exercising my discretion as to costs, I should take account of the fact that Dr Stern saw the plaintiff on the date the Calderbank offer was to expire, and that the plaintiff's solicitors must be taken to have been aware that they were qualifying a psychiatrist when they made the offer, something not known to the defendant's solicitors.

9. It does not seem to me that Dr Stern's report made a great deal of difference to the case. He diagnosed a relatively minor psychiatric condition, one not requiring treatment. The defendant's solicitors, despite giving notice that they would object to the tender of the report, did not seek to have the hearing adjourned, or to qualify a psychiatrist to give evidence in the defendant's case. Dr Stern's report ultimately went into evidence unchallenged.

10. The leading authority as to the effect of rejection by a defendant of a Calderbank offer by a plaintiff in this Court is Quirk v Bawden (1992) 112 ACTR 1. The leading judgment was given by Higgins J, as his Honour then was. Miles CJ and Gallop J concurred. Higgins J referred to the genesis of the principle in Calderbank v Calderbank [1975] 3 WLR 586, and its development through subsequent decisions in England and in other Australian jurisdictions. His Honour explained that the mere refusal of an offer which happened to be less than the sum ultimately awarded was not necessarily enough to justify an order for indemnity costs. Such as result might be avoided by a defendant who could show that he or she had reasonably engaged in a proper attempt to settle the matter. Before the discretion to make a special costs order could be exercised, it would have to be shown that the defendant had failed to act reasonably in declining to accept the plaintiff's offer or to continue to negotiate at a reasonable level in response to it. In the case in question, the plaintiff had made a Calderbank offer to settle for $350,000, which was rejected by the defendant, and had subsequently been awarded $372,000 by the Court. Higgins J regarded these figures as showing that the discount was not insignificant and that the offer had represented a genuine compromise when it was made. It was significant, though not conclusive, that there had been no counter-offer, or any complaint that the basis for the offer was unexplained or that any particulars of the claim were deficient. It appeared that the defendant had made no serious attempt to consider the offer. The then Master had ordered that the appellant pay the respondent's costs as between party and party up to and including the date of the Calderbank letter and on an indemnity basis thereafter. Higgins J was not persuaded that the Master's discretion had miscarried and the defendant's appeal was dismissed.

11. I am satisfied that the offer made in the present case provided an opportunity for the defendant to settle the plaintiff's claim at a figure sufficiently below the award of the Court to justify a special order. I regard it as significant that the defendant made no attempt to settle the plaintiff's claim, either before or after the offer. I am reminded that the purpose of the Calderbank principle is to encourage settlement of litigation, in the interests of saving the parties expense and reducing the load on scarce community resources such as the Court itself. I take the view that the Calderbank offer made by the plaintiff represented a fair compromise having regard to her actual entitlement as subsequently assessed by the Court.

12. In the normal course, where a party seeks an order for costs on an indemnity basis, I have taken the view that the Court should be informed of any unusual terms as to costs in the retainer between the party and his or her solicitors. In the present case I am assured by counsel for the plaintiff that there was no special costs agreement. In these circumstances, the effect of an indemnity order would be that the plaintiff would recover all her costs except insofar as they are of an unreasonable amount or were unreasonably incurred. Subject to this, the costs would be taxed by reference to the items set out in Schedule 3 to the Rules.

13. It was not submitted on behalf of the defendant that, in the event that I was satisfied that a special costs order should be made, there was anything inappropriate about making such an order on an indemnity basis.

14. Counsel for the plaintiff seeks a special order from the date of the Calderbank letter. It was open to the defendant to accept the plaintiff's offer until 11 March 2005, and it seems to me that the special order should date from then rather than the date of the offer.

15. The plaintiff's costs are to be paid by the defendant as between party and party up to and including 11 March 2005, and thereafter on an indemnity basis. The costs of this application are covered by that order and no additional order in that regard is necessary.

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.

Associate:

Date: 15 July 2005

Counsel for the plaintiff: Mr F M G Parker

Solicitor for the plaintiff: Gary Robb & Associates

Counsel for the defendant: Mr P D Ryan

Solicitor for the defendant: Philips Fox

Date of hearing: 11 July 2005

Date of judgment: 15 July 2005