Turnbull v Kyogle Council (No 2)

At the commencement of the hearing on Monday of this week I was informed that the parties had reached agreement on the quantum of the matter ($15 million) and on a discount that should be applied to this figure (10%).

I was then asked to initially deal with a notice of motion that had been filed by the defendant on 3 September 2024 seeking leave to amend its defence. I was informed that if the motion failed then it would follow that judgment would be entered for the plaintiff for $13.5 million.

I gave my decision on the notice of motion earlier today (Turnbull v Kyogle Council [2024] NSWSC 1297). I refused the defendant leave to amend its defence, thereby prompting the judgment referred to above.

A costs issue then arose. The defendant accepted that it should pay the plaintiff’s costs. The plaintiff however, sought a variation of the standard costs order by seeking an order that the costs be payable on an indemnity basis on and from 19 July 2024. The defendant resisted this variation.

The reason behind the plaintiff’s request was that the plaintiff had served an offer of compromise on the defendant on 18 July 2024 offering to accept a judgment in his favour in the sum of $8,700,000. The offer was made in accordance with r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW).

The defendant accepted that there was no technical defect in the offer. It is also for a figure well below the judgment sum. Without more, there would be no reason for the indemnity order not to be made.

The defendant said that there was a reason not to make the order. The defendant submitted that it had acted appropriately in not accepting the offer because it had a reasonable and viable argument in support of its proposed amended defence. Had the defence succeeded, the defendant would not have been liable for any damages, although it did seem to concede, in my mind a little illogically, an obligation to pay the amount that had been agreed for non-economic loss. This was $761,000 which is well below the offer that had been made by the plaintiff.

In support of its case the defendant tendered some correspondence (Exhibit 1 on costs) that it had conducted with icare, the organisation which operates the Lifetime Care and Support Scheme. The defendant had sought clarification of certain matters relating to the plaintiff’s position within the Scheme. The reply received, on 26 March 2024, reflected some erroneous interpretations of the relevant Act. The defendant wrote back to icare on 20 May 2024, seeking clarifications and received an email response on 22 May 2024 in which the icare representative agrees with the comments that had been made by the defendant’s solicitors.

Notwithstanding that the defendant’s interpretation of s 9 of the Motor Accident (Lifetime Care and Support) Act 2006 (NSW) was correct and that icare seemed to agree with the defendant’s argument, as pursued in the notice of motion, in respect of s 7(3), the fact is that this correspondence had been completed almost 2 months before the offer of compromise was made.

The difficulty that then arises for the defendant is, even if it had a reasonable argument on the notice of motion, is that sufficient to relieve it of the consequences of the offer of compromise.

In Morgan v Johnson (1998) 44 NSWLR 578, at 581 Mason P said this about the principles concerning offers of compromise:

The most relevant part of the just quoted passage is:

Accepting that the defendant did run a reasonable argument in the notice of motion it is apparent from Morgan that this does not avoid the natural consequence of the rule.

There was no other reason advanced by the defendant to not give effect to the offer of compromise. Accordingly, I will make the orders as requested by the plaintiff.