Dibbs v Emirates (No 2)

On 11 September 2015 the Court made orders dismissing the plaintiff’s amended summons of 2 September 2015 and entering a verdict for the defendant. The defendant sought an order for costs against the plaintiff.

A timetable was fixed for the parties to file submissions on the issue of costs, and the Court has now had the benefit of evidence and submissions from both parties.

The defendant submits that the usual orders of costs following the event should be made in its favour and, additionally, that indemnity costs should be payable from 17 October 2014, because an offer of compromise (or, alternatively, a “Calderbank” offer) was made on 16 October 2014.

The plaintiff opposes any order for indemnity costs, contending that the defendant’s offer of 16 October 2014 complied with neither the relevant provisions of the Uniform Civil Procedure Rules (2005) (“UCPR”) nor with the principles enunciated in Calderbank v Calderbank [1975] 3 WLR 586. Alternatively, it is submitted that the evidence was not complete as at 16 October 2014 and it was thus not unreasonable for the plaintiff to reject the offer made to her by the defendant.

The defendant relies upon an affidavit of Lara Dopson of 13 October 2015 as to the details of the offer of compromise made to the plaintiff. Ms Dopson deposes that the offer was made pursuant to r 20.26 of the UCPR and offered payment to the plaintiff in the sum of $75,000, plus costs as agreed or assessed on the basis that the plaintiff’s claim against Emirates would be discontinued. The offer was stated to be open for 28 days and was not withdrawn during the specified period.

The offer was made in writing and proposed full and final settlement of the plaintiff’s claim against the defendant.

The plaintiff did not respond to the offer, and it expired on 14 November 2014.

The matter proceeded to hearing over three days on 1, 2 and 3 September 2015. Judgment was delivered adverse to the plaintiff, with the Court concluding that liability had not been established and, even if it had, any damages payable to the plaintiff would have been very modest ($33,271) because of the extent and severity of a pre-existing injury the plaintiff had sustained. The sum that would have been awarded in such circumstances is substantially lower than that offered to the plaintiff by the defendant in October 2014.

The defendant submits that the general rule that costs should follow the event should apply until such point as the offer of compromise was made, after which indemnity costs should be awarded.

In her written submissions the plaintiff did not deal with the question of costs in the ordinary course and it may be taken that she concedes that the defendant is entitled to an order in its favour for costs as agreed or assessed. The area of dispute appears to be confined to the question of indemnity costs.

In that regard, the plaintiff contends that the offer of 16 October 2014 did not comply with the UCPR, and nor could the offer have provided a basis for a binding contract of the sort contemplated in Calderbank v Calderbank.

As to the purported non-compliance with the Rules, the plaintiff points to asserted procedural inadequacies in the offer of compromise, contending that the requirements of r 20.26 UCPR were not met. That rule is in the following terms,

By reference to the rule above the plaintiff submits that:

The submission relies upon a particularly narrow, even pedantic, construction of what is required by the Rules.

A copy of the defendant’s offer of compromise forms part of the evidence filed by the defendant in support of its application for costs.

Its offer was accompanied by correspondence of 16 October 2014 referring to the enclosed “offer of compromise made pursuant to Part 20 of the Uniform Civil Procedure Rules”. The offer document itself bore the statement “In accordance with Part 20 of the Uniform Civil Procedure Rules, the Defendant makes the following offer of compromise”.

Whilst there was not specific reference to r 20.26, or to r 20.26(2)(d) on the documents, there was a clear statement accompanying and upon the offer document that the offer was made in accordance with the Rules. Since the document was titled “Offer of Compromise”, and since Part 20 of the UCPR includes “Division 4, Compromise”, it is clear that the defendant’s offer was one made pursuant to Division 4 of Part 20 of the Rules, and was an offer seeking compromise.

The manner in which the defendant proposed to finalise the litigation was also clear, even without including a statement of the precise wording of the proposed orders for disposal of the claim (r 20.26(2)(a)(ii)). Had the plaintiff responded to the offer of compromise, some acceptable form of words could have been readily agreed by which the matter could have been put before the Court for consent orders to be made.

By that approach, the plaintiff would have received a more than adequate settlement, the parties would have been spared the expense and personal stress of litigation, and the Court’s resources would have been conserved.

Offers of the type made by the defendant in October 2014 must be considered in the context in which litigants conduct civil litigation, that being a context requiring observance of s 56(3) of the Civil Procedure Act 2005, to assist the courts to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

Here the defendant made an offer of compromise which was ignored by the plaintiff when made, and which the plaintiff now seeks to repudiate because of asserted non-compliance with the UCPR. Such a response is needlessly technical, and addresses minutiae rather than the real issues, that being, whether the defendant is entitled to indemnity costs given the chronology and history of the offer of compromise.

The plaintiff makes a similarly technical response to the defendant’s asserted reliance upon the principles in Calderbank v Calderbank in support of the claim for indemnity costs, arguing that, in the absence of a statement of consent from the defendant to the filing of a notice of discontinuance, the terms of the defendant’s offer were inadequate to support the existence of a binding contract.

The correspondence accompanying the defendant’s letter of compromise contained the following statement:

Again, the intention – and the genuine desire to resolve the claim expeditiously – is clear.

The defendant noted that its intent was to seek a resolution of the matter pursuant to the Rules, but sought to have any deficiency addressed by its offer taking effect as a Calderbank Offer. That approach is not unreasonable and an offer of compromise which does not comply with r 20.26 may have effect as such an offer: Trustee for the Salvation Army (NSW) v Becker [2007] NSWCA 194; Associates Confectionery (Aust) Ltd v Mineral and Chemical Traders Pty Ltd (1991) 25 NSWLR 349.

The plaintiff submits that the defendant’s offer could not have grounded a binding contract since she could not have filed a notice of discontinuance without the consent of the defendant and, had she obtained consent and filed the notice, there would have been no enforcement option available to her should the defendant have defaulted.

Neither of these arguments carries any real weight.

The absence of any statement of consent in the Offer of Compromise or accompanying correspondence could have posed no real barrier to settlement of the matter. Since the discontinuation of the proceedings was the very mechanism suggested by the defendant to formally resolve the litigation (following payment by it of the offered sums, with costs also to be met) there could hardly have been any issue about its consent to that course.

Neither was there any real reason to suppose that the defendant would obtain discontinuance of the proceedings and then fail to pay the agreed settlement sum or costs, to the plaintiff’s disadvantage. The Offer of Compromise was plainly a genuine attempt to resolve the matter without further expenditure of time and resources; there was nothing to suggest that the defendant would not do as it said it would if the offer was taken up.

Even had that occurred, there would have been no long-term disadvantage to the plaintiff, since the notice of discontinuance could have been readily set aside in such circumstances, with an order for costs adverse to the defendant being inevitable in such circumstances.

In my view, even if there were some issue of non-compliance with the Rules, the defendant’s offer of compromise can be properly viewed as a Calderbank offer. See Trustee for the Salvation Army (NSW) v Becker [2007] NSWCA 194 at [27] – [28] on that point, where it was said,

UCPR 42.1 provides,

The Rules create a presumption that, subject to the Court’s discretion, costs will ordinarily be awarded in favour of the successful party to the litigation. Awards of costs are made in favour of the successful litigant to compensate the party for costs incurred in prosecuting or defending a claim; where the successful litigant did all it could to resolve the litigation, but was opposed in that course by the losing party, it is ordinarily reasonable for indemnity costs to follow. That may be so even if there is some non-compliance with strict procedural requirements.

Pursuant to s 98 of the Civil Procedure Act 2005 (NSW) the Court retains the general discretion to award indemnity costs.

It is relevant to consider,

In Miwa Pty Limited v Siantan Properties Pty Ltd (No 2) (2011) NSWCA 344, Basten JA adopted at [12] the following factors in determining whether the rejection of an offer was unreasonable,

In the present matter it may be noted that,

In all the circumstances, I have concluded that the Court should make the orders sought by the defendant as to costs.

Pursuant to UCPR 42.15,