Hunter v Roberts (No 2)

THE COURT: The Court’s judgment of 20 May 2019 allowed the applicant’s appeal from an order of the District Court dismissing, on the ground of delay, her statement of claim in which she sought damages for personal injury suffered in a motor accident (Motor Accidents Compensation Act 1999 (NSW), s 73(5)). In doing so, the Court made the following orders as to costs:

By her notice of motion of 23 May 2019 the applicant seeks an order pursuant to Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 36.16(1) that order 9 above be varied as follows:

That application was brought within the 14 days provided by sub-rule (3A), enlivening this Court’s power under r 36.16(1) to vary the earlier costs order.

In support of the proposed variation, the applicant relies on an informal “Calderbank” offer (from Calderbank v Calderbank [1976] Fam 93) made by email to the respondent’s legal advisers on 24 December 2018. That offer proposed orders allowing the appeal, setting aside the orders of the District Court and dismissing the respondent’s underlying motion. As to the costs of the motion in the District Court and of the appeal to that point in time, the offer proposed:

The offer was open for acceptance until 4pm on 11 February 2019, and provided that should the respondent not accept it, the applicant would be “seeking indemnity costs from the date of this communication”. Significantly, the offer accompanied the service of the applicant’s written submissions in the appeal.

The general rule as to the costs of proceedings is that they should “follow the event” or result (UCPR, r 42.1); and unless the Court orders “otherwise” those costs are to be assessed on the “ordinary basis” (UCPR, r 42.2), which entitles the party to recover a “fair and reasonable amount” for costs (Civil Procedure Act 2005 (NSW), s 3(1) and Legal Profession Uniform Law Application Act 2014 (NSW), Pt 7, Div 3). The making of an offer of compromise in the form of a Calderbank letter may justify a departure from the ordinary basis on which costs are awarded and assessed and, as Giles JA observed in SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37], the ultimate “question is whether the offeree’s failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule”. Subsequent authorities (including Leichhardt Municipal Council v Green [2004] NSWCA 341) have proceeded on the basis that such a departure will not be justified unless in all the circumstances it was unreasonable for the offeree not to accept the offer.

The relevant principles are not in issue and sufficiently summarised in the following statements of the Court in Perisher Blue Pty Ltd v Nair-Smith (No 2) [2015] NSWCA 268 at [14], [16] and [60]:

The Calderbank offer made on 24 December 2018 was more favourable to the respondent than the judgment and orders of this Court. It provided for the parties to bear their own costs of the motion in the District Court and of the appeal, whereas this Court ordered that those costs be paid by the respondent.

Accordingly, in circumstances where the offer was clearly made, accompanied by the written submissions on the appeal, and allowed a reasonable time for the respondent to consider it (none of these matters is contested by the respondent), the assessment which must be made, and on a summary basis (see Elite Protective Personnel Pty Ltd & Anor v Salmon [2007] NSWCA 322 at [148]), is whether the respondent acted unreasonably in refusing that offer.

In our view the respondent did act unreasonably for the following reasons.

The principal question raised in the appeal was whether the primary judge had erred in not concluding that the applicant’s explanation for her delay in giving notice of her motor accident claim was “satisfactory”. That evaluative question directed attention to whether a hypothetical reasonable person in the applicant’s position “would have been justified in experiencing the same delay”; here from 28 September 2013 to 10 February 2014, a period of 4 months and 14 days, the motor accident having occurred on 28 March 2013.

The applicant’s position was that whilst she was aware of the possibility of making a claim from about 30 June 2013, she did not understand that to secure her entitlement to claim damages she had to lodge any claim within 6 months of the motor vehicle accident, and accordingly by the end of September. She was 21 years of age with minimal education and did not appreciate that by not contacting the NRMA or a solicitor before then, she was putting at significant risk her right ever to make a claim. Before and during the period of delay, she continued to suffer from physical and psychological injuries resulting from the accident; and her primary focus was on her recovery and getting back to work. None of this was controversial on the evidence before the District Court.

In the applicant’s written submissions to this Court on the appeal (esp at [24], [27]-[30], [32]-[34]), it was contended that the primary judge had applied the wrong test in concluding that the applicant’s explanation was not “satisfactory”; that her Honour had made two material errors of fact in making that assessment; and that in the circumstances, a reasonable person in the applicant’s position would have been justified in experiencing the same delay.

In his written submissions in reply filed on the day the Calderbank offer expired, the respondent conceded that the primary judge’s fact-finding process contained two material errors of fact which “must have influenced her Honour’s reasoning process”. That was sufficient to enliven this Court’s duty in an appeal by way of rehearing to consider afresh whether the applicant’s explanation was a “satisfactory” one in the relevant sense.

Whilst the respondent’s written submissions contended otherwise, it was apparent on an analysis of the circumstances summarised above that applying the authorities relied on by the applicant, including Karambelas v Zaknic (No 2) [2014] NSWCA 433 esp at [16], [17] and [34]; (2014) 69 MVR 127, her prospects of succeeding in her appeal, and securing that finding, were very good.

In the face of such prospects of success, the respondent acted unreasonably in not accepting her offer. His written submissions seek to answer that by suggesting that the matters which influenced the Court’s decision included that it was not until 26 February 2014 that the applicant was in a position to allege that the respondent was the driver of the vehicle, a matter not expressly referred to in the applicant’s written submissions and accordingly not brought to his attention. That last observation is correct but not decisive in view of the fact that the material relied on in the applicant’s written submissions, and referred to above, plainly justified the Court’s conclusion and an assessment of the applicant’s prospects as very good. That the evidence supported a conclusion that the explanation was “satisfactory” was, to some extent, acknowledged at the close of the oral argument in the District Court, it being said on behalf of the respondent:

Finally, in the evidence tendered on this application under r 36.16(1), the applicant also relied upon an earlier Calderbank offer made on 4 May 2017, four days before the hearing of the motion for dismissal in the District Court. The fact that that offer was made, and not responded to, is of no relevance to the resolution of the matters dealt with above.

Accordingly, the Court makes the following orders: