Menz v Wagga Wagga Show Society Inc (No 4)

On 20 May 2019 I made orders in these proceedings entering a verdict and judgment for the defendant, and ordering that the plaintiff pay the defendant's costs, as agreed or assessed. [1] My Associate was subsequently contacted by the solicitor for the defendant requesting that the matter be relisted for the purposes of the defendant making an application for a special costs order.

The orders now sought by the defendant are in the following terms:

In support of the orders sought, the defendant read an affidavit of Brett Ryan Turnbull of 19 July 2019. That affidavit establishes the following facts.

On 29 March 2016, the solicitor for the defendant served on the solicitor for the plaintiff an Offer of Compromise (“the first offer”) pursuant to the Uniform Civil Procedure Rules 2005 (NSW) (“the Rules”) in the following terms:

The first offer was served under cover of a lengthy letter of the same date, in which the solicitor for the defendant pointed out what were said to be a number of deficiencies in the plaintiff's case.

On 27 April 2018, the solicitor for the defendant served on the solicitor for the plaintiff a further Offer of Compromise (“the second offer”) in the following terms:

The second offer was served under cover of a letter which stated (inter alia) the following:

On 31 May 2018, the solicitor for the defendant served on the solicitor for the plaintiff a further offer of compromise (“the third offer”) which was in the following terms:

The plaintiff read without objection an affidavit of Geoffrey John Potter, Solicitor, dated 28 August 2019. In that affidavit, [2] Mr Potter deposed to the various orders which had been made in these proceedings requiring the defendant to serve expert liability evidence. Mr Potter’s affidavit establishes that after a series of breaches of those orders by the defendant, an expert report of Andrew McLean was finally served on 3 August 2018.

In view of the numerous procedural defaults, the defendant was required to make an application to the Court in order to rely on the report. On 30 August 2018 Harrison J dismissed that application. [3]

Counsel for the plaintiff submitted that when the first offer was made, there was no expert evidence filed by the defendant and that accordingly, the plaintiff had not been able to properly consider her position in relation to the offer. It was further submitted that the second and third offers had been made in circumstances where the plaintiff was similarly unable to give proper consideration to the offers in each case, and that it was not unreasonable for the plaintiff to take the course that she did.

Counsel submitted, in particular, that at the time the first offer was made, the pleadings had just closed, and no expert liability evidence had been served. Counsel further submitted that between 29 March 2016 and 7 March 2018, a period of almost 2 years within which the second offer was made, the defendant had consistently represented to the plaintiff, and to the Court, that it was proposing to serve expert evidence as to liability, and had repeatedly failed to do so in accordance with orders which had been made based on those representations. It was submitted that in all of these circumstances, and in the absence of any expert liability evidence having been served by the defendant, the plaintiff was entitled to (and did) assume that such evidence could not be obtained and would not be served.

Counsel for the defendant submitted that each of the offers made represented a genuine compromise. He pointed out, in particular, that the second and third offers were substantial and submitted that there was nothing preventing the plaintiff from giving them her full consideration. It was further submitted that even if there was an expectation on the part of the plaintiff that the defendant would serve expert evidence, that was not a proper basis on which to reverse the presumptive entitlement to a special costs order.

Rule 20.26 of the Rules facilitates the making of an offer of compromise. It has not been suggested that any of the offers failed to comply with the provisions of that rule. What is in issue is whether the Court should exercise its discretion pursuant to r 42.14 which is in the following terms:

The principles which govern the exercise of that discretion were set out by Mason P in Morgan v Johnson and may be summarised as follows : [4]

The essence of the submission advanced on behalf of the plaintiff was that in the absence of the expected service of expert evidence by the defendant, the plaintiff was not in a proper position to properly consider any of the offers. In considering that submission, the following matters are relevant.

Firstly, at the time that the first offer was made the defendant saw fit to draw to the plaintiff’s attention, in some detail, what it saw as the issues, an what it regarded as the shortcomings in the plaintiff’s case. The plaintiff could not possibly have been under any misapprehension as to the fact that liability was in serious issue, and that the defendant sought to rely on a number of provisions of the Civil Liability Act 2002 (NSW) in its defence.

Secondly, even absent such correspondence, the fact that those matters were very much in issue must have been evident to the plaintiff from the pleadings.

Thirdly, whilst I accept that there had been indications by the defendant that expert evidence would be served, the fact that such evidence was not served for a long period did not preclude the plaintiff from giving proper consideration to the offers. As I have already noted, the fact that liability was very much in issue must have been evident to the plaintiff from the pleadings.

In all of these circumstances, there was nothing preventing the plaintiff from giving proper consideration to each of the offers at the time they were made. It follows that there is no basis on which to exercise the discretion to reverse the defendant’s prima facie entitlement to the orders sought.

For those reasons I make the following orders: