Patrick Stevedores (No 1) Pty Limited v Vaughan (Costs) [2002] NSWCA 422

New South Wales Court of Appeal

CITATION : Patrick Stevedores (No 1) Pty Limited v Vaughan (Costs) [2002] NSWCA 422 FILE NUMBER(S) : CA 41062/01 HEARING DATE(S) : On the papers JUDGMENT DATE : 19 December 2002

PARTIES : Patrick Stevedores (No 1) Pty Limited Francis Vaughan JUDGMENT OF : Beazley JA at 1; Stein JA at 1; Davies AJA at 1

LOWER COURT JURISDICTION : Supreme Court LOWER COURT 20350/99 FILE NUMBER(S) : LOWER COURT Cooper AJ JUDICIAL OFFICER :

COUNSEL : J D Hislop QC/H J Marshall (A) G Little SC/L G Stone (R) SOLICITORS : Gillis Delaney Brown (A) D Hand (R) CATCHWORDS : Costs - Offer of compromise LEGISLATION CITED : Supreme Court Rules 1970 (NSW) Pt 52A r 22 Ettingshausen v Australian Consolidated Press (1995) 28 NSWLR 404 Fotheringham v Fotheringham (No 2) (1999) 46 NSWLR 194 CASES CITED: South Sydney Council v Morris (No 3) [2001] NSWCA 200 Roads and Traffic Authority of New South Wales v Dimitrovski [2002] NSWCA 117 Lee v Kennedy [2001] NSWCA 8 Evatt v Nationwide News Pty Limited (No 2) [1999] NSWCA 143 DECISION : Appellant to pay the respondent's costs. Those costs to be on an indemnity basis from 1 July 2002

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41062/01 SC 20350/99

BEAZLEY JA STEIN JA DAVIES AJA

19 December 2002 PATRICK STEVEDORES (NO 1) PTY LIMITED v VAUGHAN COSTS JUDGMENT 1 THE COURT: The judgment in this matter was handed down on 2 September 2002 dismissing the appeal and allowing the cross-appeal with costs. The respondent subsequently made an application for costs from both the appeal and the claim in the court below from 30 October 2001 to be assessed on an indemnity basis, and for costs on and before 30 October 2001 to be assessed on a party and party basis. 2 On 30 October 2001, prior to the first instance trial, the respondent made an offer of compromise pursuant to Pt 52A r 22 of the Supreme Court Rules 1970 (NSW). This offer of compromise was rejected and the respondent obtained at trial a judgment more favourable to him than the terms of the offer of compromise. 3 On 10 December 2001, Acting Justice Cooper ordered that the: "[appellant] … pay [the respondent's] costs of the proceedings on a party and party basis up until 30 October 2001 and the [appellant] … pay the [respondent's] costs of the proceedings on an indemnity basis thereafter." 4 On 27 December 2001 a Notice of Appeal Without Appointment and on 15 February 2002 a Notice of Appeal With Appointment was filed. 5 On 28 June 2002 the respondent made a further offer of compromise to the appellant. The appellant received the offer of compromise on 1 July 2002. The appellant rejected this offer of compromise. The Court of Appeal judgment was more favourable to the respondent than the offer of compromise. 6 The respondent submits that because the appellant was not successful during the appeal "the cost order of the Court below remains on foot to the benefit of the respondent". That is, because of the outcome of the appeal, he is entitled to claim indemnity costs from 30 October 2001 until the date that the judgment was handed down in the appeal. The respondent also submits that he was entitled to make the additional offer of compromise during the appeal in order to "influence a compromise in [the] appeal and to preserve his costs position from [the date of the second offer of compromise without that] … precluding him from the effect and the benefit of the costs order made in the Court below". 7 The appellant submits that the proceedings in the Court of Appeal are separate proceedings from those in the Court below. The appellant concedes that the respondent is entitled to an order that the appellant pay the costs of the appeal on an indemnity basis from 1 July 2002. However, the appellant submits that the respondent's costs of the Court of Appeal proceedings should be paid on a party and party basis up to 1 July 2002. 8 The appellant submits that pursuant to Pt 22 r 3 the time for accepting the offer of compromise made on 30 October 2001 had expired before the conclusion of the proceedings in the Court below. They submit that from 10 December 2001, when judgment was entered in the Court below, to 1 July 2002 there was no offer of compromise open to be accepted by the appellant. 9 Part 52 r 22 (4) provides that where an offer of compromise is rejected in circumstances such as this case indemnity costs should be awarded "unless the Court otherwise orders". 10 The appellant concedes that the award of indemnity costs is appropriate from the date of receipt of the second offer of compromise. The issue in this case is whether the award for indemnity costs made at the first instance trial should continue as a result of the appellant's unsuccessful appeal. 11 In Ettingshausen v Australian Consolidated Press (1995) 28 NSWLR 404 Gleeson CJ and Priestley JA at 410 found that: "there is no justification for concluding that, once the claim to which it relates has been subject to a complete trial, an offer of compromise made before the trial has no further significance for any appeal, or subsequent re-trial."

Their Honours held that under Pt 22 an offer of compromise is an offer to compromise an entire claim, "[it] is not a compromise of a hearing, or of one round in a bout of litigation" . Their Honours further held in Ettingshausen that the fact than an offer of comprise is no longer open to a party to accept, due to the expiry of the time specified in Pt 22 as being the time in which the offer was open to be accepted: see Pt 22 r3, does not alter the effect that that offer may have on the costs position of parties. 12 In Fotheringham v Fotheringham (No 2) (1999) 46 NSWLR 194 Powell JA (Spigelman CJ, Mason P, Beazley JA and Stein JA agreeing) stated that Pt 52A did not "dictate that the [offeror party] should have an order for [their] costs of the appeal, and still less that these costs should be assessed on an indemnity basis". He emphasised that it is in the discretion of the Court "in the light of relevant matters and in accordance with accepted principle" to award indemnity costs for the appeal. Stein JA (Spigelman CJ, Mason P and Beazley JA agreeing) considered that Ettingshausen was authority for the proposition that an "offer of compromise [made at trial] continues to have cost consequences for an appeal". However, the discretion of the Court in awarding costs "brings with it the need, where applicable, to consider all of the other circumstances relevant" to the exercise of that discretion. 13 Recent authority in this Court applying Ettingshausen and Fotheringham reveals that the discretionary award of indemnity costs following an offer of compromise depends upon the individual circumstances of each case. In cases where there were "aspects of the trial judge's reasoning which were not unreasonable for the appellant to test" the Court has been cautious in awarding indemnity costs: South Sydney Council v Morris (No 3) [2001] NSWCA 200, see also Roads & Traffic Authority of New South Wales v Dimitrovski [2002] NSWCA 117. In cases where the offer was reasonable and by not accepting the offer the offeree party "left themselves very much at risk in the matter of eventual costs orders" the Court has been more willing to award indemnity costs: Lee v Kennedy [2001] NSWCA 8; see also Evatt v Nationwide News Pty Ltd (No 2) [1999] NSWCA 143. 14 The considerations relevant to the exercise of the discretion to award costs in this case include the rejected offer of compromise made at trial, the rejected offer of compromise made during the appeal and the general conduct of the appeal. In relation to the last consideration that appellant was totally unsuccessful on the appeal. However, the factual circumstances involved were novel and the damages have been considered by the Court to be at the higher end of the discretionary range open to his Honour, such that it was not unreasonable for the appeal to have brought. In those circumstances, we do not consider that this is an appropriate case in which to award indemnity costs in the period prior to the making of the second offer of compromise.

Order 15 The appellant is to pay the respondent's costs of the appeal. Those costs are to be on an indemnity basis from 1 July 2002. The Court does not by its order disturb the costs order made the trial judge in the court below.

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