“Offers of Compromise”: Baresic -v- Slingshot Holdings Pty Limited & Anor (No. 2) NSWCA 160

Author: Kate Blue

Judgement Date: 12th May, 2005

Citation: Baresic -v- Slingshot Holdings Pty Limited & Anor (No. 2)

Jurisdiction: NSW Court of Appeal[1]

In Brief

  • This case involves the application of Pt 39A r25(4A) of the District Court Rules which provides:

“ Where an offer (Offer of Compromise) is made by a Plaintiff 28 days or more before the hearing of the action commences and the offer is not accepted by the Defendant, and the Plaintiff obtains an order or judgment on the claim to which the offer relates no less favourable to the Plaintiff than the terms of the offer, then, unless the Court in an exceptional case and for the avoidance of substantial injustice otherwise orders, the Plaintiff shall be entitled to an order against the Defendant for the Plaintiff’s costs in respect of the claim assessed on a solicitor and client basis. “

  • This case is also authority for the proposition that the effect of an Offer of Compromise, like a Calderbank offer in District or Supreme Court proceedings, would not extend to provide the offeror with any benefit in subsequent Court of Appeal proceedings.

Background

  • The Appellant suffered a severe neck injury on 21 March 2001 whilst riding on an amusement park ride called a “Slingshot” which was operated by the Respondents.  The Appellant commenced proceedings in the District Court claiming that her injuries were due to the Respondents’ negligence.
  • On 8 April 2004, Gibson DCJ delivered Judgment in which Her Honour held that the Respondents had not acted negligently in their operation of the Slingshot machine.
  • The Appellant successfully appealed to the Court of Appeal and Gibson DCJ’s orders were set aside and a verdict was entered in favour of the Appellant in the sum of $318,267.06.
  • The Respondents were ordered to pay the Appellant’s costs at first instance and of the Appeal, however the parties were ordered to file Written Submissions in relation to the basis upon which costs should be paid.
  • Prior to the trial the parties had agreed quantum of the Plaintiff’s claim in the sum of $318,267.06, in accordance with a previous award made by an Arbitrator.
  • The Hearing in the District Court commenced on 1 December 2003 but was adjourned to 20 February 2004.
  • On 16 January 2004 the Appellant made an Offer of Compromise to the Respondents in the sum of $275,000 plus costs.
  • The Respondents did not accept the Appellant’s compromise offer.
  • The Appellant sought an order that the costs of the trial and the appeal be assessed on a solicitor/client basis and indemnity basis respectively.

Court of Appeal Decision

  • Beazley JA held that as the Appellant was successful on the appeal she was entitled to the costs of the trial, assessed on a solicitor/client basis from 17 January 2004 unless the Court exercised its discretion to order otherwise.  Her Honour Beazley JA stated:  “The discretion is only enlivened if the Court finds exceptional circumstances and for the avoidance of substantial injustice.”
  • The Respondents sought an exercise of the discretion in their favour by submitting that the matter involved complex legal issues relating to the foreseeability of risk sustained by the Appellant and that it was reasonable that these issues be tested.  Beazley JA, however, held that it cannot be said that this case involved novel considerations of law or exceptional factual circumstances that would persuade a Court to exercise its discretion.
  • In the circumstances the Court held that the Appellant was entitled to solicitor/client costs in respect of the District Court proceedings from 17 January 2004, with costs prior to that date being assessed on a party/party basis.
  • It was accepted by the Appellant that the compromise offer did not bind the Court of Appeal in relation to any costs order.  
  • The Appellant also submitted however that the Respondents should be ordered to pay the Appellant’s costs of the Appeal on an indemnity basis.
  • The Court cited with approval Heydon JA (as he then was) in South Sydney Council -v- Morris (No. 3) [2001] NSWCA 200: “Offers of compromise made under the rules of the District Court cease to have effect once a particular matter to which they relate leaves the jurisdiction of the District Court.  Such offers of compromise remain relevant insofar as this Court can take them into account when exercising its general discretion as to costs pursuant to Section 76 of the Supreme Court Act.
  • Beazley JA held that in the exercise of the Court’s general discretion to award costs, an order that one party pay the other party’s costs on an indemnity basis is usually predicated upon there being some unreasonable or delinquent conduct on the part of the party against whom the order is made, including the failure to accept an Offer of Compromise.  That was not the case in this matter.
  • Accordingly, the costs of the Appeal were awarded to the Appellant on a party/party basis.
  • Beazley JA also noted that once proceedings move from the District Court to the Court of Appeal there is no relevant difference between an offer under Pt 19A DCR and a Calderbank offer, insofar as costs for the appeal are concerned: Morris –v- South Sydney Council 2001 NSWCA 200. 

Implications

  • This case is authority for the proposition that the effect of an Offer of Compromise in District or Supreme Court proceedings does not extend to provide the offeror with any benefit in subsequent Court of Appeal proceedings.
  • An Appellant is well advised to make a fresh Offer of Compromise or a Calderbank offer in the period between the trial and the appeal “if they wish to secure their claim for indemnity costs of the Appeal” per Beazley JA.
  • Nonetheless the question of costs ultimately remains a matter for the Court’s discretion in the particular circumstances of the case.  The reasonableness of the offer will be relevant to the exercise of the discretion.

[1]    MASON P, BEASLEY JA AND BRYSON JA