Citation: Rook v State of New South Wales (No 4) [2015] NSWDC 155
Court: District Court of New South Wales
Date: 11 June 2015
Judge: Neilson DCJ
Background
The plaintiff brought proceedings against the State of New South Wales arising from an incident at a Sydney police station. His claims spanned four causes of action: false imprisonment, assault and battery, detinue, and malicious prosecution. The proceedings, listed for five days, ultimately ran for ten days including submissions.
The plaintiff succeeded on false imprisonment and assault and battery, abandoned the detinue claim during the hearing, and failed entirely on malicious prosecution. He also failed on his claims for aggravated and exemplary damages, recovering only $500 in nominal damages for assault and battery. The bulk of his damages, $18,590 in total, flowed from the false imprisonment finding.
This fourth judgment addressed costs only. The central dispute was whether the plaintiff was entitled to indemnity costs from the date of his unaccepted offer of compromise, or whether the court should exercise its discretion under UCPR r 42.14(2) to "order otherwise" and limit him to ordinary costs.
Legal Issues
- Whether the plaintiff's offer of compromise was open for a reasonable time, as required under the UCPR
- Whether "exceptional circumstances" are required before a court may exercise the r 42.14(2) discretion to depart from the default indemnity costs order
- Whether indemnity costs were appropriate given the plaintiff's partial success, particularly his failure on malicious prosecution and on aggravated and exemplary damages
- Whether costs should be apportioned between the issues on which the plaintiff succeeded and those on which he failed
Decision
On the reasonableness of the offer's timeframe, the court rejected the defendant's submission that almost five working days was insufficient time for acceptance. Neilson DCJ applied the approach from Kooee Communications v Primus Telecommunications (No 2) [2008] NSWCA 85, noting that experienced solicitors and counsel should have been able to assess the case promptly. The State of New South Wales, as an experienced litigant with retained counsel, was in no different position. The defendant's prompt counter-offer reinforced that it had both the time and capacity to evaluate the plaintiff's offer.
On whether "exceptional circumstances" are required, the court acknowledged conflicting dicta in the Court of Appeal. The relevant tension was between Hodgson JA's view in Nominal Defendant v Hawkins [2011] NSWCA 93 (that exceptional circumstances are generally required) and the analysis in Barakat v Bazdarova [2012] NSWCA 140 and Leach v The Nominal Defendant [2014] NSWCA 391, which pointed toward a broader discretion. Neilson DCJ concluded that exceptional circumstances are not required before the court may exercise the discretion to "order otherwise."
On whether the discretion should be exercised here, the court found it should be. A substantial portion of the ten-day hearing was devoted to issues on which the plaintiff failed, including the malicious prosecution claim and the pursuit of collusion allegations and credit-related factual disputes. Those issues absorbed significant hearing time and generated costs that the plaintiff, not the defendant, had driven. In these circumstances, making a full indemnity costs order in the plaintiff's favour would not reflect the reality of the litigation.
On apportionment of costs, the court declined to split costs between successful and unsuccessful issues. The credit questions raised on the failed claims were directly intertwined with credibility findings relevant to the successful claims. A formal apportionment would, in the court's view, be an overly complex and ultimately artificial exercise. The court instead exercised the r 42.14(2) discretion by ordering costs on the ordinary basis only, declining to award indemnity costs.
Orders Made
- The defendant is to pay the plaintiff's costs of the proceedings on the ordinary basis.
- That costs order includes the costs of the costs application itself.
Key Takeaways
- The District Court held that exceptional circumstances are not required before a court exercises the UCPR r 42.14(2) discretion to "order otherwise" and displace the default indemnity costs consequence of an unaccepted offer of compromise.
- A response time of nearly five working days was sufficient to satisfy the "reasonable time" requirement for an offer of compromise, at least where experienced solicitors and counsel had been engaged throughout the litigation.
- Where a plaintiff devotes a large proportion of the hearing to claims on which they ultimately fail, that may justify limiting them to ordinary costs even where they better their offer of compromise overall.
- Apportionment of costs between successful and unsuccessful issues will not always be appropriate. Where failed issues raised credit questions that were also relevant to the successful claims, separating them may be impossible in any meaningful way.
- The jurisdictional constraint under s 33(1)(b) of the Local Court Act 2007 (NSW), which prevents the Local Court from hearing false imprisonment and malicious prosecution claims, meant the plaintiff had no choice but to litigate in the District Court despite the modest damages ultimately recovered.
Legislation and Cases Referenced
Legislation
- Uniform Civil Procedure Rules 2005 (NSW), rr 36.17, 42.14
- Local Court Act 2007 (NSW), s 33(1)(b)
Cases
- Barakat v Bazdarova [2012] NSWCA 140
- Calderbank v Calderbank [1975] 3 All ER 333
- Kooee Communications Pty Limited v Primus Telecommunications Pty Limited (No 2) [2008] NSWCA 85
- Leach v The Nominal Defendant [2014] NSWCA 391
- LMI v Baulderstone (No 2) [2002] NSWSC 72
- Nominal Defendant v Hawkins [2011] NSWCA 93; (2011) 58 MVR 362