When will a walk away offer be held to be a genuine Offer of Compromise?

Hearse & Anor v Staunton & Ors [2011] NSWSC 1065  

Judgment date: 12 September 2011

Hall J: 

12The provisions of UCPR Part 20 Rule 26 are concerned with written offers by a party to another to compromise any claim in the proceedings either in whole or in part on specified terms: Rule 20.26(1). An offer must be exclusive of costs, except where it states that it is a verdict for the defendant and that the parties are to bear their own costs: Rule 20.26(2).

13In order to be a valid offer under Part 20 of the UCPR, the offer must be a valid offer, that is, the form and terms of the offer must be in accordance with the Rules. There is no issue in these proceedings as to the form and terms of the offer, other than the question as to whether it constituted a genuine Offer of Compromise. The commentary in the UCPR [20.26.10] states that the Offer of Compromise procedure is not intended to be utilised simply as a statutory demand whose rejection would automatically entail the payment of costs on an indemnity basis. To be an Offer of Compromise under the Rule, some real element of compromise must be involved in the offer: Tickell v Trifleska Pty Limited (1990) 25 NSWLR 353; Hobartville Stud Pty Limited v Union Insurance Co Limited (1991) 25 NSWLR 358 (both cases concerned offers of compromise made by the plaintiffs).

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26It may be accepted that the costs incurred by the time the offer was made on 7 April 2010 would not have been insubstantial. Had the offer been accepted, there would have been a real benefit to the plaintiffs having regard to the costs incurred. In other words, the Offer of Compromise made on behalf of the third, fourth and fifth defendants was not one made on the basis of a capitulation with no real benefit to the plaintiffs. There are no "exceptional circumstances" , as discussed above, that would operate against making the order sought. In my assessment, the defendants are entitled to an indemnity costs order from the date specified for acceptance of the Offer.

Putting a hold on pre-litigation dispute resolution requirements in NSW

On 8 September 2011 the NSW Parliament passed the Courts and Other Legislation Further Amendment Bill 2011.  The purpose of the Bill is to postpone the pre-litigation dispute resolution requirements set out in Part 2A of the Civil Procedure Act 2005 by 18 months.  Part 2A of the Civil Procedure Act was to apply to proceedings commenced on or after 1 October 2011 and imposes on parties to certain types of civil disputes an obligation to resolve the dispute, or narrow the issues in dispute, prior to the commencement of proceedings. The Bill now awaits assent or proclamation.

As safe as houses - a look at homeowners' liability

Bader v Jelic [2011] NSWCA 255

Judgment date: 31 August 2011

Macfarlan JA (Young JA and Sackville AJA agreeing):

43. The following oft-quoted observations that Gleeson CJ made in Jones v Bartlett [2000] HCA 56; (2000) 205 CLR 166 are pertinent to the present case:

"There is no such thing as absolute safety. All residential premises contain hazards to their occupants and to visitors. Most dwelling houses could be made safer, if safety were the only consideration. The fact that a house could be made safer does not mean it is dangerous or defective. Safety standards imposed by legislation or regulation recognise a need to balance safety with other factors, including cost, convenience, aesthetics and practicality. The standards in force at the time of the lease reflect this. They did not require thicker or tougher glass to be put into the door that caused the injury unless, for some reason, the glass had to be replaced. That, it is true, is merely the way the standards were framed, and it does not pre-empt the common law. But it reflects common sense" (at [23]).

When failing to take precautions against a risk of harm will amount to breach of duty

Mungis (No 2) Pty Limited v Still [2011] NSWCA 261

Judgment date: 6 September 2011

Sackville AJA (Basten JA and Macfarlan JA agreeing):

51. The duty of care arises under the general law. However, a court cannot make a finding of breach of duty for failing to take precautions against a risk of harm unless the three pre-conditions set out in s 5B(1) of the Civil Liability Act are satisfied: Roads and Traffic Authority (NSW) v Refrigerated Roadways Pty Ltd [2009] NSWCA 263, 53 MVR 502, at [173], per Campbell JA (with whom McColl JA and Sackville AJA agreed).

52. Section 5B provides as follows:

"(1) A person is not negligent in failing to take precautions against in failing to take precautions against a risk of harm unless:

(a) the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and

(b) the risk was not insignificant, and

(c) in the circumstances, a reasonable person in the person's position would have taken those precautions.

(2) In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things):

(a) the probability that the harm would occur if care were not taken,

(b) the likely seriousness of the harm,

(c) the burden of taking precautions to avoid the risk of harm,

(d) the social utility of the activity that creates the risk of harm."

Varga v Galea [2011] NSWCA 76

Judgment date: 4 April 2011

McColl JA (Beazley JA and Handley AJA agreeing):

"Evidence of the practicability of a proposed alternative course or safeguard "is essential except to the extent that [it is] within the common knowledge of the ordinary man": Maloney v Commissioner for Railways (NSW) (1978) 52 ALJR 292 (at 293) per Barwick CJ; see also Neill (at 369 - 370); Vozza (at 321 - 322). A mere allegation that a precaution is practicable is insufficient where the evaluation of whether or not the precaution is practicable involves issues of technical knowledge and experience: Swain v Waverley Municipal Council [2005] HCA 4; 220 CLR 517 (at [45]) per McHugh J, citing Bressington v Commissioner for Railways (NSW) [1947] HCA 47; (1947) 75 CLR 339 (at 348) per Latham CJ. Absent such evidence, or an ability to have recourse to common knowledge, it will merely be a matter of conjecture whether suggested precautions would be practicable or not: Neill (at 365) per Kitto J. "

Circumstances in which court will order joinder of parties under r 6.19 of the Uniform Civil Procedure Rules 2005

CGU Insurance Ltd v Bazem Pty Ltd [2011] NSWCA 81

Macfarlan JA (Beazley JA and Hodgson JA agreeing)

27 The power given by these concluding words of UCPR r 6.19(1) is not in my view available only where the conditions stated in r 6.19(1)(a) and (b) are satisfied. These conditions are applicable where a party commences proceedings: the party may join more than one defendant as of right if the conditions are satisfied. There is no reason however why the Court's discretion to grant leave for the joinder of defendants should be so limited when the power granted to the Court is expressed in unqualified terms.

28 Nor in my view should it be regarded as otherwise limited in the manner that the Insurer contends it should. As the High Court said in Owners of the Ship "Shin Kobe Maru" v Empire Shipping Co Inc [1994] HCA 54; (1994) 181 CLR 404, "[i]t is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words" (at 421).

29 As the power here is expressed in unqualified terms, I do not consider that there is any sound basis for the Insurer's submission that at least one of a limited number of factors must be present before the Court's power to grant leave under this provision arises. Contrary to the Insurer's submissions, it is not necessary that there be a factor "along the lines of ... a Corporations Act priority issue" or "an issue of insolvency or potential insolvency" of the Insured (Appeal Transcript p 8), as there was in the Ashmere decisions. It is quite possible that in any particular case considerations other than these might move the Court to grant leave under this provision. For example, the facts in the present case that the Insurer had denied liability, that the Architect had not itself commenced proceedings to enforce the Policy and that the Insurer did not contend that there was no reasonable basis for an allegation that it was liable to grant indemnity under the Policy might have provided the basis for a proper exercise of discretion. Certainly the power to grant leave existed in such circumstances. The development of guidelines (of the type to which Mason CJ referred in Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 at 541) for the exercise of the discretion conferred by the rule might encourage or discourage the exercise, in the circumstances that I have described, of the power to grant leave. But that is a different issue from one of whether the power to grant leave exists.

Principles in determining contributory negligence

Reed v Warburton [2011] NSWCA 98

Judgment date: 20 April 2011

Basten JA (Hodgson JA and Handley AJA agreeing):

"This is to be determined in accordance with the principles set out in s 5R of the Civil Liability Act . Although the appellant owed no duty to himself, in a legal sense, to care for his own property, the Act requires that the principles applicable in determining whether a person has been negligent also apply in determining whether the person who suffered harm has been contributory negligent "in failing to take precautions against the risk of that harm": s 5R(1). Again, it is appropriate to consider the conduct of the appellant generally, without being unduly constrained by reference to taking "precautions". It is also necessary to apply the standard of a reasonable person "in the position of" the appellant. As emphasised by his senior counsel, that involved consideration of his knowledge and matters of which he ought reasonably to have been aware, as an owner/builder, but he should not be treated as having the experience or knowledge of a licensed plumber."