AA v Trustees of the Roman Catholic Church for the Diocese of Maitland-Newcastle (No 3) [2024] NSWSC 1444

Catchwords: COSTS – i ndemnity costs – Calderbank offer – offer of compromise – whether time open for acceptance of offer was reasonable in the circumstances – where offer to settle claims about alleged abuse many years ago open for only a short period – whether it was unreasonable for the defendant not to accept offer – indemnity costs orders refused Supreme Court New South Wales Medium Neutral Citation: AA v Trustees of the Roman Catholic Church for the Diocese of Maitland-Newcastle (No 3) [2024] NSWSC 1444 Hearing dates: 23, 26 – 28 August 2024 Date of orders: 14 November 2024 Decision date: 14 November 2024 Jurisdiction: Common Law Before: Schmidt AJ Decision: The Diocese is to pay AA’s costs of the proceedings, as agreed or assessed. Catchwords: COSTS – i ndemnity costs – Calderbank offer – offer of compromise – whether time open for acceptance of offer was reasonable in the circumstances – where offer to settle claims about alleged abuse many years ago open for only a short period – whether it was unreasonable for the defendant not to accept offer – indemnity costs orders refused Legislation Cited: Civil Procedure Act 2005 (NSW) , s 56 Uniform Civil Procedure Rules 2005 (NSW), rr 20.26(9), 42.13, 42.14 Cases Cited: AA v Trustees of the Roman Catholic Church for the Diocese of Maitland-Newcastle) [2024] NSWSC 1183 Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322 Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85 Leichhardt Municipal Council v Green [2004] NSWCA 341 Texts Cited: Nil Category: Costs Parties: AA (Plaintiff) Trustees of the Roman Catholic Church for the Diocese of Maitland-Newcastle (Defendant) Representation: Counsel: S Prince SC and PA Tierney (Plaintiff) C Robertson (Defendant) Solicitors: Koffels Solicitors & Barristers (Plaintiff) Makinson d’Apice Lawyers (Defendant) File Number(s): 2024/100043 Publication restriction: Nil JUDGMENT I g ave judgment in this matter for AA in September: AA v Trustees of the Roman Catholic Church for the Diocese of Maitland-Newcastle) [2024] NSWSC 1183. The parties were directed to confer and provide proposed final orders. Initially, t hey could not agree on the calculation of damages for past economic loss . A n agreement finally emerged, with the result that orders were entered in favour of AA for $ 636,480.00 . What was agreed for economic loss , including interest , was $ 90,480 , considerably less than had been claimed . There remains a disagreement about costs. There is no issue about the Court ’ s power to make a costs order, the Rule s which appl y, or the applicable principles. AA seeks an indemnity costs order from 3 June 2024 when he made an offer to settle for $390,000 , plus costs. That is resisted by the Diocese, who contends that there should be no departure from the usual costs order , despite the success AA finally had . The fact that indemnity costs may run if a Calderbank offer is not accepted, provides incentives for the making and acceptance of such an offer. But in issue between the parties is whether the time that the June offer was left open was reasonable in the circumstances. If it was not, it cannot be concluded tha t the Diocese acted unreasonably when it did not accept the offer and an indemnity costs order cannot result from its failure to accept it. I am satisfied that in all of the circumstances which arise to be considered , the Diocese ’ s case must be accepted , even though AA bettered the June offer by a considerable amount . The June offer was only open for acceptance for four days , shortly after service of further evidence . It was made in the context in which expedition was sought and granted, AA ’ s deteriorating health . That resulted in the grant of his application to have his evidence taken on commission before the August hearing. It was on 4 June that Mr Kalfas SC was appointed to take AA ’ s evidence on commission . It was taken on 12 June. This explains AA ’ s solicitor ’ s advice on 3 June that it was anticipated that his costs would increase by approximately $80,000-$90,000 over the following 28 d a ys . They also explained why the offer was considered to be reasonable, given the non-economic and economic loss AA had suffered , as well as what he would be awarded for interest. The offer was not accepted. B ut the Diocese ’ s solicitors advised on 7 June that the receipt of evidence AA had only served on the afternoon of Friday 31 May made the time frame for acceptance of the offer unreasonable. Further, that the evidence would be reviewed as quickly as possible, but that the time allowed did not permit the offer to be accepted. Despite this advice AA did not extend t he time for acceptance of the offer . No explanation for this was given. It must be inferred that it was considered that the time given was reasonable. O n 9 August the Diocese also made an offer to compromise on the basis that each party would bear its own costs . It also made a second offer , to settle for $200,000 , inclusive of costs . T he Diocese ’ s solicitors then advised that reliance was placed on the evidence of Mr Perry, AA ’ s school friend, a credible and independent witness ; the fac t that there was no objective evidence that at the time of the alleged assau l ts , it knew that Father Pickin posed a foreseeable and not insignificant risk of h ar m to AA ; and that there was no basis on which the claimed vicarious liability could be established. Problems with the quantification of the claimed damages were also explained. Th ese offer s were also not accepted. N or was AA ’ s June offer revisited. Instead a further offer for a considerably higher amount was later made and also not accepted. There is no question that AA bettered the June offer , given the September judgment . That is sign i ficant . But so , is the time at which he made the June offer , the short time for which it was open and that this time was not extended, despite the problems which the Diocese raised . Under r 20.26(9) of the Uniform Civil Procedure Rules 2005 (NSW) , an offer of compromise made two months before the commencement of trial must be left open for acceptance for 28 days. That Rule was not relied on , the 3 June offer having been made on a Calderbank basis, with the result that r r 42.13 and 42.14 do not apply. AA contends that the time given to accept the 3 June offer was reasonable because: by the time it was made the Diocese had good reason to believe that he had been sexually assaulted by Father Pickin , given the conclusions which Syme DCJ had earlier reached when sentencing another priest, Father Denham; that in 2022 it had settled a claim made by BB about Father Pickin’s sexual abuse; and that others, including Mr McClung , had claimed that he had also sexually abused them; in its defence the Diocese did not deny the claimed abuse; this and its later approach at trial , where it called Mr Perry, highlighted the weakness of its case on the central issue of the claimed abuse; the claimed difficulty of considering the evidence had to be assessed in light of two of the three statements which had be e n served on 31 May being supplementary; the offer explained why the proposed sum was less than AA was likely to b e awarded , that being motivated by his wish to achieve vindication for the abuse he had suffered while he remained alive and had capacity ; on any view , the amount then offered involv ed a sensible and reasonable compromise of his claims; the Diocese did not later challenge th e evidence which BB and Mr McClung gave at trial; and Mr Perry, who was approached by the Diocese to give evidence in June, later gave evidence which corroborated various aspects of the evidence which AA gave. It should thus have been obvious to the Diocese that he could not prove that the abuse had not occurred . The Diocese disputed that t he time the offer was open was reasonable, contending tha t at the time it was made: t he pleadings were not closed and the evidence of BB and Mr McClung had not been served, with statements of AA, his son and brother having only been served the previous Friday; the statements AA had made and recently served contained factual inaccuracies, which later had to be corrected ; the Diocese did not then know the true identity of Mr Perry or his wher e ab o uts , h e having been referred to only as “Allan” in AA’s statements , no corroborative statement from him having been served by AA and no contact with him being able to be made by the Diocese until after 7 June ; w hen the offer was made the Diocese was preparing for the 12 June hearing of AA’s evidence in New c ast l e and so had insufficient time to consider the offer, as it advised ; still the time for its acceptance was not extended; th a t was despite AA’s claimed economic loss not having been addressed in the evidence served and eventually , that claim ha ving to be a d dr e ssed by further submissions following closing arguments at the final hearing , given the evidence and submissions which had been led ; w hat was known by AA , but had not been addressed in the statement of particulars which had been served before the offer was made , was that the loss he claimed could not be substantiated . There having been considerable perio d s when AA was in jail and when he had been off work after three serious accidents for which he had received workers compensation; t he re was then also a large claim for past out of pocket expenses advanced which had not been particularised and was later abandoned ; w hile BB’s claims had been settled, there had been no admission of liability; co ntrary to AA’s submissions, the Diocese was then unaware of Mr McClung’s allegations about Father Pickin until his statement was served in July 2024; and that claims which had been made by three others about Father Pickin on which AA also relied, had never been substantiated . Reliance was placed on K ooee C ommunications Pty Ltd v P rimus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85 , where it was considered that an offer made well in advance of hearing, at a time when pleadings had not closed, the period for acceptance should have been 28 days: at [18]- [ 19 ] . AA disputed this, contend ing that the Diocese ’ s August offer revealed that it had been dismissive of his cl a im, that helping to demonstrat e the unreasonableness of the refusal of his June offer. That was further demonstrated by the rejection of his later offer of $763,000 inclusive of costs, at a time when his costs must have well exceeded $126,520. I t was also argued that i n all the circumstances , it was inconceivable that the Diocese did not appreciate the risk it t ook in rejecting the June offer . That ha d been unreasonable, with the result that it would be unjust not to order it pay his costs on an indemnity basis from 3 June. I am unable to accept these submissions. In Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322 , t he C ourt ’ s wide discretion in considering whether to grant indemnity costs pursuant to a Calderbank offer was explained . That providing it a degree of flexibility which is not available when offers are made under the rules governing offers of compromise. S uch flexibility being likely to promote the overriding purpose of the Civil Procedure Act 2005 (NSW), specified in s 56 to be the just, quick and cheap resolution of the real issues in the proceedings: at [135]. Such offers facilitate the public policy objective of providing an incentive for disputants to end their litigation as soon as possible and th e related public policy of discouraging wasteful and unreasonable behaviour by litigants : Leichhardt Municipal Council v Green [2004] NSWCA 341 at [14] discussed in Elite Protective Personnel at [17]. Unlike the position in that case, however, it may not be accepted that the offer AA made in June ought to have been accepted because it was simple to understand . D espite what his solicitors had explained, consideration had to be given to the evidence served , concerning as it did events which had occurred very many years ago, as well as what had and had not been particularised to that point and what still needed to be investigated . It is pertinent that AA had not served any evidence from Mr Perry , which was only later obtained by the Diocese , which finally called him to give evidence . Further, the evidence which had been served includ ed errors which were only later rectified by AA . The 3 June offer was also only open until 7 June , a short period understandably, given the expedition which had been granted and the impending evidence which was being taken on commission. But it must also be accepted that the result was that there was limited opportunity for the Diocese to consider or respond to the offer . Had there been further time given , particulars which had not been provided to that point could have been sought and provided , as could an explanation of the claims made for economic loss for periods when AA was unable to work , for reasons unconnected with the claimed abuse. The Diocese raised the problem caused by the short period the offer was open with AA ’ s solicitors , but there was no response , as there could have been , despite the impending hearing . In the result, w hile I am satisfied that what AA offered was a genuine offer of compromise , one which he significantly bettered at trial, I am also satisfied that it was made in circumstances where the Diocese did not act unreasonably, when it did not accept the offer within the time given . T hat is because, in order t o comply with their obligations under s 56 , parties need not only to seek to settle their disputes on appro pri ate terms , their offers should be open for an appropriate time , to provide a real opportunity for them to be accepted . W hen they make a Calderbank offer and are put on notice that it cannot be accepted because of the short ti m e frame provided for its acceptance, they need to consider and respond to the problem raised , if they wish to ensure that the failure to accept the offer will later result in an indemnity costs order . If they fail to respond to a problem raised about the short time an offer i s open for acceptance , as AA here did, the risk will be the Court refusing to exercise its discretion to make an indemnity costs orde r in their favour. That will be the result if they are then not able to establish that such an order is what justice requires , because not accepting the offer was not unreasonable in the circumstances . This is such a case. I am not persuaded that t he circumstances arising to be considered permit the conclusion that the Diocese acted unreasonably in not accepting AA ’ s June offer , given the very short t i me it was open for acceptance, despite the problems which the Diocese legitimately raised . The position may have been different if AA had served evidence from Mr Perry, but it was the Diocese who eventually called him. The result , in the circumstances which have to be considered, is that it cannot be concluded that justice requires that the indemnity costs order AA seeks be made , notwithstanding his later success, by which he considerably bettered his offer . This means that the departure sought from the usual costs order under the rules, cannot be granted. Orders For these reasons I order that the Diocese is to pay AA ’ s costs of the proceedings, as agreed or assessed. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 November 2024