Australia: When is it reasonable to reject a costs-protective offer? Trouble on the travelator

Last Updated: 31 October 2017
Article by Katherine Goldberg

When is it reasonable for a plaintiff to reject a defendant's costs-protective offer? This was the key issue for consideration in the case of Andrenacci v Australian Pacific Airports (Melbourne) Pty Ltd (Ruling No 2) [2017] VCC 864.


Ms A sued Australia Pacific Airports (APA) in relation to injuries she allegedly suffered when she slipped on a motionless travelator at Melbourne Airport in 2010.

Ms A was a registered dentist and her claim for economic loss was substantial, with future loss alone calculated as being between $1M and $1.8M. She reportedly sought damages in excess of $3M.

Trial was fixed for 22 February 2017. About 3 weeks prior to trial, APA served an Offer of Compromise for $100,000 inclusive of costs. Ms A did not accept the offer and the parties proceeded towards trial. However, the travelator of justice does not always run smoothly and the parties encountered a delay on the runway.

Delayed departure

Ms A sought to lead expert evidence from consultant engineer, Mr Mark Dohrmann. (Those familiar with the matter of Hudspeth v Scholastic Cleaning and Consultancy Services Pty Ltd v Ors [2014] VSC 567 will remember that Mr Dohrmann found himself in hot water after several versions of his report, one of which appeared post-dated, emerged along the bar table mid-trial, leading to the Court making its own-motion inquiries into the conduct of Mr Dohrmann and various lawyers).

It must have been an unnerving déjà vu for Mr Dohrmann when APA objected to Mr Dohrmann's report on the basis he had failed to comply with the Expert Witness Code of Conduct. APA alleged various problems with Mr Dohrmann's report including: incorrect photographs; incorrect measurements; reference to outdated and irrelevant standards; and an alleged "cut & paste job" from various websites.

Ultimately, Mr Dohrmann's report was excluded (Andrenacci v Australian Pacific airports (Melbourne) Pty Ltd [2017] VCC 188). The February trial date was vacated so that Ms A could find replacement expert opinion. However, by the time the new expert was engaged, the surface of the travelator had been changed.

The take off and a long-haul flight

The matter proceeded to trial in May 2017 and ran for 20 days before a jury. Ultimately, the jury found that APA had not breached its occupier's duty of care.

APA's bumpy landing

APA sought orders that Ms A pay its costs of the proceeding on a standard basis, and further, on an indemnity basis from 1 February 2017 (the day after the Offer of Compromise was served).

The Court acknowledged that the Rules created a presumption that the defendant is entitled to its costs on an indemnity basis, unless special circumstances exist which would lead to a departure from that presumption.

It noted Ms A's argument that at no time prior to the jury's verdict could her case have been regarded as hopeless or without merit, in part because some of the matters that would ultimately weigh against the plaintiff were not known to her advisors at the time of the offer was made.

The Court considered the following issues which occurred after the offer had lapsed:

  1. the plaintiff's new expert could only view the changed travelator surface;
  2. surveillance film of Ms A was shown to various doctors, some of whom altered their previously supportive opinion about the plaintiff having seen the film; and
  3. APA called a number of witnesses all of whom said there had been no other slipping incidents on the travelator.

The Court noted that had she accepted the offer of $100,000 inclusive of costs, Ms A would have been left with nothing "in her hands" and the offer was really just an offer to pay her costs; the offer:

"did not, in the circumstances of the potential judgement, represent a realistic attempt to sensibly negotiate and resolve a hard contested and complex case".

Accordingly, the Court rejected APA's application for an indemnity costs order.

So where's the lifejacket?

With the benefit of hindsight, APA's offer would have been an excellent outcome for Ms A. But the critical issue was whether or not it was reasonable for Ms A to refuse APA's offer at the time it was made. Ms A did not know that her expert evidence was about to become weaker, that she had been captured on surveillance or that there would be oral evidence that no other similar incidents had taken place.

While defendants may think that a low offer just before trial, especially in a large claim, should be a clear warning to the plaintiff that the defendant may have a knock-out blow coming, the Court accepted that a plaintiff is reliant on advice, which will be based on the evidence available to the adviser.

This decision is a cautionary tale for defendants who must carefully weigh the risks of "tipping their hand" to make a plaintiff's rejection of an offer seem unreasonable against the risk of losing forensic advantage at trial.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Katherine Goldberg
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