Kapi v Pacific Helicopters [2002] PGLawRp 46; [2002] PNGLR 92 (27 August 2002)

NATIONAL COURT OF JUSTICE

DAVID KAPI

V

PACIFIC HELICOPTERS

Waigani: Davani J
22, 27 August 2002

DAMAGES – Measure of – Statutory maximum – Civil Aviation (Aircraft Operators Liabililty) Act Chapter 292 s 27(i).

PRACTIcE AND PROCEDURE – Payment into court – Liability not admitted – Judgment entered at Statutory maximum – Without prejudice negotiations to settle – Order to take effect at date of decision.

COSTS AND INTEREST – When to (consider without prejudice) communication – Dispute on payment of costs and interest – When costs and interest will accrue.

Facts

This is an application by the defendants to strike out the statement of claim of the plaintiff and judgment at K30,000.00 – being the statutory maximum fixed under s 27(i) of the Civil Aviation (Aircraft Operators Liability) Act Ch 292 – to be awarded to the plaintiff. The amount of K30,000 has been paid into court by the defendant. The plaintiff filed a cross motion seeking judgment at K30,000 with costs and interests to be assessed.

Held

1. Order 12 r 1 of the National Court Rules allows any party to a proceeding to seek orders for judgment to be entered for any party at any stage of the proceedings. Hence this application by the defendant for judgment to be entered for the plaintiff.

2. Payment into court constitutes an officially recorded offer to settle that cause of action to which the payment relates. If the plaintiff wishes, he may accept the money paid in. Upon acceptance, the proceedings are forever stayed in so far as they relate to that cause of action for which the payment was made into court. If the money is not accepted, the trial proceeds to judgment. The almost invariable practice is that a plaintiff who refuses to accept the money and at trial, recovers no more than the amount paid in, must bear both his and the defendant's costs from the date of payment: see Order 22 r 18(3) National Court Rules.

3. The defendant's liability to costs should only be from when the plaintiff filed the wirt of summons to when money was paid into court. Interest should accrue from the date of judgment.

Papua New Guinea cases cited

Wallace v MVIT [1991] PNGLR 341.

Cases cited

Calderbank v Calderbank [1976] Fam 93.

Gorman v Mathews [1897] 13 WN (NSW) 224.

Newton v Grand Junction Railway Co [1846] EngR 1049; (1846) 16 M & W 139.

Parsons v Mather & Platt Ltd [1977] 2 All ER 715.

Pitts v Adney [1961] NSW R 535.

R W Miller & Co Pty Ltd v the Ship "Patris" [1975] 1 NSWLR 704.

Counsel

G Gileng, for plaintiff.
D Lightfoot, for defendant.

27 August 2002

Davani J: On 27 August 2002, I gave a brief ruling and said I would later give detailed written reasons. This I now do.

This is an application by the defendant to strike out the statement of claim and for judgment to be entered for the plaintiff in the sum of K30,000.00. I have heard the sum of K30,000.00 has been paid into court and that this be paid to the plaintiff. The defendant also asks for interest and costs.

The plaintiff has filed a cross motion also asking for judgment of K30,000.00 and for costs and interest to be assessed at a separate trial. Alternatively, he asks that the defendant's motion filed on 24.7.02 be dismissed. In the statement of claim the plaintiff claims damages for negligence or alternatively damages pursuant to the Civil Aviation (Aircraft Operators Liability) Act Ch 292.

The defendant argues that the sum of K30,000.00 is the statutory maximum allowed under the act governing aircraft accidents, which is the Civil Aviation (Aircraft Operators liability) Act Ch 292. Section 27(i) of the Act provides for this. It states that: "subject to the Regulations relating to passenger tickets, the liability of the carrier under this part in respect of each passenger, by reason of his injury or death, is limited to the sum of K30,000.00 or such higher sum as specified in the contract of carriage."

I have seen that the defendant offered to settle the claim at the statutory maximum by payment of K30,000.00. This was by letter of 13 October 1998. He sent another letter on 4.10.98 suggesting party/party costs and interest at 8% from the date of the issue of the writ, without admission of liability.

The defendant submits that interest should be payable but only up to when the first offer to settle was made on 13 October 1998. They submit that should be done because the plaintiff did not respond to this letter until 6 February, 2002, when it sent a letter of that date to the defendant's lawyers with a counter offer.

I have heard objections by the defendant's lawyer that this correspondence should not be read by the court because they were exchanged on a 'without prejudice' basis.

In this case, the letters were purely for the purpose of negotiating a settlement. The law allows (rather than compels) either party to veto the admission into evidence of concessions made during negotiations. Here, the defendants are attempting to show that they had always maintained their offer to the plaintiff of the statutory maximum of K30,000.00. Then the 'without prejudice' acceptance of the offer was withdrawn by the plaintiff on 7 May 2002. The correspondence are therefore to establish the offer made. It cannot be permitted to put a party into the position of being able to cause a court to be deceived as to the facts, by shutting out evidence which would rebutt inferences upon which that party seeks to rely (see Pitts v Adney [1961] NSW R 535 per Walsh J.). The court must not be misled, no matter how subtle it is.

The plaintiff's lawyer submits that even if the K30,000.00 is accepted by the plaintiff, that the writ should not be dismissed as there may be the possibility of including a third party for a claim in common law negligence.

There is no evidence before me as to who this third party is. Even then, the statutory limit is K30,000.00 excluding interest and costs. Here liability has not been admitted. But the defendant paid the amount of K30,000.00 into court, to show its good faith. The plaintiff does not dispute that, except for when it withdrew its agreement to settle.

If the matter were to proceed to trial, and negligence proven, the court in all likelihood will still award the statutory maximum. If the defendant is prepared to settle, the plaintiff should accept that.

What of the payment into court? Payment into court constitutes an officially recorded offer to settle that cause of action to which the payment relates. If the plaintiff wishes, he may accept the money paid in. Upon acceptance, the proceedings are forever stayed in so far as they relate to that cause of action for which the payment in was made. If the money is not accepted, the trial proceeds to judgment. The almost invariable practice is that a plaintiff who refuses to accept the money and, at trial, recovers no more than the amount paid in, must bear both his and the defendant's costs from the date of payment in.

In this case, the plaintiff is saying he wants judgment but at the same time, asks that the defendant's motion seeking judgment of K30,000.00 be dismissed. On the face of it, it appears the plaintiff is in a quandary, either to accept the money or wait to identify the third party which, I find is unreasonable indeed.

Can judgement be entered for K30,000.00?

Order 12 r 1 of the National Court Rules permits a court, "at any stage of any proceedings, on the application of any party, direct the entry of such judgment or make such order as the nature of the case requires, notwithstanding that the applicant does not make a claim for relief extending to that judgment or order in any originating process."

From the facts before me, it is clear that there is no dispute that K30,000.00 is the statutory maximum. Payment in was made without admission of liability but the fact that payment was made was indicative that the defendant considered it was bound by the statutory provisions of the relevant Act.

I will order judgment in the full amount of K30,000.00.

In relation to the defendant's motion to strike out paragraph 5 of the statement of claim, I will not do so as that is the cause of action on which the claim is based. It is also not necessary at this time as I have entered judgment in the statutory maximum allowed which, I assume, is inclusive of special and general damages.

In relation to costs and interest, counsel for the defendant submits that when the offer to pay K30,000.00 was put to the plaintiff on 13 October 1998, the plaintiff was then put on notice that the defendant was not going to litigate. The court proceedings were then commenced by the plaintiff on 23 March 2000. The defendant submits that if anything, it should be liable for costs only up until the date of the first offer to settle. In relation to interest, the defendant submits, interest should be calculated up to when the monies were paid into court on 27 May 2002.

There is provision in O 12 r 3(4) of the National Court Rules which permits a court to order that a judgment or order take effect at a date earlier or later than the date fixed in the Rules which ordinarily, is 14 days after the date of service of the judgment or order on a person required to do the Act (see O 12 r 4(2)).

The court's power to ante-date an order is available only where there are exceptional facts (see Wallace v MVIT [1991] PNGLR 341). In the Wallace case, the parties agreed to settle by Deed of Release, signed by both parties and dated 2.4.87 without admission of liability, at the statutory maximum of K100,000.00. But because there was a disagreement on costs and interest, the matter was referred to the National Court, as provided by the Deed of Release. The court found there that the denial of liability while agreeing to and paying compensation and freely entering into a contract to confer jurisdiction were to be regarded as exceptional circumstances, that would justify the ante-dating of the judgment so entered to the date of the agreement. The court also held in that case that because the plaintiff accepted his damages by agreement, i.e. the Deed of Release, on 2 April 1987, that he was estopped from arguing the question of quantum from that time onward. The court then ante-dated the judgment to 2 April 1987.

In this case, I do not find the circumstances to be exceptional. I take note of Doherty J's caution in Wallace (supra) where she said that:

"Hence the case law in other judgments acknowledge the courts power to ante-date but stresses the need to exercise great caution, there is an attitude against a "flood gate" situation arising if a court ante-dates orders."

The situation here is that the plaintiff refused to settle then filed a writ claiming negligence. He is quite entitled to do that. But, he is aware of the statutory maximum, yet persisted. If anything, both plaintiff and the defendant are entitled to costs and interest. It is the matter of when the costs and interests would accrue, that is in issue here.

Order 22 r 18(3) of the National Court Rules states that "where money is paid into court with or without a denial of liability, and the Plaintiff recovers less than the amount so paid in, the plaintiff shall, unless for special cause the court or a judge shall otherwise order, be entitled to an order for his costs to the date of the payment in, but be ordered to pay all the costs of the defendant so paying into court from and after the date of such payment into court."

This is a case where money was paid into court without a denial of liability but that the plaintiff recovered the whole of the amount paid in. Settlement negotiations were on a 'without prejudice' basis, i.e. defendant's lawyers letters of 13 October 1998 and 4 October 2000. Its letter of 7 February 2002 was not on a 'without prejudice' basis. This letter enclosed a Deed of Release for the plaintiff's execution. The plaintiff by its 'without prejudice' letter of 22 February 2002 extended time within which to settle for another 21 days and still did not return the Deeds of Release, duly executed, to the defendant's lawyers. Can the defendant claim its costs for the plaintiff's indecisiveness? Certainly, "...but unless an offer is "open" (i.e. not 'without prejudice'), it may be inadmissible when the court is determining the question of costs" (see Aranson, Rearburn, Weinburg "Litigation: Evidence, Procedure" 2nd Edition (1979) 217). But it has been held that only the 'open offer' can be considered in relation to the question of costs (see Gorman v Mathews (1897) 13 WN (NSW) 224).

In a case such as this where there is no formal mechanism recognized by the rules whereby a party can gain a costs advantage from making an offer to settle, the court has an unfettered discretion to penalize (in costs) a party who has recovered less than an amount offered 'without prejudice,' if the party making that offer had expressly reserved the right to mention the offer when costs came to be considered: (see Calderbank v Calderbank [1976] Fam 93; also known as the 'Calderbank letter' rule) where the offer is qualified by an express reservation that its 'without prejudice' quality is not to apply to the question of costs. This is the case here. The defendant's lawyers 'open' letter of 25 February 2002 to the plaintiff's lawyers gave notice of the payment into court and the production of all correspondence into court, on the question of costs because of the plaintiff's refusal or inability to sign the Deed of Release. That letter read in part:

"You forget that it was our client that made the initial offer of settlement and until we have evidence that your client is prepared to sign the Deed of Release (which can now be evidenced by you simply acknowledging that you hold in escrow a signed Deed of Release) there will be no payment. Our client will pay the money into court and await the Court's decision, if necessary. We will then require the production of all original and copy correspondence passing between us on any relevant hearing on the question of costs."

However, despite that, the plaintiff then withdrew its willingness to settle by letter of 7 May 2002 after the parties had agreed to settle within 21 days. This was done some six weeks after the conditional acceptance by the plaintiff to the defendant to which the defendant failed to respond. On that basis and taking into account all that has happened, no party should be prejudiced for the actions of another but should bear full responsibility for their own actions. The defendant's liability to costs should only be from when the plaintiff filed the writ of summons to when money was paid into court, considering the events that have transpired. Interest should accrue from date of judgment. I say this referring to the case of R W Miller & Co Pty Ltd v the Ship "Patris" [1975] 1 NSWLR 704 where the court held that interest runs from date of entry of the final judgment and not before. In the English case of Parsons v Mather & Plat Ltd [1977] 2 All ER 715 Ackner J said (which is relevant to the Papua New Guinea situation):

"The view which I have expressed above seem moreover to accord with the commonsense of the matter. 'The giving of interest is not by way of penalty, but is merely doing the plaintiff full justice, by having his debt with all the advantages properly belonging to it. It is in truth a compensation for delay' (per Pallock CB) in Newton v Grand Junction Railway Co [1846] EngR 1049; (1846) 16 M & W 139 at 144."

The court's orders are as follows:

1. Judgement is entered for the plaintiff in the sum of K30,000.00;
2. Interest is assessed at 8% pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act from date of judgment to date of payment;
3. Costs of the proceedings shall be paid by the defendant from the date of filing of the writ on 23 March 2000 to when money was paid into court on 27 May 2002.

Lawyer for plaintiff: Pacific Legal Group.
Lawyer for defendant: Blake Dawson Waldron.