Almario v. Varipatis (No. 3) [2013] NSWSC 93

Judgment 1On 21st December 2012 I delivered judgment for the plaintiff against the defendant in the sum of $364,372.48. My orders included: 3. The defendant to pay the plaintiff's costs on the ordinary basis after they had been agreed or assessed. .... 5. I reserve liberty to the parties to apply for any special order as to costs by notice in writing to that effect lodged with my associate by email on or before Tuesday, 29th January 2013. 2Pursuant to order 5, the plaintiff has applied in writing for a variation of order 3 so that it reads: The defendant to pay the plaintiff's costs: (a) As agreed or assessed on the ordinary basis up to and including 27th July 2012; (b) As agreed or assessed on an indemnity basis from 28th July 2012 onwards. In support of the application, the plaintiff reads the affidavit of his solicitor, Ms. Sally Gleeson, sworn 25th January 2013. Ms. Gleeson deposes to the service of a series of offers of compromise in purported compliance with UCPR 20.26 on 27th July 2012, 19th October 2012 and 23rd November 2012 respectively. Each was in the sum of $150,000. The first was expressed to be plus costs, as agreed or assessed, the second and third, exclusive of costs. 3Pursuant to directions I subsequently made for the determination of the costs question in chambers on the papers, the defendant filed written submissions on 6th February 2013 opposing the variation sought by the plaintiff, and in effect, seeking a variation in his own favour denying the plaintiff his costs in respect of the case in deceit that was abandoned during the hearing (see Almario v. Varipatis (No. 2) [2012] NSWSC 1578 at [2]). Submissions in reply were filed on behalf of the plaintiff on 8th February 2013. The plaintiff concedes that he ought to bear his own costs relating to the deceit claim, but otherwise joins issue with the defendant. The defendant's argument 4The defendant disputes the plaintiff's entitlement to indemnity costs, but acknowledges, by necessary implication, that UCPR 42.14 is prima facie engaged entitling the plaintiff to costs assessed on an indemnity basis from the beginning of the day following the day on which the offer was made unless I otherwise order: UCPR 42.14. 5By reference to New South Wales Insurance Ministerial Corp. v. Reeve (1993) 42 NSWLR 100 and Morgan v. Johnson (1998) 44 NSWLR 578 at 582, the defendant accepts that to displace the usual rule, he carries an onus of demonstrating exceptional circumstances justifying another order. This may be a somewhat generous approach given the modern form of the rule, but is doubtless a prudent stance in light of the division of opinion as to the meaning of UCPR 42.14 discussed, but not resolved, in Barakat v. Bazdarova [2012] NSWCA 140 at [42] - [52] per Tobias AJA, Bathurst CJ and Whealy JA agreeing. As the Court of Appeal, in that case, found it unnecessary to resolve the conflict of opinion which it had identified (see [48] - [50]), and as the defendant is prepared to assume against himself the need to discharge the higher burden, it would be neither useful nor profitable for me to determine which line of authority to follow: Barakat at [50]. 6The defendant argues that I should make an order otherwise than in accordance with the usual rule by reason of a confluence of five circumstances, which I will summarise: (1)The sole ground which founds the defendant's liability i.e. failure to refer the plaintiff directly to a bariatric surgeon for assessment in 1998, was not the subject of expert evidence from a like qualified professional served before the trial, but "fell out" during oral examination in the course of concurrent evidence; (2)The unreliability of the evidence of the plaintiff and his wife made it difficult to assess the plaintiff's case on causation; (3)The question of the effect of the plaintiff's assessed cognitive impairment upon any assessment of his suitability as a candidate for bariatric surgery was not addressed by the plaintiff's expert evidence before the trial; (4)The case was complex and difficult for a number of reasons including the long effluxion of time since the occurrence of the salient events, expert questions involved a developing area of medical science, and the need for expedition, because of the plaintiff's dire medical condition, necessitated decision making on the run; (5)When the first offer was made, there were two defendants, the second being a gastroenterologist, and the respective obligations of each were anything but clear making a joint offer to both unreasonable. The plaintiff's argument 7The plaintiff accepts that he should bear his own costs on the deceit count, as I have said, and I will vary order 3 at least to that extent. 8The plaintiff argues that, generally, the question of whether the Court should otherwise order should be determined prospectively at the time the offer was made rather than with the benefit of hindsight having regard to events that occurred at the trial. Litigation is inherently chancy and, therefore, uncertain of outcome. The course of evidence is dynamic. The purpose of the rule is to encourage the parties to compromise, inter alia, because of those inherent features of litigation. The failure of the defendant to refer the plaintiff to a bariatric surgeon for assessment was a particular of negligence from the outset (SOC [59] (h); ASOC [57] (m); FASOC [57] (m)). Dr. Vickers, a specialist hepatologist, in his report of 3rd March 2012, said more aggressive means such as bariatric surgery should have been considered by a doctor in the position of the defendant. In his affidavit sworn on 17th August 2012, the plaintiff swore that he had never been advised about surgery to lose weight, he had always followed advice, and he had always undergone surgery whenever advised to do so. Looking forward and not back this was material, albeit untested, which was available to the defendant at an early time. Neither the complexity, nor the fluidity, of the process made it reasonable for the defendant not to consider each offer. There is no evidence that more information was sought to allow each offer to be considered, that the defendant cavilled with the reasonableness of making any of the offers, or that a reasoned response was ever forthcoming. The form of the first offer 9The defendant has taken no point about the form of the offer of compromise of 27th July 2012 being expressed as plus costs, as agreed or assessed. But the plaintiff has exhibited diffidence about its compliance with the rules: plaintiff's submissions on costs [1] and [4]. The plaintiff's diffidence is founded on Old v. McInnes and Hodgkinson [2011] NSWCA 410 at [105]. As has been pointed out in a number of subsequent decisions in the Common Law Division, collected by Hoeben J (as his Honour then was) in Egan v. Mangarelli (No. 2) [2012] NSWSC 1226, in a subsequent decision Vieira v. O'Shea (No. 2) [2012] NSWCA 121 at [7] the Court of Appeal (Basten, Meagher JJA and Handley AJA) said: A mere reference to costs in an offer otherwise compliant with Pt 20, Div 4 will not take the offer outside the rules unless the reference operates inconsistently with the relevant costs rule (citations omitted) (See also Rail Corporation NSW v. Vero Insurance Limited (No. 2) [2012] NSWSC 926 (Garling J) at [85] - [98]; Ziliotto v. Dr. Hakim (No. 2) [2012] NSWSC 1079 (Davies J); cf Cheal Industries Pty Ltd, Re; Fitzpatrick v. Cheal [2012] NSWSC 932). 10Like Hoeben J, Davies J and Garling J, I would follow the later decision of Vieira and take the view that the reference to costs in the first offer of compromise did not take that offer of compromise outside the rules. Consideration 11Whether the defendant needs to make out exceptional circumstances, or some more flexible standard applies, I accept the plaintiff's approach, with one exception, to which I will return. It was clear from the outset that the central part of the plaintiff's case, having regard to the pleadings and the expert evidence then available, was that the discharge of the defendant's duty of care involved the plaintiff being assessed by an appropriately qualified specialist upon referral by the defendant, with a view to considering treating the plaintiff's condition by bariatric surgery. That the course of the evidence at the hearing may have followed unexpected paths in that the plaintiff gave less reliable evidence than expected, and the general practitioners gave more helpful evidence than anticipated, is not to the point. As the plaintiff argues, these were chances that the defendant took when he refused the offers and decided to go to trial. And taking the defendant's five points either individually or together does not persuade me, subject to one exception as I have said, that the ordinary operation of rule 42.14 has been displaced. 12Whether the test requires satisfaction of something exceptional, or some less exacting standard, I am not persuaded that the matters raised by the defendant justify displacement of the usual rule. 13The one exception to which I have referred is the consideration of the complexity of the medical issues in this case in the context of the need for expedition, and the resulting circumstance that decisions had to be taken on the run. The need to take decisions on the run is, to some extent, a feature of all modern litigation given the approach the court takes to case management. In these circumstances lawyers and their clients are required to think fast. But in the present case, that feature was exacerbated by the plaintiff's medical condition and the resulting need for the matter to be brought to trial with great expedition. In that circumstance it seems to me that it was reasonable for the defendant to be caught in what might be described as the fog of forensic war during the period available for acceptance of the first offer. After all, that period was during the first six months following the first notice of this litigation by the defendant, years after the critical events had occurred, and where liability was to be determined by reference to a relatively new area of medicine. 14But by the time the second offer was made that fog should have lifted sufficiently to enable clearheaded decisions to be made. 15There is no evidence of the reasoning process the defendant undertook in assessing the second and third offers. There is nothing from which I can infer that it was justified in allowing those offers to lapse. Doubtless, the case was complex, and difficult for the plaintiff to win: the defendant was no doubt entitled to regard its prospects as favourable. But that it may have been "reasonable" to decide to go to trial is not a sufficient circumstance to justify displacement of the rule, for that decision courted the realisation of the chance that the operation of the rule is predicated upon. To allow that consideration to displace the rule would undermine its purpose. 16For these reasons, I revoke Order 3 pronounced on 21st December 2012 and instead order: 3(a) The defendant to pay the plaintiff's costs of the proceedings except the costs of and incidental to the plaintiff's claim in deceit; (b) Costs are to be assessed on the ordinary basis up until the end of 19th October 2012; and on an indemnity basis thereafter. (c) Costs awarded include the costs of the application to vary the costs order pronounced on 21/12/2012.