Anthony Haywood v Collaroy Services Beach Club Limited

Supreme Court of NSW|2006-06-16|Before: Hidden J, Shaw J

CITATION : Anthony Haywood v Collaroy Services Beach Club Limited [2006] NSWSC 566

DECISION : Application for entry of judgment for defendant refused - award made for funds management - indemnity costs ordered after offer of compromise - stay of proceedings granted on conditions

CATCHWORDS : PRACTICE & PROCEDURE: - Action for damages for personal injury - whether judgment should be entered inconsistent with the jury's verdict - assessment of award for funds management - whether order for indemnity costs appropriate after offer of compromise - stay of proceedings

Supreme Court Act 1970 LEGISLATION CITED : Uniform Civil Procedure Rules 2005 Supreme Court Rules 1970

Fowdh v Fowdh & Anor (NSWCA, unreported, 4 November 1993) Buckman v M & K Napier Constructions Pty Limited [2005] NSWSC 546 CASES CITED : Reading v ABC [2003] NSWSC 716 Turner v Ku-ring-gai Municipal Council (1990) 72 LGRA 60 Morgan v Johnson (1998) 44NSWLR 578

PARTIES : Anthony Neville Haywood (plaintiff) Collaroy Services Beach Club Limited (defendant)

COUNSEL : Jeremy Gormly SC with J Mrsic (plaintiff) J Maconachie QC with J Sheller (defendant)

SOLICITORS : T D Kelly & Co (plaintiff) Hunt & Hunt (defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

020252/01 Anthony Neville Haywood v Collaroy Services Beach Club Limited

Application for entry of judgment for defendant 1 HIS HONOUR: After the jury's verdict in favour of the plaintiff, Mr Maconachie QC asked that judgment be entered for the defendant notwithstanding that verdict. He relied upon the argument he had mounted in his unsuccessful application for a directed verdict, that is, that it was not open to the jury to find that the plaintiff had fallen by the mechanism which had been the foundation of his case. Alternatively, Mr Maconachie asked that I order a new trial. 2 He relied upon Pt 29 r 11 of the Uniform Civil Procedure Rules 2005. Mr Gormly SC argued that that rule did not enable me to enter judgment inconsistent with the jury's verdict and that, by s102 of the Supreme Court Act 1970, that was the province of the Court of Appeal. However, in the light of authorities on the predecessor of the current rule, Pt 34 r 8A of the Supreme Court Rules 1970, it seems that I may have the power: see the judgment of the Court of Appeal in Turner v Ku-ring-gai Municipal Council (1990) 72 LGRA 60 at 70 - 1, and the decision of Shaw J in Reading v ABC [2003] NSWSC 716 at [49] ff. That said, it is not a matter which I need decide. It is sufficient to say, as I said in response to Mr Maconachie's application for a directed verdict, that I consider that there was evidence upon which it was open to the jury to find the plaintiff's case made out. The evidence was capable of supporting an inference that the plaintiff fell in the manner and for the reasons for which he contended. 3 The application for entry of judgment for the defendant is rejected. Mr Maconachie did not press his application for a new trial, accepting that that was a matter for the Court of Appeal by virtue of s102(b) of the Supreme Court Act.

Funds management 4 In separate proceedings brought by the plaintiff's father in the Equity Division of this Court (1657/06), I have ordered that the plaintiff's estate be managed by the Protective Commissioner. In the Common Law proceedings there is a claim by the plaintiff for funds management. The defendant does not contest the plaintiff's entitlement to such an award and, except in one respect, there is no significant dispute about the amount which should be awarded. The plaintiff relies upon a report of Furzer Crestani Services, chartered accountants, and I received oral evidence from the author of that report, Mr Mariano Rossetto. For the defendant, I received a report of Ms Tammy Lindsay of Horwath (NSW) Pty Limited. 5 Both experts arrived at what Mr Rossetto described as "an initial cost of funds management" in respect of the damages awarded, after some necessary deductions, based upon the fees charged by the Office of the Protective Commissioner. Mr Rossetto arrived at a figure of $635,186. Ms Lindsay's figure was $636,000. The defendant accepts that Ms Lindsay's slightly higher figure is appropriate. 6 However, Mr Rossetto made a further calculation upon the basis that that initial cost would itself become part of the fund to be managed. He assessed the Commissioner's fees to manage that amount of $635,000 odd dollars, arriving at a figure of $103,278. He then repeated the process in respect of that latter amount, producing a figure of $12,107, and the application of the process yet again to that amount led to a figure of $1,126. He stopped at that point because no significant sum would have been produced by any further calculation. Adding those three additional amounts to the initial cost which he had assessed, $635,186, he arrived at a total cost of funds management of $751,697. It is that amount which the plaintiff claims. 7 Mr Maconachie submitted that I should not adopt that approach, which is unsupported by authority. He relied upon the judgment of Burchett AJ in Buckman v M & K Napier Constructions Pty Limited [2005] NSWSC 546, in which the plaintiff had argued for a somewhat similar approach. In that case his Honour was considering the cost of funds management in respect of an award, after certain deductions, of $2,700,000. He rejected the plaintiff's argument, dealing with it in this way at [13]: I turn to the second question, that raised by the plaintiff's contention to the effect I should add the amount required to meet the cost of fund management to the fund, and recalculate what is required, because any amount allowed will swell the fund and therefore be reflected in the charges ultimately made. Theoretically, this process could go on forever, although the plaintiff's counsel do not push the point so far. It is, indeed, a point reminiscent of the ancient mathematical fallacy of the hare and the tortoise: if, it was said, the hare can run ten times as fast as the tortoise, which has a ten yards start, while the hare runs the ten yards, the tortoise will go one, and while the hare runs that, the tortoise will go one tenth and so on, so the hare will never quite catch the tortoise! But, in my opinion, there is a simpler answer to the plaintiff's contention, which is not fallacious. The calculation of damages is not mathematically exact. It involves estimations. To strive for the precision the argument seeks in respect of the cost of the management of a fund components of which are themselves broad assessments of reasonable sums that are beyond calculation, such as damages for pain and suffering and the loss of the amenities of life, would just be incongruous. Furthermore, while a calculation utilising the figure of $2,700,000 in some way seems inescapable, it must be recognised… that even that basic step will lack precision, since a change in market conditions (a steep rise or fall in the share market, for instance) could, within a little time, change greatly the figure to which the Protective Commissioner's percentages will be applied, or, it may be added, a change in the regulation itself may intervene during the life expectancy of the plaintiff. It is, and must be, all a question of reasonable estimate which will determine the amount to be allowed. 8 It will be seen that the approach contended for in that case is somewhat different from that for which the plaintiff in the present case argues but, in my view, it is relevantly similar. As a matter of comity, I would adopt the reasoning of Burchett AJ in the passage quoted and, in any event, I respectfully agree with it. I would not allow the additional amount which the plaintiff seeks for funds management. The appropriate allowance is $636,000. 9 For the plaintiff, an order is also sought that the defendant pay the costs incurred by his estate in relation to the appointment of the Protective Commissioner. Mr Maconachie has very properly conceded that that is the appropriate course, and I order accordingly.

Costs 10 On 17 January 2005 the plaintiff's solicitor made a written offer of compromise, pursuant to Div 1 of Pt 22 of the Supreme Court Rules (now Div 4 of Pt 20 of the Uniform Civil Procedure Rules). The offer was to accept damages of $900,000 plus costs, a sum significantly less than that which the jury awarded. Under Pt 52A r 22(4) of the Supreme Court Rules (now Pt 42 r 14 of the Uniform Civil Procedure Rules), the plaintiff seeks costs on an indemnity basis from 18 January 2005. He is entitled to such an order unless, within the terms of the sub-rule, "the Court otherwise orders". The exercise of that discretion must be guided by the principles emerging from a number of authorities, helpfully summarised by Mason P in Morgan v Johnson (1998) 44 NSWLR 578 at 581 - 2. 11 Mr Maconachie resisted this application on the basis that the plaintiff's case had changed significantly after the offer of compromise was made. He relied upon the decision of the Court of Appeal in Fowdh v Fowdh & Anor (unreported, 4 November 1993), in which a majority of the Court upheld an order refusing indemnity costs because of developments in the plaintiff's case after an offer of compromise was made. Mahoney JA, with whom Meagher JA agreed, said: It is one thing for a plaintiff to present her evidence, make an offer of compromise, and to succeed at the trial on that evidence. In such a case, indemnity costs may be warranted. It is another thing for the plaintiff to present a case and make an offer of settlement, and then to succeed at the trial upon a relevantly different case. A plaintiff who has done that may not readily receive indemnity costs. 12 It is necessary to sketch some of the procedural history of the matter. As at January 2005 the plaintiff was relying upon the report of Mr J H Bryant, architect, which had been served upon the defendant. That report addressed particulars of negligence in the statement of claim originally filed on 2 April 2001. Relevantly for present purposes, those particulars alleged the failure to place and maintain a railing of adequate height along the perimeter of the stairway, and the construction and maintenance of steps of inadequate width and height. The statement of claim did not allege that the height of the railing failed to conform with the Building Code of Australia, and there were no statutory counts. 13 Mr Bryant's report, dated 4 July 2001, asserted that the height of the railing, about 900mm, complied with the BCA, which required a minimum height of 865mm. He noted, however, that the directors of licensed clubs are aware that people have less control after consuming intoxicating liquor, and that there was "good reason not only to provide a support rail of practical height, but also to provide a secondary barrier higher than average pelvis level at some position behind the convenient handrail". 14 He also noted that the provision of a rail higher than that required by the BCA was not uncommon in public stairways, and expressed the view that the plaintiff's accident would not have occurred if the "barrier" in question had been higher. He found that the width of the steps was inconsistent and, in any event, inadequate. In the absence of eyewitness evidence, he found it "possible to suppose that Mr Haywood tripped on the narrow and inconsistent steps and that the momentum of his fall forced him over the curved balustrade, which was grading steeply away". 15 On 14 January 2005, three days before the offer of compromise, the plaintiff's solicitor wrote to the defendant's solicitor to inform him that the height of the railing in fact did not comply with the relevant provision of the BCA, which required a balustrade of not less than one metre above the nosings. In February 2005 the plaintiff's solicitor received and served the first report of Messrs Meikle and Hosford. It was because of these developments, as I understand it, that a trial date fixed for the end of that month was vacated. 16 In or about June 2005 the plaintiff's solicitor filed and served the reports of Mr Robert Braid and Mr Michael Monroe, architects, and Mr Douglas Cornish, building consultant. Those experts confirmed the minimum height of one metre for the railing required by the Building Code. Mr Munroe and Mr Cornish expressed the opinion that the railing at the club should in fact have been 1,100mm high, while Mr Bray said that it should "preferably" have been 1,200 mm. 17 In June 2005 the defendant's solicitor obtained the report of Associate Professor Rodney Cross in answer to the Meikle and Hosford report. In July 2005 the plaintiff filed the amended statement of claim which outlined the case presented at the trial before me. Among the particulars of negligence in that statement of claim were allegations of non-compliance with the BCA, in particular, with respect to the height of the railing. It also contained statutory counts alleging the same breaches of the Code. 18 It appears that the parties had attempted mediation, without success, in November 2004. On 7 November 2005, in anticipation of the trial before me in February this year, the plaintiff's solicitor wrote to the defendant's solicitor suggesting another attempt at mediation. The defendant's solicitor replied the next day, querying the basis upon which further mediation was suggested. If there was a response to that letter, it is not before me. On 25 November 2005 the defendant's solicitor wrote again to say that he was instructed not to agree to a further mediation. 19 In the event, I find it unnecessary to have regard to the plaintiff's invitation to further mediation in determining this question. What is at issue is whether the case the plaintiff made out at trial was significantly different from that which was foreshadowed at the time the offer of compromise was made. In my view, it was not. 20 True it is that at the time of the trial the original statement of claim had been amended and expanded to a considerable degree. In particular, the fact that the railing was lower than the height required by the BCA had been pleaded and was the subject of expert evidence. Moreover, the effect of that evidence was that at the premises in question prudence dictated a railing higher than the minimum required by the Code. In addition, the mechanism of the fall for which the plaintiff contended became the subject of the expert evidence by Messrs Miekle and Hosford, for the plaintiff, and Associate Professor Cross, for the defendant. 21 That said, it does not appear to me that the plaintiff's case changed in such as a way as to be significant for present purposes. At the time of the offer of compromise, his case was that he lost his balance because of the defects in the steps identified by Mr Bryant and that he fell against the railing, which was not high enough to support him. That was still his case at the trial. 22 The assertion that the railing was lower than the minimum requirement of the BCA was foreshadowed in his solicitor's letter to the defendant's solicitor of 14 January 2005, to which I have referred. While I admitted the evidence of Messrs Miekle and Hosford over objection, it appears to me that the plaintiff could have made out his case without it. It would have been open to the jury, unaided by expert evidence, to conclude that the railing was not high enough to support a man of the plaintiff's height who fell against it. It should also be noted that, while the jury found for the plaintiff on the relevant statutory counts, he also succeeded on the negligence claim without any finding of contributory negligence. 23 The present case is different from Fowdh v Fowdh, cited by Mr Maconachie. It is apparent from the judgment of Mahoney JA in that case that the resolution of the issues at trial had turned upon medical evidence which was not available when the offer of compromise had been made. 24 Early this week, I received a written submission from Mr Maconachie concerning the plaintiff's solicitor's letter of 14 January 2005, and a written response from Mr Gormly. Mr Maconachie pointed out that the letter of 14 January was received very close to the offer of compromise, and that the defendant ought to have had a reasonable opportunity to obtain its own expert report about the matter raised in it before it could determine an informed response to the offer. He opposed an award of indemnity costs on that basis. Alternatively, he argued that allowance should be made for the time reasonably necessary for the defendant to obtain an independent report and that any order for indemnity costs should be dated from roughly the end of June 2005. 25 I am not persuaded by this argument. As I have said, the height of the railing was an issue in the plaintiff's case from the outset. All that the letter of 14 January added was the assertion that it was below the minimum requirement of the BCA. As Mr Gormly pointed out in his submission in response, that is a matter which the defendant might readily have ascertained in the investigation it must have undertaken to answer the plaintiff's claim. In the event, it was not a matter in dispute at the trial, at which the central issue was causation. 26 Accordingly, I order the defendant to pay the plaintiff's costs from 18 January 2005 on an indemnity basis, and prior to that date on a party and party basis. This does not affect certain costs orders made against the plaintiff between June 2002 and June 2005. An application by the plaintiff that those cost orders be vacated was foreshadowed, but was not pursued.

Stay of Proceedings 27 Mr Maconachie foreshadowed an appeal, as might have been expected, and seeks a stay of proceedings. Mr Gormly accepted the stay as appropriate, but has asked the certain conditions be imposed to ensure the prompt disposition of the appeal. The first of those is that the defendant file and serve a notice of appeal with appointment within seven days. I think it is reasonable that the time for the filing of the notice be truncated somewhat. The parties had a daily transcript during the trial, and copies of my interlocutory decisions were supplied at the time they were given. However, the revised transcript of my summing up has not yet been supplied, although I expect that it will be in the very near future. 28 That said, I think that seven days for the filing of the notice of appeal is too short. In all the circumstances, I think it appropriate to make it a condition of the stay that a notice of appeal with appointment be filed within twenty-one days of the provision to the parties of the revised summing up. It is a further condition that the defendant consent to an application by the plaintiff for expedition of the hearing of the appeal. Mr Gormly also asked that the time for taking various steps in preparation of the appeal after the filing of the notice of appeal be abridged. That is a matter which might be pursued in the Court of Appeal, but I would not make it a condition of the stay. 29 The defendant agrees to pay or reimburse to the plaintiff's solicitor the sum of $23,907.00 in respect of Court fees, jury retention fees and transcript fees incurred by the plaintiff in the proceedings. The plaintiff's solicitor, for his part, undertakes that that amount would be reimbursed with interest in the event that the Court of Appeal orders, consequential to any other determination, that the plaintiff pay the Club's costs of these proceedings in the Supreme Court. 30 A stay of proceedings is granted, subject to those conditions and noting that undertaking.

Liberty to Apply 31 The parties have liberty to apply generally on three days notice. **********

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