Arian v Nguyen

COUNSEL : Appellant: K Rewell/M Cleary Respondent: J D Hislop QC/B G Smith SOLICITORS : Appellant: Dennis & Company Respondent: Curwood & Partners CATCHWORDS : PERSONAL INJURY - motor vehicle accident - appellant/plaintiff riding bicycle - recovered judgment for damages at $5,210.20 - appeal as to assessment of damages and costs - EVIDENCE - credibility and weight - issue as to whether appellant/plaintiff exaggerated symptoms - appellant/plaintiff testimony found unsatisfactory and without credit - inconsistencies in evidence - effect of appellant's lack of credibility on evidence of other witnesses - COSTS - depriving a successful party of costs - exercise of discretion to order successful party to pay unsuccessful party's costs - Pt 39A r 12 District Court Rules - whether appellant/plaintiff's action amounted to misconduct - offer of compromise by respondent/defendant less than judgment - Pt 39A r 25(6) District Court Rules - discussion of jurisdiction and discretion to award costs against a successful party. D Motor Accidents Act 1988 LEGISLATION CITED : Workers Compensation Act 1987 District Court Rules 1973 General Insurance Office v Bailey (1992) 27 NSWLR 304 Heuston v Yore Contractors Pty Limited (unreported, SC(NSW), 9 March 1992) Oshlack v Richmond River Council (1998) 193 CLR 72 Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 Mannix v Loumbos [2000] NSWCA 32 Ottway v Jones [1955] 1 WLR 706 Scherer v Counting Instruments Limited [1986] 1 WLR 615 Trade Practices Commission v Nicholas Enterprises Pty ltd (1979) 28 ALR 201 Robinson v Australian Association of Social Workers Limited [2000] SASC 239 CASES CITED: Re Elgindata Limited (No 2) [1993] 1 All ER 232 Ashby v Marshall (unreported, SC(SA), 28 November 1991) Popovic v Murray (unreported, SC(Tas),15 March 1991) Huxley v West London Extension Railway Company (1899) 14 App Cas 26 Ritter v Godfrey (1920) 2 KB 47 Donald Campbell & Co v Pollak [1927] ACt 732 Thorne v Doug Wade Consultants Pty Ltd [1985] VR 433 Jamal v Secretary, Department of Health (1988) 14 NSWLR 252 Cretazzo v Lombardi (1975) 13 SASR 4 Adams v Kennedy & Ors [2001] NSWCA 7 Lee v Kennedy & Ors [2001] NSWCA 8 DECISION : Appeal in respect of the verdict in the sum of $5,210.20 is dismissed; The appeal in respect of the costs order is upheld and the order made by the trial judge in regard to costs is set aside; The respondent pay the appellant's costs of the first day of the trial, to be taxed, those costs not to include any item relating to the specialist medical practitioners whose reports were tendered in evidence; The appellant pay the respondent's costs in respect of the rest of the trial; The appellant pay 75 per cent of the respondent's costs of the appeal, to be taxed.

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

FOSTER AJA IPP AJA

1 FOSTER AJA: I agree with the orders proposed by Ipp AJA and with his Honour's reasons. 2 IPP AJA: The appellant was the plaintiff in an action for damages for personal injuries in the District Court. The injuries arose out of a collision that occurred on 19 September 1996 when a motor vehicle driven by the respondent struck the appellant, who was riding a bicycle. Liability was admitted and the trial Judge assessed damages at $5,210.20. Notwithstanding that the appellant was successful to that extent, her Honour ordered that he pay the respondent's costs to be taxed. The appellant appeals against the assessment of damages and the order for costs. 3 The appellant alleged that he was seriously injured in the collision. The injuries and disabilities he complained of were extensive indeed (the learned trial judge's description of his complaints took up about a page of her judgment). The most serious injuries alleged to have been sustained were to the appellant's back, neck and head. These injuries were said to have caused debilitating headaches, limitation of movement in the back, neck, arms and legs and loss of hearing in both ears. Moreover, the appellant alleged that the collision and the injuries he suffered brought about psychological consequences. These were said to include post-traumatic stress disorder and anxiety as well as other disorders. According to the appellant and certain medical practitioners, the injuries he sustained in the collision rendered him unemployable. 4 The respondent on the other hand contended that the appellant had sustained only minor injuries in the collision and these had no effect on his capacity to earn or care for himself. The respondent's case was that the injuries were trivial and did not result in any disability. 5 In substance, the trial judge upheld the respondent's contentions. The effect of her Honour's findings was that the appellant suffered no sequelae from the impact other than those of which he complained when he was admitted to hospital immediately after the collision.

6 The foundation of her Honour's decision was her finding that the appellant was not a credible witness, that he had deliberately not told the truth to medical witnesses and had grossly exaggerated his symptoms. This view of the appellant's credit affected her Honour's opinion as to the weight to be attached to medical witnesses who testified in support of the appellant's claim. Generally, these witnesses rested their opinions on what they had been told by the appellant. Once her Honour found that no reliance whatever could be placed on the appellant's honesty and credibility, the basis of the opinions expressed by these witnesses collapsed. 7 In consequence, the learned judge was not satisfied that the appellant established an impairment (within the meaning of s 79A(3) of the Motor Accidents Act 1988 ) for a continuous period of not less than twelve months so as to qualify for an award for non-economic loss. Moreover, her Honour found that the appellant had not proved that in consequence of his injuries he was not able to secure paid employment and was not able to return to his university studies (as he alleged). In essence, on this aspect, her Honour found that the appellant had not established that he had sustained any loss of earning capacity as a result of the collision. 8 The learned Judge was not satisfied that the appellant had any need for assistance with self-care or domestic services. As regards past and future care, her Honour said "of the amount claimed [namely, $17,611 for past and $18,165 for future care] the [respondent] has paid $5,210.20 and I regard it as more than adequate that I allow this amount". Hence, the verdict of $5,210.20. 9 On appeal, the main challenge to her Honour's decision was directed to the finding that the appellant was not a witness of credit. 10 The appellant was extensively cross-examined and his cross-examination revealed many inconsistencies in his testimony. Not only were there internal inconsistencies in the evidence he gave, but there were inconsistencies between that evidence and information he gave to several of the medical witnesses on significant issues. The general impression gained from reading his testimony was of a wholly unsatisfactory witness. It was difficult for cross-examining counsel to get the appellant to give direct answers to the questions asked. On many occasions the appellant's answers were inordinately lengthy and contained a string of inconsistent replies. Generally he was evasive. He appeared to attach little or no weight to the need to be accurate in the answers he gave. He seemed to be ready to give the first answer that came to his mind irrespective of its truth. 11 Several of the inconsistencies related to matters of importance. I shall refer to some of these. 12 In the course of his testimony the appellant claimed to have lost consciousness for five minutes. The ambulance report, however, recorded the appellant's injuries as being small abrasions to the left knee and left elbow and a complaint of pain in his left leg and shoulders. The report recorded the appellant's consciousness as being normal, there was no loss of consciousness. The appellant was taken to Bankstown Hospital after the collision and according to the hospital notes, an examination of the appellant when he was admitted established some slight tenderness in the neck, bruising to the left shoulder and minor abrasions of the left elbow and anterior tibial regions. He complained of pain in these regions but was "otherwise well", there is no suggestion that he lost consciousness.

The foregoing is to be contrasted with the history the appellant later gave to various doctors. He told Dr Youssef that, as result of the impact with the respondent's vehicle, he "fell to the ground and was knocked out for a short time" and sustained the following injuries: "1. Injury to left side of the head with hearing difficulty in the left ear. 2. Injury to shoulders, left elbow, back, and an injury to both knees."

Similarly, the appellant told Dr Mahony, a specialist medical practitioner consulted by him, that he had been "knocked out for a short time" and was taken to hospital with a number of injuries including "an injury to the left side of his head" with "difficulty with hearing with the left ear" and "an injury to his back". He told Dr Ireland, an orthopaedic surgeon retained by the respondent, that after the accident he was unconscious "for a few minutes". 13 An issue of significance was whether the appellant had suffered similar symptoms before the collision. He told Dr Youssef that he had "[n]o history of previous accident or serious injuries". According to Dr Mahony the appellant gave "no history of any added accidents or serious illnesses". The appellant told Dr Ellis, a specialist medical practitioner, that "in the past there has been no serious illness, or injury relevant, in particular no previous neck disability". He told Dr Ireland that "there had been no previous injuries".

It was established however, when the appellant gave oral testimony, that he had been involved in a motor vehicle accident on 30 August 1993 which caused him to suffer neck pain for which he consulted Dr Youssef as well as another general practitioner, Dr Bishara. The appellant also conceded in cross-examination that he had suffered from migraine headaches from 1994 and had consulted Dr Youssef in this connection. He also had had hearing difficulties in 1993 and was given a referral to see Dr Ghabrial, an ear nose and throat specialist, although he did not apparently in fact consult Dr Ghabrial. At some time he did, however, see another ear nose and throat specialist, Dr Howison. 14 The appellant told Dr Ellis that he had seen a specialist, Dr Fagan, because of his hearing loss sustained in the collision and Dr Fagan had found "a 25% loss of hearing as a result of the accident". Two reports by Dr Fagan were tendered in evidence. Neither referred to any percentage loss of hearing. The first report dated 27 September 1996 noted that the appellant was "troubled by a left sided hearing loss" but stated that the loss was "quite minor" and the "great likelihood is that all will settle without treatment". In his second report dated 7 May 1997Dr Fagan said: "I am having difficulty understanding [the appellant's] problem as his hearing tests fluctuate so wildly that it defies explanation.

I do not believe that I have anything further to offer [the appellant] and have discharged him to return to your care".

15 In April 1997 the appellant told Dr Ellis that he was training in medical technology and radiation therapy and was "in a final year of a three year course". In fact, the appellant had passed one subject in his first semester and had been given passes in two other subjects because of his study previously overseas. 16 The appellant contended that as a result of the accident he was prevented from completing his medical studies at university. In this regard it is to be noted that the appellant was aged 31 years at the time of the collision and he had immigrated to Australia from Syria in 1991 and, according to him, before coming to Australia he had completed three years of a course in medicine at a university in Turkey. In 1994, the appellant commenced university studies in medical radiation therapy at the University of Sydney. In his first year he was given a pass in two of his subjects because of the studies he had previously undertaken overseas. He failed at least two of the remaining four subjects. In 1995 he took two subjects in the first semester and failed them both. He took two subjects in the second semester but withdrew without doing the exams. These university failures in 1995 and 1996 occurred before the accident in question. In his evidence in chief the appellant asserted that he failed in 1996 because of the accident, but his own counsel pointed out to him that the accident did not occur until September 1996 "so that had nothing to do with the first semester subjects". Generally, the appellant's evidence concerning his reasons for not passing the subjects he took at university was evasive and unsatisfactory. In the circumstances, the learned judge found that the appellant's failure to complete his university course was not caused by the accident. 17 The appellant asserted that, in consequence of the accident he was unable to obtain employment. The fact however is that although the appellant came to Australia in 1991 he was never able to obtain gainful employment of any consequence. In 1992 he worked for some nine days at the Sydney City Mission as part of the Restart Programme for the Department of Immigration. In 1993 he did some limited work for Unilever involving "marketing" and "many things". Otherwise, he has done no paid work in Australia. In particular, he did not work at all in 1995 and 1996. 18 The appellant indicated in his evidence in chief that at the time of the accident he was about to start work with the Bureau of Statistics. In support of this allegation he referred to a letter dated 5 August 1996 he received from the Australian Bureau of Statistics indicating that generally there were positions available with the Bureau in connection with the 1996 census. The letter called for an urgent response from those interested in obtaining employment. A perusal of the letter, however, reveals that it did not contain an offer of employment but was, rather, an invitation to apply for work of a temporary nature.

The appellant did not respond to this invitation. According to his evidence in chief he said that he received the letter about a month or so before the accident and did not respond because of the accident. Under cross-examination he said that he received the letter one or two days before the accident when it was too late to apply for the position. His evidence on this issue was wholly unsatisfactory. 19 The matters to which I have referred afford ample ground for the credibility finding made by the learned judge. No serious argument was raised on the appellant's behalf that sought to justify the way the appellant testified and to explain his inconsistencies and contradictions, the changes in his testimony when pressed, his failure to remember crucial issues and the unconvincing vagueness with which his evidence was riddled. Rather, counsel for the appellant submitted that there were objective and corroborative pieces of evidence which should have led the learned trial judge to accept the appellant's evidence on significant issues. The evidence concerned was that of certain medical practitioners whose reports were tendered in evidence. I turn now to the evidence in question. 20 Counsel submitted that the evidence of Dr Youssef should have been given particular weight, he being the treating doctor. Dr Youssef expressed the opinion that as a result of the accident the appellant was "suffering from musculo ligamentous sprain which affected his left side of the head, neck, shoulders, back and legs as a result of the accident". In my opinion, however, the learned judge was entitled to discount the testimony of Dr Youssef. Firstly, Dr Youssef knew of the prior injuries sustained by the appellant as he was consulted by the appellant in connection with them. Nevertheless, he did not mention any of these matters in his reports. Secondly, as I have already mentioned, the learned Judge was entitled to find that the history of the accident and the injuries sustained by the appellant as reported by the appellant to Dr Youssef were false. It is apparent that Dr Youssef relied on these matters in expressing his opinions. This rendered his views seriously questionable. In the circumstances, her Honour was entitled to find that nothing said by Dr Youssef could reliably be regarded as an objective fact corroborating the appellant's testimony. 21 Counsel for the appellant then referred to the reports of Dr Mahony. According to those reports: "[T]he [appellant] has developed symptoms referable to a contusion to the left side of his face with damage to the left ear. He has symptoms referable to a cervical strain, a left lateral epicondylitis, a low lumbar back strain, a contusion to both knees, certainly in association with condromalacia of the pateiii (sic - patelli). It is consistent that the road traffic accident he described could have produced such lesions". I have above referred to the description given by the appellant to Dr Mahony concerning the injuries he had sustained in the collision and repeat that the trial judge was entitled to find that that description was false. I have also referred to the fact that the appellant falsely indicated to Dr Mahony that he had no history of any other accidents or serious illness. Dr Mahony's opinions were dependant on the information he received generally from the appellant. Once the trial judge found the appellant to be an untrustworthy reporter, she was entitled to discount Dr Mahony's testimony.

The learned judge said in regard to Dr Mahony that he "did not set out any diagnosis in his reports". Her Honour was criticised in this respect by counsel for the appellant, but, if by "diagnosis" her Honour meant that Dr Mahony did not express an opinion as to the cause of the appellant's symptoms, then her Honour was entirely justified in making the comment that she did. 22 Counsel for the appellant placed considerable reliance on the testimony of Dr Ellis. In his report dated 4 March 1998 Dr Ellis said "as a result of the motor vehicle accident and the fall from the bike in September 1996 [the appellant] has suffered musculo-ligamentous contusion, aggravation of degenerative change in his back and neck. A recent MRI examination has revealed significant and severe disc injuries". Dr Ellis concluded that the appellant was "unemployable". Dr Ellis' assessment of the appellant was based on his assumption, as he stated, that the MRI examination had revealed significant and severe disc injuries. Dr Ellis had not personally seen the report of the MRI examination. He said in this connection, "a verbal report was obtained indicating that at the L5/S1 disc there was internal disc disruption, a ruptured annulus and disc protrusion demonstrated. A report from the radiologist concerned is essential". It is not apparent from the evidence precisely what information was given to Dr Ellis about the MRI report or who gave him that information. In particular, it is not apparent whether the information was given to him by the radiologist concerned or by the appellant. Dr Ellis' note that "a report from the radiologist concerned is essential" tends to suggest that he did not speak to the radiologist himself.

The MRI report was tendered in evidence. The relevant part reads: "There is decreased signal intensity in the L5/S1 disc indicating disc dehydration and degeneration. At the L5/S1 level there is a small posterior rupture of the disc annulus with a small posterior protrusion in the mid-line. This creates encroachment on the epidural fat, but does not cause encroachment on the thecal sac or the neural structures". It was not possible for the learned judge of her own knowledge to determine whether the MRI scan, on the basis of the MRI report, "revealed significant and severe disc injuries", but assistance was to be obtained from Dr Ireland, who was the only other medical witness who dealt with the MRI scan. He, too, did not see the MRI scan but read the MRI report. He noted that "it is always difficult to visualise just what is meant by a small posterior mid-line protrusion of the disc" and said that he really needed to look at the x-rays "to make anything worthwhile of them". Nevertheless, he observed that it appeared from the MRI report that the appellant "may have some minor disc upset, but small abnormalities such as are reported there are comparable with quite normal function of the spine."

The learned judge said, "it is apparent that in stating that the MRI examination revealed significant and severe disc injuries Dr Ellis was misinformed", and for this reason attached no weight to Dr Ellis' report. In the circumstances, having regard to the doubt attendant upon the information given to Dr Ellis and taking into account the remarks of Dr Ireland, the learned judge was justified in the conclusion to which she came in this respect. 23 Counsel for the appellant sought to place reliance on the report of Dr Anderson, an occupational physician retained by the respondent. In a report dated 4 September 1997, Dr Anderson said, under the heading "Diagnosis": "(a) [The appellant] gives a history of hurting his left side and, to a lesser extent, his neck and back in September 1996. (b) At today's assessment, he seemed to be in some distress. There was very little reasonable movement of his spinal column and evidence of mild irritation of the nerve roots at C7, C8 and at S1 on the right."

Dr Anderson also noted that the appellant did not appear to have been badly injured in the accident in September 1996. He said "this appears to have been relatively mild, causing nothing more severe than localised bruising and possibly some localised wrenching of joints. The most severe issue associated with the actual accident appears to have been the ENT condition, which is described in the clinical literature". Dr Anderson, of course, is not a specialist on hearing problems and, as I have pointed out, Dr Fagan regarded these as relatively insignificant. Moreover, Dr Seymour, an ear nose and throat specialist, considered that the appellant's ear problems were not caused by the collision.

In any event, the weight to be attributed to Dr Anderson's views is substantially dependant on the reliability of the information given to him by the appellant. Once the appellant is regarded as an untrustworthy person, the views of Dr Anderson cannot be regarded as objective or corroborative. 24 With regard to the appellant's complaints of deafness and tinnitus it is sufficient to refer to the testimony of Dr Seymour. Dr Seymour expressed the opinion that any deafness from which the appellant suffered was not caused by the accident and was due to noise exposure prior to the accident. He was also of the opinion that it was unlikely that there was any causative relationship between the tinnitus and the accident. He pointed out further that tinnitus is a subjective symptom which cannot be measured clinically and is vulnerable to exaggeration or even simulation. Dr Seymour's evidence alone justified the trial judge's findings concerning the complaints in question. 25 Counsel for the appellant relied on the evidence of two psychiatrists, Drs Ali and Greenway. They considered that the accident had caused the appellant to suffer from various psychiatric disorders. There was conflict between their evidence and the evidence of two other psychiatrists, Drs Lucire and Shand. Dr Lucire considered that the appellant was a "pathological liar". She was cross-examined and asked to give examples of the instances where she thought the appellant to have lied. She gave many such instances. Counsel for the appellant submitted that in certain respects Dr Lucire was mistaken. Dr Lucire's alleged errors were said to show that her opinion was unreliable and should not have been accepted. I am not persuaded, however, by this submission as even if Dr Lucire did err, as submitted, the errors in question were relatively few and insignificant.

In any event, it is quite plain from her Honour's reasons that she came to the conclusion that the appellant was an untrustworthy and unreliable witness independently and without reference to Dr Lucire's views. On this basis, she stated that she found herself in agreement with the respondent's medical experts as far as the appellant's exaggerations were concerned. In my view the approach so adopted by the learned judge is unexceptionable and she was entitled to reject the views expressed by the psychiatrists retained by the appellant on the ground that whatever information was given to them by the appellant could not be trusted or relied upon. 26 Counsel for the appellant submitted that the collision was serious and this supported the appellant's contentions. On the evidence, however, the impact was minor. The collision occurred when the appellant was hit by a car that pulled out from a side street. According to an accident report the respondent's vehicle was travelling at five kilometres an hour before the impact and the appellant was cycling at eight kilometres an hour. The appellant fell onto the roadway, got up and sat on a fence by the roadside. He was wearing a helmet at the time. 27 Finally, in regard to the trial judge's rejection of the testimony of the appellant and the medical practitioners on whom he relied, it was submitted in the appellant's written submissions (but not in oral argument) that the learned judge had improperly taken into account the appellant's demeanour in court without informing counsel for the appellant of her intention to do so. The learned judge referred to the report of Dr Ireland in which the doctor stated "that [the appellant] stood slightly stooped and appeared to be constantly moving as if trying to obtain relief from discomfort. He grunted intermittently and he handled himself protectively". Her Honour said in this regard, "this is not the way in which [the appellant] presented to the court in mid-September 1998". Again, in regard to the report of Dr Shand, the learned judge noted that Dr Shand had stated: "the [appellant] walked in a halting fashion with a suggestion of a left sided limp. General movements were slow, laboured and accompanied by emotional embellishment, sighing, grunting and grasping and plenty of hand support, especially when rising from a chair and getting onto the couch. He did the latter very slowly but exhibited 90 degrees of hip flexion on both sides without complaint of pain."

The learned judge said in this regard, "this was not the physical presentation which the [appellant] gave to the court".

The difficulty with the appellant's submission in respect to this ground is that there is nothing in her Honour's reasons which supports the inference that her Honour was observing the behaviour of the appellant at a time other than when he testified. In other words, there is nothing to suggest that the appellant's behaviour to which her Honour referred did not take place in full view of counsel. In the circumstances, I do not think that the learned judge can be faulted: General Insurance Office v Bailey (1992) 27 NSWLR 304 . 28 I turn now to the other points raised on behalf of the appellant. 29 The appellant claimed out-of-pocket expenses of $17,611 for past care and $18,165 for the future. The sum claimed for past expenses included substantial amounts for physiotherapy, hydrotherapy and psychiatric consultation. The effect of the learned judge's findings was that amounts of that kind were not expended on injuries sustained in the collision, and no expenses caused by the collision would be needed in the future. At the time of the trial the respondent had paid $5,210.20 towards the appellant's out-of-pocket expenses. The learned judge said that she regarded this sum "as more than adequate" for the out-of-pocket expenses sustained and ordered that there be judgment for the appellant in that sum only.

It was argued in written submissions filed on the appellant's behalf that it was necessary for her Honour to list the expenses that were disallowed and to give reasons why they were disallowed. In fact, her Honour gave ample reasons for rejecting the appellant's claims that he had suffered serious injuries to his back, neck and ears and that he had been seriously psychologically affected by the impact. These reasons explain why the claim for future expenses was disallowed. The learned judge took a broad approach to the claim for past loss of out-of-pocket expenses and expressed the opinion that the amount awarded was sufficient to cover all such expenses that were caused by the accident. In my view that approach was legitimate. 30 Section 45(2A) of the Motor Accidents Act provides:

"The duty of an insurer under subsection (2) to make payments applies only to the extent to which those payments: (a) are reasonable and necessary, and

(c) relate to the injury caused by the fault of the owner or driver of the motor vehicle to which the third-party policy taken to have been issued by the insurer relates."

Counsel for the appellant submitted that the learned judge's verdict of $5,210.20 indicates that her Honour accepted that the payments made by the respondent were in respect of expenses incurred by the appellant that were reasonable and necessary and properly verified and related to the injuries caused by the collision. This submission may be accepted. Counsel argued further, however, that the payments totalling $5,210.20 constituted an admission by the respondent that the appellant was suffering from injuries requiring medical treatment at a time when the payments by the respondent were made. This has significance as several of the payments were made more than twelve months after the collision and it was argued that those payments constituted an admission that the appellant's ability to lead a normal life had been significantly impaired for a continuous period of at least more than twelve months by the injury suffered in the accident (and hence there had been compliance with s 79A of the Act).

I am unable to accept the arguments so advanced. Firstly, I think it to be questionable whether the payments constitute an admission as argued. The appellant relied in this regard on Heuston v Yore Contractors Pty Limited (unreported, SC(NSW), 9 March 1992, Hunt CJ at CL). This case concerned the admissibility of evidence of continued weekly payments of worker's compensation said to constitute admissions by the defendant that the worker was incapacitated at the time of such payments. Hunt CJ at CL held that evidence of such payments was admissible as they were capable of constituting an admission as submitted. But the statutory regime under the Workers Compensation Act 1987 is very different to that under the Motor Accidents Act . The statutory provisions establishing liability on the part of the insurer to make weekly payments of workers compensation after an award has been made, are such that the continued payment by an insurer of such payments, without disputing liability therefor, may be regarded as an admission by the insurer that the worker was still incapacitated as a result of the injury. Provisions of that kind do not exist under the Motor Accidents Act and it is more difficult under that statute to draw an inference that payments made by an insurer, before liability on the part of the insured is established, constitute an admission of liability on the part of the insured.

I do not have to decide the question however as, on the facts, I do not think that the payments amounting to the sum of $5,210.20 are capable of being construed as an admission in the wide terms contended for. In my view, at best for the appellant, the payments in question are capable of giving rise to an admission that, to the extent of the aggregate thereof, the payments were reasonable, necessary and properly verified and related to the injury caused by the accident. The admission, however, can go no further than that. Payments of this kind may be made long after the expenses, to which they relate, were incurred. There is no rational basis for regarding such payments as constituting admissions that the injuries that caused those expenses continued to endure between the date on which the expenses were incurred and the dates on which payments therefor were made. 31 I turn now to the costs order made by the learned judge. As mentioned, her Honour ordered that the appellant pay the respondent's costs of the proceedings. 32 Part 39A r 12(1) of the District Court Rules 1973 provides: "If in any action which could have been brought in a Local Court but which is brought in the Court: (a) the plaintiff recovers a total amount which does not exceed the prescribed amount by payment by or on behalf of the defendant without judgment; or (b) judgment is given or entered up in favour of the plaintiff for an amount which does not exceed the prescribed amount, the plaintiff shall not be entitled to recover any costs in the action unless the Court certifies that it appears to it that there was a sufficient reason for bringing or trying the action in the Court."

Counsel for the appellant submitted, firstly, that Pt 39A r 12 constitutes a complete code and the court had no discretion in regard to costs other than as provided expressly thereby. I do not accept this submission. There is nothing in Pt 39A r 12 that indicates an intention to confine the well-established broad-ranging judicial discretion (implicit in Pt 39A r 9) in regard to the making of costs orders, save to the extent expressly provided thereby. The general approach to this kind of issue is manifest from Oshlack v Richmond River Council (1998) 193 CLR 72 where Gaudron and Gummow JJ said at 81: "The provisions of s 69 of the Court Act which confer upon the Court the discretion exercised by the primary judge attract the application of a general proposition that it is inappropriate to read a provision conferring jurisdiction or granting powers to a court by making conditions or imposing limitations which are not found in the words used … The terms of s 69(2) contain no positive indication of the considerations upon which the Court is to determine by whom and to what extent costs are to be paid. The power conferred by the section is to be exercised judicially, that is to say not arbitrarily, capriciously or so as to frustrate the legislative intent. However, subject to such considerations, the discretion conferred is, to adapt the words of Dixon J, unconfined except in so far as 'the subject matter and the scope and purpose' of the legislation may enable an appellate court to pronounce the reasons given by the primary judge to be 'definitely extraneous to any objects the legislature could have had in view' ( Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505)." 33 An issue arose before the trial judge as to whether the appellant had been successful in any respect. Her Honour accepted that, at a stage prior to the commencement of proceedings, the respondent refused to meet any more of the appellant's expenses but, after action was instituted, made a number of further payments. It is not possible from the papers to determine the precise amount which was paid after the commencement of proceedings, but counsel who appeared for the appellant at trial when the issue of costs was argued said that in February 1998 (some seven months before the trial) "s 45 payments were not in excess of approximately $1,555.60". Accordingly, it is plain that the commencement of proceedings did result in a real benefit to the appellant, and at least to the extent indicated, he must be regarded as having succeeded in the litigation. 34 Nevertheless, the learned judge rightly pointed out that the appellant had established no more than his right to out-of-pocket expenses and his claim was "substantially overstated". Her Honour held, on this ground, that there was insufficient reason for bringing the action in the District Court and, accordingly, she was not prepared to grant a certificate in terms of Pt 39A r 12(1). 35 Her Honour went on to observe that she had found the appellant to be guilty of "conscious exaggeration" and a "conscious effort to deceive both the [respondent and the court] in respect of the claims made." The learned judge indicated that this finding led her to make the exceptional order that the appellant pay the respondent's taxed costs. 36 In Oshlack v Richmond River Council McHugh J (at 97) reiterated the long-standing rule that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. His Honour went on to say: "The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd ([1951] 1 All ER 873 at 874), Devlin J formulated the relevant principle as follows: 'No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct.'" His Honour noted that "misconduct" in this context includes conduct relating to the litigation and conduct that unnecessarily protracts the proceedings.

McHugh J was in dissent in Oshlack but as Foster AJA pointed out in Mannix v Loumbos [2000] NSWCA 32 there was no disagreement in the High Court as to these observations of general principle which are well established. 37 The making of an order that a successful party pay his or her opponent's costs requires strong justification (Ottway v Jones [1955] 1 WLR 706 at 708, 714, Scherer v Counting Instruments Limited [1986] 1 WLR 615 at 618) and exceptional circumstances must exist before a party will not only be deprived entirely of costs but also required to pay part of the opponent's costs (Trade Practices Commission v Nicholas Enterprises Pty Ltd (1979) 28 ALR 201; Robinson v Australian Association of Social Workers Limited [2000] SASC 239).

Where a party raises issues or makes allegations improperly or unreasonably, this may constitute misconduct such that the court may not only deprive it of its costs but order it to pay the whole or a part of the unsuccessful party's costs: Trade Practices Commission v Nicholas Enterprises Pty Ltd at 208 per Fisher J, Re Elgindata Limited (No 2) [1993] 1 All ER 232 at 237 per Nourse LJ; Ashby v Marshall , (unreported, SC(SA), 28 November 1991); Popovic v Murray (unreported SC(Tas), 15 March 1991). 38 It is rare for a successful party who is guilty of misconduct in the litigation to be ordered to pay the unsuccessful opponent's costs where the misconduct does not lengthen the proceedings unnecessarily, cause unnecessary issues to be canvassed or otherwise cause the costs of the litigation to be increased. Indeed, the court's entitlement to depart from the usual order that costs follow the event has sometimes been said, in effect, to be subject to the qualification that the misconduct in question occasioned unnecessary litigation and expense (see Huxley v West London Extension Railway Company (1899) 14 App Cas 26 at 32-33 per Lord Halsbury LC; Ritter v Godfrey [1920] 2 KB 47 per Atkin LJ at 60). In other cases, however, this qualification has not been mentioned: see for example Donald Campbell & Co v Pollak [1927] AC 732 at 811-812; Thorne v Doug Wade Consultants Pty Ltd [1985] VR 433 at 500; Jamal v Secretary, Department of Health (1988) 14 NSWLR 252 at 271-272; Re Elgindata Limited (No 2) (supra). On balance, it seems to me that while delay and increased expense brought about by improper conduct in the course of the litigation are highly relevant factors in the discretion to depart from the usual order as to costs, they are not essential to the exercise of that discretion. It would, in any event, be very unusual for misconduct of that kind not to cause unnecessary delay and expense. 39 In the present case, the learned trial judge did not expressly find that the appellant's conscious exaggeration and efforts to deceive caused increase expense and delay, but such consequences were the inevitable result of the appellant's improper conduct. In any event, as I have pointed out, having found that the appellant was guilty of serious dishonesty in the conduct of the trial, the order made was within her Honour's discretion. 40 There is another matter, however, that also has a significant bearing on the costs order that was made. As it was put for counsel who appeared for the respondent at trial, "there had been an offer under the rules but for slightly less than [the sum of $5,210.20]". In other words, the respondent had made an offer of compromise under the District Court Rules which the appellant had not accepted, and the award eventually made exceeded the amount of the offer. Accordingly, Pt 39A r 25(6) became operative. This rule provides that in such circumstances "unless the court in an exceptional case and for the avoidance of substantial injustice otherwise orders", the plaintiff is entitled to an order against the defendant for his or her costs in respect of the claim up to and including the day the offer was made. No submissions appear to have been made to the learned judge concerning the consequences of the judgment sum exceeding the offer and her Honour made no mention of this matter in her reasons. It was plainly not something that was considered by her. 41 In Cretazzo v Lombardi (1975) 13 SASR 4 analogous circumstances obtained. The plaintiff sued for personal injuries and liability was not disputed. The plaintiff claimed to suffer from continual headaches and various psychological ailments. The defendant alleged that the plaintiff was a malingerer. The trial judge (like her Honour in the present case) found that the plaintiff was "consciously exaggerating his symptoms to a very large degree, perhaps almost entirely". In consequence the trial judge assessed damages at an amount which was within the jurisdiction of the Local Court. He rejected an argument that the plaintiff should be deprived of his costs because he could have brought the action in the Local Court for the amount he was awarded. He granted costs on a very limited basis to the appellant but ordered him to pay other defined costs, which were substantial, to the respondent. 42 On appeal, Bray CJ (with whom Jacobs and Zelling JJ agreed) referred (at 12) to the inadequate offer made by the defendant pursuant to the then South Australian equivalent of Pt 39A r 25(6). The defendant had made an offer pursuant to the South Australian rule in an amount less than the judgment sum. The learned Chief Justice said in this regard (at 13): "Under the terms of [the relevant rule] if the offer had been more than the award, the plaintiff must still have received his costs up to a date fourteen days after the making of the offer, and the defendant, though he would have got his costs after that date, would have had no right to any costs incurred before it, subject in either case of a finding of special circumstances by the learned judge. Yet the order under appeal contemplates that this appellant/plaintiff will have to pay portion of the defendant/respondent's costs incurred before the making of the offer. It orders him, in short, to pay portion of the costs of the defendant who has made an inadequate offer which he could not have been ordered to pay if the offer had been excessive. That surely is a highly relevant matter…

I think, therefore, that the learned judge was wrong in failing to take the fact and the amount of the offer into account". 43 For those reasons Bray CJ considered that the Full Court should exercise a discretion in regard to the costs order afresh. His Honour considered that "the appellant should suffer some penalty in costs for the groundless and conscious exaggeration of his claim which has been found against him.". He proceeded at 14): "Lest I should be misunderstood, I add that I am not saying that in all cases of this kind [the relevant rule] is to be applied as if it covered them in terms. Nor am I saying that a plaintiff's malingering and exaggerations can never amount to special circumstances within the meaning of the rule, even if it were applicable in terms. All I am saying is that I think the existence and the amount of the offer and a comparison with what would have happened if the offer had equalled or exceeded the amount of the judgment are, in my view, circumstances highly relevant to the exercise of the discretion." 44 I regard the reasoning in Cretazzo v Lombardi (supra) as persuasive. The importance of obtaining a judgment in excess of an offer of compromise was emphasised in Adams v Kennedy & Ors [2001] NSWCA 7 and Lee v Kennedy & Ors [2001] NSWCA 8. I consider that the learned trial judge in the present case should have taken into account the fact that the appellant obtained a judgment more favourable to him than the terms of the offer made by the respondent. In the particular circumstances, this meant that, pursuant to Pt 39A r 25(6), "unless the court in an exceptional case and for the avoidance of substantial injustice otherwise order[ed]", the appellant was entitled to an order against the respondent for his costs in respect of the claim up to an including the day the offer was made. As I have mentioned, this consequence was never considered by the learned judge, no doubt because no submission was made by counsel for either of the parties as to its relevance. In my opinion, however, this omission was so significant that it resulted in a flawed exercise of discretion by her Honour. Accordingly, the discretion falls to be exercised by this Court anew. 45 At the outset in so exercising its discretion, the Court is required, pursuant to Pt 39A r 25(6) of the District Court Rules, to determine whether this is an "exceptional case" and whether, "for the avoidance of substantial injustice", the Court should make an order otherwise than requiring the respondent to pay the appellant his costs in respect of the claim up to an including the day the respondent's offer of compromise was made. 46 Although the issue is a difficult one, I consider that the avoidance of substantial injustice does not require an order to be made depriving the appellant of his costs up to an including the day the respondent's offer of compromise was made. Despite the appellant's dishonesty, I consider that the policy underlying Pt 39A r 25(6), as well as general fairness, requires those costs to be paid by the respondent. I am fortified in this conclusion by Cretazzo v Lombardi (supra). 47 The further question then arises whether, in regard to the appellant's costs to the date of the offer of compromise, this Court should certify, in terms of Pt 39A r 12(1), that it appears to it that there was a sufficient reason for bringing or trying the action in the District Court, notwithstanding that judgment was given in favour of the respondent for an amount which did not exceed the prescribed amount. In my opinion, such a certificate should be given. There was sufficient doubt attendant upon the appellant's claim (even if honestly presented) to warrant it being brought in the District Court, which in effect is a specialist personal injuries court. 48 Finally, in regard to the costs issue, I note that s 45(4) of the Motor Accidents Act provides: "A payment made under this section to or on behalf of a claimant before the claimant obtains judgment for damages against the defendant is, to the extent of it amount, a defence to proceedings by the claimant against the defendant for the damages".

The respondent made payments under the section to the appellant but did not plead or argue that those payments constituted a defence. In the circumstances I do not regard the fact that such payments were made as being presently relevant. 49 I consider that the learned judge's order in regard to costs should be set aside. Making due allowance for all the matters to which I have referred I consider that a fair result would be achieved were the respondent to be ordered to pay the appellant's costs up to and including the first day of the trial, and the appellant ordered to pay the respondent's costs of the rest of the trial. The appellant's costs should not include any item relating to the specialist medical practitioners whose reports were tendered in evidence (as their testimony bore solely on the issues in respect of which the appellant was found to have attempted, deliberately, to deceive the court and the respondent). 50 As regards the costs of the appeal, the respondent was successful on appeal, save in respect of the costs order. The costs orders relating to the appeal should reflect this. 51 Accordingly, I would propose the following orders:

The appeal in respect of the verdict in the sum of $5,210.20 is dismissed.

The appeal in respect of the costs order is upheld and the order made by the trial judge in regard to costs is set aside.

The respondent pay the appellant's costs of the first day of the trial, to be taxed, those costs not to include any item relating to the specialist medical practitioners whose reports were tendered in evidence.

The appellant pay the respondent's costs in respect of the rest of the trial.

The appellant pay 75 per cent of the respondent's costs of the appeal, to be taxed. **********

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