HIS HONOUR: I published my reasons for judgment in the principal proceedings on 27 September 2019; see Coffey v Murrumbidgee Local Area Health District [2019] NSWSC 1265. I dismissed the plaintiff's claim. The defendant now seeks costs on an indemnity basis.
By letter dated 16 July 2015, the defendant's solicitor wrote to the plaintiff's solicitor offering to settle the proceedings in the following relevant terms:
"We enclose by way of service Offer of Compromise.
This offer is made strictly without prejudice but on condition that you are advised that the defendant intends to rely upon this letter to seek costs on an indemnity basis if the question of costs should arise and also on the question of interest. See Messiter v Hutchinson (1987) 10 NSWLR 525 and Calderbank v Calderbank (1975) 3 WLR 586.
The offer remains open for 28 days."
The attached offer was for $100,000. It was not accepted.
In support of its claim for indemnity costs, the defendant made the following submissions.
The defendant has an entitlement to the costs order sought under UCPR,r 42.15A absent the exercise of my discretion to order otherwise: Hillier v Sheather (1995) 36 NSWLR 414. The onus is therefore on the plaintiff to satisfy me that the particular circumstances of the case are sufficient to justify departure from the rule.
In anticipation of the plaintiff's arguments, the defendant contended first that the offer was an offer of a true compromise, not effectively a demand for capitulation, nor merely nominal, particularly in circumstances where there was a live issue on the evidence as to the extent to which the plaintiff's injuries were referable to any breach (assuming a breach were made out). By the time the offer was served, the defendant had served two reports from obstetricians and gynaecologists, Dr Lyneham and Dr Child, and two reports from Associate Professor Nick Evans, a paediatrician and neonatologist.
Secondly, had the offer been accepted, the defendant would have been liable to pay the plaintiff's costs. The proceedings had been on foot since March 2011 and in the ensuing four plus years, each side had served expert evidence and incurred significant costs. The defendant's willingness to bear the plaintiff's costs heightens the element of compromise inherent in the offer.
Thirdly, the limitation defence that I upheld was pleaded in the amended defence filed on 23 February 2012, in excess of three years prior to the offer. The plaintiff's camp was uniquely qualified to assess the merits of that defence.
Fourthly, the competent professional practice defence, being one of the bases on which the plaintiff lost the case, was pleaded in the original defence and further particularised in the amended defence. Moreover, reports and supplementary reports from Dr Lyneham and Dr Child had been served by 16 July 2015 and were accepted by me as establishing the relevant standard pursuant to s 5O of the Civil Liability Act. It is not to the point that later reports from Dr Lyneham and Dr Child were served. Those later reports responded to new contentions introduced by further amendments to the plaintiff's claim: see the further amended statement of claim dated 21 December 2017 and the further expert evidence served by the plaintiff in the form of the reports of Associate Professor Bryce dated 2 and 3 November 2017.
The plaintiff cannot point to any change of substance in the defendant's case that occurred after the offer, still less any change that might have informed the bases upon which the case was lost. For example, it is irrelevant that, after serving the offer, the defendant served expert genetic evidence from Professor Delatycki, expert radiological evidence from Associate Professor Coleman and expert paediatric neurological evidence from Professor Ryan given that those reports, although supportive of the defendant's causation case, did not influence my reasoning.
The plaintiff's submissions in response raised the following contentions.
At the time the offer was made, the plaintiff had served two reports from an obstetrician and gynaecologist, Dr Fleigner, dated 28 June 2011 and 14 February 2012 which supported the plaintiff's position on breach of duty. The plaintiff had also by that time served evidence in support of his position and the defendant had served evidence in response. My ultimate findings concerning s 5O of the Civil Liability Act occurred after the service of these reports, when the relevant experts participated in joint conferences, produced joint reports, and gave evidence at the hearing. Furthermore, I later considered the lay evidence contained in the statements and given by Drs Bunting, Follett and Currie at the hearing.
As at the time of the offer, the defendant was in a superior position to the plaintiff because not only did it have the reports of Drs Lyneham, Child and Evans, but it had also identified, located and carried out investigations to inform itself as to breach of duty and had commenced the process of obtaining statements from those doctors involved in Ms Coffey's care. The defendant knew at the time the offer was made what its lay evidence in respect to breach of duty was, but the plaintiff did not. The defendant did not complete service of the statements of the above-named witnesses until after the offer had expired. In particular, as at the date of the offer, the defendant had obtained a signed statement from Dr Follett dated 10 June 2015, but had not served it.
The following evidence had also not by that time been served by the defendant:
1. statement of Dr Bunting dated 11 August 2015 served on 12 August 2015;
2. statement of Dr Bunting dated 10 December 2015 served on 11 December 2015;
3. statement of Dr Follett dated 10 June 2015 served on 24 July 2015;
4. statement of Dr Follett dated 26 November 2015 served on 11 December 2015;
5. statement of Dr Currie dated 15 June 2015 served on 24 July 2015;
6. statement of Dr Currie dated 24 November 2015 served on 11 December 2015;
7. statement of Dr Stewart dated 10 December 2015 served 11 December 2015; and
8. statement of Andre Santiago dated 25 November 2015 served on 11 December 2015.
The plaintiff maintained that it is erroneous to imply, as the defendant seems to do in its submissions, that the reports of Drs Lyneham, Child and Evans were accepted by me in isolation as establishing the relevant standard per s 5O of the Civil Liability Act. The finding at [166] of the judgment is said clearly to follow a detailed analysis of the available expert and lay evidence and the submissions made by both parties at the conclusion of the hearing. The evidence considered by me included the joint expert reports and the lay evidence of Drs Bunting, Follett and Currie. This was evidence which was not available to the plaintiff at the time the offer was made: see analysis at [165] - [177] of my judgment.
Although the defendant had pleaded a limitation defence in the amended defence filed 23 February 2012, it took no steps to have that defence determined in advance of any final hearing. Furthermore, against the defendant's submission that "The plaintiff's camp was uniquely qualified to assess the merits of that defence", the plaintiff's position is that determination of the limitation defence occurred only after I had heard and considered the evidence of Ms Coffey and Mr Potter at the final hearing, in addition to the documents produced in answer to various Notices to Produce issued by the defendant in the course of the final hearing and at no time prior to it. Only after hearing and considering the evidence did I proceed to consider and determine the application of the Limitation Act 1969: see [182]-[191] of my judgment.
In summary, the plaintiff submitted that the offer did not at the time it was made represent a genuine offer of compromise. There was then only limited evidence available to the plaintiff that was contrary to her liability position on the issue of breach of duty. The limitation defence as pleaded was untested. There was no evidence available to warrant a significant compromise by the plaintiff on quantum. It was therefore not unreasonable for the plaintiff not to accept the offer.
The plaintiff submitted that I should otherwise order.
[2]
Consideration
The substantial burden of the plaintiff's submissions is that the offer of compromise was made too soon, in the sense that the evidence was not then complete on either side, so that it was in effect unreasonable for the defendant to expect or require the plaintiff on pain of a possible indemnity costs order to make a fundamental decision about the strength of her case with less than full information. I think that is correct.
The proceedings involved the determination of not uncomplicated medical issues across several specialties arising out of the birth of Ms Coffey's son at the Wagga Wagga Base Hospital. There was an associated factual dispute about what actually occurred in the period of two weeks or so leading up to the delivery and in the immediate post-natal period, and the need to assess the role if any played by an overlying congenital condition affecting the child and his evident disabilities. As my reasons for judgment in all likelihood reveal, the determination of these matters was not straightforward even when all of the available evidence was to hand.
The defendant's offer of compromise was made at a relatively early stage of the proceedings, at least having regard to the expert medical evidence that had been gathered, if not in terms of the time the proceedings had been on foot. I do not by that comment intend any criticism of the defendant in attempting to bring the proceedings to a conclusion at that time. I am however sympathetic to the suggestion that even though the plaintiff had commenced her proceedings with an understanding and expectation that she had reasonable prospects of success, the vicissitudes of litigation are such that certainty at any stage in the course of such proceedings is a rare commodity. It is perhaps unremarkable that the proceedings did not later settle following mediation, given the diametrically opposed views about the likely outcome.
In my opinion it was not unreasonable for the plaintiff, at the time that the offer was made, not to accept it. It would not in my view have been possible or reasonable to expect that the plaintiff could have given any consideration to the defendant's offer at the time it was made that did not involve an unacceptable degree of speculation. That is to be compared with a decision to accept or reject such an offer with the benefit of an available and confident appreciation of the prospects of success.
I remain of that view, notwithstanding the defendant's success on the limitation defence. As the authorities to which the parties drew my attention clearly reveal, there are significant difficulties in the assessment and application of the relevant provisions of the Act. Although it cannot be suggested for any number of reasons that the defendant had any obligation to apply to have this issue decided as a preliminary point, it remained in play until the final hearing. I take the plaintiff's submissions in this context to emphasise that the determination of whether or not her proceedings were time barred was not so one-sided that it had invited an early application by the defendant for final relief.
It seems to me in all of the circumstances that the plaintiff should be ordered to pay the defendant's costs of the proceedings on the ordinary basis.
[3]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 18 February 2020
Parties
Applicant/Plaintiff:
Coffey
Respondent/Defendant:
Murrumbidgee Local Health District formerly known as Greater Murray Area Health Service