SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

[2016] ACTSC 339

DAMAGES - Personal Injury - Motor vehicle accident - Whether judgment should be amended to allow interest on Griffiths v Kerkemeyer damages and past out-of-pocket expenses - Meaning of "liabilities incurred that do not carry interest as against the person claiming interest" in Court Procedures Rules 2006 (ACT), r 1619(2)(a) - Griffiths v Kerkemeyer damages not liabilities for the purposes of r 1619(2)(a) - Rate of interest where Griffiths v Kerkemeyer damages assessed by reference to current day rates - Meaning of "special circumstances" in r 1619(7) - Whether special circumstances established by reason of change in expert opinion - Whether failure to accept Calderbank offer unreasonable - Whether order should be made varying default costs consequences under r 1725 of recovering less than $175,000 in proceedings transferred from Magistrates Court to Supreme Court

Court Procedures Rules 2006 (ACT), rr 1009, 1619, 1725(3)

Evidence Act 2011 (ACT), s 91

Road Transport (Third Party Insurance) Act 2008 (ACT), s 156A

Statute Law (Miscellaneous Amendments) Act 1981 (Cth)

Supreme Court Act 1933 (ACT), s 69(3)(a)

Blundell v Musgrave [1956] HCA 66; (1956) 96 CLR 73

Cooper v McLinden [2011] ACTSC 206

Cressy v Miloriad [2016] ACTSC 303

Eastman v Director of Public Prosecutions (No 3) [2014] ACTSCFC 3

Griffiths v Kerkemeyer [1977] HCA 45; (1977) 139 CLR 161

Grincelis v House [2000] HCA 42; (2000) 201 CLR 321

Jess v Scott (1986) 12 FCR 187

JS Hill & Associates Ltd v Dawn [2001] ACTSC 28

MBP (SA) Pty Ltd v Gogic [1991] HCA 3; (1991) 171 CLR 657

Minister for Community Services and Health v Chee Keong Thoo [1988] FCA 54; (1988) 78 ALR 307

Quirk v Bawden (1992) 112 ACTR 1; (1992) 111 FLR 115

Re Kavanagh (1995) 125 FLR 138

Schollum v Australian Capital Territory [2012] ACTSC 58

Stewart v Tsueneaki [2012] ACTSC 141

Wattam v Jorgensen [2012] ACTSC 111

Report of the Statute Law Revision Committee on Interest on Judgments (Government Printer, Melbourne, 1961)

1. These proceedings were heard on 4, 5, 6 and 10 October 2016. Judgment was given on 12 October 2016: Cressy v Miloriad [2016] ACTSC 303. The order of the Court was that judgment be entered for the plaintiff against the second defendant in the sum of $169,779.

2. I gave the parties the opportunity to be further heard in relation to costs and this opportunity has been taken up.

3. The defendants had made a mandatory final offer under the Road Transport (Third Party Insurance) Act 2008 (ACT) (RTTPI Act) as well as a Calderbank offer in the sum of $170,000. The proximity of the judgment amount to the amount of the settlement offers has provoked a number of different applications by both the plaintiff and defendants.

4. By application in proceeding dated 16 November 2016 the plaintiff has sought that the judgment amount be varied to allow for interest on past out-of-pocket expenses and past Griffiths v Kerkemeyer damages.

5. The grounds for that application are as follows:

1. In the course of progress in the plaintiff's claim for damages, and in filing documents with this honourable Court, interest was claimed on all relevant heads of damage for the plaintiff.

2. During the course of the hearing on 10 October 2016 in proceedings numbered SC 375 of 2015, plaintiff's counsel inadvertently omitted to claim interest for past out-of-pocket expenses paid by the plaintiff and past Griffiths v Kerkemeyer damages.

3. It is in the interests of justice that the plaintiff recover the full damages to which she is entitled as a result of the negligence of the first defendant, including interest.

6. By application in proceedings dated 18 November 2016 the defendants have applied for a variation of the judgment amount so as to exclude any allowance for interest on the past component of general damages and past loss of income after 22 September 2015.

1. In the course of proceedings on 22 September 2015, the defendants made a Mandatory Final Offer of $170,000 inclusive of payments made, plus costs in accordance with section 141 of the Road Transport (Third-Party Insurance) Act 2008 (ACT).

2. This offer was not accepted by the plaintiff and on 12 October 2016, judgment was entered for the plaintiff in the sum of $169,779.

3. Pursuant to rule 1619 (7) of the Court Procedures Rules 2006 (CPR), the court must not order the payment of interest in relation to a period after the defendant offers an appropriate settlement amount to the plaintiff.

4. The amount offered by the defendants in settlement of the proceeding and the amount for which judgment was entered in the proceeding does not exceed the amount offered in settlement by more than 10%. As such, the amount offered by the defendants on 22 September 2015 is an appropriate settlement amount under Rule 1619 (8).

5. At the time judgment was pronounced this Honourable Court was not aware of the offers of settlement made by the defendants and did not comply with Court Procedures Rule 1619 (7) in calculating the plaintiff's damages.

6. This is a matter appropriate to be dealt with pursuant to rule 6906.

8. At the hearing of the application both parties consented to the reopening of the judgment so as to permit the amendment of the judgment in relation to interest. This avoided the necessity to determine whether, and the extent to which, the judgment should be amended pursuant to the slip rule as a result of the failure by the plaintiff's counsel at trial to identify in his schedule of damages claims for interest in relation to past out-of-pocket expenses and Griffiths v Kerkemeyer damages. That omission occurred in circumstances where orders of the Court required the plaintiff to do so or be taken to have abandoned that aspect of her claim.

9. On 13 June 2012 a "Health Recovery Consultant" employed by the second defendant made an offer of settlement to the plaintiff in the sum of $28,285.19 plus costs. This offer was rejected by letter dated 11 July 2012. The plaintiff's solicitors pointed out that she continued to require ongoing treatment and was not in a position to engage in any settlement negotiations.

10. On 9 January 2013 the "Health Recovery Consultant" made another settlement offer in the same amount for reasons which were articulated in some detail in the letter. This offer was also rejected on the same basis as the previous offer.

11. The parties participated in a compulsory conference pursuant to pt 4.7 of the RTTPI Act on 22 September 2015. The claim was not resolved. The parties then exchanged mandatory final offers under pt 8 of that Act on 22 September 2015. The plaintiff offered to settle for $215,000 being $120,000 for pain and suffering and $95,000 for damages other than pain and suffering.

12. The defendants offered to settle for $170,000 being $60,000 for pain and suffering and $110,000 for the balance of the claim.

13. On 22 October 2015 the defendants made a Calderbank offer of settlement to settle proceedings for $170,000 inclusive of payments made plus costs.

14. On 26 October 2015 the proceedings were removed from the Magistrates Court to the Supreme Court. This resulted from the plaintiff's application dated 7 October 2015.

15. On 10 November 2015 the plaintiff made an offer of compromise under the Court Procedures Rules 2006 (ACT) (CPR) to settle proceedings for $200,000 plus costs in accordance with r 1009(2). At this point the evidence of the plaintiff's solicitor, Mr Treloar, was that he had estimated the damages recoverable by the plaintiff on the basis of the material available at the time including the opinions expressed by Prof Paul Smith in his report of 3 March 2015 numbered paragraph 4. Question 4 which the professor had been asked was as follows:

Whether in your opinion the injuries sustained by our client in the motor vehicle accident materially caused or contributed to the need for hip surgery.

16. In answer to that question Prof Smith's report provided:

Ms Cressy suffered her injuries in a motor vehicle accident on 11 August 2011. Radiographs performed on 23 November 2011 revealed established right hip osteoarthritis. Prior to the motor vehicle accident Ms Cressy had no history of any hip problems and described no symptoms referable to the hip prior to her accident.

Based on the radiographs available Ms Cressy most likely had gradually developed osteoarthritic change over the course of her life, however this was rendered symptomatic by the vehicle accident. Based on the radiographs it would appear that Ms Cressy would have required hip replacement at some point in her life, however may have remained asymptomatic for a long period if the vehicle accident had not occurred.

17. The parties agreed that as at this date the reports of Dr Stubbs, Dr Pascall, Dr Gorman and Dr English, each of which had been served by the defendants, were also available to the plaintiff.

18. The plaintiff filed her statement of particulars on 29 April 2016.

19. The hearing took place on 4, 5, 6 and 10 October 2016. Mr Treloar was not in court on the day when Mr Muller made his oral submissions and had not reviewed his written submissions prior to them being provided to the Court.

20. The issues that arise for determination are as follows:

(a) Should the judgment amount be varied to take account of interest on Griffiths v Kerkemeyer damages and out-of-pocket expenses?

(b) Should the judgment amount be varied so as to exclude interest pursuant to r 1619(7) of the CPR?

(c) Should the costs order be varied by reason of the defendants' mandatory final offer or Calderbank offer?

(d) Should an order be made pursuant to r 1725(3) of the CPR?

Should the judgment amount be varied so as to add amounts for interest not claimed in the plaintiff's damages schedule?

21. It was uncontroversial that interest should be awarded on past out-of-pocket expenses. Depending upon which date interest is calculated up until, the relevant amounts were as follows:

(a) calculated up to 22 September 2015: $327.69

(b) calculated up to 12 October 2016: $440.62.

22. I address below the appropriate date up to which interest should be awarded.

23. In relation to Griffiths v Kerkemeyer damages, the decision in Grincelis v House [2000] HCA 42; (2000) 201 CLR 321 (Grincelis) is generally taken to support the award of interest upon such damages.

24. In the present case the defendants made three submissions in relation to Griffiths v Kerkemeyer damages.

25. First the defendants submitted that no interest should be awarded because those damages were within the scope of r 1619(2)(a) of the CPR, namely, "compensation in relation to liabilities incurred that do not carry interest as against the person claiming interest or claiming a lump sum instead of interest". Rule 1619(2) precludes the award of interest on such amounts.

26. The defendants contended that this issue was left open by the decision in Grincelis because in that case the Court said (at [8]):

Neither party contended that sub-section (3) [a provision in similar terms to r 1619(2) (a) of the CPR] applied to the present case. It is therefore, unnecessary to consider what is meant by "compensation in respect of liabilities incurred which do not carry interest as against the person claiming interest".

27. The second argument was that no interest should be awarded where the Griffiths v Kerkemeyer damages were calculated by reference to current dollar rates rather than rates which had been applicable at the time the gratuitous services were provided. The substance of the argument was that in circumstances where the award of Griffiths v Kerkemeyer damages was made in current day dollars it was inappropriate to make any award of interest because the use of current day dollars took into account the factors which would be addressed by an award of interest.

28. The third argument was that the defendants should be permitted to depart from the rate of $35 per hour which had been agreed during the course of the trial and that rates in the range of $20-$22 per hour should be substituted if an award of interest was then to be made. The rates of $20-$22 an hour were derived from decisions of this Court said to disclose the rate which would have been applied in the period 2011-2012. It was only if these rates were adopted that any award of interest should be permitted.

29. In Grincelis the plaintiff had been awarded very substantial damages which included damages for gratuitous services provided by his parents. The issue between the parties was whether and, if so, at what rate interest should be awarded. In this Court Hogan M had not awarded interest on those damages. A cross-appeal to the Full Court of the Supreme Court challenging the failure to award interest was, by majority, dismissed. From there an appeal was taken to a five judge bench of the Full Court of the Federal Court. In relation to interest the Court held that interest should have been allowed on damages awarded in respect of past gratuitous services. The majority concluded that interest should be calculated in the manner described in MBP (SA) Pty Ltd v Gogic [1991] HCA 3; (1991) 171 CLR 657 (Gogic). Mr Grincelis appealed to the High Court in relation to the calculation of interest.

30. In Grincelis the gratuitous care had been provided over a substantial period between the accident and the trial and had been calculated at the rates which were applicable from time to time. In other words, damages were calculated using the rates applicable at the time when the services were provided. The majority of the High Court held that in those circumstances it was appropriate to award interest at the rates of pre-judgment interest identified in the Court's practice direction (the equivalent of what is now sch 2 to the CPR). In adopting that approach the majority judges determined that it was not appropriate to adopt the Gogic rate of 4%. The judgment explains that the Gogic rate was adopted in relation to non-economic loss in circumstances where that non-economic loss was calculated in current dollars. Interest on that amount was, therefore not required to reflect a component to compensate the plaintiff for the decline in the real value of money by reason of inflation. Instead the only component that was necessary to award was an amount for a loss of the use of the money in the relevant period.

31. In the light of this summary of the effect of the majority decision in Grincelis, it is clear that the awarding of Griffiths v Kerkemeyer damages in current dollars only takes account of the loss of value of money due to inflation and does not incorporate the other component which an award of interest may cover, namely, the loss of use of the money. Having regard to the reasons in Grincelis it is, in my view, clear that (a) it is appropriate to award interest and (b) where the rates for the gratuitous services have been calculated by reference to rates applicable at the date of the trial then the amount of interest should be that necessary to take account of the loss of use of the money.

32. I will deal with each of the arguments made by the defendants individually.

33. The defendants are correct to contend that the application of s 69(3)(a) of the Supreme Court Act 1933 (ACT), and the equivalent provision in r 1619(2)(a) of the CPR, is an issue that was not determined by the High Court because no party argued for the application of that provision in that case. No decision of this Court has addressed the application of s 69(3)(a) or r 1619(2)(a). Miles CJ noted the unresolved issue as to the meaning of s 69(3) in JS Hill & Associates Ltd v Dawn [2001] ACTSC 28 at [9]. Thus the position is that there is no authority which expressly determines the question adversely to the defendants, but any decision of an ACT court in which interest was awarded on past Griffiths v Kerkemeyer damages would necessarily be inconsistent with the argument put by the defendants.

(a) The question turns upon the meaning of "liabilities incurred that do not carry interest as against the person claiming interest".

(b) The submissions of the parties did not draw attention to any previous authority on this issue or descend to an examination of the legislative history of the current rules or its predecessor.

(c) The provision in s 69(3) was originally inserted into what is now the Supreme Court Act 1933 by the Statute Law (Miscellaneous Amendments) Act 1981 (Cth). The explanatory memorandum sheds no light on the present issue.

(d) The terms of the section appear to have their origins in the recommendation of the Victorian Statute Law Revision Committee in its Report of the Statute Law Revision Committee on Interest on Judgments (Government Printer, Melbourne, 1961). As the terms of the report make clear, the reforms proposed by the Committee were occurring at a point where the award of interest up to judgment remained a source of some controversy. For example interest on damage for past pain and suffering was a source of contention: see the report at [11]. Plainly enough, at the point when the reforms proposed in the report were formulated, Griffiths v Kerkemeyer had not been decided. Further, as elucidated by the history of cases which ultimately led to the decision (traced in the judgment of Stephen J in Griffiths v Kerkemeyer [1977] HCA 45; (1977) 139 CLR 161 at 171ff), the law at the time of the report was as stated in Blundell v Musgrave [1956] HCA 66; (1956) 96 CLR 73 at 79, 92 and only tentative steps (such as the decision of Taylor J in Wilson v McLeay [1961] HCA 56; (1961) 106 CLR 523) had been taken in a direction which ultimately led to it being departed from. Thus there can be no doubt that the provision was not targeted at damages in the nature of Griffiths v Kerkemeyer damages because they were not a recognised category of damages at the time when it was first proposed.

(e) I do not accept the plaintiff's submission that the relevant liability is that of the defendants to the plaintiff. That appears to be inconsistent with the reference to liabilities that "carry interest as against the person claiming interest". Those words have the effect that the liabilities which are referred to are those that "do not carry interest against [the plaintiff]".

(f) The point of the provision in the rule appears to be that if the plaintiff is recovering for a liability incurred to some other person which has not been discharged and which does not carry interest then the plaintiff is not entitled to interest under the rule, because to do so would have the effect of overcompensating the plaintiff if the plaintiff was not in turn required to pay interest on the unpaid amount to the third-party.

(g) Griffiths v Kerkemeyer damages are not "liabilities" within the meaning of the section because it is the nature of such damages that a plaintiff who recovers those damages is not liable to the person who provided the services and no trust over damages recovered is imposed: see Griffiths v Kerkemeyer at 177, 193-194.

(h) Therefore r 1619(2)(a) does not prevent the awarding of interest in relation to Griffiths v Kerkemeyer damages.

35. Once the appropriateness of awarding Griffiths v Kerkemeyer damages is accepted, it makes conceptual sense that interest be awarded on those amounts. That is because if liability was accepted and damages paid by a defendant as they accrued then there would be no delay in the receipt of Griffiths v Kerkemeyer damages. Because of the delay between the provision of the gratuitous services and the judgment, there is a period during which the party entitled has been kept out of his or her money. Those circumstances are sufficient to indicate that an award of interest upon those damages is appropriate.

36. I do not accept the defendant second's argument, namely, that the award of damages in current day dollars avoids the need for any award of interest. Having regard to the decision in Grincelis and consistently with the decision in Gogic, awarding damages in current day dollars does not take account of all issues which may give rise to an award of interest. The fact that the rate for Griffiths v Kerkemeyer damages may be set in current day dollars may have incorporated within it factors other than inflation. It may, for example, incorporate within it changes in the market for the provision of domestic or care services which are not simply related to the change in the value of money. In that way Griffiths v Kerkemeyer damages are distinct from the general damages considered in Gogic where it was clearer that the current dollar award was limited to the change in the value of money. However, in circumstances where the parties had agreed on the rate for Griffiths v Kerkemeyer damages and there was no evidence of any non-inflationary factor affecting the rate for those services, it is appropriate to proceed on the basis equivalent to that in Gogic. The Gogic approach involved adopting the "somewhat arbitrary" 4% figure: Gogic at 666. I consider that it is the appropriate "somewhat arbitrary" rate to apply in order to capture the value of the loss of use of money between the date when the services were provided and judgment.

37. So far as the defendants sought to depart from the agreement between the parties as to the rate which should be applied to Griffiths v Kerkemeyer damages, I do not consider that it is open to the defendants to now do so. There was no agreement to that departure. It is clear that had there been no agreement at the trial then the rate to be applied would have been the subject of evidence and the rate of $35 per hour is clearly not the highest end of the range of which the plaintiff might have led evidence. Having adopted that position at trial it is not open to the defendants to unilaterally depart from it.

38. In any event, the method by which the defendants sought to establish an alternative rate, namely by reference to awards in judgments of this Court made in 2011 and 2012, is not a permissible method of proof. The decisions relied upon reflect rates agreed between the parties in those cases (Cooper v McLinden [2011] ACTSC 206 at [58]) or rates adopted without any particular reference to agreement or evidence on the point (Schollum v Australian Capital Territory [2012] ACTSC 58 at [29]; Wattam v Jorgensen [2012] ACTSC 111 at [66]; Stewart v Tsueneaki [2012] ACTSC 141 at [134]). To the extent that the decisions reflect findings of fact, reliance upon them to establish a rate is clearly precluded by s 91 of the Evidence Act 2011 (ACT) which provides that "evidence of the decision, or of a finding of fact, in an Australian or overseas proceeding is not admissible to prove the existence of a fact that was in issue in that proceeding." The commercial rate at which the relevant services could have been provided is a question of fact, not a question of precedent and hence is caught by s 91. To the extent that the decisions referred to do not reflect findings of fact on matters in issue in those proceedings, then the basis that they could be relied upon to establish a rate in the present case was not explained.

39. As a result, the plaintiff is entitled to interest on Griffiths v Kerkemeyer damages which, depending upon which date interest is calculated up until, is as follows:

(a) calculated up to 22 September 2015: $1603.15

(b) calculated up to 12 October 2016: $2072.49.

Should the judgment amount be varied so as to exclude interest pursuant to rule 1619(7)?

1619 Interest up to judgment

(1) In a proceeding for the recovery of money, including a debt or damages or the value of goods, the court may -

(a) order that interest be included in the amount for which judgment is given -

(i) at the rate it considers appropriate; and

(ii) on all or any part of the money; and

(iii) for all or any part of the period beginning on the day the cause of action arose and ending on the day before the day judgment is entered; or

(b) order that a lump sum be included in the amount for which judgment is given instead of interest under paragraph (a).

...

(5) For subrule (1) (a), the court may set the rate of interest -

(a) in accordance with the rate stated in the claim for relief; or

(b) having regard to the rate of interest applying, from time to time, under schedule 2, part 2.1 (Interest up to judgment).

...

(7) In a proceeding for damages, the court must not order the payment of interest under this rule in relation to a period after the defendant offers (or first offers) an appropriate settlement amount to the plaintiff unless the special circumstances of the case justify the making of the order.

(8) For subrule (7), if an amount is offered in settlement of the proceeding and the amount for which judgment is entered in the proceeding (including interest until the day of the offer) does not exceed the amount offered in settlement by more than 10%, the amount offered is an appropriate settlement amount.

41. The relevant offer for the purposes of the application of this rule is the mandatory final offer made on 22 September 2015. That was an offer for $170,000.

42. For the purposes of sub-rule (7), the relevant comparison is therefore between:

(a) the offer of $170,000; and

(b) the amount of damages awarded, but with any interest component calculated only up to 22 September 2015.

43. For the purposes of comparison, if interest is only to be calculated up until the date of the offer it is necessary to exclude interest accruing after the date of the offer in relation to the various components of damages in relation to which interest was or will now be awarded. Those components are general damages, past economic loss, past out-of-pocket expenses and Griffiths v Kerkemeyer damages. In relation to past out-of-pocket expenses and Griffiths v Kerkemeyer damages this can be done by including the interest figures identified at [21](a) and [39](a) above. The calculation of interest in relation to general damages and past economic loss is more complicated.

44. In relation to general damages the amount of interest allowed was $7,224: principal judgment at [82]. This was based on general damages of $70,000 being suffered over the period prior to trial (5.16 years). If, instead, interest is to be calculated only up until 22 September 2015 then the relevant period is 4.11 years. Consistently with the earlier basis for calculation, if this is assumed to have occurred uniformly over the period prior to trial then the relevant amount of general damages upon which interest should be calculated would be $55,756 (4.11/5.16 times $70,000). However, recognising the imprecision of the process and that general damages were likely to be suffered somewhat more in the earlier part of the period, it is appropriate to calculate interest up to 22 September 2015 on the basis of an amount of $60,000. On this basis the relevant amount of interest would be $4,932 ($60,000 x 0.02 × 4.11). Therefore, for the purposes of comparison the difference between this figure and the amount of interest actually awarded ($7,224-$4,932 = $2,292) needs to be deducted from the judgment amount.

45. In relation to past economic loss, the amount of interest identified at [95] in the principal judgment was $2,168. The damages awarded was an amount of $20,906 which represented the value of the loss of chance of the plaintiff obtaining a permanent EL1 position. Had the matter been resolved as at 22 September 2015 then, for the purposes of calculation of interest, the relevant period would have been that from 11 April 2013 (the date when the plaintiff ceased acting in an EL1 position and returned to her substantive APS6 position) until 22 September 2015. That is a period of 128 weeks. Adopting the same methodology as adopted at paragraphs [93] and [94] of the principal judgment, the relevant amount for the purposes of calculating interest would be $16,218 (128 weeks x $181 per week x 70%). Interest arising in relation to that amount at CPR rates up until 22 September 2015 would be $1,302. Therefore for the purposes of comparison the difference between this figure and the amount of interest actually awarded ($2,168 - $1,302 = $866) needs to be deducted from the amount of the judgment ordered to be entered.

46. The adjustments that need to be made to the figure referred to in the principal judgment are therefore summarised as follows:

(a) principal judgment amount $169,779

(b) plus interest on out-of-pocket expenses $328

(c) plus interest on Griffiths v Kerkemeyer $1,603

(d) less adjustment to interest on general damages $2,292

(e) less adjustment to interest on past economic loss $866

(f) damages and interest up to 22 September 2015 $168,552.

47. Given that this amount is less than the amount which was offered by the defendants it clearly does not exceed by more than 10% the amount that was offered for the purposes of r 1619(8) and hence an "appropriate settlement amount" for the purposes of r 1619(7). Therefore the position is that "the court must not order the payment of interest ... in relation to a period after" the defendants' offer "unless the special circumstances of the case justify the making of the order".

48. The plaintiff's submission on this point was that there were special circumstances that arose because of the contents of the plaintiff's treating orthopaedic surgeon, Prof Smith. At trial one of the principal variables that affected the assessment of damages for future economic loss was how long, in the absence of the accident, the plaintiff's right hip would have remained asymptomatic and, in the absence of the accident, whether the plaintiff would have been required to undergo a right hip replacement at the same or a later date than she in fact did. The evidence on this point is summarised and my conclusions expressed in paragraphs [41] - [69] of the principal judgment. The conclusion that I reached is expressed in paragraph [68] of the reasons as follows:

68. In those circumstances it is only possible to assess the chance that the plaintiff might have been free from significant symptoms in a reasonably imprecise way. There was certainly a chance that she would have remained asymptomatic for a year beyond the date of injury. Following a period during which she was asymptomatic she would have suffered symptoms similar to those that she in fact suffered following her hip being rendered symptomatic. The outer bounds of the period during which it could be said with a reasonable degree of certainty that a hip operation would have been required in any event is five years from the date of the accident, that is, about the time of the hearing.

49. A similar phrase, 'special reasons' has been interpreted in Jess v Scott (1986) 12 FCR 187 at 195 as involving "an elastic test, suitable for application across a range of situations ...". The Court went on to say that "[i]t is an expression describing a flexible discretionary power, but one requiring a case to be made upon grounds sufficient to justify a departure, in the particular circumstances, from the ordinary rule ...".: Jess at 195; see also Eastman v Director of Public Prosecutions (No 3) [2014] ACTSCFC 3 at [4]. As to "special circumstances", Burchett J said in Minister for Community Services and Health v Chee Keong Thoo [1988] FCA 54; (1988) 78 ALR 307 at 323:

Examination of the numerous instances of the use of the expression "special circumstances", in acts and regulations, contained in the fourth edition of Stroud's Judicial Dictionary suggests that, though occasionally used in a neutral sense (eg to express grounds for a change of venue), it is almost invariably used to express grounds of excuse, leniency, allowance or relaxation of some requirement.

This passage was referred to with approval by Higgins J in Re Kavanagh (1995) 125 FLR 138 at 145. Therefore, in my view, the plaintiff must establish that the circumstances were sufficiently out of the ordinary to warrant a departure from the default rule.

50. The plaintiff emphasised the difference between the statement of Prof Smith in paragraph 4 of his report with the oral evidence that he gave at the hearing. The evidence is summarised at [42] - [45] of the principal judgment. It is notable that it was only in re-examination that he was asked about whether there were any studies which provided an empirical basis for establishing the timeframe between the radiological presence of advanced osteoarthritic change and the need for a hip replacement. It was at that point which he gave the significant evidence about the empirical material in the study of Dr Tonnis.

51. There are two points to note about the state of the evidence. First, in so far as the plaintiff relied upon the evidence of Prof Smith, the terms of the report were neither definitive nor precise. The references to "at some point in her life", "may have remained asymptomatic" and "a long period" give rise to considerable uncertainty as to the period which he is contemplating or the level of possibility described by the use of the word "may". No follow-up question was asked so as to clarify his actual opinion. It was only when asked in re-examination that he disclosed an empirical basis for his opinion which tied it to specific periods and levels of probability. Second, the evidence in the report of Dr Stubbs emphasised by the plaintiff was his statement that the hip pain was "because there is osteoarthritis of the hip not related to the motor vehicle accident". The plaintiff characterised this opinion as at the "extreme" end of the spectrum. However, Dr Stubbs's report also said "[t]he hip osteoarthritis has now become symptomatic and it is impossible to say when this would have occurred if she had not been involved in the motor vehicle accident but it is certainly of long-standing and is not a result of the motor vehicle accident." He expressed surprise that the hip was not already symptomatic having regard to its condition. It must have been clear to the plaintiff and her lawyers that there was, on the evidence available at that time, likely to be a substantial contest over the likely period before the inevitable hip replacement had to occur. It was not a case where the evidence available to the plaintiff at that time was all one way. The other doctors engaged by the defendants whose reports had been served (Dr Pascall, Dr Gorman and Dr English) each addressed the issue of the condition of the plaintiff's hip in a manner which indicated that there would be a significant contest over the opinion of Prof Smith if the imprecise words used in his report dated 3 March 2015 were interpreted in the manner most favourable to the plaintiff's case: see Exhibit 4 at 27, 43, 44, 65 and 66.

52. I do not accept the plaintiff's submission that any refinement of the position articulated by Prof Smith in his report of 3 March 2015 was such as to amount to special circumstances for the purposes of the rule. Rather, it appears to be within the scope of the evidentiary imprecision and uncertainty that is very common in a personal injury case such as this. It was a "usual" rather than "unusual" position for a plaintiff to be in. For these reasons I do not consider that special circumstances that would justify a different order have been established and as a consequence interest can only be awarded up until the date of the defendant's offer, namely 22 September 2015. Having regard to adjustments in relation to interest, summarised at [46] above, the judgment that must be entered is $168,552.

Should the costs order be varied by reason of the defendants' mandatory final offer or Calderbank offer?

53. By the time of argument on the costs application the defendants accepted that s 156A of the RTTPI Act did not apply in relation to these proceedings. As a consequence, the parties agreed that the Act:

(a) did not mandate any qualification of a plaintiff's entitlement to costs in a case such as the present; and

(b) did not put the plaintiff on notice that a failure to accept a mandatory final offer may provide a basis for departing from the usual rule as to costs.

54. It is not necessary to express any view on the operation of s 156A other than to note that, at the very least, it would put parties on notice of the possibility of costs consequences flowing from a failure to accept an offer.

55. It is probably because of the absence of any statutory effect given to a mandatory final offer that the defendants followed their mandatory final offer of 22 September 2015 with a Calderbank offer in substantially the same terms on 27 October 2015. Notwithstanding that the proceedings were commenced on 22 August 2014 and offers of compromise became available with amendments to the CPR commencing 1 January 2015, the defendants did not make any offer of compromise.

56. Having regard to my conclusion above that r 1619(7) precludes the awarding of interest after 22 September 2015, the amended amount of the judgment is $168,552 which is less than the amount offered in the Calderbank offer dated 27 October 2015.

57. In my view, the offer of 27 October 2015 was in a proper form and clearly involved a genuine compromise of the proceedings. In those circumstances it is necessary to consider, consistently with the decision in Quirk v Bawden (1992) 112 ACTR 1; (1992) 111 FLR 115, whether the rejection of the offer by the plaintiff was unreasonable. That contrasts with the position that would have existed if an offer of compromise had been made, because in such a case the offering party would not have been required to establish an unreasonable failure to accept the offer: r 1011(2).

58. In my view, the defendants have not establish that the plaintiff's conduct in not accepting the offer of 27 October 2015 was unreasonable. While the offer of settlement was clearly, both at the time and in the light of the judgment, a reasonable one, that is not sufficient to establish that the plaintiff's failure to accept the offer was unreasonable. On the state of the evidence at that point the plaintiff had a reasonable basis for contending for a substantially greater award of damages. It is clear having regard to the offer of settlement which she made that the plaintiff and her advisers had properly considered settlement and were not unwilling to compromise her claim. It is relevant to note that she will only recover a small amount less than the amount which was offered and, as the various issues addressed in the principal judgment and the detailed exercise as to interest that is illustrated in these reasons demonstrates, very minor differences in various components of the award of damages have made the difference between exceeding or failing to exceed the amount offered in the Calderbank offer.

59. Rule 1725 applies to proceedings in the Supreme Court if the Magistrates Court would have had jurisdiction to hear and decide the proceedings and the amount recovered is less than $175,000. If the amount recovered is between $100,000 and $175,000 then the default position is that the plaintiff is only entitled to recover 75% of the costs and disbursements that the plaintiff would otherwise have been entitled to recover: r 1725(2)(d). The plaintiff is also only entitled to recover court fees at the Magistrates Court rate: r 1725(2)(a). However, the Court may order that the plaintiff is entitled to a different amount for the costs and disbursements including the amount of any court fee: r 1725(3).

60. This is not a case where a party has wrongly commenced proceedings in the Supreme Court. Rather it appears to be a case where a party has, acting upon advice, sought to have a proceeding moved from the Magistrates Court to the Supreme Court. Ultimately the judgment obtained was within the jurisdiction of the Magistrates Court and just below the threshold for the application of the rule in r 1725 of the CPR.

61. At the trial the schedule of damages provided by the plaintiff's counsel would have involved an award of damages of approximately $297,000. Clearly on any view of the case it was not one where the damages were likely to very greatly exceed the jurisdiction of the Magistrates Court. The plaintiff had offered to settle the proceedings for $200,000. However, the most favourable view of the evidence of Prof Smith at the point of transfer of the proceedings to this Court would give rise to the potential for greater amounts to have been awarded for various components of damages than were awarded in the judgment. It would clearly be inappropriate for a party to run a significant risk that, by proceeding in the Magistrates Court she would run up against a jurisdictional limit and hence be denied damages potentially of many tens of thousands of dollars because of the limited jurisdiction of the Court. In order to achieve a transfer the plaintiff was required to persuade the Court that such a transfer was appropriate. In the present case the order was made by the Registrar and the defendants neither consented to nor opposed the application. In those circumstances I do not consider it appropriate that the plaintiff be burdened with the default rule imposed by r 1725(2)(d). That imposes a 25% reduction of both costs and disbursements of the plaintiff. In my view, a more appropriate order is one which is better targeted at avoiding the requirement that the defendants pay costs which they would not have been required to pay had the proceedings remained in the Magistrates Court, namely, an order that the plaintiff only recover court fees no greater than those which would have applied had the proceedings remained in the Magistrates Court and pay the costs of the application in proceedings dated 8 October 2015.

1. Order 1 made on 12 October 2016 is amended by deleting "$169,779" and inserting "$168,552".

2. Orders 2 and 3 made on 12 October 2016 are deleted and substituted with:

2. The second defendant is to pay the plaintiff's costs of the proceedings except any court fee incurred after 26 October 2015 to the extent that the fee exceeded the fee that would have been payable if the proceedings had remained in the Magistrates Court.

3. The plaintiff is to pay the defendants' costs of the application in proceeding dated 7 October 2015.

4. Pursuant to r 1725(3) of the Court Procedures Rules 2006, r 1725(2) does not apply in relation to the costs ordered to be paid under order 2.

I certify that the preceding sixty-two [62] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Associate Justice Mossop.