Daynes v I-MED Central Queensland Pty Ltd

Supreme Court of NSW|2024-10-21|Before: Cavanagh J

JUDGMENT

On 22 August 2024, I entered judgment for the plaintiff in the sum of $367,952.56 and ordered that the defendant pay the plaintiff's costs. My judgment of 22 August 2024 sets out the reasons for those orders.
By way of an amended notice of motion filed on 16 September 2024 the defendant seeks: 1. orders under the slip rule amending the amount of the judgment; 2. a variation on the award of interest; and 3. a variation on the costs order I made having regard to the amount of the judgment (once and if it is amended in accordance with the application of the defendant).
The defendant opposes the application submitting that: 1. there is no basis for any amendment under the slip rule; 2. there is no basis for any alteration of the interest allowed; and 3. the defendant is not entitled to the orders it seeks for costs having regard to the existing judgment or even a slightly amended judgment.
In support of the application, the defendant relies on an affidavit of Amber Sharp dated 30 August 2024, being the solicitor for the defendant. Annexed to Ms Sharp's affidavit are documents relating to the negotiations between the parties and settlement offers as well as other documents said to be relevant to the application.

The effect of the judgment

The effect of my judgment is that I did not accept the defendant was entitled to terminate the plaintiff's employment in the manner in which it did and thus the plaintiff was entitled to damages. I assessed damages in an amount equivalent to 6 months of contractual entitlements.

The defendant's contention

The defendant submits that in finding that the fixed term of the plaintiff's employment contract was to come to an end in three months (rather than eight days less than three months) and calculating damages on that basis, I inadvertently erred because (the defendant submits) it is plain from the rest of my judgment that I intended to award damages equivalent to the remaining period of the plaintiff's fixed term and an additional three months.
The plaintiff opposes the application. The plaintiff submits that the awarding of damages for the whole of the six months is not a clerical mistake or error that arises from an accidental slip or omission. The plaintiff submits that I intended to do what I did, that is to award six months in damages with two three month blocks. As such, there is no basis on which the judgment can now be varied.

Rule 36.17 Correction of judgment or order ("slip rule")

Rule 36.17 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") is as follows: If there is a clerical mistake, or an error arising from an accidental slip or omission, in a judgment or order, or in a certificate, the court, on the application of any party or of its own motion, may, at any time, correct the mistake or error.
Plainly, the slip rule does not permit correction of orders that are made following a proper consideration of discretionary factors merely because one party submits that the orders are incorrect. The Court may not review its judgment for the purposes of considering new matters or issues or altering the judgment based on a different view of the law. Having said that, the slip rule may apply in circumstances in which the Court has been inadvertently misled by a party or the Court has misinterpreted or misunderstood submissions or simply overlooked matters about which there could be no controversy if brought to the Court's attention (see Mainteck Services Pty Limited v Stein Heurtey SA and Stein Heurtey Australia Pty Ltd [2013] NSWSC 1563 at [6] per Sackar J).
In my view, the plaintiff is entitled to the correction sought for the following reasons.
Although I used the period of three months until the end of the fixed term and then another three months deliberately that does not mean that it could not have been an accidental error. The slip rule may apply when the Court is inadvertently misled by counsel or when the judge misunderstands the effect of what is being said. That applies in this matter, having regard to the following exchange: "HIS HONOUR: Have you dealt with that in written submissions? It may be far out, but the plaintiff's claiming it. SAUNDERS: No, I understand. The reason I say it's far out of range is because we have a situation here where an employer has, we have tried to lawfully dismiss him, steps to lawfully terminate the contract were taken. If I can provide your Honour-- HIS HONOUR: What I'm interested in is this, Mr Saunders, you say, well, if we're wrong, the contract was coming to an end in three months, he gets his three months. SAUNDERS: Yes. … HIS HONOUR: That's what I thought. I thought the last paragraph was sort of saying, "Well, that was the end of it," but what I'm getting at is, are you asking me to accept that as evidence that even if they are wrong, even if I-MED was wrong, there's no way Dr Daynes was hanging around after the three months? SAUNDERS: Yes, that's the likely counterfactual. It may extend to add the three months to the end of the fixed term contract, then the three months notice period, but not a huge amount turns on that."
Although the statements by Mr Saunders appear to be acceptance of the proposition that the plaintiff's fixed term would be coming to an end in three months, I accept that those statements were made in the context of the defendant's written submissions identifying the precise amount and earlier reference by Mr Saunders to the precise amount.
I intended to award the amount to which the plaintiff was entitled between the date of his termination and the end of his fixed term contract and another three months. That is plain from my judgment.
I erred because I understood that the amount he would be entitled to until the end of his fixed term contract was three months when in fact it was less than three months. I acknowledge that that was my accidental error in using the three months figure based on oral exchanges during submissions without calculating the precise days myself.
As such, the judgment must be amended to reflect what I intended, which was to award the plaintiff a monetary sum equivalent to the amount he would have been entitled to receive between the day of his termination and the end of his fixed term contract plus another three months.
If I had asked the parties during submissions whether the amount that should be awarded to the plaintiff to represent the sum equivalent to the end of his fixed term contract should be three months or the precise number of days, both would have indicated that it should be the precise number of days. In other words, it would not have been a matter of controversy. It follows that the judgment must be amended to reflect that.

Calculation of correction

The second issue to be considered under the slip rule is how the monetary value of 8 days is calculated. The plaintiff submits that I would adopt the following approach: "a. 365 days equates to $640,000 worth of entitlements; b. each day of entitlements is worth $1,753.42 (day rate); c. 3 months is equal to 91.5 days; d. 91.25 days less 8 equates to 83.25; e. 83.25 multiplied by the day rate, plus $160,000, equates to $305,972.22"
The defendant contends that salary is payable for periods of work and is not usually divisible by calendar day. The defendant submits: "The contract itself make this clear, providing: That Dr Daynes' 1.0 FTE constituted 'five (5) days per week'; and his 'monthly payment' would be calculated on the basis of 'each day worked within that period (each day as stand alone)'. The defendant's calculation is based on that working day structure, and is on that basis more appropriate. The correct figure is $302,769.23."
In my view, I should calculate the amount in accordance with the contract, that is, the monthly payment is calculated on the basis of each day worked within that period. On that basis, the defendant's calculations are correct, and the correct figure is $302,769.23.

Interest

The amount I awarded on account of interest was reflective of the amount of the principal.
The plaintiff submits that there is no error in the calculation of interest and thus it cannot be amended under the slip rule. I do not accept that submission. In circumstances in which the amount of the interest reflected the amount of the principal, it makes no sense to suggest that, having varied the amount of the principal under the slip rule, the amount of the interest cannot be varied such that plaintiff would obtain a form of windfall profit because he would receive interest on a higher sum that he was actually awarded.
The plaintiff did not challenge the defendant's calculations as to interest but rather the entitlement to have the orders varied. Adopting the same approach as I did at [267] of my judgment (to the question of interest) then interest on the capital sum of $302,769.23 between 1 August 2022 and 22 August 2024 amounts to $45,410.73. The amount in the judgment will be amended to reflect the total of the new principal sum and new interest being $348,179.96.

Costs

The significance of the amended judgment is not in the comparatively small lesser amount which will be payable by the defendant but more reflected in the defendant's position on costs. I ordered that the defendant pay the plaintiff's costs.
The defendant seeks a variation of that order. Depending on what findings I might make, the defendant proposes various other orders. The principal orders sought are to the effect that the defendant should not be ordered to pay the plaintiff's costs but, instead, the plaintiff is to pay the defendant's costs on an ordinary basis from 8 December 2023 to 28 June 2024 and the plaintiff should pay the defendant's costs on an indemnity basis from 29 June 2024. The basis of the defendant's proposed orders is that: 1. firstly, no costs ought to be awarded to the plaintiff, having regard to the amount of the judgment and having regard to r 42.34 UCPR; and 2. secondly, even if the plaintiff is entitled to costs until 8 December 2023, on that date the defendant made offers which should result in the defendant not being liable to pay the plaintiff's costs; and 3. even if that not be so, the defendant made a further offer on 28 June 2024, which it has beaten.
I will deal with r 42.34 UCPR firstly. Rule 42.34 is in the following terms: 42.34 Costs order not to be made in proceedings in Supreme Court unless Court satisfied proceedings in appropriate court (1) This rule applies if-- (a) in proceedings in the Supreme Court, other than defamation proceedings, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $500,000, and (b) the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants. (2) If the proceedings could have been commenced in the District Court, an order for costs must not be made unless the Supreme Court is satisfied that the commencement and continuation of the proceedings in the Supreme Court was warranted.
Assuming that the plaintiff would otherwise be entitled to costs from the defendant, the effect of r 42.34 is that, as the plaintiff has recovered an amount less than $500,000, an order for costs must not be made if the proceedings could have been commenced in the District Court. That is unless the Court is satisfied that the commencement and continuation of the proceedings in the Supreme Court was warranted.
I accept that the proceedings could have been commenced in the District Court. The plaintiff did not submit to the contrary. However, the fact that the proceedings could have been commenced in the District Court does not preclude an award of costs in favour of the plaintiff.
The Court has a broad discretion in respect of costs. Rule 42.34(2) only provides that an order for costs must not be made unless the Court is satisfied that the commencement and continuation of the proceedings in the Supreme Court rather than the District Court was warranted.
Whether the commencement and continuation of the proceedings in this Court was warranted must depend upon the facts and circumstances of the individual case. The rule does not set out any particular factors which might point in one direction or the other.
In State of New South Wales v Quirk [2012] NSWCA 216, the Court (per Tobias AJA with whom Beazley and Hoeben JJA agreed) held on a similar application that the factual issues were sufficiently complex to warrant the proceedings being commenced and continued in the Supreme Court. The Court noted that the case was conducted before a highly experienced judge of the Common Law Division and was conducted by experienced senior counsel on both sides (at [171]). In Milich v The Council of the City of Canterbury (No. 3) [2012] NSWSC 1280, Davies J at [22] considered that although the plaintiff had recovered less than the sum of $500,000, the serious nature of the injuries and the potential amount of the claim justified continuation of the claim in the Supreme Court.
It is only necessary to say that the plaintiff was seeking a significantly higher sum than he obtained (in excess of $5 million). Whilst the factual issues were not that complex, they involved a consideration of different types of evidence. Further, the plaintiff raised as an alternative to his primary case, an argument that had some legal complexity. If I had made different findings and if the plaintiff had pursued the proceedings in the District Court, there would have been a risk of the plaintiff recovering more than the jurisdictional limit of the District Court. In those circumstances, I am satisfied that the commencement and continuation of the proceedings in this Court was warranted. I would not vary the costs orders because of r 42.34.

Variation of costs having regard to the offers made

The defendant relies on UCPR Part 20 Division 4.
On 8 December 2023, the defendant made an Offer of Compromise in the sum of $307,728.23 plus costs as agreed or assessed. The defendant also served an offer in accordance with Calderbank v Calderbank [1976] Fam 93 in the same terms. The defendant had previously made lower offers.
The amount of the principal sum received by the plaintiff is less than that offer although with interest the amount is more than the offer. The plaintiff claimed interest from the outset (as set out in the relief sought in the statement of claim). There is no suggestion from the defendant that the plaintiff would not be entitled to interest. As set out in MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657 at 663: "The function of an award of interest is to compensate a plaintiff for the loss or detriment which he or she has suffered by being kept out of his or her money during the relevant period."
There is no reference to interest in the Offer of Compromise but the offer was plainly an offer to settle the whole of the plaintiff's claim. It was thus an offer to settle all of the plaintiff's entitlements, including an entitlement to interest. Interest calculated on the same basis to which I have already referred up to 8 December 2023 would have amounted to $27,632.88. I do not agree with the defendant's assessment of interest at [20] of their written submissions.
In a claim for damages which required only an assessment of the amount payable under a written contract and interest thereon, there is no reason to ignore the interest component of the claim for the purposes of assessing or comparing the offer of compromise with the amount to which the plaintiff would have been entitled to at that time. The defendant must be taken to have not allowed anything for interest in the offer made on 8 December 2023. Whilst the offer might be approximate to the sum ultimately awarded (excluding interest), when interest is added, the plaintiff exceeded the defendant's offer.
I do not accept the defendant's submission that, having regard to the costs ultimately incurred by the plaintiff and the amount that he might recover on a party-party basis, he would have been better off accepting the December 2023 offer. That may be so in practical terms but allowing for interest, the offer made by the defendant in December 2023 was less than he ultimately received.
The plaintiff did not respond to the defendant's Offer of Compromise of 8 December 2023. Nor had the plaintiff responded to earlier offers. That might be viewed as unfortunate but that does not result in any adverse costs order in the circumstances of this case.
Mediation took place on 25 June 2024. Following the mediation, the plaintiff made an offer of $740,000. The plaintiff has recovered lass than that offer.
The defendant then made a further offer on 28 June 2024 in accordance with Calderbank v Calderbank in the sum of $435,000 plus costs as agreed or assessed. The offer included other terms which might be considered usual terms such as the plaintiff discontinuing the proceedings and entering into a deed of release, again, on standard terms. The offer was made at a time approaching the hearing date when the parties must have been aware of all the issues in the case and the evidence to be relied upon. It was made following the mediation. The plaintiff must have been in a position to accept it if he wished to do so.
The plaintiff recovered less than that offer and substantially so. The principles in Calderbank v Calderbank apply. The Court has a broad discretion as to costs.
It is notable that the defendant has been ordered to pay substantially less than the offer of 28 June 2024. Further, the offers made by the plaintiff were all well above what he actually received. Having said that, the defendant's offer was made very close to the hearing and only open for a very short time. In my view, the appropriate orders with respect to costs are: 1. The defendant pay the plaintiff's costs as agreed or assessed up to and including 28 June 2024. 2. The plaintiff pay the defendant's costs as agreed or assessed from 29 June 2024.
There is one further issue which needs to be determined. The defendant submits that the plaintiff should not be entitled to interest from 8 December 2023 having regard to s 100(4) of the Civil Procedure Act 2005 (NSW) because the defendant made an offer of an "appropriate settlement sum" (as that term is defined in s 100(5)) on 8 December 2023.
Sections 100(4) and (5) are in the following terms: (4) In any proceedings for damages, the court may not order the payment of interest under this section in respect of the period from when an appropriate settlement sum was offered (or first offered) by the defendant unless the special circumstances of the case warrant the making of such an order. (5) For the purposes of subsection (4), "appropriate settlement sum" means a sum offered in settlement of proceedings in which the amount for which judgment is given (including interest accrued up to and including the date of the offer) does not exceed the sum offered by more than 10 per cent.
The offer made by the defendant was within 10 per cent of what the plaintiff would have received having regard to my findings calculated on the basis of the principal sum and interest up to 8 December 2023. As such, s 100(4) applies and interest may not be awarded unless the special circumstances of the case warrant the making of such an order.
The plaintiff submits that the special circumstances of the case warrant the making of an order for interest up to the time of judgment. The plaintiff submits that special circumstances exist because this was a case in which he, as a specialist in breast work, was dismissed in part for sexual harassment of a woman. He submits that he was entitled to pursue public vindication by obtaining a judgment in his favour and, of course, the effect of the judgment was a finding that he did not engage in sexual harassment such as to entitle the defendant to terminate him summarily.
The defendant responds by submitting that the plaintiff in fact did not obtain vindication because he did not establish otherwise unreasonable behaviour on the part of the defendant and that his claim of reputational damage and being unable to find work could not be accepted on the evidence presented in the proceedings. I find it difficult to accept that a radiologist accused of sexual harassment would not suffer reputational damage but it is unnecessary for me to make any further finding about that. I accept that, having regard to the plaintiff's submissions, special circumstances existed such that he should be entitled to interest up to the date of the judgment.
It follows that the costs order I made should be varied and replaced as follows: 1. The defendant is to pay the plaintiff's costs as agreed or assessed up to and including 28 June 2024. 2. The plaintiff is to pay the defendant's costs as agreed or assessed from 29 June 2024.
I make the following orders: 1. In accordance with UCPR r 36.17, the judgment dated 22 August 2024 is amended as follows: 1. At paragraph 255(1) replace "3 months" with "less than 3 months". 2. At paragraph 261 replace "3 months" with "less than 3 months". 3. At paragraph 263 replace "last 3 months" with "the last 11 weeks and 5 days". 4. At paragraph 265 replace "$320,000.00" with "$302,769.23". 5. At paragraph 267 replace "2 August 2022" with "1 August 2022". 6. At paragraph 267 replace "$320,000" with "$302,769.23". 7. At paragraph 267 replace "$47,952.56" with "$45,410.73". 8. Replace paragraph 268 with the following: 9. "The orders I make are thus: 1. Judgment for the plaintiff in the sum of $348,179.96 2. The defendant is to pay the plaintiff's costs as agreed or assessed up to and including 28 June 2024. 3. The plaintiff is to pay the defendant's costs as agreed or assessed from 29 June 2024."

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: 21 October 2024

Uniform Civil Procedure Rules 2005(NSW)rr 36.17, 42.15, 42.34

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Judgment (9 paragraphs)

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