Diamond v Simpson

LOWER COURT Supreme Court - Common Law Division JURISDICTION : LOWER COURT 12791/87 FILE NUMBER(S) : LOWER COURT Whealy J JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40962/01

MEAGHER JA IPP JA YOUNG CJ in EQ

Thursday 11 March 2004 ROBERT DIAMOND v CALANDRE SIMPSON AND TRUSTEES OF THE SISTERS OF ST JOSEPH (NO 4) Judgment 1 MEAGHER JA: I agree with Young CJ in Eq. 2 IPP JA: I agree with Young CJ in Eq. 3 YOUNG CJ in EQ: The Court gave judgment on the second tranche of the appeals in this matter on 16 December 2003. 4 According to para 228 of my judgment, the Court said: "The formal orders of the Court are thus: 1. Appeal allowed; 2. Declare that the cross defendant is liable to pay to the cross claimant one-half of the amount paid or payable to the plaintiff in respect of orders made against the cross claimant in these proceedings. 3. Liberty to apply to a Master to certify the amount of such amount if the same cannot be agreed. 4. Cross appeal dismissed with costs." 5 A formal order was taken out on 13 January 2004 which included orders 1 and 4 which were renumbered 1 and 2 and a declaration 3(a) close to No 2. There was no mention of order 3, nor has there been in subsequent submissions. I thus assume that the parties have agreed on the relevant amount. 6 The appellant to whom I will refer as "the Doctor" contends that the form of orders were inadequate fully to carry out the decision of the Court and that they should be amended and supplemented under the slip rule, see Shaddock (L) & Associates Pty Ltd v Parramatta City Council (1982) 43 ALR 473. 7 The second respondent, whom I will call "the Hospital" does not challenge the contention that the orders as taken out were inadequate and ought to be amended but does not agree with the amendments proffered by the Doctor. 8 The contentions having been raised, the parties made submissions in writing. The Court considered these and then listed the matter on 9 March 2004 when senior counsel for both the Doctor and the Hospital spoke to their submissions. 9 As previously, Mr P Brereton SC and Mr I F Butcher appeared for the Doctor, Mr P Hall QC and Mr S Woods appeared for the Hospital and Mr R Monteith, Solicitor, appeared for the plaintiff. 10 The proposed amended orders do not affect the first respondent/plaintiff, but her solicitor has made submissions to make it quite clear that so long as the plaintiff's position is unaffected, she does not wish to take part in any debate. 11 The Doctor says that the formal orders should be as follows. I have underlined, in accordance with the Doctor's submissions, the suggested orders proffered by the Doctor. In addition, the Doctor says that he should get his costs on the hearing of the cross claim and on the appeal on an indemnity basis. 12 Further, the Doctor drew attention to the situation that in its application for special leave to appeal to the High Court the Hospital has suggested that this Court failed to address grounds 1 through 6 of its notice of contention. 13 I should address then the problems under three heads:

C. Any problem with the notice of contention. 14 A. The Doctor says that the orders should be in the following form: "1. Appeal allowed with costs ; 2. Set aside orders 5 (the verdict and judgment for the cross-defendant on the cross-claim) and 6 (the order that the cross-claimant pay the cross-defendant's costs, including reserved costs) made by the trial judge ; 3. In lieu thereof: 3.1 declare that the cross-defendant is liable to pay the cross-claimant one half of the amount paid or payable to the plaintiff in respect of orders 2 and 3 made against the cross-claim by the trial judge as substituted by this Court in these proceedings, together with interest at the rates prescribed by the Rules of Court for interest on judgment debts from the date of payment of such amount by the cross-claimant to the plaintiff; 3.2 order that the cross-defendant pay the cross-claimant's costs, including reserved costs, of and incidental to the cross-clam ; 3.3 order that the cross-defendant indemnify the cross-claimant in respect of the costs payable by the crss-claimant to the plaintiff pursuant to order 4 made by the trial judge (being the costs payable by the plaintiff to the cross-defendant upon the discontinuance of the plaintiff's claim against the cross-defendant) ; 4. Liberty to apply to a Master to certify the amount of such amount if the same cannot be agreed; 5. Cross-appeal dismissed with costs." 15 The Hospital agrees with the proposed new orders 1 and 2. 16 Proposed order 3.1 deals with two points:

(b) the plaintiff's costs. 17 As to (a), the Doctor says that he paid the plaintiff and as things have turned out, he has paid the plaintiff $5,499,346.00 for the period 11 December 2001 to 16 December 2003 for which the Hospital was liable. The Hospital thus has had the use of that money during that period whilst the Doctor has been out of pocket. 18 Interest was not claimed in the amended cross claim. 19 The Hospital relied on this as its sole answer to the claim for interest. 20 However on it being pointed out that interest was claimed in the notice of appeal (see Red 719) nothing more was said. 21 Thus, the Doctor is entitled to interest. 22 (b) It is necessary, briefly, to give a bit of background. 23 The plaintiff originally sued both the Doctor and the Hospital. On the first day of the hearing, the Doctor admitted liability and the plaintiff discontinued against the Hospital. The Judge ordered the plaintiff to pay the Hospital's costs. However, this Court determined that the Hospital would, if pursued by the plaintiff, have been found liable to her. 24 The Doctor says that this Court's decision ordering contribution necessarily involves the Doctor being paid one-half the costs which he had been ordered to pay the plaintiff. The Doctor's defence of the plaintiff's claim was thus in the interests of the Hospital as well as his own interests in seeking to minimise the damages. An award of contribution ordinarily involves contribution to the costs payable by the defendants to the plaintiff: James Hardie & Coy Pty Ltd v Wyong Shire Council (2000) 48 NSWLR 679. 25 The Hospital's riposte is that a substantial portion of the plaintiff's costs would be referable to establishing the Doctor's liability which would not have been necessary if the Doctor had admitted liability at an earlier date. Further, an order that the Hospital pay half the plaintiff's costs would be incongruous seeing that the trial judge made an order that the plaintiff pay the Hospital's costs based on the discontinuance. 26 Additionally it is put that the Doctor's pleadings do not seek an order that the Hospital pay such costs, the same was not raised during argument in this Court and it is now too late to make this application. 27 As to the first of the ripostes, I would agree that it is valid, but it can be met by adding at the end of 3.1 "(the costs of the plaintiff covered by this order are not to include any costs solely referable to the plaintiff seeking to establish that the cross claimant was negligent)". 28 The second riposte should be answered by saying that there may be some incongruity involved, but this is because of the action of the plaintiff in abandoning a perfectly good claim against the Hospital. This should not affect the Doctor who has proved that the claim was a good one. This incongruity does not excuse the Hospital from the ordinary shared responsibility for costs of concurrent tortfeasors. 29 As to the third riposte, it would seem to me that the matters dealt with in the James Hardie case show that the question of the plaintiff's costs is almost for all purposes these days in the same plight as the plaintiff's damages and, whilst it might be desirable to plead with particularity that costs of the plaintiff are being sought as part of or in addition to damages, it not imperative to do so. 30 Accordingly, the third riposte does not find favour with me. 31 Thus order 3.1 should be made with the addition I have noted. 32 The Hospital objects to proposed 3.2 on several grounds, viz:

(a) the date from which those costs should be payable;

(b) whether the costs of the motion filed on 28 February 2001 should be excluded; and

(c) whether the words "and incidental to" should form part of the order. 33 As to (a), the contention is, and it was raised at the hearing of the second tranche of the appeal, that the Syntocinon theory as it found favour with this Court was only latterly formulated and that it would be unfair to visit the costs of the cross claim on the Hospital until at least it was properly formulated. It is alleged that this happened no earlier than 2 March 2001 and that it was not until May 2001 that the final case was reformulated. 34 The Doctor says, and again this was ventilated at that hearing, that even though the cross claim was only formally amended after the motion of 28 February 2001, this came about because the Hospital's solicitors had for a significant period of time taken the position of considering the cross claim and seeking particulars without much by way of objection and only at the eleventh hour formally objecting to the amendment which sparked the motion of 28 February 2001 which was successful before the trial judge. 35 These matters were discussed under the heading "M. Collateral Matters" in paras 209-214 of my earlier reasons. I there pointed out that the trial judge was in my view justified in exercising his discretion to allow the amendments to the cross claim sought in the motion of 28 February 2001. It also would appear, at least inferentially, form what I said in those paragraphs that I was not convinced by Mr Hall QC's submissions that suddenly, in 2001, some new case was being made by the Doctor. 36 At the hearing on 9 March, the Hospital without prior leave or consent of the Doctor, distributed to the Court an affidavit of Mr Roberts, Solicitor, a partner of the solicitor on the record for the Hospital annexing various interrogatories and requests for particulars and replies. 37 Mr Hall submitted that the affidavit showed that until at least the end of February 2001, the Hospital was fairly of the view that the Doctor's case was very different from the case on which he ultimately succeeded. 38 Mr Brereton's response was, in essence:

(1) He did not appreciate the tender of the affidavit.

(2) The answers to particulars 9 and 11 of 26 February 2001 were sufficient to show the Hospital the case ultimately made out.

(3) It is significant that the solicitor was not prepared to swear that he did not fully appreciate the case being made by the Hospital as at 26 February 2001. This point is reinforced by the forensic convention that if a solicitor for a party who gives evidence does not tell the complete story, the Court can assume that he does not consider he can or should do so as no solicitor would ever present a half truth to a Court on oath. 39 Mr Brereton further says that his submissions to the trial judge on the motion of 28 February 2001 which are set out in Whealy J's judgment on that motion (Red Appeal Book vol 1 p 43) shows that the case, substantially in its final form was communicated to the Hospital no later than 2 March 2001. 40 These matters reinforce my view that it is not correct to say that the Doctor reformulated his case in May 2001. 41 This matter becomes relevant also on the question of indemnity costs, considered later. 42 Accordingly, I do not consider this matter a bar to what the Doctor seeks. 43 The second matter is the costs of the motion of 28 February. In the light of what I have said above, I cannot see any reason why the costs of this motion should be in any different condition than to the rest of the costs. 44 As to the deletion of the words "of and incidental to" I agree that these words should be deleted. They add nothing and might cause confusion. 45 Accordingly, order 3.2 should be varied by deleting the words "of and incidental to". 46 Order 3.3 addresses the problem that now arises because of the Bullock order that was made by the trial judge that the costs which the Doctor had to pay the plaintiff included the costs which the plaintiff had to pay the Hospital. 47 Order 3.3 is framed not to disturb the plaintiff's entitlement to look to the Doctor for reimbursement of the costs she has to pay the Hospital pursuant to the Bullock order, but superimposes an order that the Hospital indemnify the Doctor in respect of those costs. 48 The Hospital complains that it is not reasonable that it be punished with a requirement to pay two sets of costs following the findings of the Court of Appeal. The term "punished" is an advocate's word and is irrelevant in this context. Costs are not punishment in any sense of the word. The real question is what is a fair and just order to be made in all the circumstances. It is merely one factor that the inappropriateness of the Bullock order in the events which have now happened cannot be addressed by this Court. 49 The same comment should be made of the Hospital's further submission that if this order were made the Hospital would not receive any benefit as a consequence of the costs order made by the trial judge which was made without objection and without any appeal being lodged in respect of it. 50 However, it not infrequently occurs that complications in multi-party actions give rise to strange adjustments having to be made in the light of the overall justice of the case. 51 The Doctor says that whilst there are complications as a result of the Bullock order, the just solution is to relieve the Doctor from paying the plaintiff's costs of the discontinuance against the Hospital because the Hospital has been held to have been liable to the plaintiff had the plaintiff pursued her claim. 52 Although the plaintiff formally opposes this proposed order, it is clear that she is not disadvantaged by it. 53 In my view, the contentions of Mr Brereton for the Doctor outweigh the contrary contentions and the order should be made. 54 There is no contention about proposed orders 4 and 5. 55 B. As to indemnity costs, this claim was made on 7 January 2004 on the basis that it is appropriate for an indemnity costs order to be made where a party obtains a judgment no better than a prior settlement offer by the other party. The decision of Rolfe J in Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425 is relied on for this proposition. 56 The Doctor says that he offered to accept 50% contribution on 10 July 2000 and again on 31 October 2000 and made an offer to accept only 30% contribution on 16 March 2001. He says that he is entitled to indemnity costs at the very least from 16 March 2001. 57 The Hospital says that the so-called offer of 10 July 2000 was not an offer at all but was merely a request to consider obtaining instructions. 58 It then says that the offer of 31 October 2000 was not a true compromise as it did not involve any element of compromise and that in any event it was not expressed to have been made pursuant to Part 22 of the Rules. 59 As to the offer to accept 30% contribution, it is put that this was a conditional offer in that it required the Hospital to agree not to seek costs from the plaintiff in relation to the discontinuance which was an unreasonable condition. 60 As to the Hospital's objection to the form of the offer, the Doctor says that there is a distinction between an offer of compromise under Part 22 Rule 1A and an offer of contribution under Part 22 Rule 12. 61 It would seem to me that this submission is correct. This follows from the structure of Part 22 and the fact that Rule 12 was added three years after the rest of the Part without any attempt being made to link it into offers of compromise. 62 However, it must also follow that no automatic consequence flows from the non-acceptance of an offer to contribute and that one must deal with such offers in much the same way as an offer under a Calderbank letter. Part 52A Rule 24 provides that "The Court may take an offer to contribute into account in determining" questions of costs; cf Part 52A Rule 22 with respect to offers of compromise. 63 It is certainly true that the authorities say that a demand that the opponent pay the full amount of the claim or even close to the full amount of the claim is not to be considered as an offer of compromise; see eg Tickell v Trifleska Pty Ltd (1990) 25 NSWLR 353. 64 The Hospital says that the 50% offers were in this category. I do not consider this to be so. The Hospital and the Doctor each had a likelihood of being found liable to the plaintiff of between zero and one hundred percent, and a 50/50 contribution can be considered as a compromise. 65 The Hospital has said that at the time of the offers the "original Syntocinon theory had been virtually destroyed". For the reasons I have given earlier, I am not prepared to hold that that is so. 66 It is not the case that a litigant must have all the facts that might come out at the trial in its possession when assessing offers of contribution. In many cases counsel and solicitors have to evaluate chances whilst there are still very big X factors involved. 67 Mr Hall cited Fowdh v Fowdh, a decision of this Court of 4 November 1993 unreported. 68 In that case Master Malpass had refused to make an order for indemnity costs where a plaintiff's case substantially and materially changed after the offer of compromise was made and expired. 69 The Court dismissed the appeal, Kirby ACJ dissenting. 70 However in this case the foundation for the view that the Doctor's case radically changed after 16 March 2003 has not been made out for the reasons already noted. 71 The submission of the Hospital that the offer of 16 March was subject to an unreasonable condition needs to be considered in some detail. 72 The offer of 16 March 2001 was said to be open only until 5 pm 23 March 2001 and was, inter alia, on the following basis: "The cross -defendant (as second defendant) to agree not to seek costs from the plaintiff in relation to the discontinuance of the primary proceedings against it and, if possible, agree to each party paying their own costs so far as the discontinuance is concerned." 73 Mr Hall says that the condition was unreasonable as the condition could not be performed by the Hospital as it required the plaintiff to give up an advantage in costs which the Hospital could not compel and which prima facie the plaintiff would not have any wish to give up. 74 He says that such a condition was clearly unreasonable. 75 Mr Hall cited the decision of the Full Federal Court in Magenta Nominees Pty Ltd v Richard Ellis (WA) Pty Ltd (29.8.1995) and of this Court in Skalkos v Assaf (No 2) [2002] NSWCA 236. 76 In the Magenta Nominees case the condition was that a complaint to a government authority be withdrawn by the opponent, a condition with which the opponent could comply if it wished. 77 None of the other cases cited to us involve a condition that the offeree might find impossible to meet. 78 The cases cited, of which Skalkos is a good example, say that when considering reasonableness in this context, one needs to consider all the circumstances of the case and the reasonableness of the offeree's conduct generally not just the narrow question of the reasonableness of the condition. 79 In a case involving ten million dollars or more, the condition as to costs was a minor matter. It may have been reasonable for the offeree to have made a counter offer or sought to have the condition withdrawn, but it was not reasonable merely to reject the offer. 80 It should be pointed out in this connection that the situation with an offer of contribution or Calderbank letter may well differ from the situation where there is a formal offer of compromise under Part 22 of the Rules. 81 Apart from the matter of the condition, applying the principles in the authorities to determine matters of indemnity costs, it seems to me that the Doctor is entitled to indemnity costs after 16 March 2001. 82 Accordingly the words "on the indemnity basis" should be added to order 3.2. 83 C. As to the notice of contention, this was dealt with in Section L of the judgment. 84 As Mr Brereton has pointed out in para 24 on p 250 of the Orange Appeal Book, once this Court held that the Doctor and the Hospital were concurrent tortfeasors, grounds 10 and 11 of the notice of contention had to fail. 85 The balance of the matters in the notice of contention were dealt with in Section L. 86 It is to be noted that the Hospital does not actually make any application with respect to the notice of contention, and that in any event, unless the Court were asked by consent to supplement its reasons, this would not fall within the slip rule. 87 At the hearing on 9 March, Mr Brereton time and again endeavoured to tease an application from Mr Hall to request the Court to give supplementary reasons if he considered that the Court had failed to do so. Mr Brereton was even bold enough to say he would not oppose any such application. However, Mr Hall stood his ground and did not make any application. 88 Accordingly, the orders proffered by the Doctor should be made as slightly amended in accordance with these additional reasons.

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