Foong v Ghaly; Foong v McLellan

Judgment (7 paragraphs)

[1]

Judgment

The plaintiff commenced proceedings arising about of two motor vehicle accidents occurred on 2 March and 2 September 2011. Although claiming damages in the amount of $20,665,550, the plaintiff was awarded $1,250 in each matter, representing a cushion of $1,000 for past wage loss and a cushion for future medical expenses of $250 in each accident.
In each case, I was satisfied, on the medical evidence as well as by reason of contemporaneous documentation (including surveillance film) tendered by the defendants, that the plaintiff's injuries were of the most minor nature in the form of soft tissue injuries which resolved within one to two weeks at most. In addition, I was satisfied that the plaintiff's financial loss arose from pre-existing problems such as criminal charges brought in relation to an offence of dishonesty for which she was convicted in the District Court of New South Wales and which resulted in the loss of her real estate licence for an extended period (see Foong v Ghaly; Foong v McLellan [2017] NSWDC 303).
Two applications are before the court today. The first of these is an application by the defendants, in accordance with order (3) of my orders of 3 November 2017 for indemnity costs arising from a series of offers of compromise and a Calderbank offer (Calderbank v Calderbank [1975] 3 WLR 586). The second is an application by the plaintiff's former solicitors for payment of costs incurred while they were acting for the plaintiff.

[2]

The relevant legal provisions

Rule 42.2 Uniform Civil Procedure Rules 2005 (NSW) (""UCPR") provides: "42.2 General rule as to assessment of costs Unless the court orders otherwise or these rules otherwise provide, costs payable to a person under an order of the court or these rules are to be assessed on the ordinary basis."
The making (and rejection) of a Calderbank offer is a factor which may cause the court, pursuant to s 98(1)(c) Civil Procedure Act 2005 (NSW) and r 42.5 UCPR, in its discretion order costs on an indemnity basis.
In Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311 at [57], Barrett JA explained the circumstances in which an offer will qualified as a Calderbank offer as follows: "[57] An offer is of the Calderbank type only if the maker of it is shown to intend that the fact of its non-acceptance may be deployed as a basis for seeking a special costs order in the event of that party's ultimate success in the action. Everything therefore depends on the message conveyed by the offer itself and any covering letter or other attendant circumstance."
That is clearly the case in the offer before the court. The offer in question represented a substantial capitulation, having regard to the very limited nature and extent of the plaintiff's injuries in relation to each of the accidents in question.
At the time the plaintiff already had a wealth of medical material available, in the form of reports from Associate Professor Aggarwal, Dr Lim, Dr Bodel and Dr Hampshire, details of which are set out in my judgment. She had been examined by the doctors for the defendants, including Dr Newland (who examined her on 9 February 2012). The medical evidence was clear.
In addition, the plaintiff had appeared before this court in its criminal jurisdiction on 3 September 2012 in her severity appeal from a sentence by the Local Court Magistrate of 15 months imprisonment to be served by way of home detention where his Honour Judge Zahra SC was provided with the information set out at [43] of my judgment. In fact, some of the costs in relation to these criminal proceedings, such as preparing a statement for the plaintiff, appear in the personal injury memorandum of fees in the application for costs by her former solicitors.
All of this material was a very strong indication not only to the plaintiff but to anyone advising her that the offer of $20,000 plus payment of legal costs was not merely a significant compromise on the part of the defendant but a good result for her, given the very significant difficulty she would have in establishing any form of economic loss attributable to the accident and any requirement for home care, past or future.
The Calderbank offer also allowed for a reasonable time to elapse, namely 21 days (Crossman v Sheahan (No 2) [2016] NSWCA 351).
I asked the plaintiff to tell me what ground she would rely upon to argue that it was not unreasonable for her not to accept the offer in the circumstances of this case. She addressed me about issues of fact and law, but these related principally to the merits of her case, for which she had provided a revised assessment of damages.
Although not addressed by the plaintiff, I have taken into account there was a claim brought on behalf of her son in relation to the first accident, whose injuries were more substantial. However, I cannot see how that would be a factor which would make it not unreasonable for her not to accept the offer that was made.
These were proceedings raising simple issues of fact and law. The settlement amount represented a very reasonable sum for soft tissue injuries which had required little or no treatment and where the extensive inquiries of Associate Professor Aggarwal had failed to identify any problem the plaintiff suffered from, in the three years prior to the offer of compromise being made. The non-acceptance of the offer by the plaintiff in those circumstances was, I find, unreasonable.

Costs prior to the Calderbank offer being made

The plaintiff consulted three personal injury firms: Messrs Brydens, Gerard Malouf and Partners and Slater & Gordon. Only Gerard Malouf and Partners brings a claim. Mr Chow has tendered, as part of the affidavit served on his opponent this morning, a memorandum of costs which indicates that the firm's costs from 2 December 2011 to the date of ceasing to act approximately three years later were well in excess of $10,000 for each matter and asks the court for a gross sum costs order for $10,000 for each of the proceedings.
A costs agreement was entered into on or about 2 December 2011 (see Annexure A to the affidavit of Mr Chow). The work in question consisted almost entirely of emails and perusals up until the commencement of proceedings in 2014. It is clear from those costs charges that, when Gerard Malouf & Partners inherited the matter from Brydens, medical reports had already been obtained and the relevant particulars of the nature and extent of injuries had been given.
It should have been clear to both the plaintiff and to her solicitors that the plaintiff's bankruptcy and criminal proceedings were the reasons for her financial difficulties, and that there was little or no evidence to confirm the constellation of medical conditions the plaintiff was claiming to be suffering from. The plaintiff did not withhold from her solicitors information about the criminal proceedings brought against her. A number of the contents of the solicitors' bill in fact relate not to the personal injury proceedings but to what is described in the memorandum of costs as the "fraud matter" (see for example, the entries from 1 April 2014 onwards), in which they were also acting.
It is also clear, from the details of the perusals claimed, that the solicitors had read all of the material obtained on subpoena in August 2014 and this would have made them significantly aware of the considerable difficulties in the plaintiff's case. Although Mr Chow did not say so explicitly, I infer that the parting of the ways between the plaintiff and her legal advisers occurred by reason of some discussions of this difficulty.
The amount of damages awarded to the plaintiff is effectively a nominal sum, and one which is vindicatory rather than compensatory: New South Wales v Stevens (2012) 82 NSWLR 106 at [22] - [26]. In circumstances such as these, the claim resulting in the nominal award should be consisted, in costs terms, in light of s 60 Civil Procedure Act 2005 (NSW): "60 Proportionality of costs In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute."
The manner in which the plaintiff's claim was conducted was wholly disproportionate to the injuries she suffered. This is not accidental but intentional; there is no easy way to reconcile the plaintiff's evidence in this court as to her medical condition with the evidence provided in the proceedings before Judge Zahra SC.
While I appreciate that the solicitors ceased acting for the plaintiff largely because of this inconsistency, they nevertheless acted for her for nearly three years and incurred substantial costs in circumstances where they must have been aware of the inconsistencies in her evidence, the absence of medical evidence in support and her energetic pursuit of university studies at a time when she was claiming to be so mentally afflicted that she was unable not only to work but even to drive a car.
Mr Chow acknowledged receiving a file from Brydens, although there were apparently some lien problems, and it must have been apparent from the reading of that file, or relatively soon thereafter, that the plaintiff's claims of injuries of the significance she claimed were without medical foundation and inconsistent with her instructions in the criminal proceedings.
Taking all of the above into account, I am of the view that the appropriate order to make for costs prior to the Calderbank offer (or, if I have erred in this regard, prior to the offer of compromise) is an order on an "each party pay own costs" basis.

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Judgment (7 paragraphs)

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