Jay v Baker

Jay v Baker - [2018] NSWDC 354 - NSWDC 2018 case summary — Zoe

[3]

Costs dispute between the plaintiff and the defendant in the 2015 proceedings

The final hearing of the proceedings occurred, as indicated, over 12 hearing days. The detail of the hearing dates is as follows: 1. On 6 October 2016, each matter was fixed for hearing on 13 June 2017 with an estimate of four days; 2. On 13 June 2017, the final hearing commenced before me. After three days of hearing, it was clear that substantially more hearing days were required which were not available to the court at that time; 3. On 5 December 2017, after two hearing days, the hearing was adjourned to 23 April 2018 with an estimate of four further days. Substantially more hearing time was needed than four days to complete the matter in April-May 2018; 4. After directions were made for the filing of written submissions, final oral submissions were heard on 17 August 2018. The delay in final submissions was partly due to the unavailability of counsel.
On 15 June 2017, the third day of the hearing, issues were raised by counsel appearing for the plaintiff Ms Jay about the remainder of the hearing of the case. At T163-T164 the court was informed: 1. That there were factual witnesses available for the third day of the hearing. Subsequently, oral evidence was given by the plaintiff, Mr Baker (the defendant), Ms Lynch and Mr Jay on that day; 2. There was a need to call two psychiatrists (subsequently identified as Dr Burke and Dr Roberts) who had met in conclave. However, it was stated that before they could be called, they needed to have the benefit of seeing the transcript of the plaintiff's evidence and the benefit of all the medical evidence and lay evidence relating to the plaintiff. It was stated by counsel for the plaintiff that that was "because in the absence of having the totality of it [the evidence] the conclave's probably of little use": T163.45.
The position stated by counsel for the plaintiff was confirmed by counsel then appearing for the defendants as "a joint position": T164.34.
Earlier in the course of the hearing on the second day, 14 June 2017, counsel for the defendants raised the issue of the timetabling of the psychiatrists' evidence. It was noted that there was a joint report which did not take the matter much further as there was disagreement and both psychiatrists stated that they had not seen the plaintiff Ms Jay for a long time and could not give an opinion on her current position: T122.20-.42.
The evidence in the proceedings shows that shortly before the resumed hearing on 4 December 2017, the plaintiff served numerous reports from the plaintiff's treating psychiatrist Dr Duncan, the treating psychologist Ms Toner, a sports medicine doctor Dr Thomas, and further medico-legal reports from Dr Burke, the primary psychiatrist relied upon by the plaintiff in the 2015 proceedings, Ms Jay: see Exhibit E.
When the matter came on at the resumed hearing on 4 December 2017, new counsel then appearing for the defendants Ms McPhee opposed reliance by the plaintiff on the new medical reports for various reasons including their late service and read an affidavit of Ms Olivia Grant-Preece sworn 1 December 2017 setting out the dates of service of the new material and annexing copies of the relevant reports: see T239-T248.
Effectively, whilst 4 December 2017 was usefully used, because of the problems with the medical evidence, the matter was further adjourned for a lengthy period until 23 April 2018 when the relevant doctors would all be available and a new conclave report could be prepared by Doctors Burke and Roberts. The question of the costs thrown away by the vacation of the hearing from 5 December 2017 was reserved: see T279.28 and T280.20.
In relation to the 2016 proceedings, whilst the plaintiff in those proceedings was separately represented by counsel and tendered some documents, it relied on the medical evidence tendered by the plaintiff Ms Jay in the 2015 proceedings.
The plaintiff Ms Jay seeks orders that the costs reserved should be costs in the cause in the 2015 proceedings. The defendant seeks an order that the plaintiff pay the costs thrown away by the vacation of the hearing from 5 December 2017.
In his written submissions dated 9 November 2018, counsel for the plaintiff Mr Andrews submits: 1. That only part of the hearing was vacated; 2. The vacation of part of the hearing which recommenced on 4 December 2017 was essentially brought about because the psychiatric experts, Dr Burke and Dr Roberts, stated that they needed to examine the plaintiff again before forming a view as to what they could or could not agree upon in accordance with the requirements of the conclave; 3. Counsel for the defendant conceded on 14 June 2017 that there was a consensus between all parties that any conclave between the psychiatric experts would be of little benefit having regard to their views; 4. Arrangements were made for further examinations of the plaintiff; 5. A re-examination by Dr Burke had occurred and the report had been received and served in November 2017; 6. The adjournment also was caused by the need for Dr Roberts to see the plaintiff; 7. No explanation was given by the defendant as to why a separate consultation had not been arranged with Dr Roberts in the period from June 2017 to December 2017. It was clear from the submissions made by counsel for the defendants that such consultations with Dr Roberts had been contemplated by the defendants; 8. Subpoenas which were complied with meant that all of Dr Duncan's and Ms Toner's reports were available to the defendants from late October 2017; 9. While the defendants had provided the transcript to Dr Roberts, no follow up took place with Dr Roberts after the transcript was provided up to and including 4 December 2017 nor had Dr Roberts been provided with any of the clinical notes which had been produced by Ms Toner; 10. It was conceded by counsel appearing for the defendant on 4 December 2017 that since June 2017, after the sending of the transcript to Dr Roberts, there was no further communication with Dr Roberts to arrange a subsequent consultation until after the plaintiff served Dr Burke's report: T238.28-.41.
Counsel for the defendant Ms McPhee, submits in her written submissions, in general summary, as follows: 1. The vacating of the hearing dates following 4 December 2017 was the direct and inevitable consequence of the timing of the service of new medical material (reports of Drs Duncan, Thomas and Burke and notes of Ms Toner) in November 2017 by the plaintiff Ms Jay; 2. No notice of the arrangements for a re-examination of Ms Jay by Dr Burke was provided to the defendants, nor any explanation for the delay in the provision and service of his report and the other material; 3. The defendants sought to address the new material in the limited time available; 4. The defendants were deprived of the opportunity to respond to the new medical material prior to the resumed hearing commencing 4 December 2017. Procedural fairness required that the material should have been served well before when it was; 5. The defendant is entitled to an order that the plaintiff pay the defendant's costs thrown away of and occasioned by the adjournment on and from 5 December 2018.
At the hearing of the oral submissions, similar submissions were made on behalf of the parties. Mr Brown on behalf of Ms Jay submitted: 1. The adjournment on 5 December 2017 was to enable the defendant's psychiatrist to see Ms Jay; 2. Both parties agreed in June 2017 that an adjournment was necessary: see in particular Mr Gracie's comments at T122.25‑.36; T163.41; 3. The defendant should have made arrangements earlier after the June 2017 adjournment for Ms Jay to see Dr Roberts; 4. The treating doctors' reports were produced on subpoena and were available to the defendant as they were to the plaintiff. The plaintiff had no earlier access; 5. Dr Burke's new report was served by the plaintiff promptly. The defendant was not taken by surprise by the new report; 6. The plaintiff cannot be blamed for the December 2017 adjournment.
Ms McPhee on behalf of the defendant relied on her written submissions and added by way of submission: 1. The comments on 14 June 2017 showed there were problems with the conclave report of Drs Burke and Roberts; 2. This is confirmed by Mr Andrews' comments at T163.40; 3. There was no mention of a plan for Dr Burke or Dr Roberts to examine the plaintiff again in the June 2017 hearing; 4. The fact is that the plaintiff served numerous new medical reports in November 2017; 5. Whilst the parties may have had access to the Duncan and Toner reports produced under subpoena it was not clear to the defendants which reports produced, if any, would be served. This also does not cure the late service of the reports; 6. The interests of Ms Jay and the State were identical. The State needed the new medical material to establish its case and could not have done so without it.
The following matters should be noted: 1. The psychiatric evidence in the plaintiff's medical reports folder, Exhibit C, consisted of reports of Dr Burke dated 24 July 2015 served on 15 October 2015, a further report of Dr Burke dated 29 July 2015 served on 15 October 2015 and a MAS report by Assessor Dr Blom on 8 August 2016; 2. The report of Dr Burke who was the plaintiff's prime medico-legal expert psychiatrist was accordingly nearly two years old at the date of commencement of the final hearing on 13 June 2017; 3. No reports were initially tendered from either the plaintiff's original psychiatrist Dr Patfield or her psychologist Ms Toner dated after February 2015: Exhibit C; 4. The view of the psychiatrists that updated consultations were needed having regard to the time that had passed, particularly for any conclave opinion, was reasonably predictable in all the circumstances.
In my view, the late service of voluminous expert medical evidence by the plaintiff in November 2017 made it highly likely that an adjournment of the proceedings set down for 4 December 2017 would occur following an application by the defendants.
In relation to the argument that the defendants should have arranged earlier consultations between the plaintiff and Dr Roberts, I do not think this answers the defendants' point. First, no further report of Dr Burke was served until 22 November 2017 shortly before the 4 December 2017 hearing. Secondly, numerous reports of Dr Duncan, the plaintiff's treating psychiatrist, were also served both in November and December 2017. It was reasonable for the defendants to have all the relevant psychiatric evidence relied upon, including the updated report of Dr Burke, before Dr Roberts saw the plaintiff and prepared his report.
While it would have been useful for an appointment to have been made at an appropriate time with Dr Roberts, there is no evidence that the defendants were aware when or if a report of Dr Burke would be provided to them. Further, mere access to the reports of Dr Duncan and Ms Toner in subpoenaed material, did not mean that the defendants knew which reports would be relied upon by the plaintiff.
In all those circumstances, the late service of the reports of Dr Duncan, Ms Toner and particularly Dr Burke, rendered a further adjournment almost inevitable. Whilst there were other objections made to the new medical evidence sought to be relied upon by the plaintiff Ms Jay on admissibility grounds and a failure to comply with the Expert Code of Conduct which were not ultimately pressed, these did not detract from the substantial cause of the adjournment being the late service by the plaintiff of the extensive further material.
It is not clear to me why the examination of Dr Harvey-Sutton and Ms Taylor-Fick could not have occurred at the December 2017 hearing: T243.31. They seemed to be available. However, on one view, the further cross-examination of the plaintiff should have occurred before the cross-examination of these expert witnesses was appropriate.
Taking into account all of these matters and exercising the discretion as to costs which the court has under section 98 of the Civil Procedure Act 2005, which is a wide discretion (Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 at [7]), in my view the plaintiff Ms Jay should pay any costs thrown away by reason of the vacation of the hearing dates on 5, 6 and 7 December 2017. From the matters I have indicated, the principal reason for the vacation was the late service of substantial new medical evidence by the plaintiff and the need for some limited further cross-examination of the plaintiff which occurred.

[4]

Costs dispute between the plaintiff and the defendants in the 2016 proceedings

In the 2016 proceedings, the plaintiff seeks an order for indemnity costs from 21 June 2017 based on the service by the plaintiff in the 2016 proceedings of an Offer of Compromise dated 21 June 2017 which was served by the plaintiff by email on that day on the solicitors for the defendants. See Exhibit A on the application and the written submissions dated 20 November 2018.
The defendants dispute the plaintiff's entitlement to indemnity costs and also submit that the new medical evidence served by the plaintiff in the 2015 proceedings was evidence in support of the plaintiff's claim for indemnity under s 151Z of the Workers Compensation Act 1987 in the 2016 proceedings, as effectively the interests of the two plaintiffs were the same. It is noted that the plaintiff in the 2016 proceedings did not tender any significant medical evidence of its own: written submissions dated 21 November 2018. It was submitted: 1. The court's relevant powers as to costs are found in s 98 of the Civil Procedure Act 2005 and Part 42 of the Uniform Civil Procedure Rules 2005 (UCPR). Costs are in the discretion of the court; 2. The usual rule is that costs follow the event and are awarded on the ordinary basis: Part 42.1 and 42.2 of the UCPR; 3. Offers of Compromise and Calderbank offers constitute a potential exception to the general rule and may result in the award of indemnity costs; 4. Whilst Part 42.14 creates a presumption in favour of a plaintiff where an Offer of Compromise is rejected and the order or judgment is no less favourable to the plaintiff, the court retains a discretion to make other costs orders where appropriate; 5. Part 42.14 is inapplicable as the Offer of Compromise dated 21 June 2017 was not rule compliant; the Offer was not a genuine compromise and the defendants' rejection of the offer was not unreasonable; 6. The Offer is said not to comply with Part 20.26(2)(a) and (b) of the UCPR as the Offer does not identify the claim to which it relates and the proposed orders for disposal including the proposed judgment and what was to be done as to the balance of the proceedings. An Offer of Compromise must substantially comply with the form and term of the rules: Leach v Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391. An Offer which does not comply with the rules is ineffective for obtaining a special costs order under Part 42.14. Further, there is nothing in the Offer or the letter to which it was attached to state that it is also intended to amount to a Calderbank offer; 7. The Offer in any case did not amount to a genuine offer to compromise as it did not represent a genuine attempt to reach a negotiated settlement but was a demand to capitulate. There was also no reference to future payments; 8. It was not unreasonable for the defendants to reject the offer as the claim was in dispute and was uncertain. The Statement of Claim was amended after the Offer was made. Further evidence was led from Ms Jay on this issue after the Offer was made during the further hearing commencing in April 2018; 9. The defendants should not be required to pay the costs thrown away occasioned by the adjournment of the hearing commencing 4 December 2017 as this was due to the late service of medical material on which the plaintiff relied.
The Plaintiff in response submitted as follows: 1. It adopted the submissions for Ms Jay; 2. The Offer did state with the covering letter the claim to which it related; 3. While the Offer may not have strictly complied with the Rules the Court must look at the context of the claim in exercising its discretion as to costs. This included the correspondence in 2015 - see Exhibit A on the application; 4. In substance the Offer and the covering letter should be regarded as a Calderbank offer; 5. The Offer was not a complete capitulation as the defendants would have saved future costs if they had accepted the offer.

[5]

Consideration

Part 20.26(1) and (2) of the UCPR provides as follows: "20.26 Making of offer (cf SCR Part 22, rules 1A, 2, 3 and 4; DCR Part 19A, rules 1, 2, 2A, 3 and 4; LCR Part 17A, rules 2 and 5) (1) In any proceedings, any party may, by notice in writing, make an offer to any other party to compromise any claim in the proceedings, either in whole or in part, on specified terms. (2) An offer under this rule: (a) must identify: (i) the claim or part of the claim to which it relates, and (ii) the proposed orders for disposal of the claim or part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment, and (b) if the offer relates only to part of a claim in the proceedings, must include a statement: (i) in the case of an offer by the plaintiff, as to whether the balance of the proceedings is to be abandoned or pursued, or (ii) in the case of an offer by a defendant, as to whether the balance of the proceedings will be defended or conceded, and (c) must not include an amount for costs and must not be expressed to be inclusive of costs, and (d) must bear a statement to the effect that the offer is made in accordance with these rules, and (e) if the offeror has made or been ordered to make an interim payment to the offeree, must state whether or not the offer is in addition to that interim payment, and (f) must specify the period of time within which the offer is open for acceptance."
In my view, there is force in some of the defendants' submissions with the result that the Offer of Compromise was not substantially compliant with the UCPR.
I reject the defendants' submissions that the Offer did not identify the claim or part of the claim to which it relates under Part 20.26(2)(a)(i). The Offer was in the usual form, identified the parties to the proceedings, identified the matter number of the proceedings and the covering letter referred to the "Worker" as being "Katrina Jay." In my view, the claim was sufficiently identified.
I accept the submission that the Offer did not disclose the proposed orders for disposal of the claim or part of the claim including the monetary judgment proposed within Part 20.26(2)(a)(ii) of the UCPR. The Offer in paragraph 2 did not refer to any orders for disposal of the claim or part of the claim but merely referred to an offer to accept a sum of money with interest. While an Offer must be viewed with a degree of practicality, this Offer simply did not disclose the orders proposed and thus did not comply with Part 20.26(2)(a)(ii) which commences "An offer under this rule…must identify…".
I accept the submission that the Offer did not include a statement as to whether the balance of the proceedings was to be abandoned or pursued within Part 20.26(2)(b)(i). A distinct cause of action is created when each workers compensation payment is paid by the plaintiff: South Eastern Sydney Area Health Service v Gadiry [2002] NSWCA 161 at [47]-[48]. Until a payment is made, the employer does not have a cause of action against the tortfeasor. There was no statement included in the offer as to whether any further claim for indemnity was to be abandoned or not pursued. The Offer in Annexure A merely showed how the Offer in paragraph 2 was calculated including for the period 29 August 2013 to 16 June 2017 which was prior to the date of the Offer. In my view, therefore, the Offer did not comply with Part 20.26(2)(b)(i).
As the Offer did not comply with the scheme in Part 20.26 of the UCPR it is ineffective to obtain a special costs order: Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311; [2013] NSWCA 188 at [25], [28], [37]-[38] and [40].
I agree with the submissions of the defendants that the Offer could not operate as a Calderbank offer as there was nothing in the Offer, the letter forwarding it or the surrounding circumstances to establish that the Offer was intended to operate also as a Calderbank offer: see Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311; [2013] NSWCA 188 at [41]-[44].
I also agree that the Offer was ineffective as it did not appear to be a genuine offer but was in substance a demand by the plaintiff to the defendant to capitulate. The Offer sought payments made, interest on those payments and in effect costs: see Part 42.13A(2). As the Court of Appeal stated in Toyota Finance Australia Limited v Gardiner (No 2) [2016] NSWCA 181 at [15]: "It is clear that "where no significant compromise at all is made by a party to an appeal", the default position provided for in the rules will not be applied." Here, no significant compromise was made by the plaintiff. The Offer required "complete capitulation": Gardiner at [17]. There was no aspect of genuine compromise: Gardiner at [18].
The defendants submit that at that time it was not unreasonable to reject the Offer as the basis for the payments was in dispute and not clear on the evidence. I accept this submission. Ms Jay had given very limited evidence as to why she was at the location: she said she "was going to Woodward Street for an appointment" (T10.35). The evidence was later greatly expanded on this issue: T306-311. The Statement of Claim was also amended to clarify the plaintiff's claim. In all the circumstances, I do not think it was unreasonable for the defendants to reject the Offer as at that time.
Accordingly, I reject the plaintiff's application for a special order as to costs including indemnity costs.
In relation to the question of the costs reserved, I accept the defendants' submissions on this issue. The plaintiff in the 2016 proceedings had to establish its case. It chose to do so by relying on the medical evidence of the plaintiff in the 2015 proceedings and not tendering its own medical evidence. The new medical evidence which was served shortly before the resumed hearing was equally in support of the plaintiff's claim for indemnity. There is no basis for requiring the defendants to pay the plaintiff's costs thrown away by reason of the adjournment.
Accordingly, I make the following orders. 1. In the 2015 proceedings: 1. Order (2) made on 25 September 2018 is varied only to the extent that the plaintiff is to pay the costs thrown away of and occasioned by the adjournment of the hearing dates on 5, 6 and 7 December 2017. 2. The plaintiff is to pay the defendant's costs of the costs application heard on 22 November 2018. 3. Liberty to the parties to apply within seven days for a different costs order to that in (b) above. 1. In the 2016 proceedings: 1. Order (4) made on 25 September 2018 is varied only to the extent that the defendants are not to pay the plaintiff's costs thrown away of and occasioned by the adjournment of the hearing dates on 5, 6 and 7 December 2017. 2. The plaintiff is to pay the defendants' costs of the costs application heard on 22 November 2018. 3. Liberty to the parties to apply within seven days for a different costs order to that in (b) above.

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