Lee (a pseudonym) v Dhupar

Judgment (7 paragraphs)

[1]

Judgment

These reasons concern two contested notices of motion arising from the principal judgment delivered on 19 November 2020 at which time a verdict and judgment was entered in favour of the plaintiff in the amount of $408,700: Lee (a pseudonym) v Dhupar [2020] NSWDC 717. These reasons assume a familiarity with that decision.
The first motion, filed by the plaintiff, seeks a contested order for indemnity costs and a non-controversial adjustment of the judgment sum. The second motion, filed by the defendant, seeks a contested stay of the execution of the judgment.
When the principal judgment was delivered, the plaintiff foreshadowed filing a notice of motion to seek an order for indemnity costs. At that time, the defendant made an immediate oral application for a stay. No grounds for a stay were identified at that time.
Both applications were deferred to a date to be fixed to enable the parties to prepare and file their respective applications and any evidence in support of the orders sought. I am informed that at present, no Notice of Appeal has been filed, however, the defendant has filed a Notice of Intention to Appeal. On 10 December 2020, the two notices of motion comprising the respective applications for indemnity costs and for a stay were filed in Court and heard instanter.
The plaintiff relied upon two affidavits from her solicitor, Mr Tim Cummings, respectively affirmed on 18 November 2020 and 10 December 2020. Those affidavits set out a chronology of the events outlining the plaintiff's unsuccessful pre-judgment attempts at settlement of the proceedings by way of offers of compromise, together with some details of the plaintiff's financial situation and property interests.

All of the plaintiff's rejected offers of compromise, as outlined in the above tabulation were in amounts well below the amount that was ultimately assessed and awarded to the plaintiff pursuant to s 16 of the Civil Liability Act 2002 (NSW) as damages for non-economic loss alone, without regard to the other assessed heads of damage.
When each of those offers are viewed in sequence in the context of the liability issues in the case as framed by the expert evidence which evolved over time, it is plain that all those offers should be seen as representing genuine and reasonable attempts at seeking a compromise resolution of the case having regard to the state of the expert evidence as it evolved at various times, as has been identified in the analysis of that evidence within the principal judgment.
The plaintiff's first four offers of compromise were met with responsive offers from the defendant to settle on the capitulatory basis of a verdict and judgment for the defendant.
Ultimately, the plaintiff obtained a judgment no less favourable than any of the monetary offers she made in the proceedings. Where the plaintiff has achieved a result in the litigation that is equal to or better than an offer that complies with the Rules, a presumptive entitlement to indemnity costs arises.
The plaintiff's first offer of compromise, in the amount of $120,000 plus costs was served on 14 May 2018, which was after the plaintiff had served an expert liability report dated 20 June 2017 from Professor Michael O'Connor and an expert damages report from Dr Samson Roberts on 9 March 2017. That offer forms the sentinel basis of her application for indemnity costs.
That offer was made after the defendant obtained an expert liability report dated 17 November 2017 from Associate Professor Michael Cooper and an expert damages report dated 12 December 2017 from Dr Angelo Virgona.
When the plaintiff's 14 May 2018 offer of $120,000 plus costs is viewed against the amount of $261,000 which was ultimately awarded for s 16 damages for non-economic loss, the reasonableness and the inherent compromise within that offer is self-evident, both when viewed from the perspective of the amount of the judgment of 19 November 2020, and when viewed as to the equivalent s 16 value as at 14 May 2018, namely $233,000.
In my view it is not necessary to look further into the state of the expert evidence or the particulars of claim to assess the compromise nature of that offer. It is plain that the extent of the compromise offered by the plaintiff was genuine, reasonable and substantial.
The defendant's reference in argument to the various changes in the extent, content and timing of the plaintiff's expert evidence and the various changes in the nature of the particulars of the plaintiff's claim for heads of damage do not identify an exceptional event that justified the rejection of the plaintiff's offer as at 14 May 2018, or for that matter, the offers that were made subsequently.
In that regard, the cascading proliferation of expert evidence on the liability issues was largely the result of the initial expert evidence obtained by the defendant, which itself mandated responsive expert commentary.
It can be taken as a given that the non-static and evolving forensic assessments made by parties at various times in the currency of litigation are necessarily reactive to changes in emphasis in the evidence. Each of those events on the timeline represents opportunities to take stock and give consideration to the direction and cost of the litigation.
The fact that the plaintiff's case succeeded to the extent that was ultimately achieved was a plainly foreseeable occurrence on the predictable timeline of litigation where the evolution of the state and strength of the evidence continued to develop as commonly occurs in such cases.
When the defendant declined to accept each of the plaintiff's offers she did so without engaging in explanatory or clarificatory debate. At those times, to use an analogy taken from the lingua franca of the case, she ran the inherent risk of litigation that ultimately materialised in the plaintiff's favour.
UCPR r 20.26(4) provides: 20.26 Making of offer (4) If the offeror makes an offer before the offeree has been given such particulars of the offeror's claim, and copies or originals of such documents available to the offeror, as are necessary to enable the offeree to fully consider the offer, the offeree may, within 14 days of receiving the offer, give notice to the offeror that - (a) the offeree is unable to assess the reasonableness of the offer because of the lack of particulars or documents, and (b) in the event that rule 42.14 applies to the proceedings, the offeree will seek an order of the court under rule 42.14(2).
The defendant's representatives did not issue any notices pursuant to UCPR r 20.26 to seek clarification or discussion on the plaintiff's first offer of compromise or in respect of any further offers the plaintiff served when the exchange of evidence occurred at various stages of advancement of the litigation.
At those times, the defendant's representatives must be taken to have been in a position to undertake the required evaluations for making forensic decisions as to settlement against the potential risk of success of the plaintiff's case and a judgment for a greater amount. The defendant's representatives did not disclose or seek to rely upon any circumstantial difficulty in analysing the plaintiff's offer nor did they seek to extend the stated time for the consideration of any of the plaintiff's offers of compromise.
Instead, the litigation took its course and the plaintiff went on to incur considerable costs, undoubtedly including otherwise unrecoverable costs components which would have been avoided if the defendant had availed herself of the reasonable settlement opportunity which presented itself for acceptance on 14 May 2018.
Ultimately, the defendant served its only monetary offer of compromise on the plaintiff after all the evidence had concluded and before the delivery of judgment. At that time the plaintiff had already incurred the considerable costs of a fully contested trial where all the ferrets had been followed.
The plaintiff's application for indemnity costs must be determined in accordance with the dictates of justice: s 58(2) of the Civil Procedure Act 2005 (NSW) ("CP Act").
An application for a special order for costs is a consequential aspect of the administration of the well-established legislative framework of the rules of practice and procedure: s 98 of the CP Act. The broad discretion conferred by that legislative provision is not fettered by, or based upon, any general default position that presumes the ordinary basis of costs to be the starting point for the consideration of an application for indemnity costs: UCPR r 42.1, r 42.2; Wright v Apthorpe [2020] NSWCA 300, at [3], [52]-[54], [70]-[71].
The exercise of the general discretion for determining the appropriate order for costs in the face of competing considerations should reflect a broad evaluative judgment of what the justice of the case requires: Gray v Richards (No 2) [2014] HCA 47, at [2].
The determination of an application for indemnity costs must proceed according to the unfettered discretion conferred by the Act and Rules. It must be exercised by reference to the relevant facts connected with or leading up to the litigation where, absent the existence of disentitling factors, the most important guiding principle is that the successful party is generally entitled to a compensatory order for costs. An order of that nature is not punitive but is instead intended to operate as an indemnity against the expense of litigation that should not, in justice, have been visited upon the applicant party: Northern Territory v Sangare [2019] HCA 25, at [24]-[25], following Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11, at [66]-[67], [35], [134].
In this instance, the sentinel relevant fact was the plaintiff's 14 May 2018 offer of compromise for a reasonable sum which was readily capable of forensic consideration at a time when costs were relatively contained. As a consequence of the defendant's non-acceptance of the plaintiff's offer of compromise, the plaintiff was obliged to incrementally incur additional layers of costs, where it appears that a significant proportion of those costs might not necessarily be recoverable on the ordinary basis.
In this case, on the application of the principles identified in the preceding paragraph, I find that the plaintiff has demonstrated an entitlement to be indemnified for those costs. I find that the plaintiff has established her entitlement to an order that the defendants pay her costs on the ordinary basis to 14 May 2018 and on the indemnity basis from 15 May 2018.

Stay application by defendant

Counsel for the defendant made an oral application for a stay immediately after orders were read on 19 November 2020. Subsequently, on 27 November 2020, the defendant gave instructions to her solicitor to seek a stay. The plaintiff has declined to consent to the defendant's request for a stay.
On 1 December 2020, the defendant filed a Notice of Intention to Appeal in the Court of Appeal Registry. At the time the defendant's motion for a stay was heard no concrete grounds for a proposed appeal have been identified either in evidence or in argument.
The defendant's application for a stay is based on what has been referred to as the "usual practice" of staying judgments pending a decision on appeal where there is a risk that the plaintiff will be unable to repay the verdict monies without difficulty or delay if an appeal were to succeed: Woolworths v Strong (No 2) (2011) 80 NSWLR 445, [2011] NSWCA 72, at [68].
In my view the above stated basis for the defendant's application for a stay is based on a misapprehension of the effect of the decision cited in the preceding paragraph. The defendant's reliance on the decision in Woolworths Limited v Strong (No 2) must be viewed in the context of several distinguishing perspectives.
First, the context that case was a hindsight consideration of restitution of already paid judgment monies that followed a successful appeal based on identified and argued grounds whilst awaiting a new trial. Secondly, as I read the remarks critical of the trial judge's failure in that case to follow the usual practice of staying judgments pending appeal, it is not clear as to whether the trial judge was, at the time of refusal, referred to specific grounds of appeal. Be that as it may, the decision in Woolworths Limited v Strong (No 2) was reversed on appeal to the High Court: Strong v Woolworths Limited [2012] HCA 5. Thirdly, and with respect, I observe that the obiter reference to considerations of usual practice at paragraph [68] of the decision made no distinguishing reference to the well-settled and well-followed foundation principles regarding an order for a stay as described in Alexander v Cambridge Credit Corporation Ltd [1985] NSWLR 685, at p 694E.
In Woolworths v Strong (No 2), some of the remarks made in TCN Channel 9 Pty Ltd v Antoniadis (No 2) [1999] NSWCA 104, were cited, as follows: "67 In Antoniadis (No 2) a plaintiff had received a judgment in the court below, had been paid the amount of the judgment, but found that the judgment was reversed on appeal. At [15]-[16] this Court said: "We can only express regret that a stay of execution was not granted in this case pending the hearing of the appeal. It was never suggested that the opponent ran any risk of losing the benefit of her judgments by being prevented from enforcing them pending the appeal. She was protected from the purely financial consequences of any delay by the accrual of interest on the judgments in the meantime. This Court regularly stays execution on judgments pending an appeal where there is a risk that the plaintiff will be unable to repay the money without difficulty or delay if the appeal were to succeed. Adherence to this principle would have prevented the present embarrassing situation where the Court has enforced interim payment to the plaintiff but repayment cannot or will not be made without further litigation in the Federal Court with a risk that the opponent will be made bankrupt without the claimant recovering its money." 68 The present situation, where restitution needs to be sought at all, arises from the trial judge having failed to follow the usual practice of staying judgments pending appeal where there is a risk that the plaintiff will be unable to repay the money without difficulty or delay if the appeal were to succeed. It is an appropriate time to reiterate the importance of that practice."
It is clear from those cited passages that the expressions of regret in Antoniadis (No 2) concerning the refusal of a stay involved the specific and distinguishable consideration of the Court's power to order restitution to return the payment of judgment monies after a successful appeal which reversed findings made at first instance whilst awaiting a new trial.
Restitution is a hindsight consideration which is different to the prospective question of whether or not arguable grounds of appeal have been established so as to justify an order for a stay of execution on a judgment: Antoniadis (No 2), at [8], [14].
In that case, at [1], it was noted that the trial judge had refused to grant a stay pending an appeal and a further application to the Court of Appeal had also been dismissed. The need for restitution only arose subsequently, following a successful appeal: [4]. The expressions of regret in Antoniadis (No 2) must be read in the context of that procedural context. That decision did not involve what I find to be the distinguishable circumstances of a prospective consideration of the arguability of a potential appeal.
In considering the defendant's arguments for a stay based on those decisions it is relevant to identify the uncontroversial well-accepted settled foundation principles regarding the usual practice for applications to stay the execution of a first instance judgment pending an appeal.
In order to obtain a stay of the judgment in this case the defendant must establish grounds that justify a departure from the general rule that the plaintiff is entitled to the benefit of the judgment entered in her favour: Alexander v Cambridge Corporation Ltd [1985] NSWLR 685, at p 694E. The absence of identified grounds of appeal makes it impossible for any Court to make a non-speculative preliminary assessment of whether there is an arguable appeal: Alexander v Cambridge Corporation Ltd, at p 695.
In an earlier decision, in Jajieh v Woolworths Ltd (No 2) [2010] NSWDC 253, at [19]-[20], I noted that the relevant considerations were conveniently identified as follows: "19. The onus is on the defendant to establish grounds for ordering a stay so as to justify a departure from the general rule that the plaintiff is entitled to the benefit of a judgment : Alexander v Cambridge Credit Corporation Ltd [1985] NSWLR 685 at [694E]. 20. The onus on the defendant is discharged if the defendant can show first, that there is no reasonable probability of retrieving the damages paid pursuant to a judgment in the event of a successful appeal, and secondly, that there should be reasonably arguable grounds of appeal : Andrews v John Fairfax & Sons [1979] 2 NSWLR 184, per Maxwell J at 189B, citing the remarks of Sugerman P, in Bridges v Consolidated Press Ltd, NSW Court of Appeal, unreported, 16 June 1970. These principles have been more recently confirmed in Adeels Palace Pty Ltd v Moubarack; Adeels Palace Pty Ltd v Najem (No 2) [2009] NSWCA 130 per Hodgson JA at [2]."
The above approach was more recently adopted and followed with approval by Elkaim J in SMA v John XXIII College (No 3) [2020] ATSC 236, at [5].
In the present case it is incumbent upon the applicant defendant to demonstrate that there is an appropriate reason for a stay to be granted so as to displace the already cited general rule identified in Cambridge Credit Corporation Ltd.
The foremost consideration is the question of whether the applicant for a stay can show an arguable case for an appeal, as was also identified in Woodlawn Capital Pty Limited v Motor Vehicles Insurance Limited [2015] NSWCA 227. In that case, at [9] the following statement was made: "9. The central determinant as to whether a stay will be granted and if so upon what terms, if any, is the court's assessment as to what is a fair balance of the rights of the parties, given that an appeal does not of itself operate as a stay and the party who succeeded at trial is entitled to the fruits of its victory. The court's concern at all times to ensure that its ultimate orders will be effective: Cook's Construction P/L v Stork Food Systems Aust P/L [2008] QCA 322; [2008] 2 Qd R 453 at [15]. See also Appeal and Appellate Courts in Australia 2014, LexisNexis at 8.5-8.14."
A review of Chapter 8 of the cited text Appeal and Appellate Courts in Australia and New Zealand by MJ Beazley et al, 2014, does not contain any commentary, critical or otherwise, concerning the decision in Woolworths Ltd v Strong (No 2), upon which the defendant relies for a stay in this case.
In Cook's Constructions Pty Ltd v Stork Food Systems Australia Pty Ltd [2008] QCA 322; [2008] 2 QdR 453, at [15], a focal point for the consideration of an application for a stay was identified as follows: "15. Accordingly, the focus of this Court's attention must be upon whether Cook's appeal might be rendered nugatory by a refusal of a stay and whether Cook would be irremediably prejudiced if the stay were not granted and its appeal were ultimately upheld."
Recognising that there is a material difference between a document which states an intention to appeal and a document that constitutes an actual appeal, in my view it would seem nonsensical to argue that the refusal of an application for a stay renders nugatory an intention to appeal so as to cause irremediable prejudice to a party who might in due course intend to initiate and pursue an appeal but who has not yet actually commenced an appeal by filing grounds of appeal: Cook's Constructions, at [14]-[15].
It is plain from the decisions in Cook's Constructions, at [8] and [10], that the Court in that instance was concerned with an appeal on actual grounds that had actually been filed. The reference to an appeal having been started or commenced could have no other meaning. That is different to the circumstance of simply filing a holding appeal pursuant to r 761(1) of the Uniform Civil Procedure Rules (1999) Qld, which is an equivalent procedure to filing a Notice of Intention to Appeal in this jurisdiction: UCPR r 51.9.
In my view, an appeal should not be taken to have been filed or commenced until the formal filing of a Notice of Appeal in which the claimed grounds of appeal have been identified and stated in accordance with the applicable rules governing appeals: UCPR r 51.16, r 51.18.
In my view, the authorities that are directed at the issue of whether an appeal might be rendered nugatory absent the grant of a stay should not be taken to apply to circumstances where a defendant has only filed a Notice of Intention to Appeal. Until the defendant files a formal Notice of Appeal with specifically formulated grounds that can reasonably be said to identify arguable error, it is a misnomer to seek to equate a Notice of Intention to Appeal with a Notice of Appeal that has actually been filed and which identifies arguable grounds.
In arguing for a stay in this case, the defendant has not pointed to any such grounds of appeal, but instead has in general terms referred to the fact of a proposed appeal on liability, causation and damages.
The defendant's written submissions, which were provided at the time of the application for a stay was made, refer to criticisms of the judgment that, without more, do not comprise grounds of appeal.
Without attempting completeness, those criticisms traverse numerous topics which were the subject of fact findings in the principal judgment. They include matters of inference; onus of proof; whether or not a factual witness was used as an expert witness; reliance on selected parts of the evidence; the inferences to be drawn from the defendant's statement to her solicitor as tendered in evidence; what conclusions ought to have been drawn from the defendant's after-the-event alteration of her clinical records by the addition of a material date; the manner in which the expert evidence was analysed; the intra-operative conclusions the defendant ought to have made; the conclusions to be arguably drawn from post-operative investigatory tests; the status of the guidelines from the manufacturer of Filshie clips for assessing whether or not there had been a breach of the duty of care owed; whether the defendant followed those guidelines; the manner in which photographic images were interpreted; and an asserted judicial failure to grapple with a critical factual issue.
It is invidious, and not my function as the trial judge, to engage with those assertions, none of which have been reduced to a set of recognisable grounds of appeal. If and when a Notice of Appeal is filed containing conventionally formulated grounds of appeal, the primary judgment will either stand or fall following a fair appellate reading and consideration of the judgment as a whole in light of any such filed grounds.
In the present circumstances I do not consider that the obiter remarks in Woolworths Limited v Strong (No 2) concerning a "usual practice" based on the cited portions of the judgment in Antoniadis (No 2) operate to displace the identified and well-settled principles identified in Alexander v Cambridge Credit Corporation Ltd.
In considering whether the factor that the defendant might be irremediably prejudiced from achieving restitution in the event of a successful appeal, the defendant must show that there is a risk the judgment monies may be dissipated beyond the defendant's reach for recovery. In that regard the defendant argued there was a risk the plaintiff would have difficulty repaying the judgment monies in the event of a successful appeal. On the evidence in this case, a consideration along those lines is doubly speculative. That is because, first there is no actual appeal to consider at this point, and secondly, such a risk or difficulty has not been persuasively demonstrated.
The plaintiff is a joint tenant with her husband in a property that is subject to a mortgage, and she also has some paid employment. The plaintiff's financial statements, which were sought by the defendant some 8 days after the delivery of the judgment, do not of themselves compellingly reveal a material risk that judgment monies, once paid, would be dissipated beyond restitutionary reach.
My evaluation of the defendant's argument on that account was that it was speculative and unpersuasive. In my view, the defendant's submissions touched lightly upon this topic. However, absent a filed Notice of Appeal, it is not necessary to give further consideration to that argument.
I find that the defendant has not established the necessary pre-requisite circumstances to justify the imposition of a stay that would, to adopt the language of the authorities, deprive the plaintiff of the fruits of her victory whilst she waits out the 3 month period of currency of a holding appeal whilst the defendant considers whether or not it has, and should file arguable grounds of appeal.

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