LUCAS v HILLIER & CARNEY No. SCGRG-94-694 Judgment No. S128 [1999] SASC 128

Supreme Court of SA|1999-05-20|Before: Millhouse J

Millhouse J. In February I gave the plaintiff judgment for $313, 994 with costs. I also gave the defendants liberty to apply in the next seven days. On 22 February I ordered that time within which to appeal should not run until the question of costs were resolved. On 18 March I heard argument on costs and reserved a decision.

For some years until 1985 the plaintiff had been employed by Australian National Railways. Since then, following his injury, he has lived on compensation.

In 1991 he went into hospital to have an operation to relieve his right leg pain. After the operation he came out with severe left leg pain instead. He was fitted with a morphine pump in November 1992, eighteen months after the original operation. I found both defendants liable, Mr Terence Mark Hillier negligent in his performance of a lower lumbar spinal operation and Mr Paul Graham Carney negligent in his after care of the plaintiff.

From the title of the action it appears that the plaintiff is an individual person. Really the Commonwealth was standing behind the individual plaintiff pursuant to s50 of the Safety Rehabilitation and Compensation Act (Cth) 1988:-

(i) is paid to an employee in respect of an injury to the

(b) the injury, loss, ... occurred in circumstances that

appear to create a legal liability in a person to pay damages

such damages have not been instituted by the employee ...

or have been so instituted but have been discontinued or have not been properly prosecuted;

Comcare may institute proceedings or fresh proceedings against the person in the name of the employee ... for the recovery of damages in respect of the injury, ... or may take over the conduct of the proceedings, as the case requires.

(2) Comcare is liable to pay all costs of or incidental to any

proceedings taken over by it, being costs payable by the

plaintiff in those proceedings, other than costs unreasonably incurred by the plaintiff.

(3) Where Comcare institutes, or takes over the conduct of,

(a) settle the proceedings, either with or without obtaining

(b) if a judgment is obtained in the proceedings in favour of the

plaintiff - take such steps as are necessary to enforce the judgment.

(4) The employee ... shall sign any document relevant to

proceedings instituted or taken over by Comcare under this

section (including the settlement of the proceedings), being a document that Comcare requires the employee ... to sign and, if he or she fails to sign any such document, the court or tribunal in which the proceedings are taken may direct that the document be signed on his or her behalf by a person appointed by Comcare for the purpose.

(5) Where Comcare institutes, or takes over the conduct of,

proceedings under this section, the employee ... shall comply with any reasonable requirement of Comcare for the purpose of the proceedings and, where the employee ... fails to comply with any such requirement, the right of the employee ... to compensation under this Act in respect of the injury, loss, damage or death to which the proceedings relate is suspended until such time as the employee ... complies with that requirement.

(6) Where a right to compensation is suspended under subsection

(5), compensation is not payable in respect of the period of the suspension.

(7) Any damages awarded under a judgment obtained in

proceedings referred to in this section, or payable as a result of the settlement of such proceedings, shall be paid to Comcare and Comcare shall deduct from the amount of those damages:

(a) an amount equal to the total of all amounts of compensation

paid to the employee ... under this Act in respect of the injury,

(b) the amount of any costs of or incidental to those proceedings

paid by Comcare; and shall pay the balance (if any) to the employee ...

(8) Where Comcare pays an amount to an employee ... under

subsection (7), the employee ... is not entitled to receive any further amounts of compensation under this Act in respect of the injury, ... to which the proceedings related until the amount of compensation that would, but for this subsection, have been payable to the employee ... in respect of that injury, ... equals the amount paid by Comcare to the employee ... under subsection (7).

´person' does not include the Commonwealth, a Commonwealth authority, a license corporation or an employee."

Over the years Comcare has paid to and on behalf of the plaintiff a lot of money. It was quite obvious that it was seeking to recover from the defendants, or rather, I assume, their insurers, what it had paid. Of the damages awarded Comcare would first recover what was due to it. Anything left over would go to the plaintiff personally.

During the plaintiff's cross-examination the plaintiff admitted to lying on oath. As a consequence I ordered that he be separately represented in his personal capacity. There was a conflict of interest between the interests of Comcare and of the plaintiff personally.

I was not impressed either by the plaintiff personally nor by the way in which Comcare had acted. The plaintiff had lied on oath. I found that he had manipulated those around him to suit his own ends. I was also critical of Comcare. I set out in my Reasons a memorandum dated 4/3/93, written by an officer of Comcare:

"It is simply not possible to obtain a report on this man at this time. If he claims anything, it is more likely we will end up paying for it than not, ... unless clearly outrageous/inappropriate, just pay."

Comcare, knowing what type of man the plaintiff is should have acted years ago, to stop him getting taxpayers' money with no justification.

The defendants make a number of submissions with regard to costs:

(a) That I should exercise my discretion with respect to costs on the

basis of which party was successful on particular issues, Usher v

Denton (1988) 141 LSJS 218, Thompson v Thompson (1974) 8

SASR 394 and Cretazzo v Lombardi (1975) 13 SASR 4, or, in the

(b) Wield a broad axe in favour of the defendants taking into account;

(i) the plaintiff's lies, exaggeration and deception and

(ii) the lack of diligence of Comcare and its representation that the

representation in his own capacity, as this followed from the

(d) they should have costs of and incidental to the evidence

(e) the plaintiff should pay the defendants' costs associated with special

damages apart from the items of special damages upon which the

The plaintiff asks for costs, to follow the event, on a solicitor and client basis. He also asks that in exercising my discretion I take into account that the defendants made no offer pursuant to the Rules of Court nor did they make a Calderbank v Calderbank (1976) Fam. R 93 or Cutts v Head (1984) 1 Ch 290 offer. As well, the plaintiff argues that the defendants could have divulged video evidence of his activities much earlier. The video was detrimental to his credit: had it been disclosed it would have reduced the time taken at trial.

Section 40 of the Supreme Court Act (SA) 1935 sets out the discretion as to costs:

40 (1) Subject to the express provisions of this Act, and to the rules of

the court, and to the express provisions of any other Act

whenever passed, the costs of and incidental to all proceedings in the court, ... shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and to what extent such costs are to be paid."

Rule 101.02 provides that costs will follow the event unless otherwise ordered. A judge's discretion is not fettered by the Rules, Copping v ANZ McCaughan [1995] SASC 4917; (1994) 63 SASR 523. What is important is that my discretion be exercised judicially on grounds connected with the cause of action, Cretazzo v Lombardi (1975) 13 SASR 4 @ 11.

In Re Elgindata Ltd (No 2) [1993] 1 All ER 232, Nourse LJ summarised established principles as to costs (@ 237):

"The principles are these. (1) Costs are in the discretion of the court. (2) They should follow the event, except when it appears to the court that in the circumstances of the case some other should be made. (3) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or a part of his costs. (4) Where the successful party raises issues or makes allegations improperly or unreasonably, the court may not only deprive him of his costs but order him to pay the whole or part of the unsuccessful party's costs. ... the fourth implies that a successful party who neither improperly nor unreasonably raises issues or makes allegations on which he fails ought not to be ordered to pay any part of the unsuccessful party's costs."

The defendants ask to have costs awarded on the basis of success on particular issues. They argue that the plaintiff pleaded numerous grounds, of which he was successful on only a few: they should not have to pay costs on issues on which the plaintiff was unsuccessful. The defendants rely on Cretazzo v Lombardi. In that case, as in this, the plaintiff was held to be "consciously exaggerating his symptoms to a very large degree, perhaps almost entirely". Bray CJ wrote the leading judgment. He was of the mind that the "appellant should suffer some penalty in costs for the groundless and conscious exaggeration of his claim", this was despite being successful on liability. As in this matter, video evidence was produced in Cretazzo which shewed many inconsistencies between disabilities complained of and ability to do certain things. However, there is an important distinction between Cretazzo and this matter. Bray CJ allowed costs against the successful party not solely because of the appellant's demeanour and exaggeration but because an inadequate offer had been made in the light of the video evidence. In the matter before us, apparently no offer at all was made. Neither side sought to make an offer under the Rules of Court, nor were Calderbank v Calderbank or Cutts v Head letters written by either party.

Before discussing the merits of the defendants' submission I mention the caution of Jacobs J in Cretazzo (@ 16) about separating costs on a successful issues pleaded basis:

"... I would wish to sound a note of cautious disapproval of applications, which are being made with increasing frequency, to apportion costs according only to the success or failure of one party or the other on the various issues of fact or law, which arise in the course of a trial. ... The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case."

I can see no reason to justify separating costs according to successful issues pleaded. Pleadings are meant to encourage parties to canvass all potential issues and if possible, to reach settlement before trial. The plaintiff was justified in pleading the issues which he did. Many were linked and could not easily be separated. The defendants argued that informed consent was not so linked. Maybe not, but that doesn't mean the plaintiff should not argue it: the decision was not a foregone conclusion. The defendants were successful on that issue because the plaintiff was so insistent and desperate to have an operation. The plaintiff was justified in pleading the issues argued and should not be penalised for doing so.

The next point is solicitor and client costs. Recently my brother Mullighan had the opportunity to consider it in Duke Group Ltd (in liq) v Pilmer and Ors (unreported, delivered 1 June 1998, Judgment No. 6699):

"... Usually costs are awarded on a party and party basis. The discretion to award costs on a solicitor and client basis is unfettered but it must be also be exercised judicially. In Colgate-Palmolive Co & Anor v Cussons Pty Ltd [1993] FCA 536; (1993) 118 ALR 248, Sheppard J had occasion to consider the principles relating to an award of solicitor and client costs, referred to by him as indemnity costs. After reviewing authorities he said at p256-p257:

2. The ordinary rule is that, where the court orders the costs of one

party to litigation to be paid by another party, the order is for

payment of those on the party and party basis. ... In many cases the

result will be that the amount recovered by the successful party

under the Order will fall short of (in many cases well short of) a complete indemnity.

4. In consequence of the settled practice which exists, the court ought

not usually make an order for the payment of costs on some basis

other than the party and party basis. The circumstances of the case

must be such as to warrant the court in departing from the usual course. ...'

Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston [1982] 1 All ER at 58 namely, there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice."

Mullighan J went on to consider what a special or unusual feature is:

"Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes [1989] FCA 540; (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Regata) or in wilful disregard of known or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless intentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Kent (SC(NSW)(CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis."

Here there was no fraud, (except for that of the personal plaintiff's - and I doubt if he will see any of this money anyway): no ulterior motive: no groundless contentions: no evidence of an imprudent refusal of an offer to compromise (I don't think the failure to have written a Calderbank v Calderbank or Cutts v Head letter in itself amounts to an imprudent refusal).

The plaintiff argues that the defendants long before the trial had a video shewing that he was exaggerating: they could have made an offer, knowing the evidence they had. This video shewed the plaintiff carrying slabs of beer, cleaning and driving his car, and fishing: he had denied he could do any of these things. The film was shewn to the plaintiff on days six and seven of the trial. Two days later Mr David Smith sought leave to represent the plaintiff separately in his own right: eventually Mr Martin Frayne came to represent the plaintiff. Effectively six days were lost obtaining separate counsel for the plaintiff and instructing Mr Frayne. On 5 March 1998 I ordered that the plaintiff pay the costs caused by this delay in any event. The precise order was:-

"1. That the plaintiff be represented separately in his personal interests, from his representation in relation to the interests of COMCARE pursuant to s50 Safety, Rehabilitation and Compensation Act (Cth) 1988.

2. That the plaintiff pay the costs thrown away on account of the

After cross-examination and having seen the video, the plaintiff's credit was greatly damaged. If the defendants had had the video long before trial, their solicitors should have disclosed this to the plaintiff's solicitors in the hope of negotiations for settlement. However, counsel for the defendants, Mr Richard Halliday with Mr Geoffrey Black, told me that the video was taken only a week or two before the trial. Mr Halliday cited Usher v Denton (No. 2) (1988) 141 LSJS 218 where Cox J said:

"I found that he exaggerated his disability and that, contrary to his evidence, there was not much wrong with him when the case came to trial. Secondly, the evidence that demolished the plaintiff's plausible case of a serious continuing disability was a film that was taken of the plaintiff at work only a few days before the trial. The plaintiff had been filmed on previous occasions but without any very significant result. I suppose it was still possible for the defendant to make a formal offer on the eve of trial, but in the circumstances I do not think that he is out of court, on the costs point, for having failed to do so."

The defendants should not be penalised in the circumstances for not divulging the contents of film taken shortly before trial.

There are no special circumstances justifying an award of costs to the plaintiff on a solicitor and client basis. Costs will be party and party.

The plaintiff admitted to telling lies on oath. I have described him as a man "not to be trusted, a manipulator, a professional invalid". The part of Comcare in all this is also open to criticism for its irresponsible "just pay" attitude. The defendants should not have to pay costs, for the inappropriate conduct by the plaintiff, either in his personal capacity or on the part of Comcare.

The plaintiff's admission of lying on oath led to counsel representing the plaintiff separately in his personal capacity. Had the plaintiff been an honest man this would not have been necessary.

The defendants had to go to great lengths to shew the plaintiff to be dishonest. He was skilled at manipulating those around him: he had fooled many in the medical profession. The plaintiff asserted he was severely disabled: the video shewed him not to be disabled, certainly not as he asserted. On 5 March 1998, Mr Frayne asked for an adjournment for two and a half days so that he could familiarise himself with the twelve to fifteen hours of investigatory film taken of the plaintiff. The costs of the adjournment were costs associated with and incidental to the film. The plaintiff should bear them.

The defendants should not have to pay for the time taken to prove the plaintiff's deceptions. The plaintiff was cross-examined for eleven days, most of the time was an attack on his credit. The video also had to be shewn to various medical practitioners and other professionals who came to court. Many admitted to having been tricked by the plaintiff.

Mr Halliday put to the various witnesses in detail the plaintiff's past medical history. The defendants' claim that the "historical revisionist approach", (as Mr Robert Cameron with Mr Peter Allen by then only for Comcare, called it), went substantially to the plaintiff's credit.

After the plaintiff's cross-examination, his credit had been destroyed. There was no need to continue to attack it: he had already admitted to lying, exaggerating and deceiving the Court. On the other hand the defendants' approach did have another useful purpose. The previous history was important for the purpose of comparing the plaintiff's pre- and post-operative conditions. It helped me in the assessment of damages.

The defendants ask for the costs of and incidental to the evidence of Mr Newberry, a podiatrist called by the plaintiff, on the basis that Mr Newberry had been completely tricked by the plaintiff. Mr Newberry admitted many times during cross-examination that "he [the plaintiff] was much more mobile than he told me he was". Furthermore, the cross-examination elicited that Mr Newberry's report had largely been based on information supplied by the plaintiff:

"Q. Your comment about yachting, darts and pool in the next

paragraph on p.1, did you understand from what he said to you that

his yachting activities had ceased following his 1991 surgery.

Q. And that his playing of darts had similarly ceased after that time.

Q. Was it something that he said to you - if you can identify it please do

A. I usually follow a formula in asking questions. I ask 'What could

you do before the injury or other event?' and 'Can you do this now?'...

Q. He gave you the impression that his alcohol problems were in the

Q. In the practice of podiatry, is it generally acceptable that one

approaches a patient by taking the patient's word for it, initially at

A. Unless there is a reason I don't think you would - you would expect

Mr Newberry's evidence was based on what the plaintiff had told him. This was shewn to be false, I can see no reason why the defendants should have to pay for it. The costs of and incidental to the evidence of this witness should be borne by the plaintiff.

Special damages were neither agreed nor proved item by item. I have never come across this before. I remarked during argument that the defendants had been "as bloody-minded as the plaintiff" on this issue. The defendants were quite successful at trial in their attack on special damages. Those claimed by the plaintiff were effectively cut by 50%. In coming to a decision I took into account the irresponsible attitude of Comcare and the plaintiff's deception.

The defendants have asked for the costs relevant to proof of special damages. They had agreed them all as to quantum but not as to liability. During the hearing counsel told me many times, "We're confident of agreeing the specials, Your Honour", but they never were agreed. I suspect intransigence on each side. I make no special order as to costs relating to special damages.

The defendants argue that I should exercise my discretion to award a proportion of costs against the plaintiff to shew my disapproval of his behaviour. I have been critical of the plaintiff, in both manifestations. Comcare for its irresponsible attitude of paying the bills without question and the plaintiff in his personal capacity for his dishonesty.

Although I had thought of making orders allowing specific items and disbursements in favour of the defendants, eventually I have decided simply to wield the broad axe. In doing so I shall take into account the various points I have canvassed and the arguments on costs put by each side.

The defendants should not have to pay the costs of the plaintiff in two capacities. Accordingly the plaintiff will have one set of costs of the action on a party and party basis. He will have half his costs and half the disbursements to be taxed. This order supersedes all other orders for costs which I have made.

At a glance

Court

Decision date

Before

Source

Judgment (111 paragraphs)

Parties

Cases Cited (8)