(1998) 44 NSWLR 578
New South Wales v Williamson [2012] HCA 57(2012) 248 CLR 417
Northern Territory v Sangare [2019] HCA 25
Judgment (12 paragraphs)
[1]
Background facts
From the court file and from the evidence before the Court on the application for costs, the following appears to be the position and constitutes my factual findings on the costs issues:
1. On 22 November 2018, the Statement of Claim was filed by the plaintiff in the Local Court. In it, the plaintiff sought damages in the sum of $60,000.
2. A Notice of Appearance was filed by the defendant dated 28 February 2019 on 1 March 2019.
3. On 1 March 2019, the defendant filed her Cross-Claim dated 26 February 2019 seeking $60,000 in damages.
4. On 22 May 2019, a Notice of Appointment of the defendant's current solicitor was filed.
5. On 16 August 2019, an Amended Defence was filed by the defendant;
6. Thereafter, further pleadings were filed with the leave of the Court. An Amended Statement of Claim was filed on 15 February 2022 and a Further Amended Defence was filed also on 15 February 2022. A Further Amended Statement of Cross-Claim was filed with leave on 5 August 2022.
7. Up until 2020, various interlocutory steps were taken in the proceedings commenced in the Local Court.
8. Both parties provided various Part 15 particulars in relation to their alleged injuries or in relation to damages.
9. On 11 August 2020, the defendant filed a Summons in this Court seeking that the Local Court proceedings be transferred to this Court under s 140 of the Civil Procedure Act 2005.
10. In support of the orders sought in the Summons for transfer, Ms De Luca-Leonard filed an affidavit dated 11 August 2020 referring to various reports of Dr Keller and Dr McClure and stated the following in paragraph 7: "In my opinion the verdict in this action if achieved by the defendant/cross-claimant could easily exceed the sum of $60,000."
11. On 28 July 2020, the plaintiff consented to the matter being transferred to the District Court with costs reserved. Following an adjournment by the Judicial Registrar of this Court, the plaintiff again consented to the matter being transferred to the District Court and orders were made for that to occur.
12. Various Offers of Compromise and Calderbank letters and settlement offers were made and served by the parties in the course of the proceedings as follows:
1. Offer of compromise by the plaintiff to the defendant sent on 28 March 2019;
2. Offer to settle from the defendant to the plaintiff dated 6 June 2019;
3. Offer of compromise by the defendant to the plaintiff dated and sent on 17 July 2019;
4. Offer to settle from the defendant to the plaintiff dated 24 July 2019.
5. Offer of compromise sent by the plaintiff to the defendant by a letter dated 7 November 2019;
6. Offer of compromise by the defendant to the plaintiff dated and sent on 18 December 2019;
7. Offer of compromise from the defendant to the plaintiff dated and sent 9 June 2020;
8. Calderbank offer from the defendant to the plaintiff dated 28 January 2021. An offer of compromise was sent on the same day;
9. Offer of compromise from the plaintiff to the defendant dated 9 January 2022;
10. Calderbank offer from the plaintiff to the defendant dated 14 January 2022.
[2]
The nature of the case and the hearing
As stated above, the case involved serious allegations of tortious batteries. The defendant alleged in her Cross-Claim that she was grabbed and strangled by the plaintiff at the incident on 31 March 2018. She later amended her Cross-Claim to allege a second strangling incident. The plaintiff alleged that he was the victim of tortious batteries and an assault on various dates in 2017 and 2018. In particular, it was alleged by the plaintiff that he was struck in the face a number of times by the defendant on the evening of 31 March 2018.
In my view, the batteries on the plaintiff by the defendant cannot be reasonably dismissed as trivial simply because they were batteries by a female on a male, involved no lasting injury and, in the Judgment, modest damages of $2,590 were assessed.
The conduct and nature of the trial are also relevant. Whilst extensive documents were tendered, evidence was given by the witnesses orally. Both parties were represented by counsel, with the defendant represented by both senior and junior counsel. There was extensive cross-examination of the more significant witnesses, particularly the plaintiff and the defendant and Ms Wells, the plaintiff's former partner. The defendant obtained a number of specialist reports in relation to injuries alleged to have arisen from the 31 March 2018 alleged batteries.
The extensive nature of the evidence and the cross-examination over numerous days required detailed written and oral submissions.
As stated above, the defendant sought between $600,000 and $630,000 in damages. The plaintiff sought over $100,000 in damages. It must be recalled that the original Statement of Claim and Cross-Claim each sought only $60,000 in damages.
On any view, the matter was a strongly fought piece of litigation in which many pieces of evidence, including the oral evidence in chief, were reviewed and tested in detail.
The defendant failed in her Cross-Claim.
The plaintiff obtained limited damages. In particular, no amount was awarded to the plaintiff for alleged psychiatric injury or for exemplary or aggravated damages. Further, there were extensive credit and reliability attacks on the plaintiff and the defendant with some of those attacks being successful, as reflected in the Court's determinations as to the credit and reliability of the plaintiff and the defendant. See the detailed discussion in the Judgment on these issues.
A number of other matters should be noted:
1. As stated above, the witnesses gave their evidence orally. The matter did not proceed by way of affidavit, although some witnesses were cross-examined on aspects of statements made by them;
2. There was thus some uncertainty as to the evidence which would be given by witnesses other than the parties;
3. There were inconsistencies between the two statements provided by Ms Wells. In her oral evidence, she gave a different account of a strangling incident to that given by the defendant. She also did not recall seeing the defendant's version of the choking or strangling incident despite being in the unit foyer at the relevant time;
4. The different evidence given by Ms Wells caused the plaintiff to seek leave to rely upon further substantial expert medical evidence;
5. It was uncertain both before and at the commencement of the trial to what extent the non-party witnesses would be subject to adverse credit or reliability findings arising from their evidence.
[3]
Submissions
The plaintiff initially submitted, in general summary, in chief as follows:
1. In the findings of the Court, the plaintiff was successful in relation to each of the events he relied upon for the purpose of his claims, the damage to the motor vehicle not being pressed. In relation to the central 31 March 2018 claim, the Court, after considering all the evidence, was comfortably satisfied that the defendant struck the plaintiff once but was not satisfied to the requisite degree that he was struck multiple times by the defendant;
2. The incidents of 3 June 2017 and 15 June 2018 were effectively conceded by the defendant, save for the untenable defence of self-defence;
3. The defendant's version of events was rejected;
4. The plaintiff had good cause to bring the proceedings and was successful;
5. The plaintiff was totally successful in defending the Cross-Claim brought by the plaintiff. The plaintiff was called on to defend a substantial Cross-Claim which would have exposed him to an award of substantial damages and effects upon his social and professional standings;
6. The plaintiff brought his proceedings in the Local Court where evidence would have been given by affidavit or written statement. It was the defendant who applied for the transfer of the proceedings to the District Court on the basis that the defendant's damages may be assessed at more than $60,000. The Court's findings were that if the defendant had been successful in establishing liability on the Cross-Claim, her damages would be assessed at about $136,000. It was therefore appropriate for the plaintiff to consent to the defendant's application for transfer to the District Court;
7. The defendant never made any offers of compensation to the plaintiff;
8. The defendant's offers to settle were bettered by the plaintiff. The offers escalated over time, taking into account costs incurred;
9. The plaintiff's offers were realistic in the circumstances and presented the defendant with a real opportunity to avoid the proceedings. The offers of 9 January 2022 exceeded the Court's Judgment. By that stage, it was clear that the proceedings would be extensive and expensive. There were significant costs risks to both parties;
10. The plaintiff has been successful in both his claim and in defending the Cross-Claim. There is no reason for the Court to depart from the rule that costs follow the event. The Court should order the defendant to pay the plaintiff's costs of the Statement of Claim and Cross-Claim proceedings. The plaintiff at all times had good cause to bring the proceedings and defend the Cross-Claim. Further, the plaintiff made a series of offers to settle the proceedings which, it is submitted, have been reasonable in the circumstances for the defendant to favourably consider;
11. In addition, the costs awarded to the plaintiff should be on an indemnity basis from 10 January 2022 under the UCPR. The plaintiff obtained a judgment on the claim no less favourable than that offer;
12. Even if the Court has difficulty in awarding costs on the Statement of Claim proceedings, the plaintiff should be entitled to an award of costs on an indemnity basis for successfully defending the Cross-Claim which potentially exposed him to an award of substantial damages, costs and loss of social and professional standing.
The defendant, in general summary, initially submitted in response as follows:
1. The Court should make no order as to the costs of and incidental to the proceedings with the effect that each party is liable for his/her own costs of the proceedings;
2. The plaintiff is a solicitor who was represented and acted for himself throughout the entire proceedings. As a solicitor and officer of the Court, the plaintiff should be expected to use the court process in pursuit of his private interest responsibly and should properly and adequately consider the proportionality of the use of the court system to resolve a private grievance of minimal financial consequence. A modest dispute can potentially expand into lengthy, expensive and onerous litigation which does not trigger an entitlement to costs on the "costs follow the event" principle;
3. The plaintiff substantially undertook all legal work himself. The plaintiff was a self-represented litigant with an inability to recover the time he spent on his case: see Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; (2019) 269 CLR 333. In Pentelow, the High Court held that as a general rule, a self-represented litigant may not obtain any recompense for the value of his or her time spent in litigation. There is no exception for a self-represented litigant who happens to be a solicitor in relation to his or her professional costs of acting in the litigation: see Pentelow at [1]-[3];
4. The plaintiff engaged counsel to appear for him at the hearing but instructed the counsel throughout the hearing. There is no evidence of a legal liability between the plaintiff and the barrister for payment of costs;
5. The plaintiff commenced proceedings in the Local Court claiming damages for what, on any view, were very minor assaults. The plaintiff consented to the proceedings being transferred to this Court. The plaintiff ultimately failed to clear the threshold limit of the Local Court, by a significant margin;
6. The defendant demonstrated, with medical evidence, that if she was successful, her damages would likely exceed the jurisdictional limit of the Local Court;
7. The plaintiff is not entitled to recover costs as a self-represented litigant. If that submission is not accepted, there should be no order as to costs of the proceedings as between the parties as it must have been obvious to the plaintiff, that a successful outcome for him on the issues pleaded in the Statement of Claim was always going to be wholly disproportionate to the costs incurred. It was always likely there were going to be a number of witnesses with at least four witnesses being called. It was also clear that the hearing would be hard-fought and require extensive cross-examination. Overall, the plaintiff's success was extremely limited in scope and he was wholly unsuccessful on the bulk of his claims;
8. The offers to settle are relevant. They were made early in the proceedings before costs had accumulated significantly. The terms of the defendant's offers of July 2019 and June 2020 were genuine and reasonable. The plaintiff did not respond to any of the settlement offers put by the defendant. The nature of the offers showed a lack of bona fides on the part of the plaintiff in promoting a settlement;
9. By the time of the plaintiff's 9 January 2022 offers, the defendant had expended large sums in preparation for the hearing. The Offer of Compromise was punitive in nature;
10. Having regard to the minimal damages awarded, the damages ought to be properly assessed in the context of expenditure of legal costs to achieve that result. In those circumstances it would be unreasonable to order costs of the proceedings to be paid by the defendant.
In reply, the plaintiff initially submitted:
1. The exercise of the Court's discretion should be made in accordance with the relevant rules in the UCPR;
2. The plaintiff's offers of compromise indicate real attempts to resolve the proceedings;
3. The defendant's accounts of the incidents on 3 June 2017, 15 June 2018 and 31 March 2018 as maintained at the final hearing were all rejected by the Court. The claim of self-defence in relation to the incident of 3 June 2017 was rejected;
4. The claim for the loss in value of the unit was dropped by the defendant well into the final hearing;
5. The second strangling incident was added by the defendant late in the final hearing;
6. The plaintiff is an employed solicitor only and is paid a salary. Counsel was not retained by the plaintiff but by a solicitor company;
7. The defendant applied to transfer the proceedings to the District Court not the plaintiff;
8. The defendant sought extensive damages in her Cross-Claim exceeding $600,000;
9. The plaintiff did give up something of value in his 9 January 2022 offer - costs incurred to that date and an entitlement to damages.
As stated above, after extensive written submissions were filed and served, on the day initially set down for oral submissions the defendant first raised the issue of a limitation or capping on costs which can be awarded by the Court because of s 61 of the LPULAA. She submitted that the limitation was applicable, and further, that no order for indemnity costs should be made in the circumstances. The plaintiff submitted that an award for indemnity costs should be made under section 5 of Schedule 1 of the LPULAA.
The plaintiff submitted:
1. He was successful in both the Statement of Claim proceedings and the Cross-Claim proceedings;
2. The defendant's evidence in the case supporting her claims was poor and inconsistent with that of Ms Wells;
3. The Cross-Claim sought substantial damages and was wholly rejected by the Court. It was reasonable to defend the claim and the serious allegations were relevant to the plaintiff's professional reputation;
4. The Statement of Claim legal services costs were prima facie limited by Section 2(1)(a) of Schedule 1 but an indemnity costs order should be made in favour of the plaintiff under s 5;
5. The Offer of Compromise was rules compliant and the plaintiff did better than the offer;
6. Section 2(1)(b) of Schedule 1 did not apply to the Cross-Claim as nothing was "recovered" by the defendant;
7. An indemnity costs order should be made as to both proceedings, particularly the Cross-Claim proceedings. There were no relevant factors supporting an "otherwise order." The fact the plaintiff was a solicitor is irrelevant to the exercise of the discretion. The plaintiff was entitled to defend himself legally.
The defendant submitted:
1. The facts of both claims were intertwined;
2. Williamson applied to s 61 and Schedule 1 of the LPULAA and the claims made in these proceedings;
3. The defendant made numerous early offers to settle which are highly relevant to the exercise of the Court's discretion as to costs (see 15 May 2023 submissions paragraph 14(C));
4. The plaintiff's claim was always going to be modest if any damages were awarded having regard to the medical evidence but take considerable court time to establish;
5. Section 2(1)(a) applied to the Statement of Claim proceedings. As the facts were intertwined, Section 2(1)(b) applied to the Cross-Claim proceedings;
6. However, on the facts there were powerful reasons for an order that each party should pay their own costs of the proceedings;
7. There should be no orders for indemnity costs. The Court should "otherwise order". The facts and result indicated that the defendant had satisfied the onus of establishing that an indemnity costs order should not be made. Reference was made to the factors referred to by Mason P in Morgan v Johnson [1998] NSWSC 367; (1998) 44 NSWLR 578 at pages 581-2.
[4]
Determination
The significant issues raised will now be considered.
[5]
Section 61 of the LPULAA and Schedule 1
As discussed above, in my view the reasoning in Williamson in the High Court appears to apply to s 61 of the LPULAA. There is no reason on my assessment of the legislation for the reasoning not to apply. Therefore, subject to the indemnity costs argument in s 5 of Schedule 1 to the LPULAA, the legal services costs limitation provisions in s 2 of Schedule 1 of the LPULAA apply to the plaintiff's claim even though the claim asserts an intentional tortious act with an intent to cause injury: the claims were for "personal injury damages". The plaintiff was awarded $2,590.00, substantially less than $100,000 referred to in s 2(1) of Schedule 1. Similarly, the definition of "personal injury damages" would apply to the Cross-Claim even though it was a claim for an intentional act with an intent to cause injury. Both parties accepted this was the proper interpretation of s 61.
However, for the reasons given above, I do not consider section 2(1)(b) of Schedule 1 applies to the result in the Cross-Claim proceedings. Nothing was "recovered" by the defendant/cross-claimant in damages. Therefore, the limitation as to the maximum costs for legal services is not applicable. I do not regard the intertwining of the facts as relevant to this issue. There were two separate claims. Section 2(1)(b) of Schedule 1 of the LPULAA does not apply to the Cross-Claim. I reject any submission of the defendant to the contrary and accept the plaintiff's submission on this issue.
[6]
The assertion that the defendant was a self-represented litigant
The Court accepts that, on its face, much of the legal work for the plaintiff in the proceedings was conducted by the plaintiff himself. He was the person present in Court during the hearing who instructed counsel appearing for him. The solicitor on the record for the plaintiff is a Mr Driscoll, a lawyer in the same firm as the firm acting for the plaintiff. The plaintiff also authored correspondence in evidence in the proceedings.
In my view, it is not a matter for the Court to determine whether any costs should be excluded for this reason, including the costs relating to the appearance of Counsel for the defendant.
That is properly a matter for a costs assessor to determine. Appropriate submissions can be made at that time on the issue. Relevant documents can be referred to. The Court is also unable to determine on the evidence:
1. Whether any legal work was undertaken by Mr Driscoll or other lawyers employed or who are partners; and
2. The legal status of the relationship between the plaintiff and Counsel who appeared for him in the proceedings.
Various assertions are made in written submissions without in every case the evidence to substantiate them. However, these matters are properly matters for an assessment. As noted, Mr McCabe appeared in court instructing counsel throughout the hearing and, it appears, was the author of correspondence which came into evidence. Nevertheless, the Court is unable on the evidence, as submitted by the defendant, to find that the plaintiff is a self-represented litigant as to all aspects of the proceedings.
[7]
The nature of the claims
I have already referred above to the nature of the litigation. It would be an error, in my view, to trivialise the nature of the litigation between the parties. The proceedings were commenced in the General Division of the Local Court. There were a number of incidents alleged by the plaintiff. The defendant filed a significant Cross-Claim. Although initially only $60,000 was sought by the plaintiff and by the defendant in her Cross-Claim, ultimately much greater sums were sought in submissions, both exceeding the jurisdiction of the Local Court. It was the defendant who sought a transfer of the matter to the District Court, albeit that was consented to by the plaintiff.
The batteries alleged by each of the parties on 31 March 2018 were serious, particularly that alleged by the defendant. The fact the plaintiff was only awarded limited damages for the battery found does not diminish the fact that being struck in the face by a person, including by a female, is a matter which is not trivial.
Further, the case was hard-fought. Counsel were engaged including senior counsel for the defendant. There was detailed and meticulous cross-examination. Written submissions were provided. The case had all the hallmarks of a significant piece of litigation although in the end the plaintiff was awarded limited damages.
I take into account the various factors which I have set out above in relation to the litigation. I also take into account the serious allegations made against the plaintiff, submissions made on behalf of the parties, the history of the litigation, the limited damages awarded to the plaintiff, the credit and reliability findings by the Court, ss 56 and 60 of the Civil Procedure Act 2005, and the various offers made by the parties including when they were made.
The defendant was completely unsuccessful in relation to her Cross-Claim. In the Cross-Claim the defendant sought very substantial damages. This required the plaintiff, through his counsel, to undertake a detailed review and consideration of the medical evidence and the cross-examination of the defendant as to her prior medical history and the consequences of the accident. In terms of the "event" within Part 42.1 of the UCPR, the defendant was unsuccessful. Having taken into account the various matters I have referred to above, including the history of the various settlement offers, I can see no good reason in the exercise of the discretion which I have under s 98 of the Civil Procedure Act, at least, not to make the usual order for costs in relation to the Cross-Claim that the defendant should pay the plaintiff's costs of the Cross-Claim as agreed or assessed. Further, as set out above, in my view I am not limited by s 61 and the capping provision in s 2(1)(b) of Schedule 1 of the LPULAA. If I was, and if I am in error, then, subject to the Offer of Compromise relied upon, the power of the Court to award costs for legal services would be limited to 20% of the amount sought to be recovered by the defendant in her Cross-Claim being 20% of $600,000-$630,000 (say $615,000) being $123,000.
I reject the argument of the defendant that each party should pay their own costs of the two claims or that there are special features which would warrant a lesser figure. This was a large, seriously run claim with extensive resources applied to it. The fact the plaintiff was a legal practitioner, and the defendant was a layperson does not appear to be particularly relevant in the exercise of the discretion. Both parties were at risk as to the result. The plaintiff was entitled to defend himself legally. The point that the facts in both claims were intertwined does not lead me to a different view. It is true the defendant made numerous offers to settle but the facts in the case developed further with the serving of additional expert evidence and the second statement of Ms Wells.
In relation to the plaintiff's claim in the Statement of Claim proceedings, the following matters need to be taken into account:
1. The plaintiff commenced the proceedings in the Local Court, General Division;
2. The defendant initiated the transfer from the Local Court by filing a Summons in this Court which the plaintiff consented to;
3. The plaintiff obtained an award of greater than nominal damages but only limited damages and assessed in an amount much less than he had sought;
4. The plaintiff was unsuccessful in relation to his assertions of the number of times that he had been struck by the defendant. The Court found he was only struck once on the evidence;
5. The plaintiff failed in his claim that he should be awarded substantial damages for psychiatric injury and for aggravated and exemplary damages;
6. Some time was taken up in evidence in relation to these matters and in submissions;
7. The plaintiff did not press the property damage claim;
8. The plaintiff sought an award of damages of over $100,000 and achieved only a small fraction of that amount.
However, the plaintiff's claims on any view were strongly contested, particularly as to the 31 March 2018 claim. The plaintiff was subject to extensive cross-examination with strong attacks being made on his credit and reliability.
The plaintiff was successful in each of the claims in whole or in part other than the motor vehicle damage claim which was not finally pressed at trial.
Having regard to the amount awarded in damages and s 61 and Schedule 1 section 2(1)(a) of the LPULAA, I am limited in the amount I can award as to costs for legal services in the Statement of Claim proceedings to the plaintiff, subject to the Offer of Compromise argument, to an amount for costs for legal services as agreed or assessed not exceeding $10,000.
[8]
The claim for indemnity costs
The offers to settle relied on by the plaintiff are set out in Mr Driscoll's affidavit and in the written submissions by counsel for the plaintiff. The ultimate result in the case was less than the offers of 28 March 2019, 7 November 2019 and of 6 May 2020.
The offer relied upon by counsel for the plaintiff for the indemnity costs application was that of 9 January 2022.
The Offer of Compromise and the email dated 9 January 2022 appear to me to be Rules compliant. Senior Counsel for the defendant accepted this during oral submissions and made no submission to the contrary.
That offer related to both the Statement of Claim proceedings and separately to the Cross-Claim proceedings.
The question is whether there are factors against an indemnity costs order in the light of the established principles set out above. The defendant submits that an indemnity costs order should not be made in the circumstances in either claim. Her counsel point to the term "prevent" in section 5 of Schedule 1 to the LPULAA which, it was submitted, retains the wide discretion in s 98 of the CPA.
Counsel for the plaintiff points to section 5(1) and (2) of Schedule 1 to the LPULAA. It is submitted that a definition of "reasonable" is provided in section 5(2). The offer was reasonable as the award on both claims was in terms that are no less favourable to the party than the terms of the offer. In my view, that is clearly the case as to both claims.
In my view, the plaintiff's submission should be accepted in relation to the Cross-Claim proceedings. The plaintiff was willing to give up his costs up to that date on the Cross-Claim which were likely substantial. There was thus a genuine compromise on his behalf. The defendant took it upon herself to pursue the Cross-Claim determinedly and took the risks of doing so. The claim was a large one. I can see no powerful reason in those circumstances against awarding indemnity costs to the plaintiff in relation to the Cross-Claim proceedings. In taking this view, I have taken into account the defendant's offers to settle and the intertwined nature of the claims. I also take into account that she had likely spent considerable money in preparing the case by this time.
However, I take a different view in relation to the Statement of Claim proceedings. I am not willing to order indemnity costs in relation to the Statement of Claim proceedings in favour of the plaintiff for the following reasons:
1. I infer from the evidence that by January 2022 very considerable costs had been incurred by both of the parties in preparing for the matter;
2. The damages awarded to the plaintiff in the Judgment were limited and only a very small portion of those sought by the plaintiff at the trial;
3. The psychological expert evidence supporting the plaintiff's claim was slight;
4. There was no expert evidence that the plaintiff had any ongoing physical injuries arising from the incidents especially the incident on 31 March 2018;
5. The matter did not proceed by way of affidavit and it was clear that the significant events in question were heavily in dispute;
6. The claim for motor vehicle damage was abandoned after the offer and at the trial;
7. It was unclear what precise evidence would be given by the non-party witnesses for the plaintiff at the trial;
8. Ms Wells gave significant inconsistent evidence at the trial. Her second statement was prepared by her and did not indicate a second "strangling" incident;
9. In those circumstances, in my view the failure to accept the offer as to the Statement of Claim proceedings was reasonable in all the circumstances.
Taking into account all of these matters, it is appropriate that the Court "otherwise orders" in relation to the Offer of Compromise concerning the Statement of Claim proceedings. The Court is satisfied, with the onus being on the defendant, that it is inappropriate to make an indemnity costs order based on the 9 January 2022 Offer of Compromise in relation to the Statement of Claim proceedings. In relation to the 14 January 2022 Calderbank letter, the rejection of a Calderbank offer by a party does not necessarily mean that indemnity costs are ordered as a matter of general principle. It must be established by the applicant that the rejection of the offer was "unreasonable" in all the circumstances of the case.
The various factors which I have referred to, including the limited expert medical evidence concerning Mr McCabe and the limited success of the plaintiff in the circumstances, all lead me to concluding that the non-acceptance of the offer to settle the Statement of Claim proceedings by the defendant was not unreasonable and that no order for indemnity costs should be made in favour of the plaintiff as to the Statement of Claim proceedings.
[9]
The hearing costs
In my view, as the plaintiff was successful in both matters, there is no good reason why the plaintiff should pay the court hearing fees which are in the nature of a disbursement. Such fees related to the hearing of both claims. It would be unfair for the plaintiff to have to pay any of these fees having regard to his success. The defendant made no specific submission on this point when it was raised orally by counsel for the plaintiff in the course of submissions. I do not consider the discretionary factors raised by the defendant indicate any other order should be made. Accordingly, pursuant to Regulation 10(2)(a) of the Civil Procedure Regulation 2017, an order should be made that the defendant pay the court hearing fees.
[10]
The costs of the costs argument
In my view, no special costs orders should be made in relation to the submissions and arguments concerning the appropriate orders for costs in the proceedings. In other words, these costs should be covered by the orders made by the Court.
[11]
Orders
For the above reasons, the Court proposes the following orders:
1. The defendant is to pay the plaintiff's costs of the Statement of Claim proceedings as agreed or assessed, with the maximum costs for legal services in relation to the Statement of Claim allowed to the plaintiff to be limited to no more than $10,000.
2. The defendant is to pay the plaintiff's costs of the Cross-Claim proceedings as agreed or assessed on the ordinary basis up to 9 January 2022 and on an indemnity basis from 10 January 2022.
3. The defendant is to pay the costs relating to the court hearing fees.
The Court makes the following orders:
1. The parties are to bring in agreed short minutes of order consistent with these reasons within 7 days.
2. Liberty to apply within 7 days.
[12]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 15 June 2023
These reasons for decision deal with costs issues arising in these proceedings following the Court handing down its detailed reasons for decision on 21 February 2023: see McCabe v Riechelmann [2023] NSWDC 44 ("the Judgment"). The trial was lengthy and strongly contested. There was very extensive cross-examination of a number of witnesses but particularly of the plaintiff and the defendant. Many factual issues were in dispute but particularly what occurred between the parties on the evening of 31 March 2018. At the centre of the primary factual dispute between the parties was whether the plaintiff or the defendant had committed a tortious battery with the defendant very seriously alleging that the plaintiff had deliberately strangled her. Substantial damages were sought by the parties against each other. In final submissions the plaintiff sought over $100,000 in damages and the defendant sought between $600,000 and $630,000 in damages.
In the Judgment, the defendant failed in her Cross-Claim. The plaintiff was only partly successful in the Statement of Claim proceedings and, in the end, only obtained a judgment in his favour in the amount of $2,590 in damages: see the orders made on 6 March 2023.
On 14 March 2023, the matter was set down for mention and a timetable was ordered for the filing and serving of affidavits and written submissions as to costs.
There is a substantial dispute between the parties in relation to the proper costs orders which should be made to finalise the proceedings.
These reasons for decision assume a familiarity in the reader with the factual background to the proceedings, including the Cross-Claim, as set out in the Judgment of 21 February 2023.
The material in evidence shows that the parties served various offers of compromise under the Uniform Civil Procedure Rules 2005 ("UCPR") and also Calderbank letters. Special costs orders are sought by the plaintiff in the proceedings against the defendant.
Legal principles relating to costs
Section 98(1)-(4) of the Civil Procedure Act 2005 (NSW) provides as follows:
"98 Courts powers as to costs
(1) Subject to rules of court and to this or any other Act -
(a) costs are in the discretion of the court, and
(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and
(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.
(2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court.
(3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings.
(4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to -
(a) costs up to, or from, a specified stage of the proceedings, or
(b) a specified proportion of the assessed costs, or
(c) a specified gross sum instead of assessed costs, or
(d) such proportion of the assessed costs as does not exceed a specified amount."
Part 42.1 of the UCPR provides as follows:
"42.1 General rule that costs follow the event
Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs."
Part 42.2 of the UCPR provides as follows:
"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."
Part 20.26 of the UCPR provides as follows:
"20.26 Making of offer
(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.
(3) An offer under this rule may propose -
(a) a judgment in favour of the defendant -
(i) with no order as to costs, or
(ii) despite subrule (2)(c), with a term of the offer that the defendant will pay to the plaintiff a specified sum in respect of the plaintiff's costs, or
(b) that the costs as agreed or assessed up to the time the offer was made will be paid by the offeror, or
(c) that the costs as agreed or assessed on the ordinary basis or on the indemnity basis will be met out of a specified estate, notional estate or fund identified in the 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).
(5) The closing date for acceptance of an offer -
(a) in the case of an offer made two months or more before the date set down for commencement of the trial - is to be no less than 28 days after the date on which the offer is made, and
(b) in any other case - is to be such date as is reasonable in the circumstances.
(6), (7) (Repealed)
(8) Unless the notice of offer otherwise provides, an offer providing for the payment of money, or the doing of any other act, is taken to provide for the payment of that money, or the doing of that act, within 28 days after acceptance of the offer.
(9) An offer is taken to have been made without prejudice, unless the notice of offer otherwise provides.
(10) A party may make more than one offer in relation to the same claim.
(11) Unless the court orders otherwise, an offer may not be withdrawn during the period of acceptance for the offer.
(12) A notice of offer that purports to exclude, modify or restrict the operation of rule 42.14 or 42.15 is of no effect for the purposes of this Division."
Part 42.14 of the UCPR provides as follows:
"42.14 Where offer not accepted and judgment no less favourable to plaintiff
(1) This rule applies if the offer is made by the plaintiff, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim no less favourable to the plaintiff than the terms of the offer.
(2) Unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff's costs in respect of the claim -
(a) assessed on the ordinary basis up to the time from which those costs are to be assessed on an indemnity basis under paragraph (b), and
(b) assessed on an indemnity basis -
(i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and
(ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made."
The term "plaintiff" includes a cross-claimant. The term "defendant" includes a cross-defendant: s 3 of the Civil Procedure Act. Similar meanings apply to the UCPR. Part 42.15A is therefore relevant to the Cross-Claim in the present case.
In Sze Tu v Low (No 2) [2015] NSWCA 91 Gleeson JA (with whom Meagher and Barrett JJA agreed) stated the following in paragraphs 37-40:
"37. Costs are not awarded by way of punishment of the unsuccessful party but, rather, "are compensatory in the sense that they are awarded to indemnify to successful party against the expense to which he or she has been put by reason of the legal proceedings": Latoudis v Casey [1990] HCA 59; 170 CLR 534 at 543 (Mason CJ); Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [67]; Mahenthirarasa v State Rail Authority of NSW (No 2) [2008] NSWCA 201; 72 NSWLR 273 (Mahenthirarasa (No 2)) at [8] (Basten JA; Giles and Bell JJA agreeing). It follows that the inquiry as to what costs order should be made is primarily directed to the position of the successful party: Latoudis v Casey at 542; Mahenthirarasa (No 2) at [9].
38. The starting position is s 98 of the Civil Procedure Act 2005 (NSW) which provides that, subject to the rules of court, costs are in the discretion of the Court including by whom, to whom and to what extent costs are to be paid. Reference should also be made to r 42.1, Uniform Civil Procedure Rules 2005 (NSW) (UCPR), which provides that if the Court makes any order as to costs, it should be in terms that costs follow the event unless it appears to the Court that some other order should be made as to the whole or part of the costs.
39. How "the event" should be defined will depend upon the nature of the litigation. Generally the "event" refers to the event of the claim and may be understood as referring to the practical result of a particular claim: Windsurfing International Inc v Petit [1987] AIPC 90-441 at 37,861 - 37,862 (Waddell J).
40. In a proper case, the party that is successful overall may be deprived of part of its costs, or ordered to pay the costs of a discrete issue. The circumstances in which this may occur are not limited to cases where it was unreasonable for the successful party to raise the issue on which it failed: Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 615D. The relevant principles were reviewed by this Court in Elite Protective Service Pty Ltd v Salmon (No 2) [2007] NSWCA 373, and summarised in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (Beazley, Ipp and Basten JJA), as follows:
• Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1996, unreported).
• In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal.
• If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27].
• Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed).
• A separable issue can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34].
• Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261 at 272."
The reasoning in Sze Tu has been referred to with approval in many later cases: by the Court of Appeal in McInnes v Rheem Australia Pty Limited [2021] NSWCA 89 at paragraphs 28 and 34. See also Ballam v Ferro (No 2) [2022] NSWSC 1358 at [53]. In the latter case, Hallen J referred to the following principle:
"53. How costs are to be borne is a matter for the exercise of broad discretion by the Court: s 98 Civil Procedure Act 2005 (NSW); Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11."
In Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 the High Court stated the following principles at [24]-[25]:
"24. It is well established that the power to award costs is a discretionary power, but that it is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation. While the width of the discretion "cannot be narrowed by a legal rule devised by the court to control its exercise", the formulation of principles according to which the discretion should be exercised does not "constitute a fetter upon the discretion not intended by the legislature". Rather, the formulation of principles to guide the exercise of the discretion avoids arbitrariness and serves the need for consistency that is an essential aspect of the exercise of judicial power.
25. A guiding principle by reference to which the discretion is to be exercised - indeed, "one of the most, if not the most, important" principle - is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party. The application of that principle may be modified or displaced where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome. For example, a successful defendant may be refused its costs on the ground that its conduct induced the plaintiff to believe that he or she had a good cause of action. But in the present case, there was nothing of this kind in the conduct of the appellant in relation to the litigation that might have weighed against the exercise of the discretion in its favour. There was no suggestion of any conduct on the part of the appellant, whether by unreasonable delay or a want of the cooperation required of litigants to ensure the "just resolution of the real issues in civil proceedings with minimum delay and expense", that might have been taken into account to justify refusing the appellant an order for its costs."
The Court also should take into account ss 56 and 60 of the Civil Procedure Act 2005.
The defendant made a number of submissions that the Court should not make indemnity or special costs orders in favour of the plaintiff and should "otherwise order" within Part 42.14(2) of the UCPR.
In AB v Keanes (No 2) [2019] NSWDC 765 I stated as follows at paragraphs 15-21:
"15. In paragraph 34 of Boateng v Dharamdas, above, the court stated as follows:
"This Court would also not be in a position to decide whether an order "otherwise" should be made for the purposes of r 42.15(2). The argument before this Court identified, without fully addressing, contentions as to whether the respondent's rejection of the Offer of Compromise was reasonable. The mere fact that the rejection of an Offer of Compromise is reasonable is not enough to displace the rule but the reasonableness of the rejection remains a relevant consideration in the exercise of the court's broad discretion to "order otherwise" (The Uniting Church in Australia Property Trust (NSW) v Takacs (No 2) [2008] NSWCA 172 at [15] and [18], compare [32]-[33]; Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [48], [60] and [61])."
16. The plaintiff accepts that the onus is on the plaintiff in the light of the offers of compromise to demonstrate that the court should make an order in relation to costs different to the order contemplated by Part 42.15(2). In Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391, McColl JA stated as follows at paragraph 45:
"45. Accordingly, the question is whether, as the appellant submits, the Court should "order otherwise": UCPR 42.15A(2). The onus is on the appellant to demonstrate why the Court should depart from the consequence of his rejection of the Offer: Caine v Lumley General Insurance Ltd (No 2) [2008] NSWCA 109 (at [35]) per McColl JA (Mason P and McClellan CJ at CL agreeing); Miwa (at [16])."
17. McColl JA stated the following in paragraph 48 in relation to the reasonableness of the offer:
"It is impossible exhaustively to state the circumstances in which the court's discretion to "order otherwise" might be exercised: New South Wales Insurance Ministerial Corporation v Reeve (at 102). The mere fact that it was reasonable for the litigant to take the view that he or she did in rejecting the offer is not enough to displace the rule: Morgan v Johnson (at 582). However that does not mean that reasonableness of the rejection is an irrelevant consideration: see Seven Network Ltd v News Ltd (at [64] - [67]); Uniting Church in Australia Property Trust (NSW) t/as Northaven Retirement Village v Takacs (No 2) [2008] NSWCA 172 (at [15]) per Hodgson JA (McColl JA agreeing); cf Basten JA (at [32] - [33])."
18. This view was confirmed by the majority in Boateng v Dharamdas at [34].
19. In Vale v Eggins (No 2) [2007] NSWCA 12 at [22] the Court of Appeal found, in circumstances where a party had not served all the medical reports on which it relied at the time the offer of compromise was made and which were relevant to an assessment of the offer, that the failure of service in the context of that case, disentitled the offering party from obtaining an award of indemnity costs.
20. Vale, above, was cited with approval by the Court of Appeal in Fairall v Hobbs (No 2) [2017] NSWCA 133.
21. In South Eastern Sydney Area Health Service v King [2006] NSWCA 2 at [85] Hunt AJA (with whom Mason P and McColl JA agreed) stated that indemnity costs should not be awarded in that case as "it would be unfair to a defendant to make an order for indemnity costs when the evidence at the trial is different from that known to the defendant at the time of the offer.""
In Outerbridge trading as Century 21 Plateau Lifestyle Real Estate v Hall (No 2) [2020] NSWDC 8 I stated as follows in paragraphs 12 to 14:
"12. Where there is a valid offer of compromise made to a party, it is for the offeree to establish a proper basis for depriving the offeror of the prima facie entitlement to indemnity costs: Nominal Defendant v Hawkins [2011] NSWCA 93 at [53] and [56] per Hodgson JA (with whom Beazley JA agreed). Exceptional circumstances are not necessary to be established before the court may "otherwise order": Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [15]. The discretion to "otherwise order" should be exercised having regard to all the circumstances of the case: Perisher Blue Pty Ltd v Nair-Smith (No 2) [2015] NSWCA 268 at [32].
13. In Toyota Finance Australia Ltd v Gardiner (No 2) [2016] NSWCA 181 the Court of Appeal stated at [13]-[15] as follows.
"13. Rule 42.15A of the UCPR applies when a defendant has made an offer which is not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim no less favourable to the defendant than the terms of that offer. In those circumstances, the defendant is entitled to a special costs order from the time the offer was made, unless the Court orders otherwise. This rule is applicable to appeals: UCPR rr 51.47 and 51.48.
14. The making of a valid offer of compromise does not, however, guarantee a special costs order. This is a matter for the Court's discretion.
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": Mega-top Cargo Pty Ltd v Moneytech Services Pty Ltd [2016] NSWCA 3 at [5]; Taheri v Vitek (No 2) [2014] NSWCA 344 at [9]- [11]."
14. In Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [40] and [43], McColl JA (with whom Gleeson JA and Sackville AJA agreed), in considering the position under Part 42.15A, stated as follows:
"40. The consequence is that a prima facie entitlement arose in favour of the respondent to have costs awarded in accordance with UCPR 42.15A: New South Wales Insurance Ministerial Corporation v Reeve (1993) 42 NSWLR 100 (at 102) per Gleeson CJ (Clarke and Cripps JJA agreeing); Leichhardt Municipal Council v Green [2004] NSWCA 341 (at [19]) per Santow JA (Stein JA agreeing). This is because, from "the time of non-acceptance 'notionally the real cause and occasion of the litigation is the attitude adopted by [the party] which has rejected the compromise'": Morgan v Johnson [1998] NSWSC 367; (1998) 44 NSWLR 578 (at 581-582) per Mason P (Sheller JA agreeing)."
...
43. In my view in the circumstances of this case, the Offer did constitute a genuine offer of compromise. The opportunity to offer any compromise for the respondent was limited. The substantive issue on appeal was an all or nothing determination on the liability issue. There was no range of verdicts as in the case of a challenge to an award of damages or to an assessment of contributory negligence or contribution between tortfeasors: cf Leichhardt Municipal v Green (at [22] - [26]); Regency Media Pty Ltd v AAV Australia Pty Ltd (at [29]). Thus the only room for compromise was in relation to costs, in which respect the respondent was prepared to forego the costs order it had been awarded by the primary judge and any costs order it might ordinarily obtain in this Court by the operation of UCPR 42.1. That constituted a "real concession": Clark v Commissioner of Taxation [2010] FCA 415 (at [90] - [92]) per Greenwood J.""
I also refer to the various factors referred to by the Court of Appeal in Carter v Mehmet (No 3) [2022] NSWCA 64 at [30]-[35].
The plaintiff also relied on its offers as Calderbank offers: see Calderbank v Calderbank [1975] 3 All ER 333. In AB v Keanes (No 2) above, I stated as follows at paragraphs 42-44:
"42. The first offer of compromise was served with a covering letter relying on the Calderbank principles. These were not addressed in submissions but I will consider them briefly.
43. The rejection of a Calderbank offer by a party does not necessarily mean that indemnity costs are ordered as a matter of course. The applicant for indemnity costs must demonstrate to the court that the rejection of the offer was "unreasonable" in all the circumstances of the case: Leichhardt Municipal Council v Green [2004] NSWCA 341 at [19]; Jones v Bradley (No 2) [2003] NSWCA 258 at [12]; Russell v Edwards (No 2) [2006] NSWCA 52 at [8]; Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194 at [7].
44. In NRMA Insurance for the Nominal Defendant v Al-Bayati (No 2) [2019] NSWCA 14, the Court of Appeal stated in paragraph 10 as follows:
"[10] The party making an offer of compromise or Calderbank offer bears the onus of satisfying the court that it should exercise the costs discretion in its favour: Evans Shire Council v Richardson (No 2) [2006] NSWCA 61; Commonwealth of Australia v Gretton [2008] NSWCA 117 at [46]; County Securities Pty Ltd v Challenger Group Holdings Pty Ltd (No 2) [2008] NSWCA 273 at [31] ...""
On the day the costs dispute was first set down for oral submissions, 12 May 2023, Senior Counsel for the defendant raised for the first time limitations relating to the maximum amount which can be awarded for costs for legal services in personal injury damages matters and the application of s 61 of the Legal Profession Uniform Law Application Act 2014 (NSW) ("LPULAA").
Part 6 of the LPULAA deals with particular kinds of legal costs. Section 61 of the LPULAA which is in Part 6 provides as follows:
"Part 6 Legal costs - particular kinds of costs
…
61 Maximum costs in personal injury damages matters
Schedule 1 contains provisions relating to maximum costs in personal injury damages matters."
This Part is separate to Part 7 which deals with the assessment of legal costs. It thus appears to be a limitation on the power of a court to award costs.
Schedule 1 of the LPULAA provides where relevant as follows:
Schedule 1 - Maximum costs in personal injury damages matters
1 Interpretation and application
(1) In this Schedule -
defendant means a person against whom a claim for personal injury damages is or may be made.
party means plaintiff or defendant.
personal injury damages has the same meaning as in Part 2 of the Civil Liability Act 2002.
plaintiff means a person who makes or is entitled to make a claim for personal injury damages.
(2) This Schedule does not apply to the following costs -
(a) costs for legal services provided in respect of a claim under the Motor Accidents Act 1988 or Motor Accidents Compensation Act 1999,
(b) costs for legal services provided in respect of a claim for work injury damages (as defined in the Workplace Injury Management and Workers Compensation Act 1998),
(c) costs for legal services provided in respect of a claim for damages in proceedings of the kind referred to in section 11 (Claims for damages for dust diseases etc to be brought under this Act) of the Dust Diseases Tribunal Act 1989.
2 Maximum costs fixed for claims up to $100,000
(1) If the amount recovered on a claim for personal injury damages does not exceed $100,000, the maximum costs for legal services provided to a party in connection with the claim are fixed as follows -
(a) in the case of legal services provided to a plaintiff - maximum costs are fixed at 20% of the amount recovered or $10,000, whichever is greater,
(b) in the case of legal services provided to a defendant - maximum costs are fixed at 20% of the amount sought to be recovered by the plaintiff or $10,000, whichever is greater.
(2) The local regulations may prescribe an amount to replace the amount of $100,000 or $10,000 in subclause (1) and may prescribe a percentage to replace the percentage of 20% in subclause (1). When such a replacement amount or percentage is prescribed, it applies for the purposes of subclause (1) in place of the amount or percentage that it replaces.
(3) The local regulations may contain provisions of a savings or transitional nature consequent on the making of regulations under this clause.
(4) When the maximum costs for legal services provided to a party are fixed by this Schedule the following provisions apply (subject to clauses 4-6) -
(a) a law practice is not entitled to be paid or recover for those legal services an amount that exceeds those maximum costs,
(b) a court or tribunal cannot order the payment by another party to the claim of costs in respect of those legal services in an amount that exceeds that maximum,
(c) in assessing the amount of those costs that is a fair and reasonable amount, a costs assessor cannot determine an amount that exceeds the maximum set by this clause.
(5) In this Schedule -
(a) a reference to legal services provided to a party is a reference to legal services provided to the party by a law practice (including by an associate of the law practice), and
(b) a reference to costs for legal services does not include costs charged as disbursements for services provided by any other person or other disbursements.
(6) If proceedings are commenced on a claim, the amount sought to be recovered by the plaintiff is taken to be the amount sought to be proved by the plaintiff at the hearing of the claim.
(7) Maximum costs fixed by this Schedule apply despite local regulations under section 59(1)(b) fixing those costs.
…
5 Costs can be awarded on indemnity basis for costs incurred after failure to accept offer of compromise
(1) If a party to a claim for personal injury damages makes a reasonable offer of compromise on the claim that is not accepted, this Schedule does not prevent the awarding of costs against another party to be assessed on an indemnity basis in respect of legal services provided after the offer is made.
(2) An offer of compromise on a claim by a party is reasonable if the court determines or makes an order or award on the claim in terms that are no less favourable to the party than the terms of the offer.
(3) The local regulations may make provision for or with respect to requiring disclosure by a law practice to the practice's client of information in relation to the operation of this clause in respect of any refusal by the client to accept an offer of compromise.
(4) If it appears to the court in which proceedings are taken on a claim for personal injury damages that a law practice has failed to comply with any provision of the local regulations under this clause, and that the client of the practice has incurred an increased liability for costs as a result of refusing a reasonable offer of compromise in connection with the claim concerned, the court may of its own motion or on the application of the client make either or both of the following orders -
(a) an order directing the law practice to repay to the client the whole or any part of those increased costs that the client has been ordered to pay to any other party,
(b) an order directing the law practice to indemnify any party other than the client against the whole or any part of the costs payable by the party indemnified in respect of legal services provided after the offer is refused."
Section 3 of Schedule 1 which relates to the maximum costs increased by an additional amount for certain claims heard by the District Court does not appear applicable to the current case.
It will be seen that s 61 of the LPULAA refers to costs in "personal injury damages" matters. Section 1 of Schedule 1 defines "personal injury damages" as having the same meaning as Part 2 of the Civil Liability Act 2002.
The amount of money awarded to the plaintiff in damages in the present case was $2,590. This would appear to fall within s 2 of Schedule 1 as the damages awarded do not exceed $100,000 provided that the claim is a claim for "personal injury damages".
The cases of Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Cross [2012] HCA 56; (2012) 248 CLR 378 and New South Wales v Williamson [2012] HCA 57; (2012) 248 CLR 417 considered statutory limitations on costs prior to the enactment of s 61 of the LPULAA. The LPULAA would be relevant in the present case as any retainer must have been later than the various incidents giving rise to the claims.
In both cases, the High Court held that the limitations on the award of costs for legal services for "personal injury damages" in the statutes there considered applied to intentional acts with the intent to cause injury such as were claimed by the parties against each other in the present Statement of Claim proceedings and the Cross-Claim proceedings: see Cross at [17]-[18], [22], [41]-[42] and [104] and Williamson at [17]-[30] (the latter case held it did not apply to the tort of false imprisonment). Thus, the provisions limiting liability for costs for legal services, because of the definition of "personal injury damages" in s 61 of the LPULAA and Schedule 1 to that Act, apply even where there is otherwise a restriction on the application of the Civil Liability Act to acts which are intentional involving an intent to cause injury.
There does not appear to be any reason in the present case to read the statutory provisions in s 61 of the LPULAA differently to the construction given by the High Court to the earlier statutory provisions in Cross or Williamson which are to a similar effect. See also Todorovska v Brydens Lawyers Pty Ltd (2022) NSWCA 47 at [5]. Accordingly, the limitation as to costs for legal services would appear to apply to the plaintiff in the Statement of Claim proceedings, having regard to the amount of damages awarded to him in the present case.
Section 2 of Schedule 1 to the LPULAA refers to "the amount recovered". Where a claim or a Cross-Claim is rejected and no amount is recovered as damages at all then Section 2 of Schedule 1 appears to have no application to limit costs for legal services. Therefore, no amount is "fixed" by the section as to costs for legal services. This construction appears to be consistent with the policy of the section which is to limit the recovery of costs for legal services where lower damages only are awarded.
Section 5 of Schedule 1 provides a different regime in relation to a reasonable Offer of Compromise on a claim that is not accepted. There, Schedule 1 does not "prevent" the awarding of costs against another party to be assessed on an indemnity basis in respect of legal services provided after the offer is made. Section 2(2) of Schedule 1 gives assistance as to what is meant by "reasonable". An Offer of Compromise on a claim by a party is regarded as reasonable within s 5 if the Court determines or makes an order or award on the claim in terms that are no less favourable to the party than the terms of the offer. However, s 5 of Schedule 1 does not appear to limit the power of a court to "otherwise order" in relation to an indemnity costs application.