HER HONOUR: On 3 June 2019, I delivered judgment in these proceedings making an order that there be a judgment in favour of the defendant: Moggridge v the Benevolent Society [2019] NSWSC 638 ("Moggridge (No 1)"). I made an order for the defendant to file and serve submissions in relation to costs by 17 June 2019, and for the plaintiff to file and serve submissions in reply by 24 June 2019. I have now received both parties' submissions.
The plaintiff is Paul William Moggridge. The defendant is the Benevolent Society. It is the owner and occupier of the cottage at which the plaintiff was injured and had the care, control and management of the cottage at the time of the injury.
As costs follow the event, it is common ground that the defendant is entitled to the payment of its costs by the plaintiff pursuant to r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"). What is in issue is whether the defendant should be entitled to a special costs order.
[2]
The law
UCPR 42.15A relevantly reads:
"42.15A Where offer not accepted and judgment no less favourable to defendant
(1) This rule applies if the offer is made by the defendant, but 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 the offer.
(2) Unless the court orders otherwise:
(a) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and
(b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, 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
…"
On 13 March 2017, the defendant served an offer of compromise pursuant to UCPR 20.26 ("the offer").
The offer was relevantly in the following terms:
1. that the defendant will pay to the plaintiff the sum of $300,000; and
2. that the defendant will pay the plaintiff's costs as agreed or assessed up to the time the offer is made.
The onus is on the offeror, in this case the defendant, to satisfy the Court that it should exercise its discretion to make a special costs order in its favour: see Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 ("Evans") at [26].
[3]
Indemnity costs
The general rule is that costs are payable on a party/party basis. A court should only depart from the general rule and award indemnity costs where the conduct of the party against whom the order is sought is "plainly unreasonable": see Sydney City Council v Geftlick [2006] NSWCA 280 per Tobias JA at [91] (Mason P and Hodgson JA agreeing). Indemnity costs orders should be reserved for the most unreasonable actions by unsuccessful plaintiffs: see Leichhardt Municipal Council v Green [2004] NSWCA 341 ("Leichhardt Municipal Council") per Santow JA at [57] (Bryson and Stein JJA agreeing).
In Cat Media Pty Ltd v Allianz Australia Insurance Ltd [2006] NSWSC 790, Bergin J at [9] confirmed the relevant principles in relation to Calderbank offers (see Calderbank v Calderbank [1975] 3 WLR 586) by reference to Leichhardt Municipal Council, stating that the costs consequences attendant under the general law upon an offer of compromise made in a Calderbank letter are in the court's discretion, to be exercised having regard to all of the relevant circumstances of the case. Firstly, there is not a prima facie presumption in favour of an award for indemnity costs if the Calderbank offer is not accepted and is not bettered; secondly, a Calderbank offer that has no real element of compromise in it, which is designed merely to trigger costs sanctions, will not be treated as a genuine offer of compromise; thirdly, there is no rule that an optimistic offer is not a genuine offer. Whether or not it was reasonable to reject an offer is a question that may figure in the discretionary balance, but it is not a question which affects the genuineness of the offer; and fourthly, an applicant for an order for indemnity costs consequent upon an unaccepted Calderbank offer must show that the rejection of the offer was unreasonable.
Thus the questions for the court are (a) whether the offer was a genuine offer of compromise; and (b) whether it was unreasonable for the recipient of the offer not to accept the offer: see Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 ("Miwa") at [8].
The defendant seeks an order that that the plaintiff pays its costs on an ordinary basis until 13 March 2017 and on an indemnity basis after 14 March 2017, on the basis of its offer of compromise dated 13 March 2017. It was common ground that the offer was not accepted by the plaintiff.
[4]
The defendant's submissions
The defendant submitted that it has has obtained a judgment on the claim which is significantly more favourable than the terms of the offer ($300,000 plus costs). In accordance with UCPR 42.15A, the defendant is therefore entitled to costs on an indemnity basis from 14 March 2017.
The defendant submitted that the following reasons support the making of the special costs order.
Firstly, having regard to the court's decision, the offer represented a genuine compromise. Leaving aside the finding that there was no breach by the defendant, the quantum assessment was limited to $6,500 for non-economic loss plus $6,891.95 for out of pocket expenses.
Secondly, at the time the offer was made, the proceedings had been on foot for over three years (with the statement of claim having been filed on 4 February 2014), and the issues between the parties were well defined. The plaintiff had the benefit of sworn interrogatories, the defence was filed and served on 25 August 2014 subject to some further updates, all the expert evidence had been exchanged between the parties and most importantly, the parties had participated in two mediations on 21 August 2015 and 2 September 2016. Certainly, by March 2017, the plaintiff had sufficient information to fully consider the terms of the offer and assess its reasonableness.
Finally, from the date of the offer until the conclusion of the trial, there were no significant changes to the conduct of the defence, such that the plaintiff would not have been taken by surprise by the defendant at trial.
[5]
The plaintiff's submissions
The plaintiff submitted that the defendant is not entitled to an indemnity costs order because the offer of compromise dated 13 March 2017 was open for acceptance for 28 days, expiring on 10 April 2017.
The plaintiff says that the defendant's submissions fail to satisfy the Court that it should exercise its costs discretion and make an indemnity order in the defendant's favour for the following reasons.
Firstly, when the offer of compromise was made there was no reasoning which accompanied it. The cover letter of the defendant's solicitor dated 13 March 2017 provided no explanation as to why the defendant took the position it did. The defendant provided no reasons as to why the plaintiff ought to accept the offer, and on what basis the offer represented a genuine offer of compromise at that time.
Secondly, at the time that the offer was made, the plaintiff had served all of his expert reports on both liability and quantum. The defendant knew of the plaintiff's position as to liability and quantum. At the time the offer was made, the defendant had three supplementary quantum reports available to it, including the supplementary report of Dr Zeman, consultant in rehabilitation medicine, dated 20 January 2017; the supplementary report of Dr Pillemar, orthopaedic surgeon, dated 12 January 2017; and the supplementary report of Dr Virgona, psychiatrist, dated 13 January 2017. These supplementary reports and their opinions were not known to the plaintiff at the time the offer was made. They were not served by the defendant on the plaintiff until 5 May 2017, at which time the offer of compromise had expired.
During the period in which the offer was open for acceptance, the defendant also obtained the report of Ms Borthwick, occupational therapist, dated 25 March 2017. This report contradicted the plaintiff's position on quantum. However, it also was not served on the plaintiff until 5 May 2017, after the expiration of the offer.
By comparison, after the expiration of the offer, the defendant obtained reports as to liability from Fleur Hannan dated 20 November 2017 and 2 February 2018. These reports were served on 20 November 2017 and 2 February 2018 respectively.
Thirdly, the plaintiff served his evidentiary statement on 8 December 2015 containing his account of the accident. On 5 April 2018, the defendant served the plaintiff with an unsigned evidentiary statement of Ms Janis Mary Williams, the defendant's employee who was caring for the plaintiff at the time of the accident. Ms Williams' account of the accident was not known by the plaintiff until to 5 April 2018, and after the commencement of the hearing. This was almost a year after the offer had expired. Ms Williams was the defendant's only lay witness.
The plaintiff submitted that at the time the offer was made, and while it was open for acceptance, it did not represent a genuine offer of compromise. This is because there was no evidence available which was contrary to the plaintiff's position on liability. Nor was there evidence available which warranted a significant compromise by the plaintiff on quantum. It was therefore not unreasonable for the plaintiff to reject the offer. For these reasons, the plaintiff submitted that the defendant is not entitled to an indemnity order.
[6]
The defendant's submissions in reply
The defendant considered the plaintiff's submissions to be misguided for the following reasons.
First, the plaintiff's submissions failed to note that at the time of the offer, the proceedings were well advanced, with the statement of claim having been filed on 4 February 2014. The plaintiff had served all of his evidence and the defendant had served all of its primary medical evidence, including a report of Ms Borthwick dated 11 November 2014. The plaintiff had been in receipt of the following evidence from the defendant well before the offer was served:
1. Report of Dr Zeman, Rehabilitation Specialist, dated 12 November 2014 (served on 5 December 2014);
2. Report of Dr Pillemer, Orthopaedic Surgeon, dated 16 December 2014 (served on 19 August 2015);
3. Report of Dr Virgona, Psychiatrist, dated 25 June 2016 (served on 30 August 2016); and
4. Report of Ms Borthwick dated 11 November 2014 (served on 5 December 2014).
Secondly, the defendant submitted that it is irrelevant that Ms Hannen's reports were served after the offer, since the need to obtain evidence from Ms Hannen only arose after the plaintiff chose to amend the statement of claim dated 24 May 2017 by pleading an entirely different case as an alternative claim against the defendant. The defendant reminded the Court that this alternative claim was ultimately abandoned by the plaintiff in the course of the trial (T 412).
Thirdly, the defendant argued that the fact that it served an evidentiary statement of Janis Williams on 5 April 2018, a year after the offer expired, is again irrelevant. The Court should note that there were no orders, nor was there a requirement that the defendant serve evidentiary statements. Ms Williams' statement was provided to the plaintiff's counsel in the course of the hearing prior to Ms Williams giving evidence in order to save time and assist the Court. Moreover, at no stage would Ms Williams' evidence have taken the plaintiff by surprise given the following matters:
1. the defendant had denied in its defence that during the course of the transfer, the reclining chair rolled backwards causing the plaintiff to fall and sustain serious injury;
2. as at the time of the offer, the plaintiff had the benefit of the records of the defendant, including Ms Williams' contemporaneous notes of the accident; and
3. unlike most personal injury actions, the plaintiff in the present case had the benefit of sworn interrogatories dated 5 August 2016 addressing the liability issues which were the subject of the dispute.
In the circumstances, the defendant argued that none of the matters identified by the plaintiff are a proper basis for the Court declining to order indemnity costs from 14 March 2017.
[7]
The plaintiff's submissions in reply
The plaintiff argued that the defendant's submissions falsely assume that the making of an indemnity order is automatic. In order to obtain a special costs order, the applicant must satisfy the Court that at the time the offer was made, it constituted a genuine compromise, and the Court must be persuaded that it was unreasonable for the offeree not to accept the offer: see Miwa; Treloar Constructions Pty Limited v McMillan (No 2) [2017] NSWCA 146. The defendant's submissions neither persuade nor satisfy the Court that it should exercise the costs discretion and make a special costs order in its favour: see Evans at [26].
This is because at the time of the defendant's offer of compromise dated 31 March 2017, the defendant argues that the following circumstances are relevant.
Firstly, while the plaintiff had served all of his quantum and liability evidence in chief, and while the defendant had served some of its expert evidence, in the period that the offer was open for acceptance the defendant had obtained but had not served the report of Ms Borthwick, occupational therapist dated 25 March 2017. The defendant only served this report, which went to quantum, after the expiration of the offer.
Secondly, the plaintiff had served a report of Catherine Sharp, registered nurse, dated 18 November 2016 on liability. The defendant had not obtained any liability evidence until it obtained the report of Fleur Hannan dated 20 November 2017. The defendant submits the need to obtain liability evidence "only arose" as a result of the amended pleadings. However, Ms Hannan was provided with a copy of Ms Sharp's report dated 18 November 2016, and she specifically responded to it at paras 7.28-7.29 of her report. Furthermore, Ms Hannan was provided with, and made reference to, the defendant's records surrounding the subject incident at para 7.29.
Finally, the plaintiff argued that the statement of Janis Williams, which was not known to the plaintiff until 5 April 2018, comprised of 109 paragraphs with many pages of annexures. The detail contained in Ms Williams' statement was substantially different to the details in the incident report, such as whether the plaintiff had been using a walking frame, a stick or a four-pronged stick. Furthermore, the defendant's evidence that the recliner chair was large, heavy and on carpet, which became significant to the Court at the hearing and thereafter, all came from Ms Williams' statement dated 5 April 2018.
[8]
Conclusion
It is important to appreciate that the plaintiff suffers from a mild neurocognitive disorder which has impaired his personality: see Moggridge (No 1) at [16], [21].
In Moggridge (No 1) at [38], I stated:
"38 The plaintiff has a mild neurocognitive disorder as a result of his 2008 stroke. I have approached my task in these proceedings by taking into account that the plaintiff suffers from short-term memory loss, and I have made some allowance for it. Nevertheless, I have reservations in accepting some of his evidence. I observed the plaintiff carefully when he gave evidence and was cross examined. Dr Angelo Virgona, psychiatrist, recorded that the plaintiff could be vague about details and at times would return to themes repeatedly (CB 388, report 26/5/2016, p 8). My observations accord with Dr Virgona's findings. One of the themes to which the plaintiff frequently returned was his opinion that Australian care was unsatisfactory."
An offer of compromise was made pursuant to UCPR 20.26 on 13 March 2017 providing that the defendant would pay the plaintiff the sum of $300,000 as well as the plaintiff's costs as agreed or assessed at the time the offer was made. The plaintiff did not accept this offer.
To my mind, the critical evidence on the issue of liability was that of Ms Janis Williams contained in her evidentiary statement dated 4 April 2018 (Ex 4, Moggridge (No 1)). I accept that prior to the offer of compromise, the plaintiff had respite records from the cottage which revealed how the defendant alleged that the accident occurred. The plaintiff disputed Ms Williams' evidence, and provided a differing version of how he came to fall. It was only during the trial and when this Court had the advantage of evaluating the credibility of Ms Williams, who largely corroborated the cottage's records, together with the photographs of the recliner chair that it became clear that the accident did not occur the way the plaintiff claimed. In other words, until that evidence was given at the hearing, it was reasonable for the plaintiff to hold the opinion that it was more likely than not that he would be successful on the issue of liability.
However, the consideration for the award of indemnity costs does not end there. The offer of compromise was for a sum of $300,000. At the time the offer of compromise was made, the plaintiff was in receipt of the primary medical/legal expert reports of Dr Brian Zeman, a consultant in rehabilitation medicine, dated 12 November 2014 and 20 January 2017; Dr Selwyn Smith, a psychiatrist, dated 18 December 2015; Dr Angelo Virgona, a psychiatrist, dated 26 May 2016; Dr James Bodel, an orthopaedic surgeon, dated 9 November 2012 and 3 April 2014; and Dr Roger Pillemer, also an orthopaedic surgeon, dated 16 December 2014, 24 February 2015, 24 February 2015 and 12 January 2017. As set out in Moggridge No 1, had the plaintiff been successful on the issue of liability, I would have awarded a very modest sum for non-economic loss totalling $13,391.95 plus out of pocket expenses. However, this assessment of damages was certainly not straightforward, as the plaintiff had previously recovered substantial damages by way of settlement for a stroke he suffered in 2008. This Court's task was to assess the additional damage caused by the fall. The plaintiff's claim for care was that as a result of the fall, he would need an additional carer for 15 hours per week into the future.
When giving evidence, the plaintiff was adamant that he wanted to return to Sydney from Thailand and live there for the rest of his life. He gave evidence that after the stroke and while still in Australia, he was going broke "at the rate of knots" paying for substantial amounts of what he considered to be substandard care: see Moggridge (No 1) at [242]. In 2016, he started spending lengthy periods of time in Thailand. In 2017, he sold his purpose-built home in Cronulla and built a customised house in Thailand. He employed a co-ordinator who understood and looked after his care and his needs by employing carers. Despite these arrangements, he told this Court that he wanted to come back to Australia, where he has friends and grandchildren. However, he also was of the opinion that the level of care he received in Australia was disgraceful at best, and that he would be better off in an RSPCA dog pen than in a care facility in Australia: see Moggridge (No 1) at [251].
Due to the plaintiff's strident (if illogical) views and his mild neurological disorder as a result of the stroke in 2008, it was not reasonable to expect the plaintiff to resile from his entrenched views and accept any advice from his legal representative to accept the offer of compromise. In these circumstances, I am not persuaded that it was unreasonable for the plaintiff not to accept the offer of compromise. Therefore, in the exercise of my discretion I decline to make an order that the plaintiff pay the defendant's costs on an indemnity basis.
As stated at paragraph [3] of this judgment, it is common ground that the defendant is entitled to the payment of its costs by the plaintiff. I make an order that the plaintiff pay the defendant's costs on an ordinary basis.
[9]
Costs of this application
Costs are discretionary. The appropriate order for costs is that each party is to pay its own costs.
[10]
The Court orders that:
(1) The plaintiff is to pay the defendant's costs on an ordinary basis.
(2) Each party is to pay its own costs of this costs application.
[11]
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Decision last updated: 28 August 2019