Moubarak v Le

The Defendants' submissions

1. The Defendants acknowledge that the ordinary operation of the rules would result in the Plaintiff obtaining his costs of the proceeding (and leaving the costs order made in the Principal Judgment undisturbed). They accept that they have to persuade me that the ordinary operation of r 42.1 of the Uniform Civil Procedure Rules ('UCPR') should be displaced.
2. In this, the Defendants submit that: 1. they 'won' the case, by defeating various claims for heads of damage alleged by the Plaintiff; whose claims had not been adequately particularised until late in the proceeding; 2. because of the ultimate outcome on the quantum of the Judgment, the proceeding should have been brought in the Local Court (or, at least transferred to that Court after the Defendants admitted liability) such that its institution, or continuation, in this Court, was not warranted; 3. the Plaintiff barely obtained a monetary verdict beyond a 'nominal' sum, and that some authorities suggest in that circumstance, the Plaintiff should be deprived of its costs. 4. the Court should make a proportional costs order reflecting the small amount of the damages award obtained; 5. the Defendant did not act unreasonably in rejecting offers of settlement made by the Plaintiff.

The Plaintiff's submissions

1. The Plaintiff contends that: 1. the ordinary rule that costs should follow the event should apply. 2. for a considerable period after the accident, including a period of approximately eight months after the proceedings began, the Defendants denied liability. In so doing, they put the Plaintiff to considerable expense and deprived him of the opportunity of resolving an assessment hearing through the administrative regime of the State Insurance Regulatory Authority. 3. Partly as a consequence of this conduct, as time wore on and the Plaintiff recovered, to some extent, from his injuries, this reduced the Defendant's own exposure on the assessment of damages. 4. The Plaintiff's earlier offers of settlement which tend to show that he was not interested in continuing the litigation for the sake of it but rather, acted in accordance with his case management obligations (section 56 of the Civil Procedure Act 2005 (NSW)). 5. This was more than was done by the Defendants who, he asserts, were bent upon the matter running to trial with a view to depriving him of his costs. 6. the proposition that the ultimate result represented a "win" for the Defendant should be rejected: the Plaintiff recovered certain items of damage and had also withstood allegations of fraud (that were neither pleaded nor particularised). 7. this Court was the proper forum for him to bring his suit. 8. some of the authorities that the Defendants rely upon when making costs orders for small monetary judgments may be distinguished.

Principles for costs orders

1. Section 98(1)(a) of the Civil Procedure Act 2005 (NSW) confers a broad discretion upon the Court to order costs. However, rule 42.1 of the UCPR provides that the Court is to order that costs follow the event unless it appears to the Court some that some other order should be made as to the whole or any part of the costs.
2. Section 98(4) specifically empowers the Court to make a variety of costs orders tailored to the circumstances, by reference to case management objects, including (without limitation) the extent to which there is proportionality between costs of the proceeding and the just determination of matters in dispute: Harrison v Schipp (2002) 54 NSWLR 738.
3. The power to award costs is generally intended to compensate; and is not exercisable for punitive purposes: Ohn v Walton (1995) 36 NSWLR 77 at 79.
4. The Defendants referred me to the Court of Appeal's decision in Bostik Australia Pty Ltd v Liddiard (No.2) [2009] NSWCA 304, which set out relevant principles to the exercise of the court's discretion on costs where a question arises about success and failure by the parties on various issues. At paragraph 38, the Court said (omitting references to authority):

• 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 in 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;
• 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 …
• Whether an order contrary to the general rule of costs following the event should be made depends on the circumstances of the case viewed against the wise discretionary powers of the Court, which powers should be liberally construed;
• a separable issue can relate to 'any dispute of 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;
• 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."

1. On the significance that a Plaintiff obtains a small monetary judgment, relative to that which is claimed, the Court of Appeal in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (No.2) [2014] NSWCA 425 said (at [26]-[27]): "Consistent with that rule (ie r 42.1), it has long been accepted that a Plaintiff who obtains judgment at trial for a monetary sum will ordinarily be entitled to an order that the Defendant pay his or her costs, notwithstanding that the Plaintiff might not have recovered the whole of the amount he or she claimed. The circumstances of particular cases may warrant departure from this approach. In particular where the Defendant succeeded on a clearly dominant or separable issue, some variation may be warranted." The Court of Appeal then referred to Bostik as to the principles to apply in circumstances where a departure from the ordinary rule was warranted.
2. In O'Reilly v Western Sussex NHS Trust (No.7) [2015] NSWSC 233, Garling J said (at [40]): "if a party commences and continues proceedings in this Court, and is ultimately successful, then unless the sum which is recovered can properly be described as nominal damages …. then the Plaintiff is entitled, ordinarily, to their costs of the proceedings, whatever those costs may reasonably be."
3. Rule 42.35 of the UCPR is (relevantly) in the following terms. "42.35 (1) This rule applies if: 1. in proceedings in the District Court, a Plaintiff has obtained a judgment against the Defendant or, if more than one Defendant, against all the Defendants, in an amount of less than $40,000 2. The Plaintiff would, apart from this rule, be entitled to an order for costs against the Defendant or Defendants. (2) An order for costs may be made, but will not ordinarily be made, unless the District Court is satisfied the commencement and continuation of the proceedings in the District Court, rather than the Local Court was warranted."

The significance of the liability issue

1. As a first point, the Defendant's submissions afford no recognition to the circumstance that for a not insubstantial period in this litigation (approximately 8 months), the Defendant denied liability. Indeed beyond pleading a bare denial of liability, the Defendant also expressly put in issue, as contributing causes of the accident, the responsibility of a third party (Wiley Park Mechanical Repairs), as well as the Plaintiff's own responsibility. All of this forced the Plaintiff to incur not insubstantial expense in the litigation. Whilst liability was in issue, the Plaintiff had to finance the treatment of his injuries from his personal resources.
2. In my view, these circumstances alone indicate that it would not be fair to entirely deprive the Plaintiff of his costs of the proceeding.

Did the Defendant 'win'?

1. As indicated, this submission can only fairly be considered at the point in the proceeding where liability was admitted and the only remaining question was the assessment of damages. As is identified in the Principal Judgment (at [90]), the question was reducible to issues of whether the Plaintiff could make out any or all of the heads of damage claimed.
2. Plainly, he did not make out all of them. His award of damages was made up of components for past and future expenses and past loss of earning capacity. He did not establish claims for future loss of earning capacity or future domestic care. Nevertheless, a fair reading of the Principal Judgment is that, contrary to the position advanced on behalf of the Defendants at trial, the Plaintiff still has some on-going disability and need for future treatment. In general terms, the question at trial was the nature and extent of the Plaintiff's on-going disability. The Defendants succeeded in establishing that whatever that was, in a physical sense, it did not suffice to prove that it will impair his future work capacity or cause him to have a requirement for future treatment.
3. Subject to other considerations to which I will now refer, I am inclined to the view that an apportionment would be appropriate, to reflect the Defendant's success in resisting those particular claims.

Choice of forum

1. In this case the Plaintiff obtained a judgment sum of less than $40,000. That being so, in accordance with r 42.35, it is for the Plaintiff to satisfy me that his pursuit and continuation of the proceeding and in the District Court was "warranted", if he is to obtain the order for costs. I note that even if r 42.35 is engaged, the Court retains a discretion as to costs: Gladio Pty Ltd v Buckworth (No.2) [2015] NSWSC 1462 at [15].
2. The Defendants referred me to a decision of Gibson DCJ in Colak v Ghalloub (No.2) [2017] NSWDC 351. This was another case in which a Plaintiff obtained a small judgment sum, and was unable to meet the costs threshold in r 42.35. Her Honour emphasised that it matters not that a Plaintiff aspires to obtain a judgment sum that is higher than $40,000. Although I agree, with respect, with that statement so far as it goes, I do not interpret Her Honour's observation to suggest that in all cases the potential judgment amount, if a claimant succeeds, is an irrelevant consideration. I consider that it is a relevant consideration: New South Wales v Quirk [2012] NSWCA 216 at [171]; Milich v Council of the City of Canterbury (No.3) [2012] NSWSC 1280 at [20]. Ultimately in this respect, at the outset of the trial, counsel for the Plaintiff submitted that the quantum of the claim was $64,000. This was not an extravagant amount for damages for personal injury arising from a motor accident, especially where the Plaintiff was injured in a 1951 motor vehicle (whose safety features are scarcely comparable with motor vehicles today), and I consider that there were at least reasonable prospects for the Plaintiff to consider that, if he succeeded on all of his claims, he would obtain an award greater than the $40,000 threshold. In saying this, I do not overlook that the quantum of the Plaintiff's claim was pitched at a much higher level at an earlier point of the proceeding; but I do not place significant weight on that circumstance. The matter of how a Plaintiff pitches its claim is more meaningfully considered at about the point when the case is ready for, or at, the commencement of the trial.
3. Reliance was also placed upon the statement by Her Honour in Colak that the real issue is the complexity of the case rather than its classification: that is, that although this case can be categorised as a motor accident case, the classification was not determinative. I do not, with respect, interpret her Honour's observations as suggesting that the circumstance that this Court is recognised as the premier, if not regular, forum for resolving proceedings in which personal injury claims are brought under the Motor Accidents Compensation Act is irrelevant. Section 107 of the Motor Accidents Compensation Act does not preclude a Plaintiff from (relevantly) commencing suit in the Local Court. However a relevant consideration on the question of whether a decision to commence a proceeding in this Court was warranted is not only this court's unlimited monetary jurisdiction for claims for personal injuries of this type, but also the body of expertise developed by its judges (with the assistance of legal practitioners with expertise in the field) in determining claims brought under that legislation; and a Plaintiff's decision to commence its suit in such a forum is, to that extent, reasonable and, moreover, to be expected. In this case, Counsel for the parties were both experienced practitioners in this area of the law, and in practice in the Court. By contrast, as was noted in another decision of Gibson DCJ, being McLennon v Antonios (No.2) [2014] NSWDC 38, motor accident cases in the Local Court generally concern claims for property damage; not personal injury.
4. I would not characterise the factual issues in relation to the various alleged heads of damage in this case as being overly complex. Nevertheless they engendered fierce debate amongst experienced legal practitioners about the enduring significance of the Plaintiff's injuries. This made the proceeding well-suited for the determination of this Court rather than the Local Court. The Defendants attacked the Plaintiff's case vigorously, including what I identified in the Principal Judgment as amounting to a 'wholesale' attack on the Plaintiff's credit. Had all that the Defendants submitted been accepted by me, damages would only have been awarded for past out of pocket expenses.
5. I note the Defendants' submission that after liability had been admitted, the proceeding should have been transferred to the Local Court, pursuant to s 146 of the Civil Procedure Act. If I was to ignore the circumstance that the Defendant had put liability in issue for a substantial period, the hearing on the assessment of damages itself took two days. Even after liability had been 'admitted', the Defendants put the Plaintiff through a gruelling cross-examination where assertions were made that were redolent of fraud (see [168]-[171] of the Principal Judgment). It must be highly doubtful at the point when the Defendants admitted liability, that the claim advanced in the jurisdiction was so plainly obvious as to be more appropriately determined within the Local Court's jurisdiction as to mandate a transfer application, or that such application was likely to succeed even if the proceeding could have been commenced in that Court. The Defendants themselves did not bring such application.
6. In the circumstances, the commencement and continuation of this proceeding in this Court was warranted within the meaning of r 42.35.

The modest amount of the judgment sum

1. The Defendants, correctly, did not submit that the Plaintiff recovered only "nominal" damages (State of New South Wales v Stevens (2012) 82 NSWLR 106). Instead, they invite me to discount any order for costs (pursuant to s 98(4) of the Civil Procedure Act) by reference to case management principles; especially s 60 of the Act.
2. The judgment sum is, however, undoubtedly for a small amount.
3. Although, for the purposes of this application, there is no evidence as to what the likely quantum of the Plaintiff's costs is likely to be, they are plainly likely to substantially exceed the judgment sum recovered. Nevertheless, in my view, for the same reasons as those addressed above in connection with other relevant considerations, the Defendants' interests are sufficiently protected in an apportionment, to mark the extent of their success.
4. Further, in terms of the Defendants' complaints about the escalation of costs in proportion to the judgment sum recovered, I do not regard the responsibility for the costs of this proceeding as being entirely attributable to the Plaintiff. It is always open to all parties in litigation to attempt to reduce the costs of litigation by the service of settlement offers, in accordance with the rules (or, Calderbank offers). One such offer of settlement was made on the Defendants' behalf, but because of the quantum, it did not enliven the costs consequences of the rejection of that offer.

Rejection of the Plaintiff's settlement offers

1. The circumstance that the Defendants rejected settlement offers by the Plaintiff in a higher amount than that which the Plaintiff recovered is no circumstance adverse to the Defendants. There could plainly be no suggestion that it was unreasonable for them to reject those offers. I do not accept the Plaintiff's submission that the Defendant's position is explicable by reference to a desire to drive up costs or to deprive the Plaintiff of them. The better explanation is that they were faced, initially, with a large monetary claim which they sought to diminish. The end result has vindicated that approach to a substantial degree.

Conclusion

1. In the circumstances where the Defendants clearly did succeed in defeating certain claims for damage, I consider that there are separable issues that warrant an apportionment. As I have indicated, those claims upon which the Defendants enjoyed success related to the future consequences of the Plaintiff's injury and disabilities. I also consider that, as the reasons in the Principal Judgment indicate, in light of the nature of the recreational activities partaken by the Plaintiff after the accident, it should have been apparent to him that he was likely to have a real difficulty in succeeding with his claims for future loss of earning capacity and future domestic assistance.
2. I was referred by the Defendants to a decision of this Court in Dorrah v Denny (District Court of NSW, 21 August 2018, unreported). In that case Wass SC DCJ followed the example of Garling J in the case I referred to earlier, O'Reilly, where the costs order was crafted to specifically reflect the claims upon which the Plaintiff succeeded. The Plaintiff submits that the circumstances of this case are plainly distinguishable from those in Dorrah v Denny. Indeed there are important differences. Nevertheless, the result in Dorrah is consistent with general authorities, which I have referred to, to the effect that where parties enjoy mixed success on separable issues, the ordinary costs outcome can be adjusted to reflect that success.
3. In my view, taking into account all of circumstances I have referred to, it is appropriate to make a variation in accordance with that approach.
4. The Defendants have raised multiple alternative applications. The Defendants have enjoyed some success, albeit that I have rejected several of those applications and several arguments raised in support of them. The costs outcome of this application will reflect this. ORDERS
5. I make the following orders: 1. Subject to order 2 of these Orders, Order 2 made on 15 April 2019 is varied, and is substituted by an order that the Defendants pay the Plaintiff's costs of the proceeding save for his costs referable only to establishing claims for future loss of earning capacity and future care and assistance (respectively). 2. The Plaintiff is to pay 50% of the Defendants' costs of this application.

Amendments 10 May 2019 - Amended numbering issue following 'Defendants' submissions' title. 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: 14 May 2019