Dr Nair-Smith's offers
5The first offer relied on was contained in a letter from Dr Nair-Smith's solicitors dated 19 October 2006. It offered to settle the proceedings for the sum of $30,000.00 plus costs and was expressed to be "without prejudice save as to costs". The offer was clearly not an offer of compromise under the rules. The parties debated whether it amounted to an effective "Calderbank offer" (Calderbank v Calderbank [1975] 3 WLR 586). Perisher contended that it did not sufficiently indicate an intention that, in the event of a more favourable result following the non-acceptance of the offer, a special order for costs would be sought (referring to Messiter v Hutchinson (1987) 10 NSWLR 525).
6It is unnecessary to consider this further as, in any event, I would not exercise any discretion I had to award indemnity costs in Dr Nair-Smith's favour based on this offer. As explained in the affidavit from Perisher's solicitor, Mr Brookes, at the time the offer was made Dr Nair-Smith had barely articulated a claim for economic loss, and had not provided proper particulars of her case or provided any adequate medical evidence to support the claim she was making.
7The second offer was made on 31 May 2007. It purported to be an offer of compromise in the amount of $20,000.00, "plus costs". It was conceded that it did not satisfy the requirements of the rules (which were unaffected by Uniform Civil Procedure Rules (Amendment No 59) 2013 which took effect on 7 June 2013, and thus were not relevantly different to those considered in Whitney v Dream Developments Pty Ltd [2013] NSWCA 188). However on behalf of Dr Nair-Smith it was submitted that, because it was generally understood in the profession that such an offer did amount to an offer of compromise, that was sufficient to enliven the Court's discretion to make a special order as to costs. Such a proposition is obviously untenable. Otherwise the second offer was not effective as a Calderbank offer. There is nothing in the offer or the evidence as to the surrounding circumstances to suggest that Dr Nair-Smith proposed to rely upon that offer on the question of costs "irrespective of its effectiveness as an offer" of compromise under the rules (Whitney at [43] per Bathurst CJ).
8Third, Dr Nair-Smith relies on an offer made on 7 August 2012. The offer was headed "Offer of Compromise" and provided for a verdict and judgment for Dr Nair-Smith in the sum of $550,000.00. It was expressed to be open for acceptance until 4:00pm on 16 August 2012. It did not address the question of costs and, in that respect, was compliant with the regime for offers of compromise then in force as discussed in Whitney.
9Perisher noted that the offer was only open for acceptance for a period of eight calendar days. As the offer was made less than two months prior to the trial, it had to be open for such time as was "reasonable in the circumstances" (Uniform Civil Procedure Rules 2005 ("UCPR") 20.26(7)(b)). At this point the parties had been bitterly fighting each other for years. They were only a month away from trial and had served voluminous materials on each other. Subject to the point made below, they were familiar with the nature of each other's case. In context, I am satisfied that eight days was reasonable.
10Perisher complained that Dr Nair-Smith did not serve her schedule of damages until 22 August 2012 (and that it only calculated damages based on the CLA). In response Dr Nair-Smith points to UCPR 20.26(5) which provides:
"(5) If a plaintiff makes an offer, no order may be made in favour of the defendant on the ground that the plaintiff has not supplied particulars or documents, or has not supplied sufficient particulars or documents, unless:
(a) the defendant has informed the plaintiff in writing of that ground within 14 days after receiving the offer, or
(b) the court orders otherwise."
11It is difficult to see how this rule could be invoked against Perisher when the offer that was made expired prior to the fourteen day period. However, subject to the point next considered, I do not consider that the fact Dr Nair-Smith did not serve her schedule of damages until 22 August 2012 affected Perisher's ability to consider and respond to the offer that was made. Other than the matter considered next, it was very well aware of the metes and bounds of Dr Nair-Smith's case by August 2012.
12These matters lead to the conclusion that the power to award indemnity costs has arisen in respect of this offer of compromise. Ordinarily it would follow that by the operation of UCPR 42.15A Dr Nair-Smith would obtain an order for her costs of the proceedings up to and including 7 August 2012 on the ordinary basis, and an order for her costs on an indemnity basis on and from 8 August 2012.
13However Perisher contends that the Court should "otherwise order" under UCPR 42.15A(2). In addition to the points just noted, it relies on the fact that Dr Nair-Smith only exceeded her offer because she was able to recover damages at common law whereas at the time of the offer and throughout the hearing in September 2012 she was conducting her case on the basis that the amount of damages she could recover was regulated by the CLA. In Nair-Smith (No 2) I calculated her damages on the assumption that her claim was regulated by the CLA at approximately $412,000,00 which, even with the addition of interest, would not exceed the third offer.
14In response Dr Nair-Smith contended that it was "disingenuous" to contend that she led Perisher to believe that her claim for damages would be conducted in accordance with the CLA, and that otherwise it was necessary for Perisher to demonstrate "exceptional circumstances" to justify the Court otherwise ordering under UCPR 42.15A (citing Caine v Lumley General Insurance Ltd (No 2) [2008] NSWCA 109; Nominal Defendant v Hawkins [2011] NSWCA 93).
15Subject to the matter noted in [17], I accept Perisher's contention that in the immediate period prior to as well as during the trial both parties were operating on the assumption that the quantum of damages recoverable by Dr Nair-Smith was governed by the CLA. When the case was opened senior counsel for Dr Nair-Smith acknowledged that the "Civil Liability Act applies to this matter", although it was not clear whether that statement was said to relate to her cause of action for a breach of the term implied by s 74(1) of the Trade Practices Act 1975 (Cth ) (the "TPA") as well as that in negligence. However, neither in the oral or written submissions was there any suggestion made on behalf of Dr Nair-Smith that the quantum of her claim was not regulated by the CLA.
16The possibility that it was not so regulated only emerged when the judgment in Nair-Smith (No 1) was published. In that judgment I addressed the competing submissions as to whether the terms of Dr Nair-Smith's lift ticket had excluded the term implied by s 74(1) (Nair-Smith (No 1) at [87]ff). This led to a consideration by the Court of the operation of s 74(2A) of the TPA which purports to pick up the CLA's restriction on the awarding of damages (Nair-Smith (No 1) at [102]). I observed that s 74(2A) was enacted after Dr Nair-Smith's accident (see Treasury Legislation Amendment (Professional Standards) Act 2004 (Cth) No 118 of 2004) (Nair-Smith (No 1) at [102] and [121]). Thus this threw up an issue about how, prior to the amendment, the CLA could operate to limit the damages recoverable for a breach of a term of a contract implied by a federal statute. Those matters were not addressed by the parties. In Dr Nair-Smith's case, the submissions referred to provisions of the Australian Consumer Law which came into effect on 1 January 2011 and post-dated the events of this case by more than seven years (Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010, s 2).
17It is the case that after the publication of the judgment in Nair-Smith (No 1), Perisher did not seek to argue that Dr Nair-Smith should not recover damages assessed at common law because it was inconsistent with the manner in which she had conducted her case to that point or was otherwise outside the pleaded case. However, that does not affect my conclusion that, as at the time of the third offer and the hearing in September 2012, both parties were conducting the matter on the basis that the quantum of damages recoverable by Dr Nair-Smith was regulated by the CLA.
18Is this a basis for otherwise ordering under UCPR 42.15A? As submitted on behalf of Dr Nair-Smith, the cases indicate that there must be some feature(s) which are exceptional or special to warrant a departure from the ordinary operation of the rule. Perisher relied on Fowdh v Fowdh [1993] NSWCA 100 in which the Court of Appeal upheld a decision of a Master to otherwise order in circumstances that Mahony AP characterised as involving a plaintiff "present[ing] her evidence, mak[ing] an offer of compromise, then ... succeed[ing] at the trial upon a relevantly different case" (at 10 to 11). The relevantly different case was that which arose out of medical evidence that emerged at the trial. Meagher JA agreed that the Master's order should not be disturbed and appeared to do so for the reasons given by Mahoney AP. Kirby ACJ dissented. Similarly in Vale v Eggins (No 2) [2007] NSWCA 12 the fact that at the time an offer was made a defendant had in their possession a number of medical reports that had not been served was held to warrant the Court not ordering indemnity costs in respect of a plaintiff who did not obtain a superior result to the offer of compromise (at [22] per Beazley JA, with whom McColl JA agreed at [26], contra Bryson JA). Of course this case involves not so much a relevantly different case but a relevantly different legal environment for calculating damages compared with that considered by the parties when the third offer was made.
19In Hillier v Sheather (1995) 36 NSWLR 414 at 423, Kirby P accepted that in considering whether to exercise the discretion to otherwise order the Courts "will not overlook the particular features of the case and the difficulty of putting an accurate estimate on its value in advance of the litigation" but added that the "general considerations of chance and risk" were appreciated in enacting the rules concerning offers of compromise. Generally the materialisation of a known adverse risk in litigation is not a matter that warrants the exercise of the power conferred by UCPR 42.15A to otherwise order. However the rule is fundamentally directed to encouraging settlement and that objective is in part sought to be achieved by imposing financial burdens on parties who incorrectly assess the risks they face in pursuing or defending litigation. This objective is not furthered when the common legal framework upon which any such assessment has been undertaken by the parties at the time offers have been made subsequently alters. The judgment in Nair-Smith (No 2) reveals that an assessment of the value of Dr Nair-Smith's case on the commonly assumed basis that the CLA was applicable warranted the rejection of the third offer.
20Subject to considering the points raised by Perisher and certain agreed costs orders, the appropriate order is that Perisher pay Dr Nair-Smith's costs of the proceedings on the ordinary basis. At this point I note that Perisher also submitted that the Court should otherwise order under UCPR 42.15A because of the "contumacious disregard [by Dr Nair-Smith] of her obligations as a litigant under the [Civil Procedure Act 2005] and UCPR". The complaints that this submission related to covered the same territory as the matters I will consider next but I note that to an extent there have previously been a number of costs orders made against Dr Nair-Smith and the parties have resolved some aspects of costs that have been reserved. Thus, at least to that extent, the "disregard" Dr Nair-Smith is said to have displayed has already been addressed. None of the costs orders that I will make will interfere with those previous orders.