Nominal Defendant v Hawkins

Judgment 1BEAZLEY JA : I have had the advantage of reading in draft the judgments of Hodgson JA and Sackville AJA. I agree with the reasons of Hodgson JA and the additional reasons for dismissing the appeal given by Sackville AJA. 2I also agree with their Honours' respective reasons that the cross-appeal should also be dismissed. Like their Honours, I doubt that I would have exercised the discretion in the same manner as did the trial judge. Nonetheless, having reviewed the authorities, I am satisfied that there was no appealable error in the trial judge's decision in respect of costs. 3HODGSON JA: The respondent Mr Hawkins brought proceedings in the District Court against the Nominal Defendant claiming damages for an injury he suffered as a result of a crash on his bicycle. 4On 6 May 2010, Armitage DCJ gave judgment for Mr Hawkins in the sum of $412,460. 5On 7 May 2010, the primary judge refused an application by Mr Hawkins that his costs be paid on an indemnity basis from 8 January 2010 and (it would seem) made an order for costs in Mr Hawkins' favour on the ordinary basis. 6The Nominal Defendant appeals from the judgment against it. Mr Hawkins seeks leave to appeal against the refusal of indemnity costs. The application for leave to cross-appeal has been heard on the basis that, if leave is granted, the cross-appeal will be determined without further argument.

Outline of facts 7Mr Hawkins' injury was caused by an accident that occurred at about 1.00am on 20 January 2006, when Mr Hawkins was riding his bicycle northwards along Pacific Highway. 8The primary judge found the following facts, which are not in dispute on appeal: (1) As Mr Hawkins approached the intersection of Pacific Highway and Oxley Street, he heard continual erratic beeping from a car horn. (2) He looked over his right shoulder and saw the headlights of a car, which was near the intersection of the highway with Willoughby Road. (3) He continued to ride downhill, and after he crossed the intersection at Oxley Street and was about half way to the Albany Street intersection, he noticed that the beeping continued and that he could hear loud music. (4) As he got to the Albany Street intersection, he could hear not only the beeping and loud music but also people yelling and carrying on, being a commotion coming from the car. (5) He looked back and saw the headlights of the car just before the intersection in the inside lane. (6) He decided to get off the road because he felt intimidated and he thought he should give them "their space" because of the way they were acting, and he cycled up onto the footpath. (7) He crossed the next intersection, that is Christie Street, but having just got back onto the footpath after crossing Christie Street, he noticed that the noise from the vehicle seemed to be right behind him. (8) He was then struck by an object on his right shoulder, causing him to veer to the left and then to the right. (9) He noticed the vehicle accelerating from beside where he was, and moving out from the kerb lane to straddle the kerb lane and the next lane, with the loud music, the beeping and the yelling from the people inside continuing. (10) Before he could regain control of the bicycle he saw a piece of metal lying across half of the footpath. (11) Had he been in control of his bicycle, he would have been able to avoid this piece of metal, but since he was not he collided with the piece of metal causing his front tyre to blow out. (12) He continued out of control on his bicycle and struck a telegraph pole thus sustaining his injuries.

Statutory provisions 9Liability of the Nominal Defendant depends on the application of Part 2.4 of Chapter 2 of the Motor Accidents Compensation Act 1999 ( MAC Act), as in force at 20 January 2006. 10That Part applied "to and in respect of a motor accident occurring before or after the commencement of this Act" (s 31). Section 34 provided for claims against the Nominal Defendant where injury was caused by the fault of a driver of a motor vehicle in the use or operation of the vehicle on a road in New South Wales, if the identity of the vehicle could not after due enquiry be established. 11There were relevant definitions in s 3 of "injury" and "motor accident": injury : (a) means personal or bodily injury caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle if, and only if, the injury is a result of and is caused during: (i) the driving of the vehicle, or (ii) a collision, or action taken to avoid a collision, with the vehicle, or (iii) the vehicle's running out of control, or (iv) such use or operation by a defect in the vehicle, and (b) includes: (i) pre-natal injury, and (ii) psychological or psychiatric injury, and (iii) damage to artificial members, eyes or teeth, crutches or other aids or spectacle glasses, and injured person means a person who suffers such an injury. motor accident means an accident or incident caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle which causes the death of or injury to a person.

Decision of primary judge 12The primary judge found that it was more probable than not that the object that hit Mr Hawkins was thrown from the motor vehicle, having regard to the circumstance that the vehicle was then beside him, and there were no other cars or persons in the vicinity. 13The primary judge also found that the driver of the vehicle drove in such proximity to Mr Hawkins and/or at such a speed so as to permit or facilitate an occupier of the vehicle to throw an object, when in the circumstances it was likely (foreseeably likely to the driver) to injure Mr Hawkins. In so finding, the primary judge relied on the following circumstances: (1) It must have been the driver who was activating the horn. (2) This was to intimidate Mr Hawkins or to drive irresponsibly. (3) To have positioned the vehicle as he did, the driver must have driven well below the applicable speed limit. (4) The vehicle remained at approximately the same position relative to Mr Hawkins until the object was thrown. (5) The vehicle then accelerated away, straddling the two lanes. The primary judge accepted that Mr Hawkins' injury was caused by the fault of the driver, within the definition of "injury" in the MAC Act, and was a result of and caused during the driving of the vehicle, within that definition.

Issues on appeal 14The Nominal Defendant relies on the following grounds of appeal: 1 The Primary Judge erred in inferring (although not expressly) that the occupant of the unidentified vehicle who threw an object at the Respondent, premeditated that act, rather than the act being spontaneous. 2 The Primary Judge erred in failing to take into account when considering inferences to be drawn from the evidence, that there was nothing in the conduct of occupants of the unidentified vehicle prior to an object being thrown at the Respondent, to indicate that it was, or should have been, apparent to the driver, that the behaviour of one occupant would progress from creating noise or disturbance, to the criminal act of throwing an object at the Respondent. 3 The Primary Judge erred in inferring that the driver of the unidentified vehicle was aware before the fact, that an occupant of the vehicle intended to throw an object at the Respondent (if there was any such premeditated intention). 4 The Primary Judge erred in inferring that the driver of the unidentified vehicle deliberately drove the vehicle close to the Respondent, to facilitate the throwing of an object at the Respondent by an occupant of the vehicle. 5 The Primary Judge erred in inferring that the most probable explanation for the manner in which the driver drove the unidentified vehicle, was to facilitate an occupant of the vehicle throwing an object at the Respondent, when there were other, at least equally probable, explanations. 6 The Primary Judge failed to consider other, equally probable, inferences as to the state of mind of the driver of the unidentified vehicle, as to which there was no direct evidence whatsoever. 7 The Primary Judge erred in finding that the circumstances of the Respondent's injury, satisfied the definition of the word " injury " in s.3 of the Motor Accidents Compensation Act 1999 [ MACA ], as at the date of the subject accident on 20 January 2006. 8 The Primary Judge erred in finding that the Respondent's injury was " caused by the fault " of the driver of the unidentified vehicle. 9 The Primary Judge erred in finding that the Respondent's injury occurred " in the use or operation of the vehicle ". 10 The Primary Judge erred in finding that the Respondent's injury was " a result of and ... caused during ... the driving of " the unidentified vehicle. 11 The Primary Judge erred in finding that the conduct of the driver of the unidentified vehicle was the "proximate" or "immediate" cause of the Respondent's injury. 12 The Primary Judge erred in finding that the conduct of the driver of the unidentified vehicle caused the Respondent's injury, having regard to the principles set out in s.5D of the Civil Liability Act 2002 . 15Mr Hawkins seeks to rely on the following grounds of cross-appeal: (1) The primary judge erred in the principles applied, in particular in not requiring exceptional circumstances to deny indemnity costs. (2) The refusal to award indemnity costs was outside the range of reasonable discretionary judgment. 16I will deal in turn with the following issues: (1) Findings of primary fact (appeal grounds 1 to 6). (2) Application of the MAC Act (appeal grounds 7 to 12). (3) Indemnity costs (cross-appeal).

Findings of primary fact 17Mr Rewell SC for the Nominal Defendant accepted that it was open to the primary judge to infer that the driver of the unidentified vehicle drove as he did (beeping the horn, moving alongside Mr Hawkins, and then accelerating away) so as to irritate Mr Hawkins and to facilitate the passengers irritating him. However, Mr Rewell submitted it was not open to the primary judge to infer, on the balance of probabilities, that throwing an object at Mr Hawkins was a premeditated act by the perpetrator; that the driver was aware of this intention; that the driver facilitated that premeditated act; and/or that it was foreseeable by the driver that a person would throw the object from the car. 18Mr Rewell submitted that throwing an object at Mr Hawkins was a criminal act, of a very different nature from the rowdy behaviour of which the driver must have been aware; and it could not be said that, on the balance of probabilities, the driver was aware that a passenger would do this or even foresaw this as a risk caused by the way he drove the car. Mr Rewell pointed to evidence from Mr Hawkins that there was nothing about the car or its behaviour or anything else that made him think that something would be thrown at him, or that caused him to lose control of his bicycle. Mr Hawkins also said that having something thrown at him came as a surprise, and that it was only on being struck by the object that he sensed some loss of control. 19I am not satisfied that the primary judge was in error in drawing the inference that the driver drove so as to permit or to facilitate the throwing of an object at Mr Hawkins. In my opinion, it was clearly open to infer that the driver drove as he did to harass and/or intimidate Mr Hawkins through the close proximity of the car, the beeping of the horn and the yelling of the occupants. In circumstances where the driver drove the car closely alongside Mr Hawkins, adjusted its speed so as to approximate his and, immediately after the object was thrown, accelerated away, moving out of the lane next to the kerb. In these circumstances, it was in my opinion an available inference that the driver drove in that way in order to facilitate something being thrown at Mr Hawkins, this being an act that the driver was aware was intentionally committed by a passenger. 20Accordingly, I would not uphold grounds 1 to 6.

Application of the MAC Act 21Mr Rewell submitted that, even if the primary judge's findings of fact were not disturbed, so that there was some fault of the driver that in some sense was causative of Mr Hawkins' injuries, the case would not fall within the relevant provisions of the MAC Act so as to make the Nominal Defendant liable for the fault of the driver of this unidentified vehicle. 22Mr Rewell referred to Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; (2005) 221 CLR 568, and submitted that the High Court held in that case that the definition of "injury" in the MAC Act required the Court to look to the immediate or proximate cause of the injury; and in this case, that was the (non-driving) conduct of an occupant of the vehicle throwing the object. 23Mr Rewell also referred to cases from other states, namely Ross v Transport Accident Commission [2000] VSC 112, Mani v Nominal Defendant [2002] QSC 152 and Coley v Nominal Defendant [2003] QCA 181. 24Mr Roberts SC for Mr Hawkins submitted that Allianz did not require that there be only one proximate cause, and that the driving in this case played such a role in the causation of the injury that it was an immediate or proximate cause, as those words were used in Allianz . He further submitted that the throwing of the object was so connected with the manner of driving in order to harass and intimidate Mr Hawkins that it would be unrealistic to treat the throwing as an independent act, distinct from the harassing and intimidating driving. 25In my opinion Allianz does require a strict reading of expressions such as "caused by" and "is a result of" in the relevant definition of "injury". 26At [102] in that case, Gummow, Hayne and Heydon JJ say this: 102 The use in the definition of the emphatic and intensive phrase "if, and only if" directs attention to notions of predominance and immediacy rather than to more removed circumstances. The definition of "injury" looks, for the CTP insurance system, to notions of proximate cause found in insurance law (82). That construction is consistent with the subject, scope and purpose of the 1995 Act. 27Footnote (82) contains the following references: Australian Casualty Co Ltd v Federico (1986) 160 CLR 513 at 534-535; March v Stramare (E & M H) Pty Ltd (1991) 171 CLR 506 at 511. 28At [131] Callinan J says this (omitting footnotes): 131 It is significant that after the words "is a result of" no expression such as "or is contributed to by" is used. The indefinite article "a" does not imply in my opinion that one of multiple causes may suffice, even if "cause" and "result" were taken as synonyms in the definition. Each of the separate expressions "is a result of" and "is caused during" has to be given its full and presumably different meaning. They have a cumulative reinforcing effect. Each has its own separate and important work to do. The words "if, and only if," refer both to result and the event or, to put it another way, what is happening in relation to the vehicle when the injury is caused. It follows that subpara (iv) of the definition should be read in this way: "'injury': (a) means personal ... injury caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle if, and only if, the injury is caused during such use or operation of the vehicle of the kind referred, or by a defect in it". "Such" is the key word. It means "[o]f the character, degree, or extent described, referred to, or implied in what has been said." Furthermore, the expression "use or operation" as used in the introductory words of the definition have separate and sufficient work to do. That work is to identify the event in the course of which there is fault, the "fault" earlier referred to. The use or operation of the vehicle earlier described and referred to in subpara (iv) is the use or operation of the vehicle in the manner most recently and proximately referred to in the definition, that is, in motion, as set out in subparas (i), (ii) and (iii). 29And at [53] McHugh J says this: 53 The above examination of the subject, scope and purpose of the Act suggests three matters that are relevant in the construction of Pt 6 of the Act. First, the Act does not provide a universal compensation scheme for all injuries sustained in connection with a motor vehicle. Second, cost-saving and the need to keep the scheme affordable are significant objects of the Act. Third, the Act has tightened the definition of injury by reference to its cause. These three matters indicate that, in the inquiry into the question of causality, an approach that limits the scope of the Act is preferable to one that would extend its application. This in turn suggests that a close causal connection is required for the injury to satisfy the requirement the injury be "caused ... by a defect in the vehicle". 30In my opinion, it must follow that, for example, an injury caused by a drive-by shooting would not fall within the definition. If a driver drives past a house, with a passenger carrying a gun, and having the intention that the passenger shoot at the house, and if the passenger does so and injures a person in the house, this would not be an injury within the definition, for which the Nominal Defendant would be liable. 31Clearly, although the shooting and consequent injury can be called an incident (within the definition of "motor accident"), it would not be considered a motor accident within the ordinary meaning of that expression. That would not matter, if the incident and the injury fell within the statutory definitions of "motor accident" and "injury" respectively; but particularly having regard to the authority of Allianz , in my opinion they do not. Injury may be considered as having been contributed to by "the fault" of the driver, this fault consisting in driving the passenger to the location knowing that the passenger was to shoot at the house, and (with this knowledge) in driving the car in such a way (say, driving slowly and steadily past the house) that the passenger could fire effectively. However, the approach in Allianz would suggest that the injury was not relevantly "caused" by that fault, that the fault was not relevantly "in the use or operation" of the vehicle, and that the injury was not "a result of the driving" of the vehicle. 32One way of putting this is that the fault of the driver would lie in his/her being an accessory to the shooting, rather than in any driving-related fault. The driving would not be in any way faulty as driving , but would merely be the means by which the passenger was put in a position to shoot. Accordingly, the driver's fault should not be considered as being "in the use or operation of the vehicle", or (if and to the extent that it was so considered) as causing the injury; and the driving of the vehicle (and any fault involved) would not play a sufficient role in causing the injury to justify a finding that the injury was a result of the driving of the vehicle. 33Having regard to what was said in the passage of Federico , to which the joint judgment in Allianz referred, I do not understand their Honours in that case to be altogether ruling out the possibility that there may be more than one cause which is sufficiently predominant or immediate or proximate to satisfy the requirements of causation in the definition of "injury" in the MAC Act. However, clearly in my opinion they are saying that the fault in the use or operation of the vehicle, and the driving of the vehicle (in those cases where par (a) of the definition of "injury" is in question), must have a very substantial causative role; and that in the former case its character as fault must be related to the actual use and operation of the vehicle as such, rather than merely as fault (with the aid of the motor vehicle) in facilitating a dangerous or criminal act by a passenger unconnected with the actual driving or operation of the vehicle. 34At the other extreme, to manoeuvre a motor vehicle, with the intention that the actual manoeuvring of the vehicle (say) by cutting in on a cyclist or unreasonably crowding a cyclist so as to harass and/or intimidate the cyclist and thereby to cause the cyclist to crash and be injured, would in my opinion clearly be fault in the use and operation of the vehicle causing the injury, and the injury would be a result of the driving of the vehicle, within the meaning of the definition of "injury" in the MAC Act. 35Before considering the facts of this case, it may be convenient to consider this approach in relation to the facts of the interstate cases referred to by Mr Rewell. 36In Ross , a car that had been travelling behind the plaintiff's car drew alongside it, and a person shot the plaintiff a number of times from that car. The plaintiff claimed he had been injured in a "transport accident" as defined in s 3 of the Transport Accident Act 1986 (Vic), that is (relevantly) "an incident directly caused by the driving of the motorcar". Beach J in the Supreme Court of Victoria found against the plaintiff, holding that the shooting of the plaintiff was not directly caused by the driving of a motorcar, but by the action of the person in the possession of the gun pointing the gun at the plaintiff and pulling the trigger. 37In my opinion, a similar result would follow on those facts under the MAC Act. There was no relevant driving fault sufficiently connected with the injury to justify a finding that the injury was within the definition of "injury" in the MAC Act. 38In Mani , the plaintiff was driving a van along a road when the driver of, or a passenger in, an unidentified motor vehicle travelling in the opposite direction threw a rock at the van, smashing the windscreen and injuring the plaintiff. It was not alleged that anything in the manner of the driving of the unidentified vehicle contributed to the injury. The plaintiff claimed pursuant to the Motor Accident Insurance Act 1994 (Qld) which relevantly applied "to personal injury caused by, through or in connection with a motor vehicle if, and only if, the injury ... is a result of ... the driving of the motor vehicle ... and ... is caused, wholly or partly, by a wrongful act or omission in respect of the motor vehicle by a person other than the injured person". Helman J in the Supreme Court of Queensland held that the throwing of the rock was not a result of the driving of the unidentified vehicle, which was merely the occasion for the throwing, and that the two activities were discrete, though contemporaneous, whether or not done by the same person. 39In my opinion, a similar result would follow under the MAC Act, for the same reasons I have given in relation to Ross . 40In Coley the plaintiff alleged he was driving along a road when the driver or a passenger in an unidentified vehicle threw a Molotov cocktail into his vehicle, setting it alight and thereby injuring him. The District Court judge ordered that relevant parts of the plaintiff's pleading be struck out, and the Queensland Court of Appeal, by a majority, allowed the plaintiff's appeal. The majority (McMurdo P and Jerrard JA) distinguished Mani on the basis that the pleading of the plaintiff in Coley alleged that the unsafe manner of driving of the unidentified vehicle (drawing alongside the plaintiff's vehicle when it was unsafe to do so, and veering towards the plaintiff's vehicle when it was unsafe to do so) enabled the Molotov cocktail to be thrown into the plaintiff's vehicle. The dissentient (Mackenzie J) considered that Mani was not distinguishable and that the injury was not relevantly a result of the driving of the motor vehicle. 41The decision of the majority in Coley was on the basis that it was not impossible that the plaintiff could make out a claim; and in my opinion, it is significant that the plaintiff in that case alleged fault in the manner of the driving itself, not merely that there was driving so as to enable the Molotov cocktail to be thrown. However, although there was driving fault alleged in Coley , I am doubtful whether it would be sufficiently connected with what actually caused the injury, the throwing of the Molotov cocktail, to satisfy the definition of "injury" in the MAC Act. 42Returning to the present case, there is driving fault, that is, intentionally driving in such a way as to harass Mr Hawkins, with the use of the horn and placing and slowing the vehicle so that Mr Hawkins could be harassed by the proximity of the vehicle and the yelling from the people inside. In my opinion, the question arises whether the throwing of the object can properly be considered as a part of or incidental to the harassing driving of the vehicle, or whether it is properly considered as an occurrence which is in a substantial way distinct from or independent of this harassing driving of the vehicle. If the former, I think the definition of "injury" in the MAC Act would be engaged; if the latter, I think it would not be. 43With some hesitation, I think the former is the preferable view. It is true that the throwing of the object was a substantial escalation of the harassing conduct. It is also true that on Mr Hawkins' evidence, the harassment had not previously prejudiced his control of his bicycle, whereas being hit by the object did so. Nevertheless, given the finding as to the driver's knowledge, I think that the throwing of the object was not only contemporaneous with but part of and incidental to the harassing manner in which the vehicle was driven. 44In the words of the definition, there was fault in the use or operation of the vehicle, which was not merely a fault in putting the thrower of the object in a position to do so: there was fault in the manner of driving so as to harass the plaintiff, and the throwing of the object was part of and incidental to this harassing driving. In those circumstances, I think it can be said that Mr Hawkins' injury was caused by the driver's fault in the use or operation of the vehicle, and was a result of the driving of the vehicle, within the definition of "injury" in the MAC Act. 45No substantial submission was advanced in support of ground 12. In my opinion, it having been found that the definition of "injury" in the MAC Act was satisfied, there is no substantial question as to whether s 5D of the Civil Liability Act 2002 was also satisfied. 46Accordingly, I would not uphold grounds 7 to 12, and I would dismiss the appeal.

Indemnity costs 47On 8 January 2010 Mr Hawkins served on the Nominal Defendant an offer of compromise, providing for judgment in his favour for $310,000 plus legal costs as agreed or assessed. Having bettered that sum by over $100,000, Mr Hawkins sought an order for indemnity costs as from 8 January 2010. 48This required consideration of Uniform Civil Procedure Rules r 42.14(2): 42.14 Where offer not accepted and judgment no less favourable to plaintiff ... (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. 49The primary judge referred to the difference between that rule and a previous rule which was to the effect that indemnity costs should be ordered "unless the court in an exceptional case and for the avoidance of substantial injustice otherwise orders". 50The primary judge referred to South Eastern Sydney Area Health Service v King [2006] NSWCA 2, in which Hunt AJA (with whom Mason P and McColl JA agreed), after referring to Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721 and Hillier v Sheather (1995) 36 NSWLR 414, said this: [85] In the present case, the respondent has submitted that the judge had wrongly considered that a belief that the appellants had reasonable grounds for defending the claim constituted exceptional circumstances disentitling her from an order for indemnity costs. However, the fact that the plaintiff's case had changed significantly between the date of the plaintiff's offer and the trial in which the judgment obtained is higher than the amount of the offer does provide a sufficient basis for an order denying the plaintiff's entitlement to indemnity costs: Maitland Hospital v Fisher [No 2] (at 725). The very nature of the situation itself demonstrates that 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. Whether or not this is an "exceptional" situation does not matter. 51The court did order otherwise in this case, so that the plaintiff did not get costs on an indemnity basis. 52The primary judge accepted a submission from the Nominal Defendant that at the time it refused Mr Hawkins' offer, it did not know and could not have known of important evidence in this case. It thus could not reasonably have anticipated Mr Hawkins' success on this basis; and acted reasonably in refusing the offer. 53Mr Roberts for Mr Hawkins submitted that the rule in its present form was relevantly in the same terms as the rule that existed prior to 1 January 1998: Morgan v Johnson (1998) 44 NSWLR 578 at 581 - 582. He referred to Caine v Lumley General Insurance Limited (No 2) [2008] NSWCA 109 at [35] where McColl JA (with whom Mason P and McClellan CJ at CL agreed) said this: [35] The onus is on the respondent to demonstrate why the Court should not order the respondent to pay the appellants' costs on an indemnity basis. In particular, the respondent must establish that it had given serious thought to the risks involved in not accepting the offers, had assessed the appellants' case properly and in the context of the relevant rules and the achievement of their purpose as outlined in Morgan . Generally, exceptional circumstances are required to justify such an order denying the appellants' entitlement: South Eastern Sydney Area Health Service v King [2006] NSWCA 2 (at [83]) per Hunt AJA (Mason P and McColl JA agreeing). 54Mr Roberts submitted there were no exceptional circumstances in this case and no justification for ordering otherwise. 55For the Nominal Defendant, it was submitted that the determination of the question of indemnity costs was a discretionary evaluative decision requiring consideration of facts and circumstances specific to the case: Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12 at [19]. Having regard to the material that was available to the Nominal Defendant and to the material that was not available to it, the case on which Mr Hawkins succeeded at trial was very different from that which the Nominal Defendant could have appreciated. It was reasonable for the Nominal Defendant to have refused the offer, and there was no error in the exercise of discretion justifying appellate intervention. 56I accept the submission for Mr Hawkins that, despite the change of wording in the rule, it is not enough to justify ordering otherwise for a person who refused an offer of compromise to show that he/she acted reasonably in doing so. Generally, exceptional circumstances are required. 57I note that in the Uniting Church v Takacs (No 2) [2008] NSWCA 172, Basten JA (in dissent) suggested at [33] that the justification for making orders otherwise in relation to indemnity costs should properly be found in considerations that would be deemed relevant for the purpose of otherwise ordering in relation to the general rule that costs follow the event. I think that may set the standard too high; and it does seem a little at odds with what was said and done in South Eastern Sydney Area Health Service v King . 58I think King does lend some support to the approach of the primary judge in this case, and I would not depart from the approach taken by the Court of Appeal in King . Although for my part I may not have considered the difficulties of Mr Hawkins' case as understood by the Nominal Defendant and/or the differences between the evidence that the Nominal Defendant could have been aware of, when it refused the offer, and that presented at the trial, sufficient to justify ordering otherwise, on the whole I do not think the decision of the primary judge displays such an error in principle as to justify appellate intervention, or is otherwise outside the range of reasonable discretionary decision-making. 59For those reasons I would refuse leave to cross-appeal.

Orders 60I propose the following orders: (1) Appeal dismissed with costs. (2) Application for leave to cross-appeal dismissed with costs, such costs being limited to costs incremental to the costs of the appeal. 61In relation to the last order, in my view the whole of the costs attributable to the hearing before the Court should be attributed to the appeal. 62SACKVILLE AJA: I agree with the orders proposed by Hodgson JA in relation to the appeal and broadly with his Honour's reasons. However, I wish to add some observations of my own.

The key finding 63The Nominal Defendant's written submissions challenged the primary Judge's finding that the driver of the unidentified vehicle drove at a speed well below the speed limit solely for the purpose of remaining behind, or close to, Mr Hawkins' bicycle. In oral submissions, Mr Rewell SC, who appeared with Mr Fitzsimons for the Nominal Defendant, did not press the challenge to this finding. 64There was also no challenge to the primary Judge's findings that the driver of the unidentified vehicle activated the horn in " short staccato beeps " and that the purpose of the driver's use of the horn in this way was to intimidate Mr Hawkins or to drive the vehicle irresponsibly. Similarly, there was no challenge to the finding that the driver deliberately deviated from a lane that would have taken the vehicle to the centre of the roadway and that the driver did so in order " to get close to the gutter ". At this point, the vehicle was directly behind Mr Hawkins and very close to him. 65In view of these findings, in my opinion it was well open to the primary Judge to infer that the driver's purpose was to facilitate the throwing of an object by a passenger in the vehicle so that the object could hit Mr Hawkins and thereby cause him distress. As his Honour found, Mr Hawkins lost control of his bicycle and sustained his injuries because he was struck by the object thrown from the vehicle. 66On the findings of the primary Judge, the driver of the unidentified vehicle, by the manner in which he or she controlled the vehicle, engaged in a course of conduct designed to intimidate and harass Mr Hawkins as he was riding his bicycle. It was because of the harassment and intimidation that Mr Hawkins moved from the roadway to the footpath. He was riding on the footpath when he was struck by the object thrown at him. This was as the driver intended.

Was this an "injury"? 67The throwing of the object from the vehicle was an integral part of the harassing and intimidatory course of conduct in which the driver of the vehicle engaged. The course of conduct continued for a period of time and was specifically directed at Mr Hawkins, another road user. This is not a case, for example, where the driver merely drove the vehicle to a point at which a passenger could throw an object (or discharge a firearm) with some degree of accuracy at another person. 68Mr Rewell nonetheless submitted that the injury sustained by Mr Hawkins was not caused by the fault of the driver in the use or operation of the vehicle within the meaning of the definition of " injury " in the MAC Act . However, as Hodgson JA has pointed out, the plurality in Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; 221 CLR 568, did not say that the definition of "injury" assumes that there can only be one cause of an injury and that that cause must be the fault of the owner in the use or operation of the vehicle. The plurality's reasoning (at [102]) directs attention to " notions of predominance and immediacy rather than to more removed circumstances ". This suggests that the Court must make a judgment as to whether fault in the use of operation of a vehicle is a sufficiently predominant and immediate cause of the injury to satisfy the statutory definition. 69The plurality in Allianz also said (at [102])) that the definition of injury looks to " notions of proximate cause " found in insurance law (compare McHugh J's criticism of the use of " proximate cause " as a criterion (at [54])). It can be seen from the judgment of Allsop P in McCarthy v St Paul International Insurance Co Ltd [2007] FCAFC 28, that the authorities have accepted that there can be more than one proximate cause of an event for the purposes of insurance law. His Honour gave as examples cases in which there were two causes of a loss which were " concurrent and interdependent in the sense that neither would have caused the loss without the other " (at [97]). 70One way of approaching the present case is to conclude, as Hodgson JA does, that the passenger's throwing of the object can properly be considered to be part of or incidental to the actions of the driver in harassing Mr Hawkins. For the reasons I have given, I think that the throwing of the object is correctly seen as an integral part of the driver's course of conduct in controlling the vehicle in a manner designed to intimidate and harass Mr Hawkins. On this analysis, it is impossible to separate the driving of the vehicle from the particular act of the passenger which, as the driver intended, caused Mr Hawkins to be struck by the object. 71An alternative approach is to apply notions of " proximate cause " in insurance law, as the plurality suggests in Allianz . On this approach, the actions of the driver of the vehicle and the actions of the passenger were concurrent and interdependent causes of Mr Hawkins being struck by an object thrown from the vehicle. The passenger could not have managed " successfully " to throw an object at Mr Hawkins without the driver's participation in the course of harassment and intimidation. Nor could the driver have managed to strike Mr Hawkins with the object, as the driver intended, without the passenger's participation in the course of harassment and intimidation. 72On either approach, in my opinion, the definition of " injury " in s 3(1) of the Motor Accidents Compensation Act 1999 (NSW) is satisfied.

Costs 73Hodgson JA has set out the terms of Uniform Civil Procedure Rules ( UCPR ), r 42.14(2). His Honour has also explained that Mr Hawkins' offer of compromise was to accept a sum more than $100,000 below than the verdict he ultimately obtained. 74In Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721, the plaintiff (the respondent to the appeal) offered to compromise her claim for $200,000, together with the costs of the trial and the appeal. The plaintiff had been awarded $206,090 at trial and the appeal by the defendant against the judgment was dismissed. The plaintiff sought an award of indemnity costs pursuant to Supreme Court Rules 1970, Pt 52 r 17(4), which was in substantially similar terms to UCPR , r 42.14(2). Although the difference between the judgment sum and the offer of compromise was small, the Court of Appeal considered that the plaintiff/respondent should be awarded indemnity costs in respect of the costs incurred by her after her offer was rejected by the appellant. 75The Court elaborated (at 725-726) on the obligations Pt 52 r 17(4) imposed on legal advisers, emphasising that the rule does not demand perfection in forecasting the outcome of cases: "The rule does no more than to oblige litigants, and those advising them, to consider realistically, upon the best information available to them, the prospects of success and the likely outcome of the litigation. Where, in the particular circumstances, the litigant or its advisers mis-judge the prospects of success or mis-calculate the outcome, their mistake may be warranted on the material which they had available. Alternatively, it may be no more than a mis-calculation in a case with large imponderables where the course they took was nonetheless perfectly reasonable. Litigation is inescapably chancy. The purpose of the rule is to put a premium on realistic assessment of cases. It is not to demand perfect foresight which is denied even to the judges. That is why a discretion is retained, under the rule, for the Court to order otherwise than as the rule provides. But the ordinary provision is expected to apply in the ordinary case. It has added a new duty to the functions of legal practitioners advising litigants. It is a duty which is both protective of the interests of litigants and of the public interest in the prompt and economical disposal of litigation. It is the duty of courts, allowing for exceptions in particular cases, to give effect to the purpose of the rule." 76The Court identified (at 724) the objects of r 17(4) as follows: "1. To encourage the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise by defendants which amount to a realistic assessment of the plaintiff's real claim which can be placed before its opponent without risk that its 'bottom line' will be revealed to the court; 2. To save the public costs which are necessarily incurred in litigation which events demonstrate to have been unnecessary, having regard to an earlier (and, as found, reasonable) offer of compromise made by a plaintiff to a defendant; and 3. To indemnify the plaintiff who has made the offer of compromise, later found to have been reasonable, against the costs thereafter incurred. This is deemed appropriate because, from the time of the rejection or deemed rejection of the compromise offer, notionally the real cause and occasion of the litigation is the attitude adopted by the defendant which has rejected the compromise. In such circumstances, that party should ordinarily bear the costs of litigation." 77In Hillier v Sheather (1995) 36 NSWLR 414, the Court of Appeal considered the District Court rule applicable to an offer of compromise by a defendant which the plaintiff refused to accept ( District Court Rules 1973, (" DCR ") Pr 19A r 9). This rule entitled the defendant to a costs order if the plaintiff obtained a less favourable outcome, unless the Court ordered otherwise. The defendant in Hillier v Sheather had offered the plaintiff $45,000. The plaintiff refused the offer, but ultimately obtained judgment only for $26,288. The trial Judge's discretion on the question of costs miscarried for presently irrelevant reasons. The Court of Appeal, by majority, re-exercised the discretion under DCR , Pt 19A r 9, in the defendant's favour. (Mahoney JA dissented but on a question of construction.) 78Kirby P rejected (at 422) a contention that " compelling circumstances " were required before a party should be relieved of the costs consequences of a failure to accept an offer of compromise (cf Wills v Bigmac Pty Ltd , Fed Ct Australia, Heerey J, 9 December 1994). However, he accepted that, in order for such relief to be granted: "the case needs in some way to be exceptional. It must be exceptional because the general rule is that provided for in the rule itself. To gain relief, an exceptional exempting order must be made." 79Kirby P did not think the uncertainties and vagaries of litigation, of themselves, warranted relief being granted. He said (at 423): "it might be thought that the rule operates rather unfairly upon plaintiffs. They may be subjected to risk by early offers which are judged to be unrealistic. Plaintiffs may not be able to afford the risks of litigation with the added risk as to costs. The transference of the risk of costs to them (even if they succeed generally) imposes upon ordinary plaintiffs a burden which few can afford to bear. It is important that the courts should not approach the exercise of the discretion to 'otherwise order' in a mechanical way: cf Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721 at 725. Even skilled legal representatives do not have the gift of prophecy. Calculating damages verdicts is inescapably inexact because of the many imponderables which must be taken into account. The present is a case in point. So much depended upon the view which would be taken concerning the significance (if any) of pre-injury spinal and neck pain. In exercising the discretion, courts will not overlook the particular features of a case and the difficulty of putting an accurate estimate on its value in advance of the litigation. Yet the general considerations of chance and risk would have been known to the rule-maker when Pt 19A, r 9 of the District Court Rules was introduced into the District Court Rules . Without more, they could not provide a basis for ordering otherwise than as the rule will ordinarily provide. If this puts plaintiffs' legal representatives in an impossibly position and, in practice, forces the settlement of cases for sums less than they are worth because the costs of litigation cannot be wagered against their risks, the complaint must be against the terms of the rules and the apparently narrow provision for exempting orders. The complaint cannot be against a court which merely gives effect to the purpose of the rule as expressed in its plain language." 80Cole JA, the other member of the majority, said only (at 432) that the plaintiff was " at risk as to costs " from the date the defendant's offer of compromise was made. 81In South Eastern Sydney Area Health Service v King [2006] NSWCA 2, the plaintiff in a medical negligence case had offered to accept $2.35 million some six years before the trial. The defendant refused to accept the offer and the plaintiff ultimately obtained judgment for $7 million. The Court of Appeal upheld the trial Judge's decision to relieve the defendant from the usual consequences of a refusal to accept an offer of compromise more favourable to the defendant than the result at trial. 82In King , the Court appears to have recognised that there was a difference in emphasis between the approach taken in Maitland Hospital and that taken by Kirby P in Hillier v Sheather . The Court in King expressed the view (at [83]-[84]) that something more than a defendant's reasonable belief as to his or her prospects was required to justify granting relief under the relevant rule: "83 ... The onus is on the defendant to persuade the Court that indemnity costs should not be ordered. He must demonstrate the basis on which an order should be made denying the plaintiff's entitlement to indemnity costs. He must establish that he had given serious thought to the risk involved in non-acceptance of the offer, and that he had assessed the plaintiff's case properly and in the context of the rule and the achievement of its purpose -- to encourage the proper compromise of litigation, in the private interests of the litigants and in the public interest of the prompt and economical disposal of litigation. Generally, exceptional circumstances are required to justify such an order denying the plaintiff's entitlement. See generally, Fowdl v Fowdl , Court of Appeal, 4 November 1993 unreported, per Kirby P at 12, 16; Hillier v Sheather (1995) 36 NSWLR 414 at 422-423; Morgan v Johnson (1998) 44 NSWLR 578 at 581-582. 84 Although the Court may take into account the particular features of a case and the difficulty of putting an accurate estimate on its value in advance of the litigation, those considerations do not provide a basis by themselves for denying the party making the offer an order for indemnity costs: Hillier v Sheather (at 423). In Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721 at 725, it was said that a miscalculation in a case with large imponderables, where the course taken by the party to whom the offer was made may have been perfectly reasonable, would provide a basis for denying an order, but the subsequent decision in Hillier v Sheather suggests that, whilst 'large' imponderables may be a relevant factor in the particular case in denying an order for indemnity costs, in the general case a party's reasonable belief as to his own chances of success does not alone provide a basis for denying an order for indemnity costs." 83Nonetheless, the Court of Appeal considered that the significant changes in the plaintiff's case between the date of the offer and the trial provided a sufficient basis for denying the plaintiff an indemnity costs order: at [85], reproduced in the judgment of Hodgson JA at [48**]. 84If this Court had the task of exercising the discretion conferred by UCPR , 42.14(2) afresh, I doubt that I would have reached the same conclusion as the primary Judge. Unlike King , Mr Hawkins' case did not change significantly between the date of his offer of compromise and the trial. The findings made by the primary Judge were in accordance with the case Mr Hawkins pleaded in his statement of claim filed on 24 November 2008. The plaintiff's offer of compromise of $310,000 plus costs was served on 8 January 2010. 85It is true that the defendant, at the time the offer was served, was not aware of the corroborating evidence of Mr Wikeri, Mr Hawkins' supervisor in his pre-accident employment. But there was no evidence that the representatives of the Nominal Defendant had enquired as to whether Mr Hawkins' account would be corroborated at trial by other witnesses. In any event, there was nothing to prevent the Nominal Defendant from making enquiries of Mr Hawkins' employer or from issuing a subpoena to obtain any records in their possession pertaining to the circumstances in which Mr Hawkins said that he had been injured. 86The primary Judge also relied on the fact that the Nominal Defendant did not have access to the photographs tendered on Mr Hawkins' behalf at the trial. However, the Nominal Defendant was aware of the location of Mr Hawkins' accident and it is not clear why its representatives could not have arranged for photographs to be taken of the roadway nearby. 87Nonetheless, the primary Judge, after referring to the principles stated in King , noted that the mere difficulty faced by a defendant in assessing the imponderables in litigation does not provide a basis, of itself, for relieving the defendant against the consequences of refusing an offer of compromise. His Honour squarely rested his decision on the fact that the Nominal Defendant did not have available, at the time the offer was made, the corroborating evidence that made Mr Hawkins' apparently dubious account more likely to be accepted at trial. 88In these circumstances I do not think it can be said that the primary Judge's exercise of discretion is vitiated by an error of law or any other basis on which an appellate court is justified in intervening. His Honour was entitled to take into account the considerations he did in the exercise of the discretion conferred by UCPR , r 42.14(2). A different evaluation of the competing considerations does not justify intervention by an appellate court. 89For these reasons I agree that Mr Hawkins' cross-appeal should be dismissed.

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