Osei v P K Simpson & Co. Pty Limited and Carney

District Court of NSW|2021-06-17

Introduction

On 19 March 2021 I handed down judgment in this matter in which the plaintiff was successful against both the first and second defendants: Osei v P K Simpson & Co. Pty Limited and Carney [2021] NSWDC 74. The total judgment sum was awarded in the amount of $19,086.65, apportioned 70% to be borne by the first defendant and 30% by the second defendant.
Leave was given to the parties to file written submissions on issues relating to costs, on the basis that those issues would be determined on the papers.
The first defendant contends that the plaintiff's costs ought to be capped at $10,000 pursuant to clause 2 Schedule 1 Legal Profession Uniform Law Application Act 2014 (NSW). This is on the basis that the proceedings were a claim for personal injury damages and the judgment sum did not exceed $100,000.
The second defendant seeks an indemnity costs order against the plaintiff from 14 March 2020 on the basis that the judgment entered against the second defendant did not exceed two Offers of Compromise that were relied on in the alternative as Calderbank offers. The second defendant also relied on rule 42.35 Uniform Civil Procedure Rules 2005 (UCPR) to contend that because the quantum recovered by the plaintiff was less than $40,000 that the plaintiff should not be entitled to costs of the proceedings. The second defendant otherwise adopted the submissions of the first defendant.
The plaintiff seeks a costs order on the ordinary basis against the first and second defendants without any statutory cap. If the court does not accept that the plaintiff's rejection of the second defendant's Calderbank offer was reasonable, the plaintiff seeks a Sanderson order to the effect that the first defendant is to pay the second defendant's costs from 14 March 2020.
It is convenient to deal with the second defendant's application first.

The Second Defendant's Application for Indemnity Costs

On 10 March 2020, the second defendant served an Offer of Compromise on the plaintiff, made in accordance with rule 20.26 UCPR offering to settle the claim as against the second defendant on the following terms: 1. Judgment for the plaintiff against the second defendant in the sum of $15,000. 2. No order for costs.
The offer was expressed to be open until 3.00pm on 13 March 2020.
In the covering letter the offer was expressed to be subject to the principles in Calderbank v Calderbank [1975] 3 AII ER 333, if it was not otherwise valid as an offer of compromise. A further term of the offer set out in the covering letter was that it was "subject to the execution of a Deed of Release providing a full release and indemnity with respect to any matters, facts or circumstances directly or indirectly related to or arising from [the plaintiff's] Statement of Claim and the proceedings".
The offer made on 10 March 2020 was not a valid Offer of Compromise because it did not provide 28 days for acceptance as prescribed by rule 20.26 UCPR and the time for acceptance stated in the offer was not otherwise reasonable in the circumstances. The plaintiff was a natural person with a limited command of English, it was highly unlikely that his solicitors could have obtained instructions from him in the time permitted by the offer. There was no urgency about the matter and the time allowed for the plaintiff to respond was unreasonable.
It follows that rule 42.15 UCPR does not apply: Davis v Swift (No 2) [2015] NSWCA 137 at [14] (Meagher and Leeming JJA).
On 19 March 2020 the plaintiff rejected the offer made on 10 March 2020.
On 19 March 2020, the second defendant served a further Offer of Compromise on the plaintiff made in accordance with rule 20.26 UCPR offering to settle the claim as against the second defendant on the following terms: 1. Judgment for the plaintiff against the second defendant in the sum of $25,000. 2. No order for costs.
The offer was expressed to be open until 12.00pm on 20 March 2020.
In the covering letter the offer was expressed to be subject to the principles in Calderbank v Calderbank [1975] 3 AII ER 333, if it was not otherwise valid as an Offer of Compromise. A further term of the settlement was the execution of a Deed of Release in the terms set out in [9] above.
For the same reasons expressed in [10] above, the Offer of Compromise was not valid and it follows that rule 42.15 UCPR does not apply.
An offer of compromise can still be relied on as a Calderbank offer, if the surrounding circumstances indicate that it is proposed to be relied on in that way: Whitney v Dream Developments Pty Ltd [2013] NSWCA 188 at [43] (Bathurst CJ).
In the case of a Calderbank offer, the offeror bears the persuasive burden of satisfying the court to exercise the costs discretion in the offeror's favour. The onus is on the offeror to establish that it was unreasonable for the offeree to reject the offer: Evans Shire Council v Richardson [2006] NSWA 61 at [26].
In his submissions on the Calderbank offers, the second defendant submitted that it was unreasonable for the plaintiff to reject the offers, but did not say why that was the case. The second defendant relied on the long letter dated 10 March 2020 sent by his solicitors outlining the perceived problems with the plaintiff's case. Crucially, that letter did not set out the argument that the second defendant succeeded on at trial that the Workers Compensation Commission could not make any award for any loss after 1 January 2013 as a result of changes to the relevant legislation.
On the basis that I have accepted that the plaintiff's costs are limited to $10,000 in total for the reasons set out below, I am satisfied that only the second offer constituted a genuine offer of compromise.
However, I am not persuaded that the plaintiff's rejection of the offer was unreasonable for the reasons that follow.
First, for the same reasons advanced in [10] above, the time permitted by the second defendant for the acceptance of the offer was insufficient.
Second, the second defendant's case changed significantly between the letter of 10 March 2020 and the date of trial. The second defendant's reliance on the change in the relevant legislative provisions was not set out in the letter of 10 March 2020 or referred to in the second defendant's Defence. This was the most significant argument on quantum and the second defendant's success on that argument was directly responsible for the paltry verdict against him.
Third, the conditions attached to the offer by reference to the Deed of Release were unknown. The Deed of Release was described in the second defendant's correspondence in the widest possible terms and would have sounded alarm bells to any prudent lawyer advising the plaintiff that he may suffer unintended consequences by agreeing to sign that type of release and indemnity without knowing the precise terms of it.
Fourth, the offer did not state how the offer would be treated in relation to the plaintiff's claim against the first defendant.
In all of the circumstances, I am satisfied that the plaintiff's rejection of the second defendant's Calderbank offers was reasonable.
On that basis it is unnecessary to deal with the plaintiff's application for a Sanderson order.

Application of rule 42.35 UCPR

Rule 42.35 UCPR provides: 42.35 COSTS ORDER NOT TO BE MADE IN PROCEEDINGS IN DISTRICT COURT UNLESS COURT SATISFIED PROCEEDINGS IN APPROPRIATE COURT (1) This rule applies if-- (a) 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, and (b) 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.
Rule 42.35 UCPR applies to the present case. The total amount of damages awarded to the plaintiff came to $19,086.65 against both defendants.
I am satisfied that it was appropriate for the plaintiff to bring and continue the proceedings in the District Court for the reasons that follow.
First, the case involved the complex interpretation of the amendments to the workers compensation legislation, including the relevant savings and transitional provisions.
Second, at no time prior to the trial did the defendants reveal to the plaintiff that they intended to rely on those changes to severely limit the quantum of the plaintiff's claim. Had either or both of the defendants done so, the plaintiff may have been put on notice that the likely quantum of damages made it a matter which was appropriate to be dealt with in the Local Court. Prior to that argument surfacing during the course of the trial, the plaintiff had a reasonable argument that the quantum of the case would exceed $40,000.

Application for Costs to be Capped at $10,000

The plaintiff seeks orders that his professional costs, including counsel's fees, are not limited by clause 2 Schedule 1 Legal Profession Uniform Law Application Act 2014 (NSW) to $10,000 (being greater than 20 per cent of the amount recovered). The first and second defendants press that the statutory cap is applicable.
Clause 2 Schedule 1 Legal Profession Uniform Law Application Act 2014 (NSW) provides: (1) If the amount recovered on a claim for personal injury damages does not exceed $100,000, the maximum costs for legal services provided to a party in connection with the claim are fixed as follows - (a) in the case of legal services provided to a plaintiff - maximum costs are fixed at 20% of the amount recovered or $10,000, whichever is greater.
Clause 2 Schedule 1 fixes maximum costs for legal services provided to parties in connection with a claim "for personal injury damages". Section 11 Civil Liability Act 2002 (NSW) defines "personal injury damages" to mean "damages that relate to the death of or injury to a person".
In Certain Lloyd's Underwriters v Cross [2012] HCA 56; 248 CLR 378 at [41], the High Court held that a claim for personal injury damages "includes any and every form of claim for damages that relate to the death of or personal or bodily injury to a person". Whilst the High Court was concerned with the predecessors to the current legislation, the definitions and provisions are relevantly the same.
The issue of whether professional costs for acting in a professional negligence matter, being a loss of chance case, falls within the definition of "personal injury damages" has been extensively discussed in Hammond v Stern [2013] NSWSC 70 with reference to Cross and New South Wales v Williamson [2012] HCA 57.
Both the first and second defendant drew support for their arguments from Hammond and contended that the facts are comparable in that Mr Osei claimed damages relating to his loss of chance to recover weekly compensation, which arose as he had suffered personal or bodily injury because of an assault whilst in his employment as a taxi driver.
In Hammond, Mr Hammond had suffered personal injuries in 2001 during the course of his employment with Rail Infrastructure Corporation. He was working under the direction of a company called Transfield and using equipment that had been manufactured by Clayco. Mr Hammond retained a solicitor and a barrister who commenced personal injury proceedings against Rail Infrastructure Corporation, but not against Transfield and Clayco. Verdict for Rail Infrastructure Corporation was entered into by agreement. Time for Mr Hammond to sue the two alleged tortfeasors subsequently expired.
In 2009, the professional negligence proceedings were commenced against the solicitor and barrister. Mr Hammond claimed damages for the loss of his lump sum workers compensation rights under the Workers Compensation Act 1987 and for loss of his opportunity to recover common law damages against Transfield and Clayco. The proceedings settled when Mr Hammond accepted an offer of compromise in the amount of $60,000 plus costs. Harrison AsJ decided that the costs of the proceedings that were the subject of the consent judgment were to be regulated by section 338 Legal Profession Act 2004, confirming that costs were to be capped at $12,000 (being 20% of the amount recovered).
I am satisfied that the damages awarded to the plaintiff in this case are "personal injury damages" as defined in s 11 Civil Liability Act 2002 and thereby that the plaintiff's costs are capped at $10,000.

Orders

The orders I make are as follows: 1. The defendants are to pay the plaintiff's costs of the proceedings in the sum of $10,000, apportioned 70% to the first defendant and 30% to the second defendant.

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: 17 June 2021

At a glance

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Judgment (6 paragraphs)

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