Oyston v St Patrick's College [2011] NSWSC 826 | Case summary

Was it impossible to advise the plaintiff about the offer? 17Firstly, it was submitted for the plaintiff that at the time the offer was received, it was impossible for the plaintiff to be properly advised as to its acceptance, because of 'severe uncertainties' in relation to her future, particularly having regard to evidence which she proposed to call from Dr Phillips. It was also argued that she was in an impossible position to realistically calculate her damages; that to have expected her legal advisers to have advised her about those matters would have required the 'gift of prophecy' as discussed by Kirby P in Hillier v Sheather (1995) 36 NSWLR 414. What his Honour in fact there observed at 423 was: "Secondly, 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 impossible 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." 18It was argued that the difference between the offer and what was achieved at trial was 'de minimus' and that, too, provided a proper basis for departure from the Rules. It was also argued that it ought to be considered that if only a further 1% of non-economic loss had been awarded, the result would have been an order of more than $125,000 putting the costs order beyond argument. The converse, that if 1% less had been awarded, similarly arises to be considered, of course. 19I am unable to accept the case so put for the plaintiff. 20The defendant's offer was made at a time when both parties had a good understanding of the case they had to meet. It was common ground that witness statements and expert evidence had by then been served, after the defendant had been given leave to call evidence from an additional expert. An outstanding joint expert's report was received two days after the offer was made. The parties were thus each in a relatively good position to be able to assess the strengths and weaknesses of their own cases and to make an assessment of the case which the other would advance. 21What was in issue was whether or not the plaintiff had been bullied; whether or not the defendant had dealt adequately with what came to its attention, or had been negligent; and whether or not she had suffered the damages she claimed, as the result of any of the defendant's failures. 22The plaintiff's claim for general damages reflected some 57.28% of a most extreme case, under s 16 of the Civil Liability Act 2002. What was finally awarded was 20%. What was known of the evidence when the plaintiff received the offer, made it abundantly clear that general damages could not be awarded at the level claimed. The claim for past economic loss was based on average weekly earnings for all females in New South Wales. That claim was rejected, because it paid no regard to the fact that at the time in question, the plaintiff's earning capacity had to reflect her age and inexperience. That, too, was a matter within the plaintiff's knowledge when the offer was received. As to future economic loss, while some $200,000 was claimed, what was pressed at the hearing was a modest buffer of the kind discussed in Penrith City Council v Parks [2004] NSWCA 201 . The amount of other claims were not finally disputed. 23These were all matters which had to be considerd in assessing the claim received. There was no evidence that this occurred. To the contrary, the case advanced suggests a failure to give proper consideration to the offer received, in light of the question of whether it might be bettered at trial, given what was then known of the respective cases which would be advanced at the hearing and the risks which might be run, if the offer were rejected. 24That the defendant's offer of settlement was a genuine one, involving a considerable compromise on its part, given the basis on which the claim was being defended must be accepted. It involved an acceptance that the defendant would be found liable. That, it seems, was an obvious conclusion given the evidence then available to the parties. Indeed, as was argued for the plaintiff, it was then obvious that the prospects of the plaintiff being successful on liability was very high indeed. The offer which the defendant made was also plainly a reasonable one, having in mind the orders finally made. It was open for acceptance for 14 days, a period which the plaintiff accepted as reasonable in the circumstances. 25In my view, it was clearly not then impossible to advise the plaintiff about the offer she had received, given the imponderables involved in this case. Any assesement of either the offer received shortly before the hearing, or any counter offer made, required a realistic assessment of what could be achieved, on the material then in the parties' hands. 26Indeed, a counter-offer of $200,000 was made by the plaintiff after the defendant's offer was rejected. No explanation was sought to be given of the basis on which that offer rested. To the contrary, it was submitted that the offer made 'was a complete stab in the dark, in order to ensure that we were protected in relation to what was going to be a lengthy trial'. That submission supports the conclusion that the offer received was not assessed, as it needed to be, given the potential effect of the costs Rules. 27In South Eastern Sydney Area Health Service v King , the Court of Appeal said that in order to satisfy the onus which fell on the plaintiff, to warrant a departure from the orders contemplated by the Rules, she had to establish that 'serious thought' was given 'to the risk involved in non-acceptance of the offer', and that her case was properly assessed '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' (at [84]). That onus was not established. 28In making those observations, what the Court of Appeal no doubt had in mind was the positive duty imposed on parties by s 56(3A) of the Civil Procedure Act , to 'assist the court to further the overriding purpose', namely 'the just, quick and cheap resolution of the real issues in the dispute or proceedings'. 29As discussed in South Eastern Sydney Area Health Service v King at [93]: "There is no obligation on the party making an offer of compromise to advance reasons why the offer should be accepted. In any event, in the week before the trial was due to commence, it may safely be assumed that the parties are in possession of sufficient information as to the relevant strengths and weaknesses of each other's case. It is not suggested that the appellants sought further time to consider the offer; they simply ignored it. The appellants in their submissions did not deny the respondent's assertion that they knew of the information Dr White had at his disposal and of the system in place for the dissemination of that information to Professor O'Gorman-Hughes ... ." 30In this case, too, both parties had sufficient information to properly make and assess offers of settlement. 31What was required when the offer was received was a realistic assessment of what award of damages might flow from an assessment of the evidence it was known would be given at the hearing. Given the submissions advanced for the plaintiff it seems that this exercise was not attempted. I am not able to accept that it was impossible. Failing to attempt the exercise does not provide a proper basis for departure from the effect of the costs Rules.

The defendant's pursuit of its case 32Departure from the effect of Rule 42.15 was pressed on three further bases. Firstly, that in the circumstances of this case, the defendant ought to have admitted liability; secondly, that it ought earlier to have notified its abandonment of a Limitation Act 1969 issue; and thirdly, that it ought not to have called Dr Rigby. It was not in issue that the discretion could be exercised on the bases urged, but the defendant argued that in the circumstances, the discretion would not so be exercised. 33For its part the defendant relied on the type of approach discussed in Dalma Formwork (Australia) Pty Ltd v Maricic (No 3) [2008] NSWCA 29, where it was observed at [19] - [24]: 19 Hillier v Sheather (1995) 36 NSWLR 414 considered a complaint that payment of costs would significantly impact upon the plaintiff's verdict. That was regarded as an irrelevant consideration. Kirby P said at 422 - "It is impossible not to have a certain sympathy for the cross-respondent. Unless relieved by the intervention of the Court, she will not only recover substantially less than she was successively offered by the cross-appellant. She will also have to bear from the diminished judgment which she recovered, much of the costs of the litigation, including all of the costs of the trial (and of the appeal). Her venture into litigation will certainly demonstrate to her the speculative and risky enterprise in which she became involved. I do not consider that these considerations can properly be taken into account in "otherwise ordering". They are precisely the considerations which the rule anticipated would arise. Indeed, their occasional occurrence is exactly the sanction which the rule imposes upon people in the position of the cross-respondent. Through the burdens cast upon her in this case, the rule is designed to send a clear signal to litigants, and their legal representatives, which will promote early settlement discussion outside the court and realistic consideration of offers made. A significant new peril has been introduced for litigants and those advising them." 20 In Houatchanthara v Bednarszyk (CA, 14 October 1996, unreported) it was said that the fact that the costs would "substantially subsume and may exceed the plaintiff's damages" did not provide a basis for departure from the general principle of the then Pt 19A r 9(6) of the DC Rules. 21 Clarke JA, with whom Santow AJA agreed, endorsed what Kirby P had said in Hillier v Sheather and continued - "It is clear that if the rule operates, the plaintiff will be significantly disadvantaged, but that disadvantage flows naturally from the risks of litigation. The idea behind the rule is to encourage settlement or compromise of proceedings, and more specifically, to encourage litigants to give serious consideration to the settlement of proceedings. Where an offer is made by a defendant to a plaintiff, the latter is put on notice that unless he or she accepts that offer, there is a significant risk that the order provided for by the rule may follow. In declining to accept the offer, the plaintiff undertakes the risk and the consequences that flow naturally from that risk. Where, as here, the claim was a very small one, the risk was very great indeed. ... The thrust of the Judge's reasoning was that the order flowing from the rules would cause detriment to the opponent, but that, as I pointed out, flows from the opponent's acceptance of the risks of proceedings and declining to accept the offer. As it seems to me, the trial judge's discretion miscarried insofar as there was no basis upon which to make a special order ... ". 22 Handley JA said succinctly of the rule that "general factors which apply in most, if not all cases, such as hardship, and difficulty in forecasting the result of the trial cannot support an exercise of the discretion in favour of the unsuccessful party". 23 The respondent submitted that his Honour was entitled to ameliorate the burden which would otherwise fall on him of a flawed trial as to liability in September-October 2004. Why that burden should be shifted to the applicants is not apparent, and a wholesale shifting would be unwarranted when the trial before Hughes DCJ was concerned with damages as well as liability. However, both costs swallowing up a large part of the verdict and a misdirected trial in September-October 2004 were inherent risks of the litigation, which would not have become realities had the respondent accepted the offer of compromise. It was not correct to separate out the contest over liability, as his Honour apparently sought to do in relieving the respondent from the burden of the costs of the trial in September-October 2004, since the rules as to offers of compromise are concerned with claims in proceedings and a claim is not determined until damages are assessed: cf Ettingshausen v Australian Consolidated Press Ltd (1995) 38 NSWLR 404 at 408-10. 24 The rules are intended to encourage serious consideration of settlement, and the respondent was not to be relieved from the consequences for which the rules provide simply because the risks of the litigation became realities. In my opinion, in ordering otherwise in relation to the date on which the costs burden was reversed his Honour acted upon considerations which could not properly be taken into account." 34Attention must also be paid to the considerations discussed in Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359, where Powell J took the view at 362 that a departure of the kind which the plaintiff sought was only justified: "... where the actions of the defendant, in the conduct of any defence to the proceedings, have involved an abuse of the process of the court, in the sense that the court's time, and the litigants' money, has been wasted on totally frivolous and thoroughly unjustified defences." Dr Rigby 35The defendant was given leave to call evidence from Dr Rigby, in order to meet evidence given by the expert called by the plaintiff, in relation to the impact of his research, on matters which had arisen in this litigation (see Oyston v St Patrick's College (Supreme Court of New South Wales, Johnson J, 21 April 2010, unreported). 36It was argued for the plaintiff that I had concluded that Dr Rigby's evidence was quite irrelevant to a proper determination of this case. I do not accept that submission, given what was dealt with at [38] to [61] of the April 2011 judgment. In my assessment, no basis was established for any departure from the costs order flowing under the Rule in respect of Dr Rigby's evidence. The Limitation Act 1969 37It was common ground that the Limitation Act point turned on evidence given by Mr and Mrs Oyston in June 2010. The point was not abandoned by the defendant until submissions were made in December. On the plaintiff's case the result was unnecessary preparation to argue the point, which ought to have been promptly abandoned, given what had fallen from the cross-examination. 38That the failure to give timely advice to the plaintiff of the abandonment of this point led to unnecessary costs being incurred, which she ought not to have to bear, must, in my view, be accepted. 39I take the view that justice requires that the defendant should bear the plaintiff's costs thrown away in preparation of unnecessary submissions on this matter. Liability 40It was also argued for the plaintiff that the defendant had been wrong in not admitting liability when the hearing proceeded, given what was then known to the parties as to what the evidence would reveal in relation to liability. The defendant's May offer recognised the risk which it confronted in the litigation on the question of liability. Despite that recognition, when attempts at settlement failed, the defendant did not concede liability, as it ought to have done in the circumstances then known to it. 41The result was that the hearing was unnecessarily prolonged both by cross-examination of the plaintiff, inconsistently with what the defendant's own documents revealed, and by evidence being called from witnesses, contrary to that documentary material. This also resulted in the need for extensive cross-examination of a witness unprepared to make appropriate concessions, even when consistent with the defendant's own records. 42The result was that the liability defence unnecessarily took up the major part of the hearing. This, it was submitted, provided a proper basis for departure from the Rule, court time and the parties' resources having been unnecessarily wasted. 43For the defendant it was argued that once an offer was rejected, the rejecting party had to accept all of the consequences, including that the case would be contested on all grounds, unless concessions were made. 44Here, the plaintiff had to show that the case was prolonged because of the defendant's pursuit of a defence which was hopeless, where the plaintiff was entitled to success. This was not such a case, because the defendant had what was described to be: "... a not unattractive case on liability. That case essentially rested on the proposition that the counselling records constituted a complete record of what had happened at the school." 45That case was also supported by the differences between what the plaintiff had said in her statements, by comparison to her oral evidence in chief and in cross-examination. 46In this respect, I am unable to accept the defendant's submissions. It seems to me that this is a case where the discretion to otherwise order, must be exercised, if justice is to be achieved between the parties, given the thoroughly unjustified liability defence which was pursued. 47The plaintiff's evidence in her statement was that she had been subjected to relentless bullying while at the College. In cross-examination, she maintained that she had repeatedly complained about being bullied, over a number of years. That evidence was finally accepted, given the corroboration provided by the documentary evidence and concessions made in cross-examination by the defendant's witnesses. 48The defendant's case was that the counselling records established its case. Contrary to that case, the evidence showed that the counselling records did not constitute a complete record of what had occurred to the plaintiff and that while its published policies were not in practical operation, it had a system in operation under which it maintained a student file for each student, where records of difficulties with bullying, amongst other things pertinent to the student, were maintained. Such records were not maintained in counselling files kept by counsellors, although extracts from these records found their way into a student's file. This was the defendant's 'paper trail', on Mrs Ibbett's evidence. 49In the plaintiff's case, the documentary evidence showed an extensive history of bullying maintained in the defendant's own records, much more extensive than the counselling records on which its case rested, revealed. 50Mrs Ibbett's evidence was that there had been no complaint. She gave entirely different evidence in cross-examination, when the contemporaneous documents were put to her. They showed that the plaintiff was referred to counselling on a number of occasions. Those records were in evidence, but the plaintiff's student file was not tendered. Documents maintained on that file, which included some of the counselling documents, as well as other documents which did not form part of the counselling records, were, however, put in evidence. They were the documents about which Mrs Ibbett was cross-examined, at length. Those documents and the evidence which Mrs Ibbett gave about the 'paper trail' maintained on the plaintiff's file , led to the conclusions reached on liability. 51This led to the rejection of the defendant's liability case and the observations: "160 There was a school counsellor and Ms Oyston was also referred to Centacare counsellors. Counselling records were in evidence. It was the College's case that they were the nub of the evidentiary material, providing a useful contemporaneous reference point to assess the parties' differing contentions. It was submitted that just about every episode of distress that Ms Oyston experienced had come back to a consultation with someone from Centacare. 161 That submission is not open, given that between June 2004 and when Ms Oyston self referred in February 2005, there was no counselling." 52During that period there were extensive records of complaints about bullying, received by the defendant from various sources. 53In my view, the approach adopted by the defendant to the question of liability was such that the hearing was unnecessarily prolonged, by way of cross-examination of the plaintiff and her parents and as a result of the evidence led from the defendant's liability witnesses, which was largely contradicted by the defendant's own records. This also had an impact on what the experts had to consider. 54The documentary evidence was entirely at odds with the picture portrayed in the defendant's case. It was the evidence which Mrs Ibbett and Mrs Carol-Fajarda gave in cross-examination about various contemporaneous documents, including documents which the plaintiff had written, complaining about ongoing and repeated bullying and others which came to the defendant from other sources, including staff, about the plaintiff being bullied, which led to the liability findings. 55It seems to me unarguable, in all of these circumstances, that it must be concluded there was an unjustifiable waste of time on pursuit of a defence, inconsistent with the defendant's own policies and documents. 56The plaintiff bearing the cost of that aspect of the litigation, also does not appear to accord with the requirements of the Civil Procedure Act . In accordance with s 56(3A) of the Civil Procedure Act , the parties each had important obligations, namely: "(3A) A party to a civil dispute or civil proceedings is under a duty to take reasonable steps to resolve or narrow the issues in dispute in accordance with the provisions of Part 2A (if any) that are applicable to the dispute or proceedings in a way that is consistent with the overriding purpose." 57The overriding purpose is that specified in s 56(1), namely the 'just, quick and cheap resolution of the real issues in the proceedings'. Section 56(5) provides that the court may take into account any failure to comply with the obligations imposed by subsections (3), (3A) or (4), in exercising the costs discretion. Part 2A of the Act includes: "18E Pre-litigation requirements (1) Each person involved in a civil dispute to which this Part applies is to take reasonable steps having regard to the person's situation, the nature of the dispute (including the value of any claim and complexity of the issues) and any applicable pre-litigation protocol: (a) to resolve the dispute by agreement, or (b) to clarify and narrow the issues in dispute in the event that civil proceedings are commenced. (2) For the purposes of this section, reasonable steps include (but are not limited to) the following: (a) notifying the other person of the issues that are, or may be, in dispute, and offering to discuss them, with a view to resolving the dispute, (b) responding appropriately to any such notification by communicating about what issues are, or may be, in dispute, and offering to discuss them, with a view to resolving the dispute, (c) exchanging appropriate pre-litigation correspondence, information and documents critical to the resolution of the dispute, (d) considering, and where appropriate proposing, options for resolving the dispute without the need for civil proceedings in a court, including (but not limited to) resolution through genuine and reasonable negotiations and alternative dispute resolution processes, (e) taking part in alternative dispute resolution processes. (3) Each person involved in a civil dispute to which this Part applies is not to unreasonably refuse to participate in genuine and reasonable negotiations or alternative dispute resolution processes. (4) Nothing in this section requires a person to provide any correspondence, information or document that might tend to incriminate the person." 58Section 18N of the Act provides: "18N Court may take failure to comply with pre-litigation requirements into account (1) If a court is satisfied that a party to civil proceedings to which this Part applies has failed to comply with the pre-litigation requirements, the court may take into account that failure: (a) in determining costs in the proceeding generally, and (b) in making any order about the procedural obligations of parties to proceedings, and (c) in making any other order it considers appropriate. (2) In determining whether to take into account a failure to comply with the pre-litigation requirements, the court may have regard to any of the following matters: (a) whether or not the persons in dispute were legally represented, (b) whether or not compliance might have resulted in self-incrimination by a person in dispute, (c) any reasons that have been provided for the failure by the persons in dispute, (d) any other matter that the court considers relevant. (3) A court may make an order under subsection (1) of its own motion or on the application of a party to the civil proceedings" 59There was no evidence that these provisions were complied with. Nevertheless, the offers which the parties exchanged were clearly consistent with their obligations under the Act. The defendant's offer reflected its appreciation that it was at significant risk of having a liability finding made in favour of the plaintiff, given what its own records showed, at a time when the parties were aware of the evidence shortly to be led. In the circumstances it is difficult to see that the defendant adhered to the duties imposed upon it by s 56, when it advanced a defence inconsistent with its own records. Those records should have led to the liability issue being resolved. 60Had liability been accepted, as it ought to have been, given what the defendant knew its own records would reveal, the hearing would unquestionably have been considerably shortened. 61In my view the approach adopted provides a proper basis on which the discretion under the Rule to otherwise order, must be exercised in this case, consistently with what s 56 of the Civil Procedure Act contemplates.

Oyston v St Patrick's College

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Judgment (9 paragraphs)

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