Nature of dispute
On 30 September 2019 judgment was handed down in these proceedings (Rodd v Hall [2019] NSWSC 1304). The plaintiff obtained judgment in the amount of $470,690.92. A conditional order was made to the effect that the defendants should pay the plaintiff's costs, subject to the right of either party to seek a special costs order.
Both parties have sought a special costs order. The plaintiff seeks an order that the defendants pay her costs on an ordinary basis to 17 July 2019 and thereafter on an indemnity basis. The defendants seek an order that there be no order as to costs or alternatively, that there be no order as to costs up to and including 16 July 2019 and thereafter that the defendants pay the plaintiff's costs on an indemnity basis.
This judgment is directed to that costs dispute.
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Consideration
A chronology of the proceedings is helpful. Proceedings were initially commenced in the District Court. A defence was filed which included an objection to an extension of the jurisdictional limit of the District Court. By letter dated 26 June 2018, the defendants' solicitors objected to the jurisdictional limit of the District Court being extended.
On 24 July 2018, the plaintiff sought the leave of this Court to transfer the proceedings to it from the District Court. That application was heard by the Common Law Registrar on 2 August 2018. The defendants' solicitors neither consented to nor opposed that application. The Registrar was satisfied on the material before him that the claim might exceed the jurisdictional limit of the District Court. As a result, the matter was transferred to this Court. It can, therefore, be inferred that had objection not been taken to the extension of the jurisdiction of the District Court, the proceedings would have been heard in that court.
On 17 July 2019, the plaintiff served on the defendants' solicitors an Offer of Compromise. That Offer of Compromise offered to compromise the proceedings for a payment of $425,000 plus costs. The offer was made in accordance with r 20.26 of the Uniform Civil Procedure Rules 2005 (UCPR). No challenge has been made to the form of the Offer of Compromise. The alternative order sought by the defendants implicitly accepts that the Offer of Compromise is in accordance with r 20.26 UCPR.
The defendants submit that r 42.34 UCPR applies and that accordingly, they should not be obliged to pay the plaintiff's costs.
Rule 42.34 relevantly provides:
"(1) This rule applies if:
(a) In proceedings in the Supreme Court, other than defamation proceedings, 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 $500,000, 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 would not ordinarily be made, unless the Supreme Court is satisfied the commencement and continuation of the proceedings in the Supreme Court rather than the District Court, was warranted."
The defendants submit that the clear language of the rule places an onus on the plaintiff to persuade the Court why an order for costs should be made in her favour or alternatively, why the Court should favourably exercise its discretion in her favour. This proposition is clearly correct and was not challenged by the plaintiff.
The defendants submit that r 42.34 UCPR should apply for the following reasons:
1. This was not a case which involved unusually complex issues of either fact or law, such as would warrant commencement in the Supreme Court. It was a slip and fall case which could and should have been heard in the District Court.
2. Where there is a tension between the effect of r 42.14 and r 42.34 UCPR, r 42.34 should prevail because in making the Offer of Compromise in the sum which she did, the plaintiff recognised that the likely assessment of her damages should she be successful was well within the jurisdictional limit of the District Court. The policy reasons behind r 42.34 UCPR are to discourage litigants from commencing cases in the Supreme Court when such matters could be brought in the District Court.
3. The plaintiff could have made the same Offer of Compromise if the proceedings had continued in the District Court. To the extent that there is any tension between the operation of rules 42.14 and 42.34 this should be resolved by the Court determining first whether the plaintiff has discharged her onus in relation to r 42.34 UCPR and then whether the defendants have discharged their onus in relation to r 42.14 in establishing that the Court should "otherwise order" under that rule. The defendants submitted that r 42.34 UCPR should be considered first as it applies to the costs of the whole proceedings, not only to costs incurred after 17 July 2019.
I have been able to find little authority on the application of r 42.34 UCPR. It was considered by the Court of Appeal in State of New South Wales v Quirk [2012] NSWCA 216. In that case, the Court of Appeal set aside a judgment in the sum of $175,000 and in lieu thereof, awarded the plaintiff $95,000. The defendant invoked r 42.34 UCPR.
Tobias AJA (with whom Beazley and Hoeben JJA agreed) said:
"169 There does not appear to be any authority as to the application of this rule. The appellant submitted that the present case could easily have been litigated in the District Court and did not require the determination of issues in the Supreme Court either as to the monetary basis of the respondent's claim or as to the complexity of the law. In this respect, actions for malicious prosecution, assault and false imprisonment are, so it was said, frequently heard in the District Court to no prejudice to the parties. Accordingly it was submitted that it was appropriate that the respondent not recover any of his costs of the proceedings.
170 In the present case the provisions of rule 42.34(1)(a) are obviously satisfied. The respondent will receive a judgment for less than $500,000. It is a matter of contention as to whether the provisions of subpar (b) are satisfied given that the respondent has failed to succeed on his malicious prosecution claim. However, for present purposes, I will assume that he would be entitled to at least some order for costs against the appellant at first instance.
171 I will therefore concentrate on the provisions of rule 42.34(2). True it is that the present case did not involve any complex legal issues and that the monetary amount to which the respondent would have been entitled had he succeeded on all his claims may not have exceeded the amount of $500,000. However had he so succeeded he may have been entitled to an amount approaching that figure. Importantly, the facts were complex involving as they did two separate incidents involving not insignificant conflicts of evidence. It was not suggested that the case ran for a period longer than it should have which was from 4 April to 21 April 2011 before a highly experienced judge of the Common Law Division of this Court. It was also conducted by experienced senior counsel on both sides. Although it is true that the case could have been litigated in the District Court, in my view the factual issues were sufficiently complex as to warrant the proceedings being commenced and continued in the Supreme Court. It therefore follows that in my view rule 42.34 has no application to the present case."
Rule 42.34 UCPR was also considered by Davies J in Milich v The Council of the City of Canterbury (No 3) [2012] NSWSC 1280. Like these proceedings, the matter had been transferred from the District Court to this Court because of a refusal by the defendant to consent to extended jurisdiction. In other respects, the matter was a relatively straight forward personal injury claim.
Davies J resolved the issue before him as follows:
"19 On 17 September 2010 the Plaintiff by summons sought that the proceedings be transferred to the Supreme Court. It appears that the proposed order for transfer was not opposed by the First Defendant.
20 The Statement of Particulars filed on 4 February 2008 identified complaints about both the lumbar spine and the neck and shoulders area of the Plaintiff's back. If the Plaintiff had been successful in his claim concerning the lumbar spine his damages would have been much more substantial than the verdict that he has now obtained because it is likely that his incapacity for work, which appears permanent, was arguably related to the time of his employment by the Second Defendant and during the time he worked with the First Defendant.
21 Rule 42.34 had effect from 10 September 2010. Because the summons to transfer was filed on 17 September 2010 the Rule, prima facie, applies. The Rule refers both to "commencement" and "continuation" in the Supreme Court. On one view the proceedings were only commenced in the Supreme Court by the order made on 5 October 2010 but, even if commencement refers to the time the proceedings begin in whatever court, the Plaintiff continued the proceedings in the Supreme Court from that date.
22 Nevertheless, by reason of the serious nature of the injuries the Plaintiff was alleging and the effect those injuries might have had, at least on his earning capacity, I consider that the transfer of the proceedings to this Court and the continuation of them in this Court was warranted within the meaning of the Rule. I am strengthened in that view by the absence of opposition by the First Defendant to the transfer of the proceedings to this Court."
By way of further background, it should be noted that the assessment of the plaintiff's damages was $588,363.65. It was reduced to the amount for which judgment was entered because of a finding of 20 per cent contributory negligence. It follows that had there been a lesser deduction for contributory negligence, r 42.34 UCPR would have no application.
In addition, the principal proceedings were not without some complexity. The opinions of the experts were diametrically opposed on the issues of negligence and what was a reasonable response to the foreseeable risk of harm. Similarly, the claim for damages was not one which was straightforward. There was a live issue concerning the extent to which the plaintiff's disabilities could be related to the consequences of her fall. It should also not be ignored that at the time the matter came before the Common Law Registrar, he was satisfied on the material before him that the claim might well exceed the jurisdictional limit of the District Court. It is also clear on the material before me, that had the plaintiff succeeded entirely on her medical case and received a lesser deduction for contributory negligence, she would have comfortably exceeded the $500,000 limit and might also have exceeded the jurisdictional limit of the District Court.
Finally, the sole reason for the matter being transferred to this Court was the refusal of the defendants to consent to extended jurisdiction. As the defendants submitted, matters such as this are regularly dealt with in the District Court and there is no reason why this matter would not have proceeded satisfactorily in that jurisdiction had the defendants not objected to extended jurisdiction. Like Davies J, I regard it as significant that when the transfer application came before the Common Law Registrar, there was no opposition from the defendants.
In those circumstances, therefore, I am satisfied that the pursuit of these proceedings in the Supreme Court was warranted and that r 42.34 UCPR has no application.
Since there was no issue as to the effectiveness of the Offer of Compromise and the application of r 42.14 UCPR, the plaintiff is entitled to indemnity costs from 17 July 2019.
I make the following orders:
1. The defendants are to pay the plaintiff's costs of the proceedings on the ordinary basis up to and including 16 July 2019.
2. The defendants are to pay the plaintiff's costs on an indemnity basis from 17 July 2019 onwards.
3. The defendants are to pay the plaintiff's costs of this costs application on the ordinary basis.
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Decision last updated: 06 November 2019