RTA v CREMONA

COUNSEL : C T Barry QC/A Porthouse - Appellant B M J Toomey QC/M Kumar - Respondent SOLICITORS : I V Knight - State Crown Solicitor - Appellant Riley, Gray-Spencer - Respondent CATCHWORDS : COSTS LEGISLATION CITED : N/A CASES CITED: Fotheringham v Fotheringham (No 2) (1999) 46 NSWLR 194 DECISION : 1 The Court notes the matters set out in paragraphs 1, 2 and 6 of the Short Minutes of Orders; 2 The Court makes orders 3, 4, 5, 7, 8, 10,11,12 and 13; 3 The appellant is to pay the respondent's costs of the appeal and cross-appeal on an indemnity basis.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40652/00 CL 75/94 PRIESTLEY JA SHELLER JA STEIN JA

Friday, 7 December 2001 ROADS AND TRAFFIC AUTHORITY v CREMONA [NO 2]

Judgment 1 PRIESTLEY JA: I agree with Sheller JA. 2 SHELLER JA: On 16 November 2001 the Court delivered its reasons for judgment and stood this appeal and cross-appeal over to 30 November 2001 for submissions on costs and the handing up of short minutes of orders.

The chance of abandoning bulk billing 3 Another matter that remained unresolved was how the chance that Dr Cremona would abandon bulk billing should be taken into account in the assessment of damages: see para 122 of the reasons for judgment. Mrs Cremona in her cross-appeal submitted that an allowance should have been made for the chance that Dr Cremona would have abandoned bulk billing from 1998. The convenient date is 1 July 1998. Dowd J found, as is recited in para 119 of the reasons for judgment, that in a discrete area such as Dapto, with sixteen other doctors continuing to bulk bill, in what was described as a lower socio-economic area, it was "likely" that, notwithstanding the relative price insensitivity of a change from bulk billing to a full charging practice, Dr Cremona would have continued to bulk bill. There was convenience in his doing so compared with the problems of collecting fees from patients. Even so, this conclusion recognised the chance that he would abandon bulk billing. Dowd J did not in assessing damages measure that chance and take it into account in assessing damages. It is necessary that we do so. 4 In para 120 of the reasons for judgment there is quoted a passage from the evidence of Mr Ford, Mrs Cremona's health economist. On certain suppositions which are set out in para 120 Mr Ford calculated that the effect of abandoning bulk billing would be an increase of 8.5 per cent on the adjusted gross fees of Dr Cremona for 1992/1993. It as agreed that Mr Ford's calculation could conveniently be used to assess the adjustment to gross fees which would allow for the chance that Dr Cremona would have abandoned bulk billing. 5 Mrs Cremona seeks to enhance the chance by careful reference to evidence relating to Dr Cremona's stated intentions and the loyalty he enjoyed from the Maltese community and his patients generally. In summary it was said that at his death he wished to abandon bulk billing and considered the change inevitable, that he was taking steps towards abandoning bulk billing in the form of investigating a suitable method of accounting, that he was an entrepreneurial person motivated by wealth generation, and that he could expect an increase in fees despite a loss of patients. 6 After the Court had heard submissions we adjourned and after consultation advised the parties that in our opinion to take account of this chance the damages should be adjusted by increasing the calculation of Dr Cremona's adjusted gross fees by 1.5 per cent from 1 July 1998. 7 Our reasons for doing this were that Dowd J had found that it was likely that Dr Cremona would have continued to bulk bill. We would understand his Honour to be saying that the greater probability was that he would have continued to bulk bill. His Honour was impressed, as we were, by the discrete area of Dapto within which Dr Cremona and sixteen other doctors were operating, all of them bulk billing, and that this was a lower socio-economic area. Despite Dr Cremona's expressed plans we do not regard the chance of his abandoning bulk billing as much greater than 15 per cent. The figure we chose represents a chance of his abandoning bulk billing of just over 17 per cent.

Proposed short minutes of order 8 It was proposed that the Court should make the following orders "The Court orders that: 1. The Court notes the agreed calculations annexed to these short minutes and initialled by Priestley JA. 2. The Court notes that the parties have agreed (without prejudice to any further appeal rights of the appellant) that these calculations give effect to the judgment in the appeal on 16 November 2001 as amended by the Court's further finding on 30 November 2001, that an increase of 1.5 per cent of gross fees from 1 July 1998 be allowed. 3. Appeal allowed 4. Cross-appeal allowed 5. Substitute for the judgment in the Court below, judgment for the respondent in the amount of $5,788,900 as and from 25 July 2000. 6. It is noted that the appellant is to have credit for the prepayment of $1,000,000 prior to 25 July 2000 and the amount of $3,200,000 on 14 August 2000. 7. By agreement but without prejudice to any further appeal rights of the appellant, the amount of the prepayment of $1,000,000, with the consent of the parties to be deducted from the apportionment in favour of the plaintiff. 8. By agreement but without prejudice to any further appeal rights of the appellant, the amount of the prepayment of $3,200,000, with the consent of the parties to be deducted from the apportionment in favour of the plaintiff. 9. By agreement but without prejudice to any further appeal rights of the appellant, the amount of $163,780 being the amount [of] superannuation received, with the consent of the parties to be deducted from the apportionment in favour of the plaintiff. 10. The Court orders an apportionment in favour of Sarah Cremona in the amount of $282,029 together with interest under s94 of the Supreme Court Act. 11. The Court orders an apportionment in favour of Alex Cremona in the amount of $248,476 together with interest under s94 of the Supreme Court Act. 12. The Court orders that the amounts of $282,029 and $248,476 respectively be paid in to Court for payment out to the Public Trustee, to be held by him on behalf of Sarah and Alex Cremona respectively in accordance with the Damages (Infants and Persons of Unsound Mind) Act [1929]. 13. The Court orders an apportionment in favour of Mrs Cremona, of the balance of the judgment after deduction of: (a) The prepayment of $1,000,000 (b) The prepayment of $3,200,00 (c) The interest on the prepayments of $155,364. in the amount of $749,585 together with interest under s94 of the Supreme Court Act. 14. Costs (as ordered by the Court)." 9 The short minutes leave unresolved two matters. RTA presses for order 9. Mrs Cremona opposes such an order. The amount of $163,780 was paid to and received by Mrs Cremona after Dr Cremona's death by way of a death benefit from the superannuation fund which Dr Cremona had established. The amount represented the fund balance; see para 33 of the reasons for judgment. Mrs Cremona unsuccessfully contended in her cross-appeal that Dowd J erred in deducting an equivalent amount from the damages awarded to her; see para 112 of the reasons for judgment. It is not clear to me why order 9 is necessary or desirable. Since it is expressed to be "with the consent of the parties" and we have been informed that Mrs Cremona opposes the order, in my opinion, it should be omitted.

Costs 10 The RTA argued that its appeal had succeeded in reducing the amount of damages by some $80,000 and should, accordingly, be treated as a successful appeal. By the same token it had to concede that the cross-appeal succeeded to the extent of increasing damages by nearly $700,000. As appears from para 39 of the judgment the RTA relied upon fifteen grounds of appeal the vast majority of which failed. In addition to Court time devoted to these grounds of appeal they were supported by very substantial written submissions which Mrs Cremona was forced to address. On the other hand her cross-appeal succeeded on two grounds and failed only on one, that relating to the $163,780 superannuation payment. If we take the appeal and cross-appeal together, as in my opinion in a case of this sort we are entitled to, Mrs Cremona was overwhelmingly successful by defeating most of the appeal grounds and succeeding substantially on her cross-appeal. In all these circumstances, I have no doubt that the appropriate order to be made is that the RTA pay Mrs Cremona's costs of the appeal and cross-appeal. 11 Mrs Cremona asked for an order that the RTA pay the costs of the appeal and cross-appeal on an indemnity basis. Mrs Cremona's counsel tendered a letter dated 15 August 2001 by which she served an offer to compromise the proceedings for $4,650,000 inclusive of out of pocket expenses and payments made plus party and party costs as agreed or assessed in full satisfaction of her claim against the RTA. The offer remained open for 28 days from its date and was made in accordance with Pt 52A r22 of the Supreme Court Rules. The RTA did not deign to respond. The agreed substituted verdict, the result of her appeal, is in the amount of $5,788,900 as from 25 July 2000. There is no answer and none was advanced to the conclusion that the RTA should pay Mrs Cremona's costs of the appeal and cross-appeal from 15 August 2001 on an indemnity basis. 12 However, on 26 July 1995 Mrs Cremona had made an offer of compromise for $3,500,000. This led Dowd J to order that the RTA should pay Mrs Cremona's costs of the proceedings in the common law division on an indemnity basis from 26 July 1995. Mrs Cremona relied upon the RTA's rejection of this offer of compromise to submit that the RTA should pay the whole of her costs of the appeal and cross-appeal on an indemnity basis. There is no doubt that we have a discretion so to order in the light of that circumstance; see Fotheringham v Fotheringham (No 2) (1999) 46 NSWLR 194. In my opinion, we should so order.

Orders 13 I propose that the Court notes the matters set out in paragraphs 1, 2 and 6 of the short minutes. The calculations annexed to paragraph 1 are annexed to this judgment. The Court makes orders 3, 4, 5, 7, 8, 10, 11, 12 and 13. The RTA is to pay Mrs Cremona's costs of the appeal and cross-appeal on an indemnity basis. 14 STEIN JA: I agree with Sheller JA. *****

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