Ruiz-Diaz v Aroyan and Ruiz-Diaz v Antal

LEGISLATION CITED: Civil Procedure Act 2005, s 56Motor Accidents Compensation Act 1999, s 109Motor Accidents Act 1988, s 43A

Andresakis v Alexus Holdings Pty Ltd [2006] NSWCA 294 Cavanagh v State of New South Wales [2008] NSWCA 350 Container Terminals Australia Ltd v Huseyin [2008] NSWCA 320 Diaz & Anor v Truong [2002] NSWCA 265 Harika v Tupaea [2003] NSWCA 332 CASES CITED: Holt v Wynter [2000] NSWCA 143; (2000) 49 NSWLR 128 Mason v Demasi [2009] NSWCA 227 McNamara v Fitzgibbon [2005] NSWCA 274 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 San v Rumble (No 2) [2007] NSWCA 259 Smith v Grant [2006] NSWCA 244

Cristina Maria Ruiz-Diaz (Plaintiff in each case) PARTIES: Andrew Joseph Aroyan (Defendant in proceedings 2576 of 2009) Christopher Antal (Defendant in proceedings 2578 of 2009)

Mr P Mooney (Plaintiff in each case) COUNSEL: Mr M Dent - solicitor (Defendant in proceedings 2576 of 2009) Ms JC Chapman (Defendant in proceedings 2578 of 2009)

Drexler & Partners (Plaintiff in each case) SOLICITORS: Sparke Helmore Lawyers (Defendant in proceedings 2576 of 2009) CKB Partners (Defendant in proceedings 2578 of 2009)

The plaintiff has filed two summonses, in each case seeking leave to commence proceedings pursuant to s 109(1) of the Motor Accidents Compensation Act 1999 for injuries she received in two separate motor vehicle collisions that respectively occurred on 12 December 2003 and 26 March 2004.

Proceedings numbered 2578 of 2009 - the first injury - 12 December 2003

In proceedings numbered 2578 of 2009 Mr Antal, the defendant in the proceedings arising out of the first collision, contested the plaintiff's entitlement to leave pursuant to s 109 of the Act. Although the defendant in these proceedings did not formally concede that the plaintiff had given a full and satisfactory explanation for the 15 week delay in commencing proceedings, the principal dispute at the hearing of the summons centred around whether the plaintiff was likely to meet the damages threshold provided by s 109(3)(b) of the Act.

Proceedings numbered 2576 of 2009 - the second injury - 26 March 2004

In proceedings numbered 2576 of 2009 Mr Aroyan, the defendant in the proceedings arising out of the second collision, did not contest the plaintiff's entitlement to leave pursuant to s 109 of the Act but argued that the plaintiff should pay the costs of the summons in that matter.

In each case the plaintiff initially claimed an order that costs in relation to each summons should be costs in the cause but later amended the orders sought to seek costs on an indemnity basis. Those claims for costs were disputed by the defendants.

The following relevant dates and events emerged from the evidence: (a) On 12 December 2003 the plaintiff was involved in the first collision which involved the defendant Mr Antal. Proceedings should have been commenced in respect of that collision on 12 December 2006;

(b) In February 2004 the plaintiff instructed her former solicitors Vilari & Co to act for her and to advise her in relation to that claim arising out of the first collision. She relied upon them and assumed that the claim formalities would be attended to;

(c) On 26 March 2004 the plaintiff was involved in a second collision which involved Mr Aroyan. She assumed that the solicitors whom she had retained in respect of her first injury would also advise, act and attend to the formalities required for a claim in respect of this collision;

(d) On 12 December 2006 the time for filing proceedings in respect of the first collision expired;

(e) On 26 March 2007 the time for filing proceedings in respect of the second collision expired;

(f) On 27 March 2007, being one day out of time, an application for General Assessment was filed with the Motor Accidents Authority (Claims Assessment and Resolution Service or CARS) which resulted in time being suspended pursuant to section 109(2) of the Act. This application was filed 105 days or 15 weeks outside the prescribed time for the filing of such claims;

(g) On 28 June 2007 the Medical Assessment Service assessor, Dr Gibson assessed the plaintiff as having a 6 per cent whole person impairment in respect of the physical injuries attributable to the collision that occurred on 12 December 2003;

(h) On 18 March 2008 the plaintiff instructed her current solicitors, Drexler & Partners to act on her behalf in respect of her entitlements arising from the motor vehicle collision that occurred on 12 December 2003;

(i) On 11 May 2008 the plaintiff's current solicitors received the relevant files from the former solicitors;

(j) On 11 December 2008, 30 January 2009 and 30 April 2009, the CARS assessment conferences proceeded before Assessor Harvey;

(k) On 20 May 2009 the assessor issued a certificate pursuant to section 94(1)(b) of the Act;

(l) On 15 June 2009 the current summonses seeking leave to file proceedings in respect of each collision were filed in the District Court pursuant to s 109 of the Motor Accidents Compensation Act 1999.

There is some confusion as to the numbering of the proceedings in that the proceedings for the first collision have been allocated the number 2578 of 2009 and the proceedings for the second collision have been allocated the number 2576 of 2009.

In order to obtain leave to proceed, the plaintiff is not only required to provide a full and satisfactory explanation for the delay in commencing proceedings but she must also show that the total damages likely to be awarded to her are not less than 25 per cent of the maximum amount that may be awarded for non-economic loss under section 134 of the Act as it applied at the relevant time, namely, $82,250. This is so even though she is not entitled to make a claim for non-economic loss by reason of the level at which her whole person impairment has been assessed under the guidelines for assessment : s 109 of the Motor Accident's Compensation Act 1999.

The relevant delay in respect of the proceedings for the first collision was 105 days or 15 weeks. The relevant delay in respect of the proceedings for the second collision was one day.

In respect of the first injury, Ms Chapman, on behalf of the defendant Mr Antal has conceded that the evidence tendered by the plaintiff to explain the delay in commencing proceedings, if accepted, would permit a finding that the plaintiff has given a full and satisfactory explanation for the delay.

In respect of the second injury, Mr Dent, on behalf of the defendant Mr Aroyan raised no issue concerning the plaintiff's entitlement to leave under s 109.

On the plaintiff's evidence, which I accept, I consider that in respect of both proceedings the plaintiff has shown she was unaware that her former solicitors had not attended to the detailed requirements of the legislation in order to protect her interests. I accept as being full, satisfactory and reasonable the plaintiff's explanation that she had assumed that her former solicitors were attending to the required claim formalities including the observance of time limits in which to commence proceedings against each defendant : Smith v Grant [2006] NSWCA 244 per Basten JA at [60].

These cases are not of the same type as McNamara v Fitzgibbon [2005] NSWCA 274 where, in the period of 10 months following receipt by solicitors of a file, no explanation was given. On the contrary, in this case the solicitors currently acting on the plaintiff's behalf acted reasonably and promptly. In my view, having due regard to the chronology of events in these cases, a full and satisfactory explanation has been given in respect of both claims.

In the claim against the defendant Mr Aroyan in respect of the second injury, no argument has been raised by Mr Dent to the effect that the plaintiff would not satisfy the requirements of s 109(3)(b) of the Act. Having regard to the medical evidence tendered I consider the defendant in those proceedings has adopted a sensible course because if s 109(3)(b) considerations had been a live issue in that case, on the evidence tendered, I consider that the plaintiff has shown a prima facie entitlement to an order in her favour in respect of that claim.

In the claim against Mr Antal in respect of the first injury, Ms Chapman tendered and referred to an extensive bundle of un-indexed medical reports and statements which were collectively marked Exhibit "1". She argued that on an examination of that material, noting that the plaintiff's claim was limited to the assessment of damages for past and future care as well as for treatment expenses, it was unlikely that the plaintiff would meet the 25 per cent quantum threshold required by s 109(3)(b) of the Act. In the course of that argument reference was made to various points within the historical summaries prepared by the various medical and allied practitioners which, it was argued, suggested that the plaintiff would not satisfy the required threshold.

In contrast to that argument, on behalf of the plaintiff Mr Mooney highlighted the particulars of claim and the survey of the plaintiff's need for domestic and related assistance as set out in Exhibit "B" which comprised the 12 December 2007 report of an occupational therapist, Mrs Margaret Kennedy-Gould. The plaintiff argued that if the survey in Exhibit "B" was accepted as a fact finding, which it submitted was the real or most likely outcome, this would point to an assessment of the plaintiff's claim approaching $1M which is a sum obviously well in excess of the quantum threshold the plaintiff must satisfy in order for her claim to be permitted to proceed.

In support of that argument Mr Mooney placed reliance on Exhibit "A" which comprised the MAS assessment Statement of Reasons of Dr Margaret Gibson, a specialist in occupational medicine. In her report dated 28 June 2007 Dr Gibson stated that following the first injury, the plaintiff was left with a 6 per cent whole person impairment relating to the her neck injury and a tear to the right supraspinatus tendon of the right shoulder. The plaintiff submitted that these conditions, together with the other stabilised conditions Dr Gibson described as relating to the second injury, provide ample support for the conclusion that the plaintiff's claim would satisfy the required threshold.

On behalf of the defendant Mr Antal, Ms Chapman sought to identify asserted inconsistencies in the summarised histories recorded by various examiners who have provided reports in an endeavour to show that on an evidentiary basis the plaintiff would not be accepted as to the requirements of s 109(3)(b). Given that the hearing of this summons is not a final hearing of the merits of the claim, in my view such an approach, which involves a credit assessment based on a detailed analysis and cross-referencing of medical histories, unaided by specific evidence to support such an approach, is inappropriate : Container Terminals Australia Ltd v Huseyin [2008] NSWCA 320 and Mason v Demasi [2009] NSWCA 227.

In considering and balancing the respective arguments of the parties I have to approach the evidence tendered on the hearing of the disputed summons with the reminder that an assessment of the plaintiff's prospects of satisfying the threshold for leave in this case is a predictive exercise in which the true question is whether the plaintiff has a real and not a remote chance or possibility of meeting required the threshold as explained in Harika v Tupaea [2003] NSWCA 332 per Mason P at [27] where a similar requirement in s 43A of the Motor Accidents Act 1988 was considered.

Guided by that approach, I conclude that on the evidence comprising the MAS certificate and reasons of Dr Gibson, the report of Mrs Kennedy-Gould, the particulars of claim and a broad reading of the material contained in Exhibit "1", in the proceedings arising out of the first injury the plaintiff has a real and not a remote chance of obtaining a verdict in excess of $82,250 notwithstanding the circumscribed heads of damage that comprise her claim. The entitlement to leave in respect of the second injury is not contested.

In the absence of evidence showing that either of the defendants is prejudiced by the making of the orders sought, I consider the plaintiff should be granted leave to proceed in respect of each claim as sought in the summonses filed on her behalf.

The plaintiff submits that she should be awarded costs on the indemnity basis due to the exceptional circumstances in which she has filed these summonses. She claims an order for indemnity costs is required in order to avoid a substantial injustice that she argues would otherwise result if she were required to pay her own costs or if costs were to be awarded on the ordinary basis. That application was grounded upon s 153(1) of the Act.

In support of that application the plaintiff pointed to the fact that the defendant in the claim arising from the first injury could have conceded the plaintiff's entitlement to leave, as did the defendant in respect of the second injury. It was submitted that as a result of that defendant not doing so, because she was required to obtain leave to proceed, the plaintiff has been put to undue expense which could have been avoided, and for which she should be compensated.

The defendant in each of the proceedings opposes the order for indemnity costs sought by the plaintiff.

There is no inflexible rule that a party seeking an indulgence by way of leave to file proceedings out of time must pay the costs of the application : Smith v Grant [2006] NSWCA 244. On the contrary, the entitlement to an order for costs in such circumstances remains a matter for discretion following a consideration of the circumstances : Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72.

I was informed that following the CARS assessments the plaintiff was dissatisfied with one of the CARS assessments but not the other yet she felt obliged to apply for leave to have both cases heard by a Court. It was therefore argued that the requirements of a fair trial necessitated that both cases should be tried together. If the plaintiff had simply sought a hearing in relation to the claim from her first injury and not the second, or for that matter, vice versa, she would run the risk that the defendant in the litigated claim would be able to argue that the principal liability for damages to the plaintiff arose from the other claim that was non-litigated. If that result pertained it could lead to a possible injustice to the plaintiff.

Accordingly, the plaintiff has argued that in these circumstances this is an exceptional case for which an order for costs under s 153(1) of the Act should be made for indemnity costs because otherwise the plaintiff would be out of pocket due to the limited nature of the costs regime provided for by s 149 of the Act in respect of such cases.

In my view, the fact that the plaintiff has had two sets of injuries which have a degree of inter-relationship for the purposes of an assessment of damages, as well as the obvious desirability of having both claims assessed at the same time, makes the circumstances of the cases unusual, out of the ordinary and therefore exceptional within the meaning of s 153(1) of the Act : San v Rumble (No 2) [2007] NSWCA 259 per Campbell JA at [67].

Although the circumstances are exceptional within the meaning of s 153(1) of the Act, for the reasons that follow I do not consider that the plaintiff has shown that a substantial injustice has arisen or may arise so as to require the making of an order for indemnity costs in her favour.

After the conclusion of argument and before the delivery of judgment, with the concurrence of her opponent, counsel for the defendant Mr Antal forwarded two authorities for consideration on the question of costs.

In the first of such authorities, in Holt v Wynter [2000] NSWCA 143; (2000) NSWLR 128 Sheller JA at [121] stated that ordinarily, a successful party who has allowed him or herself to get out of time should pay the costs of the application unless the respondent's opposition was wholly unreasonable. In that case Handley JA, and Brownie AJA agreed with Sheller JA.

The second authority, Cavanagh v State of New South Wales [2008] NSWCA 350 was a case in which Grove J accepted the application of Holt's case at [38] in circumstances where the appellant before him made no submission to the contrary of the respondent's submission that the appellant pay the costs of the hearing below. Accordingly, in Cavanagh's case Grove J applied the position that would "ordinarily apply" as stated in Holt's case. He did so in the absence of argument contesting the position on costs.

Having considered the decision in Holt's case I consider it is distinguishable from the present case. I consider this to be so because the circumstances of the present case are exceptional whereas in Holt's case the court was concerned with circumstances that ordinarily arose. In the present case the circumstances are exceptional because of the inter-relationship of the damages issues between the plaintiff's two claims and if there is to be an assessment hearing of one case in the interests of justice between the parties it is desirable that both cases should proceed to assessment together having regard to the requirements of s 56 of the Civil Procedure Act 2005. In any event I do not understand Holt's case to impose a universal or inflexible rule for costs in such cases so as to exclude the usual considerations concerning the exercise of discretion on costs.

A further reason for distinguishing Holt's case from the circumstances of this case is that for the reasons which follow, I consider that the opposition by Mr Antal to the plaintiff's summons was wholly unreasonable, a circumstance allowed for in the cited reasons of Sheller JA.

In the case of the defendant Mr Aroyan in proceedings numbered 2576 of 2009 the defendant sensibly conceded the issues save as to costs and the orders granting leave were a formality.

In the case of the defendant Mr Antal in proceedings numbered 2578 of 2009 I accept the plaintiff's submission that the defendant Mr Antal could and should have followed the lead of Mr Aroyan and conceded the issue of the plaintiff's entitlement to leave, having regard to the evidence. In my view, it was perfectly plain that on an application of the considerations in Harika's case, that a hearing on the merits was not required, where the plaintiff's claim for care was well over $82,250 and was supported by expert evidence, that an order granting leave would be highly likely and would necessarily be made. Despite this, the defendant Mr Antal chose to contest the plaintiff's claim for an entitlement to leave to proceed by seeking to argue the merits and minutiae within the medical histories when these were trial issues. Such an approach ignored the principles set out in Harika at [27]. Having taken that course on what I consider to have been a wholly unreasonable basis, and having failed to achieve the result sought, this raises the question of whether the unsuccessful defendant should pay the plaintiff's costs of the summons.

In general, it is recognised that a departure from the usual order for costs where the losing party is ordered to pay the costs of a successful party would work injustice on the successful party : see for example Oshlack, per Kirby J at [96]; page 108. It is for this reason that I consider that in each case the defendants should pay the costs of the plaintiff in seeking leave to proceed.

In the case of the defendant Mr Aroyan, it is noteworthy that the defendant's concession concerning the plaintiff's entitlement to leave was only announced when the matter commenced. Had that concession been given effect earlier, the plaintiff would have been saved the costs of pursuing the summons to the doorstep of the court. In the case of the defendant Mr Antal I consider that costs should follow the event for the reasons I have outlined.

This leaves the question of whether the plaintiff's costs should be paid on the indemnity basis.

Section 149 of the Act refers to the regulations made under the Act providing for the fixing of maximum costs for legal services in motor accident cases. That is the relevant statutory framework under which the determination of costs must proceed in these cases. In that context and from the perspective of considering the appropriateness of an indemnity costs order, I consider the fact that the plaintiff has had to incur substantial costs to overcome the earlier apparent procedural default of her former solicitors, whilst unfortunate, is not a matter that can be said to arise as a result of fault on the part of either of the defendants. Insofar as the plaintiff had to incur a liability to pay additional or non-recoverable costs in order to obtain leave to proceed, I do not consider that such additional costs should be paid by the defendants on the indemnity basis because, apart from opposing the applications for leave to varying degrees, the defendants were otherwise blameless.

In my view, although the plaintiff has established that the circumstances of her cases are exceptional in that she has to litigate two cases in order to avoid a potential for injustice to occur, I do not consider that she has shown that she has incurred or will incur a substantial injustice as a result of these circumstances. I consider that if an order for indemnity costs were made against the defendants in these circumstances, the effect of such an order would be inappropriately punitive in its effect. Accordingly, I do not consider that these circumstances warrant the exercise of discretion to make an award of costs on the indemnity basis.

A question arises as to whether the additional costs that the plaintiff might have to bear outside the statutory framework contemplated by s 149 of the Act should be paid by the pursuit of an alternative remedy that may be available to her. For a number of reasons, the potential availability of an alternative remedy, for example, a claim against former solicitors, is not to be given much weight as a factor to disentitle a party to an order for leave to enable her to proceed out of time as was explained in relation to the similar considerations that applied under the former Motor Accidents Act 1988 : Diaz & Anor v Truong [2002] NSWCA 265. One such reason for that position relates to the difficulty in weighing and evaluating the prospects of success of such a claim : Andresakis v Alexus Holdings Pty Ltd [2006] NSWCA 294 per McColl JA at [92], [93]. The applicability of that principle to a claim for costs additionally incurred as a result of having to obtain leave to proceed is a matter that does not arise for determination in these summonses.

I make the following orders: (a) In proceedings numbered 2576 of 2009 and 2578 of 2009 in each case the plaintiff is granted leave to file her statement of claim by 27 October 2009; (b) At trial, both cases are to be heard together; (c) In each case the defendants are to pay the plaintiff's costs of the summons on the ordinary basis; (d) The exhibits may be returned; (e) Liberty to apply on 7 days notice if further orders are required.

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