Sakr v Mercantile Mutual Insurance

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OFAPPEAL

MILED SAKR v MERCANTILE MUTUAL INSURANCE (AUSTRALIA) LIMITED

1 HANDLEY JA: I agree with O'Keefe AJA. 2 FITZGERALD JA: The circumstances giving rise to this appeal are set out in the reasons for judgment of O'Keefe AJA. 3 The appellant was involved in a comparatively minor collision which aggravated a pre-existing, but previously asymptomatic, degenerative condition in his back. As a result, he experienced pain and suffering and his amenities of life and earning capacity were adversely affected. He is dissatisfied with the amount of his damages and with the trial judge's explanation of his decision. 4 While it would have been better if the trial judge's reasons had been more carefully and comprehensively expressed, they were adequate in the circumstances. The respondent exaggerated the consequences of his injuries, had a poor earnings history and inadequate financial records and was disinclined to work. His Honour lacked a firm evidentiary foundation for detailed findings, and had to be guided by his unfavourable impressions of the appellant and his injuries and their consequences. 5 The trial judge held that the appellant's ability to lead a normal life had been significantly impaired for a continuous period of not less than six months and that the severity of his non-economic loss is 12% of a most extreme case. I agree with O'Keefe AJA that those findings are compatible and that the imprecision in the language used by the trial judge to express his findings does not indicate that his Honour misapplied the legislation. 6 I also agree with O'Keefe AJA that the trial judge's finding that the appellant's ability to lead a normal life had been significantly impaired for a continuous period of not less than six months is consistent with the modest "cushions" which the appellant was awarded for past and future economic loss. The inconsistency asserted by the appellant concerned the effect of his injury on what he could have earned. [1] However, the ultimate question was not what he could, but what he would, have earned if he had not been injured. [2] The trial judge obviously considered that the appellant would have earned very little, pre-trial or post-trial, if he had not been injured, and there was ample evidence to warrant those conclusions. 7 The appellant's submission that the amount awarded for future treatment expenses confronts the same problem. The appellant's case lacked a basis in evidence which the trial judge was prepared to accept. 8 The costs order made by the trial judge was the order which his Honour was required to make by part 39A Rule 31(4) of the District Court Rules because there were no "special circumstances" for the purpose of Rule 31(5). However, the appellant submitted that his Honour had no power to make the correct order because he had previously made an incorrect order as a result a mistake by the respondent's solicitor who had briefly overlooked the damages which the appellant had earlier been awarded by an arbitrator. According to the appellant, the error in the earlier order did not arise from an accidental slip or omission within the meaning of Pt 17 Rule 10 because a judge making an order under Pt 39A Rule 31(4) and (5) had to "exercise … an independent discretion". Reliance was placed on a passage in the judgment of McHugh JA in Storey & Keers Pty Ltd v Johnstone. [3] 9 It is a sufficient answer to the appellant's argument that, in the absence of "special circumstances", the order which the trial judge made did not involve the exercise of a discretion but was dictated by Pt 39A Rule 31(4). If the trial judge had not corrected his order and the respondent had applied for leave to cross-appeal, the initial order which was made erroneously would have been corrected by this Court. 10 I agree that the appeal should be dismissed, with costs. 11 O'KEEFE AJA: This is an appeal by Miled Sakr in respect of an award to him of damages of $42,756.00 in the District Court. The grounds of appeal are primarily directed towards the appellant's contention that the amount awarded was inadequate. However, there is also a challenge to the final order for costs made by the trial judge. 12 Miled Sakr (the appellant) was injured on 31 January 1995 when a vehicle of which he was the driver was involved in a rear end collision. He commenced proceedings for damages in the District Court. The respondent did not dispute liability so the matter was set down for trial as an assessment of damages. It first came before an arbitrator, who found that the collision "was only a minor one which amounted to no more than a slight bump". This aggravated a pre-existing degenerative condition in the appellant's back which up to that time had been asymptomatic. Having found that the disability of the plaintiff was not to the extent claimed by the plaintiff, that the plaintiff was not as incapacitated as he suggested and that there was still a number of areas in which the plaintiff could seek work and for which he was fit, the arbitrator awarded the appellant damages of $45,678.85. 13 Being dissatisfied with this outcome the appellant applied for an order for re-hearing as is provided for in s.18(2) of the Arbitration (Civil Claims) Act 1983. The re-hearing took place before Robison DCJ on 6 and 7 October, 1999, with judgment being given on 8 October 1999. In the result the trial judge awarded the appellant damages of $42,756.70 made up as follows:

1. Non-economic loss of 12% … … … $10,760.00 2. Out-of-pocket expenses … … … $ 6,696.70 3. Future out-of-pocket expenses … … $ 300.00 4 Past economic loss … … $10,000.00 5. Future economic loss … … … $15,000.00 $42,756.60 14 In arriving at this conclusion His Honour found that the rear end collision was nothing more than a bump, being somewhere between a jolt and a bump. In this regard he preferred the evidence of the driver of the respondent's vehicle, Mr Staggs. His evidence was that he had stopped at a set of traffic lights behind the plaintiff on an upward incline. When he leant over to retrieve some paper work that was on the back seat his foot slipped off the brake pedal and as a result his vehicle, which was an automatic, moved forward and bumped the vehicle in front of him. Since the distance between the two vehicles immediately prior to Mr Staggs foot slipping off the brake pedal was only half to one metre and since there was nothing to indicate that Mr Staggs had applied the accelerator, the trial judge concluded that the nature of the collision was minor and rejected the evidence of the appellant that the collision had been "a very strong smash". 15 Although finding that some injury to the appellant's cervical spine had occurred with some resultant impairment but that the appellant had exaggerated his symptoms, the trial judge also found, pursuant to s.79(1B) of the Motor Accidents Act 1988 (the Act), that the appellant had been significantly impaired in his normal non-economic life for a continuous period of not less of six months. However, the extent of that impairment was assessed as only 12%, leading to an award under this head of damages of $10,760. The award in this regard is attacked on the basis that it is manifestly inadequate and that the findings in respect of non-economic loss were inconsistent with the findings made and the amount awarded in respect of economic loss. 16 The finding that the plaintiff's ability to lead a normal life had been significantly impaired for a continuous period of not less than six months was made for the purposes of determining the award for non-economic loss as provided for in s.79 of the Act. 17 The word "significantly" in s.79(1B) must be read in the context of s.79 as it takes its place in Part 6 of the Act. One of the objects of Part 6 of the Act is to control the amount of damages that may be awarded (s.68A(a)) and to prevent the making of an award of damages in a case to which the Act applies contrary to the provisions of Part 6. The object of s.79 is to limit the amount of damages for non-economic loss in claims relating to "relatively minor injuries", in order to achieve the objective of the statute of more fully compensating those with "more severe injuries" at a cost the community can afford to meet. It is against this background that s.79(1B) should be understood. Section 79(1B) provides that no damages shall be awarded for the non-economic loss of an injured person as a consequence of a motor accident unless the injured person's ability to lead a normal life has been "significantly impaired" for a continuous period of not less than six months by the injury suffered in the accident. 18 In order to determine whether or not the terms of s.79(1B) have been met, an inquiry must be made as to the normal life of the injured person and then, having determined what that is, to ascertain whether or not the ability of that person to lead such a life has been significantly impaired for a continuous period of not less than six months by the injury suffered in the accident. In the instant case the finding made in terms of s.79(1B) of the Act amounts to no more than that the appellant, as a consequence of his injury was, for a continuous period of not less than six months, not able to do in the same way as before the things that he did in the course of leading his life in the normal way before the accident and that this was significant in relation to such life. 19 The amount of the damages from non-economic loss to which s.79(1B) refers is to be determined according to the severity of such non-economic loss. At the relevant time, namely at the date of trial, that maximum amount was $273,000. However, it could be awarded "only in a most extreme case" (s.79(3)). The ascertainment of the damages, other than in a most extreme case, involves a determination of the severity of the appellant's non-economic loss and then relating that severity in money terms as a proportion of a most extreme case. The percentage chosen by the judge was 12. The section itself contemplates that amounts as small as $15,000, or even less, may fall within s.79. However, if the amount assessed is $15,000 or less, no damages for non-economic loss are to be awarded (s.79(4)). If the amount awarded is more than $15,000 but less than $48,000, an amount of $15,000 is to be deducted from the amount which would otherwise be awarded (s.79(5)(a)). The form of s.79 therefore suggests that the significant impairment requirement for the purposes of satisfying s.79(1B) need not be great or ultimately of particular, or any, significance in its economic consequences to an appellant. 20 In the instant case the fact that there was a finding of 12% under this head of damages means that although significant within that term as used in s.79 of the Motor Accidents Act, it was nonetheless minor in an economic and non-economic sense and in the longer term. 21 The attack on the award in respect of non-economic loss was that the 12% awarded was manifestly inadequate and that the trial judge assessed the damages under this heading on an incorrect basis, namely on the basis of 12% of a most extreme case, rather than as a proportion determined according to the severity of non-economic loss. 22 Non economic loss is defined in the Act as meaning: "(a) pain and suffering, and (b) loss of amenities of life, and (c) loss of expectation of life, and (d) disfigurement." 23 The appellant suffered no disfigurement. There is no suggestion that there was any loss of expectation of life as a consequence of his injury. The two aspects of the definition that needed to be considered were pain and suffering and loss of amenities of life. The extent to which loss of amenities of life had been experienced was minor. For example, he could still cut his lawn, had he the motivation to do so. Pain and suffering were exaggerated and although there was some pain present the trial judge took into account that what had happened was an aggravation of a pre-existing degenerative condition that would in the course of time have become symptomatic in any event. That being so I do not think that that it can be said that 12% was outside the parameters within which a discretionary judgment could be made. 24 The second limb of the attack on the award made in respect of non-economic loss depends upon that part of the judgment of the trial judge in which he says: "I am satisfied that the plaintiff's ability to lead a normal life has been significantly impaired but not to the extent that the plaintiff has himself asserted as a result of the accident. In any event significant impairment, in my view, has been for a continuous period of not less than six months, to the extent of 12% of a most extreme case." 25 This passage, it is argued, confuses ss.79(1B) and 79(2). The amount of the damages to be awarded is a proportion determined according to the severity of the non-economic loss of the maximum amount which could be awarded. The maximum amount that could be awarded related only to a most extreme case. It is the high water mark of awards of damages under this head of damage. It is of that maximum that the proportion (which may be translated into a percentage for the purposes of calculation) in s.79(2) must be taken. It is only when there is a significant impairment for a continuous period of not less than six months as a result of the injury suffered in the accident (s.79(1B)) that a consideration of the proportion in s.79(2) arises. The application of that proportion to the maximum amount specified in s.79(3) is then made. 26 Whilst on a first reading it may be said that the trial judge has conflated ss.79(1B), (2) and possibly (3) on its proper reading, it is in my opinion clear that the trial judge has in fact carried out the exercise required by the combination of ss.79(1B), (2) and (3). He has determined that the gateway in s.79(1B) has been passed through, that the severity of the non-economic loss is not great and that when the severity is compared with a most extreme case the resultant is a proportion expressed as 12%. This is then translated into a monetary sum, namely $32,760 from which the amount required to be deducted by the Act , namely $22,000, has been taken giving a resultant of $10,760. 27 In my opinion on a fair reading of the judgment no error as argued for by the appellant is disclosed. 28 In relation to economic effects the situation of the plaintiff was made the more difficult by the following findings:

The degree of the disability which the appellant claimed to have sustained had been exaggerated.

The appellant exhibited a degree of laziness and was content to rely on his social security benefits from the government.

He had proved unsuccessful in business prior to taking up work as a taxi driver.

He had worked as a taxi driver, was still capable of doing so, but showed a disinclination to undertake night work in that capacity which is said to be more profitable.

In the 120 weeks leading up to the commencement of his business as a fruiterer with a fruit and vegetable run in October 1994, the appellant had not worked other than for a few days driving a taxi.

The business in which he was engaged up to about the time of the accident was not profitable.

There were no proper records from which the appellant established that he had lost anything in that business as a consequence of his injuries.

The conclusions of Furzser Restani Services, Chartered Accountants, qualified on behalf of the appellant were not accepted. Their report was based on material supplied by the appellant, namely his Statement of Claim, the Particulars provided pursuant to Part 12 Rule 4A, a rough notebook into which he claimed to have entered his takings and expenses and material provided by Comet Taxation Services, which in turn relied upon material provided by the appellant. This was not a sound basis and undermined the conclusions in the report.

The findings in the report of Crispin and Jeffrey, Accountants, who had been qualified on behalf of the respondent were accepted. Their report fairly represented the reality of the situation when they concluded that the appellant's "business venture was a loss making enterprise which generated significantly less net income than the social security benefits he was receiving prior to commencing business".

Since a short time after the accident the plaintiff had not sought any employment at all. 29 The findings of the trial judge were that the appellant had sustained some aggravation of advanced, but previously asymptomatic, degenerative changes in his cervical spine. What His Honour then did was to determine what the appellant could have done in the work force but for the accident, and what the appellant could do after the accident. Recognising that the assessment of damages for loss of future economic capacity involves questions of judgment and estimation and that it can never be a precise process, the trial judge set out to determine what capital sum should be allowed as damages for the impairment of the appellant's working capacity. In doing so he adopted the approach referred to by Barwick CJ in Arthur Robinson (Grafton) Pty Limited v Carter (1967-68) 122 CLR 649 in which he said that it is appropriate to consider: "What global sum … represents fair compensation for the injuries sustained by the plaintiff" (supra at 660) 30 His methodology was not inconsistent with the principles discussed in Husher v Husher (1999) 197 CLR 138 in which Gleeson CJ, Gummow, Kirby and Hayne JJ said : "The financial loss occasioned by impairment of earning capacity is the loss of what (if there had been no accident) the injured plaintiff would (as opposed to could) have expected to have had under his or her control and at his or her disposal by exercising that capacity." (supra at 147) 31 It is thus important for the assessment of damages that the plaintiff prove not merely some impairment of earning capacity but also prove what financial loss is occasioned by any such impairment. The onus of proving these matters being on the appellant, the findings adverse to his credit and in relation to his lack of desire to work are highly relevant to the assessment of damages. 32 It has been submitted on behalf of the appellant that the findings by the trial judge were inconsistent in that having found significant impairment pursuant to s.79 of the Act the amounts awarded for past economic loss and for future economic loss were inadequate. For the reasons indicated above I do not think that the argument as to inconsistency of the findings is correct. Furthermore, it was submitted that the award for past economic loss of $10,000 represented only approximately $45.00 per week for the period in respect in which it was awarded and was thus manifestly inadequate. However, had the appellant not been injured the probabilities appear to be that he would, at least for some time, have continued to operate an unprofitable business. That would have meant that in fact he lost no money as a result of his injuries during the period that he continued in such business. If anything, his inability to work in that business meant that his losses were stemmed until such time as it was closed down. Thereafter the appellant, on his work history, would have either not worked, or could have worked as a taxi driver, had he the motivation to do so. 33 The income from taxi driving was unstated, but would undoubtedly have been better than sustaining a loss. It would seem that it was because of considerations such as these that His Honour chose to award a lump sum. In line with the small percentage of impairment to his non-economic life, so too in respect of his economic life between the date of accident and the date of trial. Superimposed on this was the fact that it was difficult, because of the exaggeration by the appellant, to determine the true facts. The onus being upon the appellant, he failed to satisfy the judge that the loss that he sustained in an economic sense between the date of injury and the date of trial was significant. 34 In view of these considerations the award of $10,000 for past economic loss falls within the parameters of judgment set by the findings of fact made by the trial judge. 35 An attack was also made upon the $15,000 awarded in respect of future economic loss. Based on the 5% tables, taken to age 65 with a 20% discount for vicissitudes of life, this was argued on behalf of the appellant to be the equivalent of some $27.00 a week. However, once again for a number of reasons the appellant suffered from severe difficulties of proof: first, the trial judge thought he was exaggerating; second, the trial judge found that he was capable of driving a taxi; third, the trial judge found that he was lazy; fourth, the trial judge found that he preferred to live off social services rather than to work. 36 All of these findings are material to the determination of damages. All of them strongly support a conclusion that what the appellant would have expected to earn if there had been no accident was not likely over a period to be a significant amount. In addition, they are material to the effect of the finding by the trial judge that whilst the appellant was capable of driving a taxi he had not done so or attempted to do so since his accident. The assessment of a global figure, in these circumstances, is not only understandable but probably necessary, if the appellant was to receive any damages in respect of his claim for loss of earning capacity. 37 Even assuming that there had been no accident, it was not unrealistic for the trial judge to accept that the employment or working pattern of the appellant would be no different in the future from that which it had been in the past. On such an approach the award of $15,000 cannot be based on some proved weekly loss, rather it must be a global assessment of the future economic effects of such degree of impairment as was established by the appellant. As can be inferred from the amount, the degree of impairment of the economic capacity of the appellant was, in view of the trial judge, minor. 38 When regard is had to what the appellant could have done in the work force, but for the accident and what the appellant would have earned but for the accident, and that is compared with the future, namely what the appellant could still do and earn in the work force notwithstanding the accident, an award of $15,000 does not seem to me to be outside the parameters of judgment fixed by the facts found in the case. 39 In Younie v Martini (CA (NSW) 21 March 1995, unreported) a finding that there had been a non-economic loss of 18% of the most extreme case was held to justify an award of $12,000 for future loss of earning capacity for a person who had been working as a nurse's aide. That sum is less than was awarded in the present case, although derived from a higher percentage. Furthermore, the court pointed out that a finding that the injured person's normal life had been significantly impaired within the meaning of s.79(1B) of the Act did "not necessarily" require an award for future economic loss. That decision reinforces what I have previously said in relation to the claimed inconsistency in the findings of the trial judge and supports the conclusion arrived at by him. 40 The amount awarded for future treatment expenses was $300. This is challenged as "grossly inadequate", being only $10 per week for some 30 weeks. However, this award was based upon the fact that the trial judge took the view that the appellant:

(a) was exaggerating his claim; (b) had some, albeit not significant, degree of expenditure in the past for medication;

(c) may have some medication in the future.; (d) would not in the future undergo any operative procedures related to the accident. 41 The extent and duration of any need for future medication was said to require the provision of "a modest sum" to the applicant. In my opinion the amount awarded was modest and on the facts determined by the trial judge, not manifestly inadequate. The onus was on the plaintiff to prove the need for medication and the cost of fulfilling that need. The trial judge rejected the case of severe injury made by the appellant, debilitating ongoing symptoms and need for future surgery. The award of $300 was merely a figure to cover any possible assumed future need. In my opinion it is consistent with the findings made by the trial judge and does not involve appellable error 42 An attack was also made on the decision on the basis that the reasons for judgment did not sufficiently explain the award of damages and that as a consequence the trial judge had failed to give proper reasons, contrary to the duty case upon a court of first instance in that regard. (See Coulton v King (1947) 64 WN (NSW) 65; Pettit v Dunkley (1971) 1 NSWLR 374; Housing Commission of NSW v Tatmar Pastoral Co Pty Ltd (1983) 3 NSWLR 378; Public Service Board of NSW v Osmond (1986) 159 CLR 656). 43 In Soulemzis v Dudley (Holdings) Pty Limited (1987) 10 NSWLR 247, Mahoney JA dealt with a number of matters material to any consideration of the adequacy of reasons given. They relevantly include: (1) "…, the reasons given must be sufficient, where there is a right of appeal, to allow that right to be exercised." (at 269) (2) "Nor is it necessary for a judge who is exercising a discretionary judgment to detail each factor which he has found to be relevant or irrelevant, or to itemise, for example, in the assessment of damages for tort, each of the factual matters to which he had had regard: (at 270); (3) Nor is a judge required to make an explicit finding on each disputed piece of evidence. It will be sufficient, if the inference as to what is found is appropriately clear;"

(4) "… the law does not require that a judge make an express finding in respect of every fact leading to, or relevant to, his final conclusion of fact; nor is it necessary that he reason, and be seen to reason, from one fact to the next along the chain of reasoning to that conclusion." (at 271)

(5) " …a tribunal at first instance may state a number of facts without making findings on all of the issues of fact relevant to the final decision and that there may be unexpressed findings of fact which, have formed part of the process of reasoning to the final conclusion of fact.

(6) "There is … no formula the application of which to the instant case will indicate what, in that case, the judge must do. Where, in the decision of an ordinary dispute, reasons are necessary, they are necessary because of the expectation that, being a judicial decision, a sufficient explanation will be given of why the order was made. And, in my opinion, it will ordinarily be sufficient if - to adapt the formula used in a different part of the law: see R v Associated Northern Collieries (1910) 11 CLR 738 at 740 - by his reasons the judge apprises the parties of the broad outline and constituent facts of the reasoning on which he has acted;

(7) To require that a judge detail the way in which he has reasoned step by step to his conclusion is, in my opinion, to mistake the nature of the reasoning process." (at 273) McHugh JA said: "If an obligation to give reasons for a decision exists its discharge does not require lengthy or elaborate reasons: Ex parte Powter; Re Powter (1945) 46 SR (NSW) 1 at 5; 63 WN 34 at 36. But it is necessary that the essential ground or grounds upon which the decision rests should be articulated." (at 280) "… the extent of the duty to give reasons is related 'to the function to be served by the giving of reasons'. Thus more elaborate reasons are required where legislation gives a right of appeal against a decision than where no appeal lies. In the first class of case, unless the basis of the decision is properly articulated, the losing party may be effectively deprived of his right of appeal. In a case where a right of appeal is given only in respect of a question of law, different considerations apply from the case where there is a full appeal. An ultimate finding of fact, which is not subject to appeal and which is in no way dependent upon the application of a legal standard, can be treated less elaborately than an issue involving a question of law or mixed fact and law. If no right of appeal is given against findings of fact, a failure to state the basis of even a crucial finding of fact, if it involves no legal standard, will only constitute an error of law if the failure can be characterised as a breach of the principle that justice must be seen to be done." (at 281) 44 Applying these principles, I do not think that the appellant's submission should be upheld. The trial judge apprised the parties of the outline of the reasoning and constituent facts on which he acted. They sufficiently explained the basis on which the award of damages was made; indeed, they set out findings and his reasons for those findings in some detail. He explained his reasons for concluding that the accident in which the appellant was involved was minor, his reasons for rejecting the appellant's accountant's report and accepting the report of the respondent's accountant. He examined the medical evidence and detailed why it was that he reached the conclusions that he did and he explained on a number of occasions why it was that he thought that the appellant was exaggerating. The reasons given did not inhibit the conduct of the appeal. In my opinion the reasons for judgment were adequate and not such as to call for intervention by this Court. 45 Shortly before actually entering judgment the trial judge paused so as to give both parties an opportunity to check his arithmetic. This was apparently done, whereupon the trial judge entered a verdict and judgment for the appellant in the sum of $42,756.70, ordered credit to be given to the respondent for an amount of $2,457 pursuant to s.45 of the Act and also ordered the respondent to pay the appellant's costs as agreed or assessed. At that time the trial judge was unaware that there had been a prior award by an arbitrator for an amount of $45,678.95. No one informed him of this fact. Yet it was fundamental to the nature of the order for costs to be made in the matter. Absent such an award, that is on the assumption that the hearing before Robison DCJ was the first hearing, costs in such a case would almost inevitably follow the event. However, because there had been an earlier determination by an arbitrator the provisions of Part 39A of the District Court Rules were applicable. Part 39A deals with costs in such cases after 30 June, 1994 which were the subject of a hearing under the Arbitration (Civil Actions) Act 1983. Rule 31 (1), (2) and (3)are concerned with the fee paid by the applicant for re-hearing being refunded in the event that the determination of the court is substantially more favourable to the applicant than the determination of the arbitrator.. Rule 31 further provides as follows: "(4) Subject to sub-rule (5), where proceedings are heard and determined under section 18(3)(b) of the Arbitration Act, and the determination of the Court is not substantially more favourable to the applicant than is the determination of the arbitrator, the Court: (a) shall not make an order for payment by any other party of the applicant's costs incurred by reason of the re-hearing; and (b) shall order the applicant to pay the costs of every other party incurred by reason of the re-hearing". (5) The Court may in respect of a re-hearing certify that the special circumstances of the case require the Court: (a) to make an order referred to in sub-rule (4)(a), in which case the Court may make that order; or (b) to refrain from making an order referred to in sub-rule (4)(b), in which case the Court may refrain from making that order." 46 Neither legal representative drew the judge's attention to the fact that there had already been an arbitration, to the outcome of such arbitration or to the provisions of Part 39A Rule 31 when he delivered judgment on 8 October, 1999. No application was made for a certificate that special circumstances existed, nor was it contended at any time before the trial judge or on appeal that any special circumstances existed. 47 It is against such a background that it is necessary to consider the ambit and effect of Pt 17 r 10 of the District Court Rules. That rule provides that: "(1) Where there is a clerical mistake, or an error arising from an accidental slip or omission, in a judgment or order, … the Court, on the application of any party or of its own motion may, at any time, correct the mistake or error." 48 This is a form common to many courts in Australia and England. 49 Following the delivery of judgment the defendant in the proceedings (the respondent to the present appeal) realised that it had failed to draw to the trial judge's attention the fact that there had been a prior determination by an arbitrator. This led to an almost immediate request for a re-hearing in relation to the order for costs. That hearing took place on 26 October, 1999. On that occasion counsel for the appellant said that on the morning on which judgment was delivered the trial judge had asked whether were any applications in relation to costs. The legal representatives for the respondent said that no special order was sought and that costs should be costs in the cause. In the result the trial judge rescinded the order for costs that he had made on 8 October, 1999 and made an order that the respondent pay the appellant's costs save that the appellant is to pay the cost of the respondent by reason of the re-hearing. 50 In the notice of appeal the appellant has challenged the decision of 26 October, 1999 on the basis that there was no jurisdiction to make it or alternatively that the discretion to do so was exercised on wrong principles and taking into account irrelevant considerations. However, at the hearing of the appeal counsel for the appellant put his argument squarely on the basis of jurisdiction or power. The order that had been made was, so the argument ran, not irregular, illegal or against good faith. Furthermore, since the making of an order for costs involved the exercise of "an independent discretion" the slip rule had no application. In this regard he relied upon what was said by McHugh JA in Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446, namely that : "The rationale of the slip rule requires that an omission or mistake should not be treated as accidental if the proposed amendment requires the exercise of an independent discretion or is a matter upon which a real difference of opinion might exist." (supra at 453) 51 It has long been the law in England that on accidental error in a judgment or order of the court may be corrected under the slip rule where it has been occasioned by the error or omission of the legal representative of a party. The slip rule in England is O XXVIII r 11. It provides that: "Clerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the court or judge on motion or summons without an appeal." 52 In Fritz v Hobson (1880) 14 Ch.D 542 a motion for an interim injunction had been adjourned to the trial of the action. At the trial the plaintiff succeeded but counsel forgot to ask for the costs of the adjourned motion. The judgment was drawn up and entered and thereafter an application was made by the plaintiff to allow the judgment to be corrected so as to include the costs of the adjourned motion. Fry J held that he had power to do so by virtue of the rule then in force (identical to Order XXVIII r 11) since the error had: "arisen from the accidental omission of counsel to draw my attention to the adjourned motion when I pronounced my judgment …"(at 562). 53 In Chessum v Gordon (1901) 1 QB 694 A L Smith MR, with whom Collins and Romer LJJ concurred, applied Fritz v Hobson (supra) and Baker v Purvis (56 LT 131) and held that there had been an accidental error or omission within the meaning of the slip rule when the court failed to include within its order for costs an amount in respect of the costs of a special referee due to the solicitor engaged in the case failing to ask for those costs. 54 In Re Inchcape, Craigmyle v Inchcape (1942) 1 Ch 394 Morton J approved and applied both Fritz v Hobson (supra) and Chessum v Gordon (supra) when granting an application to amend an order of the court in relation to costs which should have been, but were not, asked for by counsel for the relevant party. In determining whether or not to apply the rule Morton J said: "It is true that when the case was before me, I made the order which I intended to make in regard to the costs for which I was asked to make provision, but there was an accidental omission on the part of counsel, and I did not make the order which I would have made if that accidental omission had not occurred." (supra at 399) 55 In Tak Ming Co Ltd v Yee Sang Metal Supplies Co (1973) 1 WLR 300 the Privy Council had to consider the application of the slip rule in force in Hong Kong (Ord 20 r 11) which was in identical terms to the slip rule in the rules of the High Court in England. That case concerned the failure of the court to include within the amount awarded to the successful plaintiff an amount in respect of interest. This occurred in circumstances in which the judge, because of the long lapse of time, due to a series of appeals in the matter, that occurred between his primary judgment and his final judgment, omitted to include any amount in respect of interest, although he would have done so had he thought of it. This explanation was said to bring into play the slip rule and that "there was an accidental omission by counsel to ask for it." (at 304) 56 In Brew v Whitlock (No.3) (1968) VR 504 the Full Court of the Supreme Court of Victoria allowed an appeal but made no order for interest pursuant to s.78 of the Supreme Court Act, 1958 (Vic). After the court's order had been drawn up, entered and served the appellant moved for an order that the order on appeal be amended to provide for interest on the amount awarded. The Full Court dismissed the application on two bases: first, that although the rules of court empowered the Full Court to give any judgment or make any order which ought to have been made and to make such further order as the case may require, this meant that the Full Court was able to do on application to it what the trial judge at the hearing was empowered to do on application to him. However, as no application for interest was made at the time of disposal of the appeal it was outside the Full Court's power to award interest under s.78.; second, the slip rule, embodied in Order XXVIII r 11 (which was relevantly identical to the common English and Australian provisions) did not apply. In order for it to apply it had to be shown that there had been: (a) a slip or omission; (b) that was accidental; (c) an error in the judgment arising from the accidental slip or omission; and (d) an error capable of being corrected under the rule.

In applying the slip rule the court said: "Here the only slip or omission, if there be any, consisted of one on the part of counsel. The only evidence is that he made no application for an award of interest. There is nothing to suggest that he intended to make an application but forgot. Certainly there was no slip or omission on the part of the court unless the court was bound to make an award without being asked and that, in our opinion, it was not. Whether the circumstances relied upon are sufficient to constitute a 'slip or omission' within the meaning of a rule may be put aside. So too may the question as to whether the slip or omission, if there be one, can be described as "accidental" merely because it was not deliberate. But the conclusive factors in our view are the last two. There was no 'error' in the Full Court's judgment. It had no application before it and it did not intend to deal with the matter at all. Moreover, there was no error capable of being the subject of correction." (at 506) 57 The substantive matter was taken on appeal to the High Court and Taylor, Menzies and Owen JJ held that the conclusion of the Victorian Full Court was correct on the basis that there was an express requirement in s.78 of the Supreme Court Act 1958 (Vic) that the power to make an award of interest conferred by the section could only be exercised upon application (at 463). However, no reference was made to the other basis on which the Full Court of Victoria arrived at its conclusion. 58 Kitto J also thought that the decision of the Full Court of Victoria was correct. However, did so on the basis that the slip rule was inapplicable, but did not articulate why this was so. In Shaddock & Associates Pty Ltd v Parramatta City Council (No.2) (1983) 151 CLR 591 Mason ACJ, Wilson and Deane JJ pointed out in respect of the decision of Kitto J that in Whitlock's case there was no evidence that the failure to apply for interest was the result of accident or inadvertence on the part of counsel. If, however, Kitto J was to be taken as giving a narrower scope to the slip rule, then those judges considered that: "the subsequent decision in Tak Ming affords strong support for the view we now take" (at 597) 59 In arriving at its conclusion in Brew v Whitlock (No.3) (supra) the Full Court of the Victorian Supreme Court distinguished a previous decision of that court in Arnett v Holloway (1960) VR 22 in which it was held that there was jurisdiction under the slip rule to amend an order of the court so as to award costs on a higher scale where the trial judge would have done so if the relevant change in the costs rule had been drawn to his attention.. This was done on the basis that the trial judge had taken "an unduly narrow and artificial view of what his real intention was". (at 35) 60 Thus even before the decision in Shaddock & Associates Pty Ltd v Parramatta City Council (No.2) (supra), there was authority of long standing which enabled the amendment of orders for accidental omissions in relation to costs and interest. 61 The ambit of the slip rule has been widened considerably by the High Court over recent years. In Shaddock & Associates Pty Ltd v Parramatta City Council (No.2) (supra) the High Court determined that it had the power to amend its order by adding to it an amount in respect of interest. This was done pursuant to Order 29 Rule 11 of the High Court rules which, reflecting the inherent jurisdiction of a superior court, provided that it may : "…at any time correct an error in a decree or order arising from a slip or accidental omission." 62 That rule, so the court held, extends to authorise action by the court to cure an omission resulting from the inadvertence of a party's legal representative. (supra at 594) Furthermore that it was competent pursuant to that rule to amend the court's previous order to make provision for interest on the damages for the period from the date on which the judgment was given in the Supreme Court to the date on which the orders were made on appeal in the High Court. The question of whether the respondent council in that case should be ordered to pay interest on the damages which had been proved and for which judgment had been given was said to be: "a subsidiary or consequential question which only arose when the substantial issue between the party as to liability and result in damages had been determined." (supra at 595) 63 Costs can be characterised in the same manner. They come to be considered only after the issues of liability and/or question of damages have been determined and they have been so treated in the cases referred to above. 64 In The Commonwealth v McCormack (1984) 155 CLR 273 the High Court considered the provisions of Order 29 Rule 11 (supra) and pursuant to its provisions varied one of its previous orders by requiring a party to whom a successful appellant had paid a substantial sum of money in satisfaction of the judgment which had been set aside on appeal to repay that sum of money. The court ( Murphy, Wilson, Brennan, Deane and Dawson JJ) described the failure to make an order for repayment as an omission that was due entirely to the failure of one of the parties to instruct counsel to inform the court of the circumstances which made such an order necessary. The absence of knowledge of the payment that had been made resulted in the court not dealing with the consequential matter of repayment. As a consequence the order it would have made, and later did make as of course, was not then made. The court further said that: "There is jurisdiction to make an appropriate order under that rule (O 29 r 11) to remedy the situation which has arisen as a result of oversight by a party's legal representative notwithstanding the fact that the formal orders have been taken out" (at 277) 65 The High Court (Gibbs CJ, Wilson and Brennan JJ) affirmed these principles in Barrell Insurances Pty Ltd v Pennant Hills Restaurant Pty Ltd (1983) 49 ALR 384 when correcting an order for costs that had been made as a result of the failure of the parties to advert to the consequences in relation to costs of the final order made by the High Court in relation to the proceedings before the primary judge in the Supreme Court. The order that was corrected was described as "clearly a slip" and "one which the court has power to correct". (at 384) The situation in that case was very similar to that in the present appeal. 66 The test applied as to whether a matter was an accidental omission was that: "(i)f the matter had been raised on the hearing of the appeals, such an order would have been made as of course …" (at 277) 67 This is the same test as that applied by Lord Herschell in Hatton v Harris (1892) AC 547 at 558, a case referred to with approval by the Privy Council in Carter v Milson (1893) 10 WN (NSW) 9. 68 Gould v Vaggelas (1983-85) 157 CLR 215 (Gibbs CJ, Wilson, Brennan and Dawson JJ) affirmed that inadvertence of counsel could be a basis for the court in appropriate circumstances to grant a remedy under the slip rule (O 29 r 11) by way of variation of an order previously made (supra at 274). The touchstone for the exercise of the power that exists where there has been an accidental omission was the interests of justice and that "had the matter been canvassed at the time of hearing … the order now sought would have been made."(at 276). 69 In the light of the foregoing examination of the cases it is necessary to return to the passage in the judgment of McHugh JA in Storey & Keers Pty Ltd v Johnstone (supra). Before making the statement upon which the appellant relies McHugh JA examined the provisions of Pt 17 r 10 of the District Court Rules (supra), looked at the principles dealt with in the leading cases and set out a number of principles which he concluded were applicable in relation to the slip rule. He said: "… although the principle of the slip rule is clear enough in conception, its application in practice has often proved difficult. The dividing line between a mistake or error which is the result of an accidental slip or omission and a mistake or error which is the product of a deliberate decision has often been difficult to draw. The difficulty became greater when it was decided that an error might be the result of an accidental slip or omission even though, because of the inadvertence of the party's legal representative, the point was not raised at the hearing of the action." (at 449)

And "If the proposed variation of an order relates to a matter which was in issue in the proceeding or to something that was incidental to such a matter, the court, in my opinion, has power to amend its order if the need for the variation is the result of an accidental omission or mistake. Matters such as costs or interest on a judgment for example, are almost always incidentally involved in proceedings, and the court has power to deal with them even though they are not specifically raised at the hearing provided, of course, the omission was accidental". (supra at 452)

And "The requirement that the proposed amendment must relate to a matter which was an issue to the proceedings or was incidental thereto merely serves to emphasize that it is only omissions or mistakes which are accidental which can be rectified. It would be contrary to the rationale of the slip rule to allow judgments and orders to be amended to deal with matters which were not in issue in the proceedings. Such matters must be dealt with by way of appeal and in accordance with the principle which governed the raising of new matters on appeal and in general the test of whether a mistake or omission is accidental is that applied by Lord Herschell in Hatton v Harris (at 558) if the matter had been drawn to the court's attention would the correction at once have been made?" (at 453) 70 From the principles enunciated and relied upon by McHugh JA and having regard to the characterisation of questions as to costs in the various cases and by McHugh JA himself (supra at 452), I am of opinion that the independent discretion of the kind referred to in the passage relied upon by the appellant was not intended by McHugh JA to apply to, and does not apply to, any discretion that may exist in relation to an award of costs. Furthermore, in the present case, there being no application for a certificate that special circumstances existed for departure from the order required by Pt 39A r 31 of the District Court Rules, there could be no dispute as to the appropriate form of order. It was mandated by Pt 39A r 31(4). 71 Applying the principles stated in the cases referred to above and the test enunciated by Lord Herschell in Hatton v Harris (supra) as adopted by the High Court in Barrell Insurances Pty Ltd (supra) and by this court in Storey & Keers v Johnstone (supra), I am of opinion that the initial order for costs made by the trial judge on 8 October 1999 was clearly a slip, an error or omission, as a result of inadvertence on the part at least of the solicitor for the respondent. 72 For these reasons I do not think that the argument raised by the appellant in relation to the cost order should succeed. The trial judge had power to make the amendment to his order of 8 October, 1999 which he in fact made on 26 October, 1999. 73 In my opinion the appeal should be dismissed with costs.

END NOTES

1. Husher v Husher (1999) 197 CLR 138, 149
2. Husher v Husher (1999) 197 CLR 138, 142-143, 147.
3. (1987) 9 NSWLR 446.

END NOTES Hyperlinked End Notes added - 26/04/07

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