Saleh v The Nominal Defendant

Guardianship Act 1987 LEGISLATION CITED: Health and Other Services (Compensation) Act 1995 (Cwth) Motor Accidents Compensation Act 1999

Alexander v Cambridge Credit Corporation Ltd [1985] 2 NSWLR 685 Bofinger & Anor v Kingsway Group Pty Ltd & Ors (No. 2) [2009] NSWCA 172 Fitzgerald v Dansey [2001] NSWCA 339 CASES CITED: Herning v GWS Machinery Pty Ltd (No. 2) [2005] NSWCA 375 Leichhardt Municipal Council v Green [2004] NSWCA 341 Lockhart Shire Council v King [2005] NSWCA 236 Saleh v The Nominal Defendant [2009] NSWDC 1

PARTIES: Khodr Saleh previously known as Rodger Mahony by his Tutor Siham Saleh (Plaintiff) The Nominal Defendant (Defendant)

COUNSEL: Mr M Cranitch SC with Mr J Jobson (Plaintiff) Mr G Watson SC (Defendant)

SOLICITORS: Milicevic Solicitors (Plaintiff) Sparke Helmore (Defendant)

On 15 May 2009 an interim judgment was given on the substantive issues in favour of the plaintiff in the sum of $1,033,398 in order that the parties could then quantify the amount to be added to the judgment on account of funds management charges. The current listing of the matter is for the purpose of making final and consequential orders.

The following matters arise for decision: (a) The assessment of funds management charges; (b) The plaintiff's claim for interest on damages assessed under the Motor Accidents Compensation Act 1999; (c) The plaintiff's claim for indemnity costs; (d) The defendant's application for a stay of proceedings pending an appeal.

A financial manager has already been appointed pursuant to provisions of the Guardianship Act 1987 to manage the plaintiff's estate in conjunction with the NSW Trustee. The parties have obtained actuarial advice and they have now agreed that by consent an amount of $250,000 should be added to the judgment on account of funds management charges. I therefore assess funds management charges in the sum of $250,000.

The plaintiff has made a claim for interest on portions of the assessed damages. The application is made pursuant to the provisions of s 137 of the Motor Accidents Compensation Act 1999 which provides a limited statutory basis for claiming interest. The defendant opposed the claim and has pointed out that the statutory pre-conditions for the award of interest have not been met in this case.

The liability issues of negligence, contributory negligence and due search and inquiry were live issues in dispute at the trial. Although I have determined those issues against the defendant, on the evidence adduced, I consider that it was not unreasonable for the defendant to have contested the plaintiff's claim. For the purposes of an application for interest pursuant to s 137 of the Act, I do not consider that the stance taken by the defendant was unreasonable. I consider that this is so particularly since, as custodian of a special fund set aside for the compensation of injuries claimed to have been caused by an unidentifiable vehicle, the defendant was reasonably entitled to insist that the claim made on behalf of the plaintiff be strictly proven.

I accept that on the contested facts of this case, before the trial, the liability result was sufficiently open and at large that it was reasonable for the defendant not to have made a monetary offer of settlement : Fitzgerald v Dansey [2001] NSWCA 339 per Sperling J at [106]. Accordingly I do not accept the plaintiff's application for interest.

The plaintiff has made an application for a special order for costs, namely that the defendant pay the plaintiff's costs on an indemnity basis from 18 February 2008. That application proceeded upon the basis that on that date the plaintiff served an offer of compromise on the defendant which was an offer that invited the defendant to admit breach of duty of care.

The defendant has submitted that the plaintiff's offer was flawed because that offer contained no compromise whatsoever and was not a genuine compromise but instead involved capitulation on the part of the defendant. In contrast, the plaintiff submits that the offer was a genuine attempt at compromise of one liability issue in the case.

I do not accept the defendant's submission that the plaintiff's offer was flawed. I take this view because I consider it is clear that the plaintiff's offer was aimed at simplifying the liability issues in the case. The plaintiff's offer called upon the defendant to admit that there was a breach of duty of care. Implicit in an acceptance of that offer was an acceptance that there was an unidentified vehicle involved in the collision and that the driver of that vehicle had been negligent. Even if that offer had been accepted by the defendant it still left open the remaining liability issue of the plaintiff's alleged contributory negligence. In these circumstances I consider that had the offer been accepted this would have considerably simplified and narrowed the parameters of contest at the trial. Accordingly, I consider that the plaintiff's offer represented a genuine attempt to settle a significant part of the liability issues over which the parties were at odds. This could possibly have led a step closer to a negotiated settlement and costs savings.

Notwithstanding the foregoing view, in this case, I do not regard the defendant's non-acceptance of the plaintiff's offer to have been unreasonable in the circumstances because what would have been the remaining contest over the issue of contributory negligence would still have involved calling substantially the same evidence that was required to prove the preliminary issue of breach of duty of care. Where all the circumstances are required to be considered in order to determine whether there was an unreasonable failure to accept an offer, this is a matter that is relevant to the exercise of discretion as to whether a special order for costs should be made : Leichhardt Municipal Council v Green [2004] NSWCA 341; Herning v GWS Machinery Pty Ltd (No. 2) [2005] NSWCA 375 at [4]; Bofinger & Anor v Kingsway Group Pty Ltd & Ors (No. 2) [2009] NSWCA 172 per Handley JA at [14].

Accordingly, in the exercise of my discretion, I refuse the plaintiff's application for indemnity costs.

The defendant has made an application for a stay pending the filing of an appeal. The intention to appeal was initially flagged by the defendant on 15 May 2009 when the interim judgment was delivered : Saleh v The Nominal Defendant [2009] NSWDC 1. Some six weeks have passed since those primary reasons for judgment were delivered. When the stay application was first flagged by the defendant I indicated I would require evidence to be addressed to justify a stay.

On the application for a stay the defendant did not tender any draft appeal grounds or seek to identify any relevant parts of the primary judgment open to be successfully challenged on appeal. When this was pointed out in oral argument Mr Watson SC then respectfully outlined a broad range of contended errors the defendant intended to pursue on appeal. The question of whether an amorphously expressed liability challenge is likely to be successful on appeal is not a matter upon which I am prepared to speculate.

In support of the application for a stay the defendant pointed to the possibility of the funds being depleted pending appeal, even with the involvement of a trustee. In this regard, evidence was tendered to show that the trustee would charge an establishment fee and other progressive management fees which would not be refundable. Given that the funds management fees over the Plaintiff's remaining lifetime have been agreed at $250,000 I do not consider the evidence to demonstrate the risk of substantial depletion of funds such as was considered to be the result in Lockhart Shire Council v King [2005] NSWCA 236.

The general principle is that a successful party is entitled to the benefit of a judgment obtained by him unless the applicant demonstrates a reason for ordering a stay : Alexander v Cambridge Credit Corporation Ltd [1985] 2 NSWLR 685 at [694E].

In my view, no reasons other than speculative reasons have been put forward and I therefore decline to order an unconditional stay. In the circumstances, I consider that the appropriate place for the defendant's application for a stay is in the Court of Appeal in accordance with the current practice convention.

However, noting that there is an intended appeal I order that the judgment be stayed for a limited period of 28 days pending any further stay that may be ordered by the Court of Appeal.

After the addition of the agreed assessment for funds management charges in the sum of $250,000, the plaintiff's final damages assessment is as follows:

(a) Non-economic loss $250,000 (b) Past loss of earning capacity $115,000 (c) Future loss of earning capacity $363,055 (d) Past loss of superannuation $12,650 (e) Future loss of superannuation $39,936 (f) Past domestic care services $20,846 (g) Future domestic care services $247,278 (h) Future medical treatment $10,000 (i) Future paramedical treatment $12,500 (j) Future pharmaceutical costs $7,500 (k) Future transportation costs Nil (l) Past out-of-pocket expenses $4,633 (m) Funds management charges $250,000 Total $1,333,398

I make the following orders: (a) I direct the entry of a verdict in favour of the plaintiff in the sum of $1,333,398 with judgment accordingly;

(b) The application for an unconditional stay is refused but a stay for 28 days is granted;

(c) I order the defendant to pay the amount of the judgment into Court within 28 days less any due deductions required by the provisions of the Health and Other Services (Compensation) Act 1995 (Cwth) and I order that the balance of such sum be invested in an interest bearing account for the benefit of the plaintiff pending an order of the Supreme Court in its Protective Division or an order made under the Guardianship Act 1987;

(d) The defendant is to pay the plaintiff's costs on the ordinary basis;

(f) Liberty to apply on 7 days notice if further orders are required.

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