Sandstrom v FSS Trustee Corporation & Anor [2020] NSWSC 581 | Case summary

Supreme Court of NSW|2020-03-27|Before: Slattery J, McColl JA

Judgment

This is the Court's second judgment in these proceedings. In the Court's first judgment it declared that Metlife Insurance Limited's ("MetLife") 2015 determination denying the plaintiff entitlements on the basis that she was totally and permanently disabled ("TPD"), was void and of no effect, declared the plaintiff was TPD and ordered the defendant insurer to pay two TPD entitlements to the FSS Trustee Corporation to be held on account of the plaintiff's claims: Sandstrom v FSS Trustee Corporation & Anor [2020] NSWSC 200.
This judgment should be read with the Court's first judgment. Matters, persons and events are referred to in both judgments in the same way.
As a result of motions filed after the first judgment, the parties contested two post judgment issues: (1) whether there should be a stay upon the Court's judgment pending appeal; and (2) whether the defendant should pay the plaintiff's costs on the indemnity basis from March 2018, by reason of the service of a Calderbank letter at that time.
Written submissions were prepared on each side by Mr D. Baran and Mr M. Eirth for the plaintiff and by Mr C. Purdy on behalf of the defendant. The submissions were comprehensive on both sides and there was no need for an oral hearing. The Court has therefore dealt with the matter in Chambers.
The parties were also at issue about questions of interest upon the total judgment sum of $752,818 (being $582,718 payable under the PBRI Policy and $170,100 payable under the FSS Policy). But the parties have been able to resolve that issue and orders were entered by consent on 6 May 2020.

(2) Should Indemnity Costs be Ordered?

Ms Sandstrom and MetLife attended a mediation on 20 March 2018. The mediation was unsuccessful. But on that day Ms Sandstrom served a Calderbank letter upon MetLife, which offered to resolve the matter on the basis that MetLife paid her the sum of $300,000 inclusive of interest and costs, together with the discharge of all prior costs orders. The offer expired on 28 March 2018.
As a result of the first judgment, Ms Sandstrom has achieved a better outcome than this offer. She now seeks indemnity costs from 29 March 2018. But MetLife contends that she has not made out the basis for an indemnity costs order upon the expiry of a Calderbank letter.
The applicable principle is that the offeror of a Calderbank letter must establish that the offeree's rejection of the offer was unreasonable in the circumstances: Evans Shire Council v Richardson (No. 2) [2006] NSWCA 61 at [26].
MetLife points out that two components of Ms Sandstrom's evidence, which played an important part in the Court's reasoning in the first judgment, were not available in March 2018 when the Calderbank offer was made. First, Mr Abbott's statement had not been served. As the Court's first judgment shows, the assessment of Mr Abbott's evidence was an important ingredient in the Court's acceptance of the plaintiff's evidence.
The other component of the plaintiff's evidence was the oral evidence of Dr Wilkins. His written evidence did not address the question of whether Ms Sandstrom's condition was unlikely to respond to treatment as thoroughly as did his oral evidence in response to detailed questioning on the issues. His oral testimony was an important basis for the Court's reasoning that the plaintiff was TPD, as the first judgment shows.
Ms Sandstrom submits that there was nothing new or remarkable about this evidence. But MetLife's argument on this issue better reflects the place of these two pieces of evidence in the reasoning in the Court's first judgment.
Had either of them been available in March 2018, they are likely to have been at the forefront of consideration by an offeree such as MetLife, in receipt of the Calderbank offer. The absence of this evidence at that time, in my view, prevents Ms Sandstrom from being able to establish that MetLife's rejection of the offer was unreasonable in the circumstances.
Other arguments were fielded in relation to MetLife not having had time by March 2018 to make investigations and develop its case theory but such considerations do not assist either way.

Costs of These Post-Judgment Applications

The plaintiff has failed on these post judgment arguments. But some post judgment legal activity was inevitable between these parties. The parties had to discuss and mutually agree upon the quantum of interest which was payable. The merits of whether or not a stay was appropriate will only be known when the outcome of an appeal is determined. An order that each party's costs of that issue would be that party's costs in the cause would be appropriate. It is only in respect of the Calderbank letter that there is any real argument that Ms Sandstrom should pay the defendant's costs of the post judgment argument.
In the circumstances, the better course, in the Court's view, is simply to excise post judgment costs from the final costs order on the ordinary basis to be made in the plaintiff's favour.

Conclusions and orders

For these reasons the Court orders that: 1. execution upon the judgment of the Court of 9 March 2020 is stayed until 9 June 2020 but if before then the second defendant files a notice of appeal against the said judgment, the stay shall be extended until the determination or discontinuance of the appeal; and 2. the Court orders that the second defendant pay the plaintiff's costs of these proceedings on the ordinary basis but excluding the costs of this post judgment argument.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 May 2020

Sandstrom v FSS Trustee Corporation & Anor

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