SE by her tutor AH v Grech

District Court of NSW|2020-09-08|Before: Mr J

The costs applications before the court

The plaintiff, a minor, brought proceedings for damages for injuries sustained while a passenger in a motor vehicle being driven by her mother's partner. Breach of duty was admitted and the sole amount claimed at the hearing (apart from an out of pocket expense of $49) was the sum of $3,500 for the costs of future counselling.
The plaintiff's claim for this modest sum was unsuccessful. In my judgment dated 21 August 2020 (SE by her tutor AH v Grech [2020] NSWDC 474), I made orders as follows. (1) Judgment for the plaintiff for $0. (2) Costs reserved, with liberty to apply. (3) Exhibits retained until further order.
Pursuant to the liberty in order (2), the parties bring the following applications: 1. The plaintiff seeks orders that the defendant pay her costs on the ordinary basis. 2. The defendant seeks orders that the plaintiff pay his costs on the indemnity or alternatively ordinary basis. 3. In the alternative to (b), the defendant asks the court to make no order as to costs.

Mr Jobson submits that the smallness of the plaintiff's offers need to be seen in the context of the Hall & Wilcox's earlier correspondence, including a s 81(1) Notice Denying Liability sent on 24 August 2016 referring to "ongoing inquiries". It was because no reply was received to Harrow Legal's reminder correspondence concerning the outcome of these inquiries (sent on 15 July 2017 and 15 October 2018) that the plaintiff had no option other than to commence proceedings, despite the modest parameter of her claim.
As is noted in my judgment, the plaintiff did have health problems but these were not injuries or disabilities attributable to the motor vehicle accident as described by the plaintiff's legal representatives. As to her nose, her pre-accident hearing and sinus problems continued to be attended to and she underwent a tonsillectomy and adenoidectomy in 2017. None of her doctors ever treated her for a broken nose. As to the plaintiff's psychological issues, the plaintiff continued to receive school and social welfare counselling and assistance about the family-related issues (including domestic violence) set out at [26] - [40] of my judgment. None of those counsellors (including the plaintiff's mother's social worker) ever treated her for motor vehicle-related anxiety.
Mr Jobson agrees that, in about October 2019, medical advice was received (but not served) that the plaintiff's nose and breathing issues had nothing to do with accident injuries. He points, however, to the sole medico-legal report served, that of a psychiatrist, which recommended six months of treatment including psychotropic drugs (Exhibit A, p. 4).
The plaintiff was on notice from the first that a challenge to the award of costs for bringing this action in the District Court would be made. As is noted in my earlier judgment, the defence (filed on 30 October 2019) admitted breach of duty of care but specifically pleaded reliance upon Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") r 42.35 and stated that "the Plaintiff should not be entitled to costs in the District Court".
What are the costs in question? At an unknown date before the hearing, Hall and Wilcox asked the plaintiff's solicitors for an estimate of their costs. On 24 June 2020 Harrow Legal replied, apologising for the delay and advising that the costs were $27,919.57 (Exhibit 1). Since that time there has been a two-day hearing as well as this application, so the costs in question can probably be put at around double this sum.

The provisions set out in the Civil Procedure Act 2005 (NSW) and UCPR

UCPR r 42.35 provides: "42.35 Costs order not to be made in proceedings in District Court unless Court satisfied proceedings in appropriate court (1) This rule applies if - (a) in proceedings in the District Court, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $40,000, and (b) the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants. (2) An order for costs may be made, but will not ordinarily be made, unless the District Court is satisfied the commencement and continuation of the proceedings in the District Court, rather than the Local Court, was warranted."
The context for this regulation is ss 56 - 62 of the Civil Procedure Act 2005 (NSW), and in particular the proportionality principles identified in the s 60: "60 Proportionality of costs In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute."

The plaintiff's submissions

Mr Jobson submitted that his client had won the case and that costs should follow the event. The failure of the defendant to advise the result of inquiries meant that the plaintiff had no option other than to commence proceedings as the limitation period was looming. After that, the proceedings could not be settled without the leave of the court, as the plaintiff was a minor, and the likelihood of the proceedings being settled on the only terms acceptable to the defendant was low, given the concerns expressed by Dr Gertler about the plaintiff's need for treatment.
As to UCPR r 42.35, Mr Jobson submitted that this should not apply to motor vehicle claims; all motor vehicle claims must be brought in this court because the Local Court did not have the time or resources for them. In addition, there would be no saving in costs as the costs were effectively the same in both courts. While these proceedings were acknowledged not to be particularly complex, the defendant had required the psychiatrists for cross-examination which meant that transfer to the Local Court was impossible, as the hearing would take more than one day if the doctors were cross-examined.

The defendant's submissions

Mr Renshaw stated that this case raised important issues of general application, in that insurers faced a tsunami of trivial claims brought in the District Court, especially for minor plaintiffs, where the injuries and disabilities ranged from slight to wholly imaginary.
In the present case, the plaintiff's tutor must have been well aware that, despite her saying to the contrary on the Claim Form, her daughter never had a broken nose or any treatment for it, which is why these proceedings have the dubious distinction of having no prior out of pocket expenses. The plaintiff's tutor was also aware that her daughter's need for ongoing counselling had other causes predating the accident. Although concessions had had to be dragged from her in cross-examination, the plaintiff's tutor eventually acknowledged that her daughter had been receiving counselling for a wide range of family issues, notably domestic violence issues and the other issues identified in the tutor's counsellor's notes. Mr Renshaw submitted that the plaintiff's tutor was a witness of no credit and deserving of an order to pay the defendant's costs on an indemnity basis.
Mr Renshaw was hardly less critical of the plaintiff's legal advisers, whom he complained had persisted with a case acknowledged at the hearing to amount to no more than a claim for future counselling, based on a psychiatric report more notable for its omissions than its observations. He submitted to me that this case was a mere hook upon which to hang their not inconsiderable legal costs, and urged me to make this case to encourage other practitioners not to do so.
Mr Renshaw also submitted that settlement of the claim in the Settlement Approvals List would not have been a difficulty because of Dr Gertler's report, as claimed by Mr Jobson. He reminded me that, while hearing this List, I had approved many such settlements where similar (and in fact worse) medical reports had been served, in applications in where he had appeared for the defendant (Kandil by his tutor Kandil v Halliday [2017] NSWDC 327; Tartak by her tutor Tartak v Zada [2017] NSWDC 330).
Mr Renshaw acknowledged that a costs order against the plaintiff or her tutor was a futility as both were penniless but reminded me that this was irrelevant. Alternatively, but based on the rationale behind UCPR r 42.35, he submitted that the plaintiff's solicitors should not be entitled to the award of any costs.

The relevant principles

The relevant areas for consideration are: 1. Application of the relevant statutory provisions to the exercise of discretion; 2. Principles relevant to nominal awards generally; and 3. The operation of UCPR r 42.35.
While UCPR r 42.1 provides that the Court is to order that costs follow the event, s 98(1)(a) of the Civil Procedure Act 2005 (NSW) essentially retains the unfettered discretion of the court to order costs. Section 98(4) specifically empowers the Court to fashion those costs orders by reference to case management, including proportionality issues: Harrison v Schipp (2002) 54 NSWLR 738. The power to award costs is to compensate, and not for punitive purposes: Ohn v Walton (1995) 36 NSWLR 77 at 79.
As to the second of these issues, where an award is for nominal damages, it has long been acknowledged that additional considerations may need to be taken into account: Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873, 874; Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394, 402 - 403; Thiess Contractors Pty Ltd v Placer (Granny Smith) Pty Ltd [2001] WASCA 166; see also GE Dal Pont, Law of Costs (4th edition, LexisNexis Butterworths, 2018 [8.35]). This is because, in terms of current case management issues, the costs "event" for the purposes of rules such as UCPR r 42.1 will be regarded as going against a party who receives nominal damages only, unless the establishment of a legal right independent of damages was one of the primary purposes of the proceedings: Witcombe v Talbot & Oliver (No 2) [2009] WASC 173 at [24].
The nominal value of the award must be looked at in the context of the issues in the case: Barescape Pty Limited as trustee for the V's Family Trust & Anor v Bacchus Holdings Pty Limited as trustee for The Bacchus Holdings Trust & Anor (No 12) [2012] NSWSC 1591. However, this is not the case where the sum recovered is the only remedy and is readily identifiable as nominal.
In O'Reilly v Western Sussex NHS Trust (No.7) [2015] NSWSC 233, Garling J said (at [40]): "If a party commences and continues proceedings in this Court, and is ultimately successful, then unless the sum which is recovered can properly be described as nominal damages …. then the Plaintiff is entitled, ordinarily, to their costs of the proceedings, whatever those costs may reasonably be." [Emphasis added]
That clearly is the case where the award in question is for $0.
Thirdly, in accordance with r 42.35, it is for the Plaintiff to establish that her pursuit and continuation of the proceedings in this court was "warranted". Even then, the court retains a discretion as to costs: Gladio Pty Ltd v Buckworth (No.2) [2015] NSWSC 1462 at [15].
Both counsel referred me to other decisions of judges of this court, all of which were helpful. Mr Jobson referred me to Carvajal v Lamba (No 2) [2019] NSWDC 333, where Russell SC DCJ considered whether the commencement and continuation of proceedings in the District Court, rather than the Local Court, was warranted in proceedings where the total damages awarded were $7013.36. His Honour noted at paragraph 5: "The District Court hears most of the personal injury actions conducted in New South Wales. The Local Court deals with the bulk of criminal work in this State. I did ask Mr Renshaw whether, in his fifth decade in practice at the Bar, he was aware of any motor accident cases being run in the Local Court. I did not receive an affirmative answer. Ms Balendra, who appeared for the plaintiff, pointed out that in the Local Court leave is required to rely upon any expert evidence. Of course, personal injury actions run in the District Court do not require the grant of leave for expert evidence. In every personal injury action there are reports from treating doctors and medico-legal expert reports. The procedure in the District Court is well-suited to the conduct of personal injury actions, and the procedure in the Local Court is not as well-suited."
His Honour noted that the question in each case is whether the complexity of the case warranted the bringing of proceedings in the District Court. In circumstances where both the plaintiff and defendant were extensively cross-examined and where there was a large folder of medical material, his Honour was of the view that it was appropriate to bring the proceedings in the District Court. One of the reasons for decision was that the District Court is the most suitable forum for motor vehicle personal injury cases.
However, that does not mean that all motor vehicle personal injury cases should be brought in this court. Nor is it the case that a plaintiff represented by tutor must commence the case in this court because of this court's settlement approvals list.
Mr Renshaw referred me to the decision of Robison DCJ in Faical Majzoub v Kwon S Hang (22 July 2019). The factual background to those proceedings was of a less dramatic nature than the facts in this case, in that the plaintiff was awarded damages in the sum of $25,961.81, which consisted largely of past economic loss for personal injury. Taking into account the rationale for the enactment of UCPR 42.35 and adopting a broad brush approach, Robison DCJ ordered the defendant pay the plaintiff's costs less 70%. This was despite the matter being acknowledged to be of some complexity (which I am satisfied was not the case here).
I accept that such findings have been made by other judges and have benefited from reading the decisions provided to me, as well as to other decisions of a like nature, such as Moubarak v Le No 2) [2019] NSWDC 170. However, each of these decisions turns on the facts of the respective case.

Application of these principles to the facts of this case

I do not consider the injuries claimed by the plaintiff to be fraudulent. The plaintiff, her mother and her mother's partner all sought compensation for their injuries in the accident. In the case of the plaintiff, she appears to have been seen on the night of the accident by her general practitioner, although there is no separate account for this visit (it was a family visit). Apart from the consultation requiring the completion of her Claim Form, she never had any other treatment. She gave evidence in an honest and forthright fashion and it is clear from that evidence that she has a strong relationship with her school counsellor, with whom she raises matters of concern about school, home and personal issues such as weight.
The plaintiff's tutor (and mother) is a tragic figure. Her history of suffering domestic violence has carried over into her current relationship with a much older man who already had nine children of his own. In addition to her three children with her former husband, from whom she went into hiding (the plaintiff is one of these children), she has given birth to another two children, both of whom are sickly, with her current partner. She is supporting those five children on a government pension. She is still a very young woman and appears to have had a limited education. Her reliance upon her solicitors to advise her would have been total.
The mere fact of impecuniosity is no barrier to the making of a costs order (Northern Territory v Sangare [2019] HCA 25; 265 CLR 164; 93 ALJR 959; 372 ALR 117; 60 Fam LR 71), but the reliance of the plaintiff and her mother upon their legal advisers would have been total. That is a strong factor in proceedings such as the present.
Mr Jobson has not discharged his obligation under UCPR r 42.35 to satisfy the court that costs should be awarded. Even if I were to accept that the commencement of proceedings were warranted, the phrase "commencement and continuation" in UCPR r 42.35(2) requires more. As soon as the solicitors for the plaintiff received the defence warning of reliance on this provision and the medico-legal report confirming that the plaintiff did not have any nasal injuries from the accident, they should have taken appropriate steps in accordance with UCPR r 42.35, rather than involve the defendant in a two-day hearing in which the defendant's legal advisers only learned from the plaintiff's opening address that the claim for a broken nose was no longer put.
Accordingly while I am not prepared to make an order for the plaintiff or her tutor to pay the defendant's costs, I accept Mr Renshaw's submission that the plaintiff should not be entitled to any costs order by reason of UCPR r 42.35.

Concluding remarks and Orders

The order I have made for each party to pay their respective costs of these proceedings should extend to this costs application.
The orders I make are as follows: 1. Plaintiff's application for the defendant to pay her costs refused. 2. Defendant's application for the plaintiff to pay his costs (on the indemnity or ordered basis) refused. 3. Defendant's alternative application for each party to pay their own costs of these proceedings granted.

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: 14 September 2020

District Court (Uniform Civil Procedure Rules 2005(NSW)

Civil Procedure Act 2005(NSW)ss 60, 98(1)(a)

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