Talwar v Ox Two Pty Ltd t/as Ocean Extreme & Anor

1. On 12 May 2017, Mr Glascott, who did not appear for the defendants at the trial, presented written submissions on costs, arguing that there should be no order for indemnity costs. The points of relevance in those submissions will be set out in the consideration.
2. Since the defendants' costs submissions dated 12 May 2017 had not been provided to the plaintiff's representatives beforehand, on behalf of the plaintiff, Ms Balendra, who did not appear for the plaintiff at the trial, sought leave to forward written submissions in reply. Those submissions were sent on Tuesday, 16 May 2017.

Consideration

1. The first relevant point raised by the defendants' submissions on costs was that the plaintiff's offer of compromise dated 23 February 2016 was made at a time when liability was disputed. In my opinion, that is not a relevant consideration. Offers of compromise can be made at any stage of the proceedings, at whatever stage of the pleadings, and when this occurs, the party at risk in relation to such an offer is at that time required to consider the risks it faces in the litigation, and the course it wishes to take in response. Ignoring such an offer can invite peril as to costs.
2. The second point raised by the defendants' submissions was that the report dated 15 April 2014 from the plaintiff's qualified psychiatrist, Dr Hampshire, when served on the defendants, was construed by the defendants as not fully defining the nature and the extent of the plaintiff's ongoing psychological difficulties, and that those difficulties, as ultimately found at the trial, were more fully defined by Dr Hampshire's second report dated 27 January 2017, which was served by the plaintiff on 2 March 2017, and tendered at the trial pursuant to leave then granted, was instrumental in the plaintiff achieving an assessment of damages in the amount awarded.
3. The defendants' submissions developed that second point by arguing that at the time the 25 February 2016 offer was communicated, liability was still in dispute in the proceedings, the defendants had pleaded statutory and other arguable defences which were not implausible or without merit, the plaintiff's expert evidence had not yet been completed, and the damages that were ultimately awarded to the plaintiff, were assessed on the basis of an acceptance of the plaintiff's evidence of her psychological disability.
4. The defendants submitted the closing date for acceptance of that offer was not reasonable, the offer was not valid within the meaning of UCPR r 20.26, or alternatively, those factors were said to operate against the exercise of a costs discretion pursuant to UCPR r 42.14 as the offer of $125,000 was said to not objectively reflect a genuine compromise as matters stood at the time the offer was open.
5. Section 98(2) of the Civil Procedure Act 2005 (NSW) makes clear that the court has full power to determine by whom, to whom and to what extent costs are to be paid. The plaintiff relies on the terms of UCPR r 42.14 in support of her application for indemnity costs after 25 February 2016. This is because her offer was rules compliant, it was not accepted, and the monetary outcome she obtained by way of judgment, was more favourable to her than the terms of the offer she had made to the defendants.
6. I do not accept the defendants' costs submissions concerning the plaintiff's 25 February 2016 offer. This is because on its face, it was stated to be made in compliance with the rules, which it was stated to have been open for a reasonable time, and the defendants had ample material available to them for an analysis of that offer against the background of the plaintiff's particularised claim.
7. The plaintiff's case of psychiatric injury and consequential impairment of earning capacity was adequately particularised for the purposes of the defendants assessing whether or not to accept that offer. No relevant clarification was sought from the plaintiff's representatives. The plaintiff's evidence at trial provided context for those particulars in more detail. This was not an unexpected event which disadvantaged the defendants. Such circumstances were always a possibility once the plaintiff was called to give evidence, where such context would be expected to be provided by way of oral evidence.
8. Notwithstanding the defendants' submission to the contrary, I consider the plaintiff's offer dated 25 February 2016 to have represented a reasonable compromise and not a request for capitulation by the defendant. Dr Hampshire's first report raised the prospect of a claim for loss of earning capacity. The defendants responded to that claim by seeking the opinion of Dr Lewin whose report did not address that issue, and the defendants' solicitor failed to follow-up on that outstanding issue with Dr Lewin. The defendants did not seek to follow up on that issue.
9. This was in circumstances where the defendants had been provided with a full complement of medical reports which addressed the plaintiff's pleaded case. Those reports were updated at trial by a refresher report from Dr Hampshire. The basis of the economic loss award obtained by the plaintiff at trial was the acceptance of the evidence of the plaintiff, as uncontroversially explained by Dr Hampshire.
10. In my view, the plaintiff's offer to settle for $125,000 was a genuine compromise of what could otherwise be achieved by a verdict at trial. The defendants took their chances in declining to accept that offer. That decision has cost consequences, especially where the defences raised were found to be unmeritorious.
11. I am therefore satisfied that the defendants should pay the plaintiff's costs on the indemnity basis from the date claimed: s 98(1) of the Civil Procedure Act 2005; UCPR r 42.14.

Disposition

1. The defendants should therefore pay the plaintiff's costs of the proceedings on the ordinary basis until 25 February 2016, and on the indemnity basis from 26 February 2016.

Costs Orders

1. I make the following costs orders: 1. The defendants are to pay the plaintiff's costs of the proceedings until 25 February 2016 on the ordinary basis, and from 26 February 2016 on the indemnity basis; 2. The defendants are to pay the plaintiff's costs of the plaintiff's present application for costs; 3. The exhibits may be returned; 4. Liberty to apply on 7 days' notice if further or other orders are required.

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: 26 May 2017