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

Application for indemnity costs

The principal judgment in favour of the plaintiff in the amount of $435,630 was delivered in these proceedings on 6 April 2017: Talwar v Ox-Two Pty Ltd t/as Ocean Extreme & Anor [2017] NSWDC 72.
On 12 May 2017, the plaintiff's present motion seeking an order for indemnity costs was heard. In support of that motion, the plaintiff read the affidavit of Donald Cameron, solicitor, sworn 10 May 2017. That affidavit revealed the following matters of relevance to antecedent settlement offers: 1. On 23 February 2016 the plaintiff forwarded an offer of compromise to McCulloch & Buggy which offered a 5 per cent discount on the issue of contributory negligence. However, that offer became irrelevant after the liability issue was separately determined in the plaintiff's favour on 13 May 2016: Talwar & Ors v Ox. Two Pty Ltd trading as Ocean Extreme (ABN 46 115 919 509) & Anor [2016] NSWDC 78; 2. On 25 February 2016, the plaintiff's offer of compromise, in conformity with UCPR r 20.26, in the sum of $125,000, was served on the solicitor for the defendants. That offer was expressed to be open for acceptance until 5.00pm on 3 March 2016. That offer was not accepted by the defendants by the time identified for the expiry of that offer; 3. On 14 March 2017, the plaintiff forwarded an offer of compromise which was served on the solicitor for the defendants, in the sum of $90,000. That offer was expressed to have been open for acceptance until 2.00pm on 14 March 2017, which was 2 days before the assessment hearing. However, that offer was incapable of acceptance because, due to an apparent administrative error, it was served at 4.55pm on 14 March 2017, at a time when as was expressed on its face, it was no longer available for acceptance. That offer therefore requires no further consideration;
The context of this application is the following summary concerning the outcome of the quantum issues at the trial, as was set out at paragraph [84] of the principal judgment: Head of damage Plaintiff's claim Defendants' submission Assessment (a) Non economic loss $139,000 $33,500 $84,500 (b) Past economic loss $124,032 $12,500 $100,000 (c) Past loss of superannuation $13,643 $1,300 $11,000 (d) Future economic loss $166,561 $14,000 $125,000 (e) Future loss of superannuation $20,820 $1,500 $15,625 (f) Past domestic assistance $54,104 $5,000 $54,104 (g) Future domestic assistance $87,319 $5,000 $30,000 (h) Future treatment expenses $39,492 $11,858 $15,000 (i) Past out-of-pocket expenses $401 $401 $401 Totals $645,372 $85,059 $435,630

Consideration

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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.

At a glance

Court

Decision date

Source

Judgment (6 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (2)