ACT v Gillan; Gillan v ACT
[2019] ACTSC 200
•2 August 2019
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | ACT v Gillan; Gillan v ACT |
Citation: | [2019] ACTSC 200 |
Hearing Date: | 13 November 2018 |
DecisionDate: | 2 August 2019 |
Before: | Penfold J |
Decision: | 1. The ACT is to pay Mr Gillan’s costs in the Magistrates Court proceedings on an indemnity basis. 2. The ACT is to pay Mr Gillan’s costs of the appeal on an indemnity basis. 3. The ACT is to pay Mr Gillan’s costs of the cross-appeal on the ordinary basis. 4. Orders 2 and 3 are stayed until further order. |
Catchwords: | PROCEDURE – COSTS – plaintiff’s claim of medical negligence by defendant based on defendant’s failure to offer alternative treatments for ruptured Achilles tendon – Calderbank offer by plaintiff in Magistrates Court rejected – plaintiff’s damages in Magistrates Court lower than amount offered in Calderbank offer – Supreme Court appeal by defendant and cross-appeal by plaintiff – plaintiff’s damages on appeal higher than amount offered in Calderbank offer – whether defendant’s rejection of Calderbank offer reasonable – rejection based on defendant’s misunderstanding of plaintiff’s case and misapplication of medical literature about consequences of alternative treatments –misunderstanding of plaintiff’s case maintained despite detailed explanations of plaintiff’s case – misunderstanding of plaintiff’s case maintained in Supreme Court appeals – defendant to pay plaintiff’s Magistrates Court costs on indemnity basis – defendant to pay plaintiff’s costs of defendant’s Supreme Court appeal on indemnity basis – defendant to pay plaintiff’s costs of plaintiff’s Supreme Court cross-appeal on ordinary basis. |
Legislation Cited: | Civil Law (Wrongs) Act 2002 (ACT) s 46 Court Procedures Rules 2006 (ACT) r 5052 |
Cases Cited: | ACT v Gillan; Gillan v ACT [2018] ACTSC 223 Baresic v Slingshot Holdings Pty Ltd (No 2) [2005] NSWCA 160 Xia v Yu [2018] NSWSC 1725 |
Parties: | Australian Capital Territory (Appellant/Cross-respondent) Andrew Bruce Gillan (Respondent/Cross-appellant) |
Representation: | Counsel S Arthur (Appellant/Cross-respondent) G Segal and L Casey (Respondent/Cross-appellant) |
| Solicitors ACT Government Solicitor (Appellant/Cross-respondent) Slater & Gordon (Respondent/Cross-appellant) | |
File Number: | SCA 39 of 2015 |
Decision under appeal: | Court/Tribunal: ACT Magistrates Court Before: Magistrate Cook Date of Decision: 13 April 2015 Case Title: Gillian v ACT Court File Number: CS 138 of 2013 |
Introduction
On 17 August 2018 I handed down judgment in ACT v Gillan; Gillan v ACT [2018] ACTSC 223 (the appeal judgment). I dismissed the ACT’s appeal against a Magistrate’s decision on liability, and upheld Mr Gillan’s appeal against the Magistrate’s decision on damages.
As part of that decision, I foreshadowed an order that the ACT pay the costs of both appeals, subject to the parties indicating that they wished to make submissions about the costs of the appeal. Counsel for Mr Gillan indicated that as well as seeking indemnity costs for the appeal proceedings, Mr Gillan also sought a variation of the costs orders made in the Magistrates Court.
Costs orders
This judgment deals with both the application for variation of the Magistrates Court costs orders, and with the costs orders to be made in respect of the appeal proceedings.
The parties provided written submissions about these matters, and made brief oral submissions on 13 November 2018. Further written submissions were made about particular matters arising during the hearing of oral submissions.
Terminology
Determining this application involves consideration of three proceedings, being the Magistrates Court proceedings and the two Supreme Court appeals. The plaintiff in the Magistrates Court was the respondent and the cross-appellant in the Supreme Court, while the defendant in the Magistrates Court was the appellant and the cross-respondent in the Supreme Court.
In this judgment I shall simply refer to the plaintiff/respondent/cross-appellant as Mr Gillan, and to the defendant/appellant/cross-respondent as the ACT. Both parties had legal representation at all times, so at some points reference to a party should be read as a reference to the party’s legal representatives.
Magistrates Court proceedings
The proceedings were instituted in the Magistrates Court in February 2013.
Pre-trial correspondence
Copies of correspondence between the parties have been provided to me, as follows.
Letter dated 18 October 2013, ACT to Mr Gillan
In this letter, the ACT rejects an informal settlement conference “until such time as your client has served the necessary evidence for him to possibly succeed in his case”; expresses the view that Mr Gillan will not be able to do so; and makes a Calderbank offer, open for 28 days, to agree to the case being dismissed with no order as to costs (noting that the ACT’s costs are currently $16.380.04).
The writer then explains why in his view Mr Gillan could not win, noting first that Mr Gillan’s ruptured Achilles tendon had been diagnosed (so there was no need for the ultrasound or MRI mentioned in the statement of claim), that Dr Lunz says that non-operative treatment was one of the options, and that there is no allegation that the treatment was provided negligently. He then goes on to suggest problems with Mr Gillan’s evidence (whether Mr Gillan would be able to prove that he was not offered the choice of treatment, and that if he had been, he would have chosen surgery) and then notes that if Mr Gillan did prove those matters, he would next need to prove that the breach of duty had materially contributed to the harm suffered. In this context, the writer refers both to s 46 of the Civil Law (Wrongs) Act 2002 (ACT) (the Wrongs Act) and to the NSW Court of Appeal’s reaffirmation in Gett v Tabet [2009] NSWCA 76 at [8] (which the writer says was endorsed by the High Court in Tabet v Gett [2010] HCA 12; 240 CLR 537) of the proposition that:
Damages should only be awarded if the Court is satisfied on the balance of probabilities that the breach of duty by the tortfeasor materially contributed to the harm. If the Court is so satisfied, then the tortfeasor will be held liable for the whole of the harm so caused.
The writer goes on to note that neither Dr Lunz nor Dr Griffiths (in expert reports obtained by Mr Gillan) had asserted that the treatment actually provided was performed inappropriately or negligently. Furthermore, he says, if either of the doctors did say that it was “probable that the injuries/disabilities suffered by the Plaintiff would have been avoided (or less) had he undergone operative treatment”, then, in effect, the ACT would rely on journal articles enclosed with the letter to the general effect that “the relevant risks” of operative and non-operative treatment “are not materially different”.
The writer expands on this comment by referring generally to journal articles comparing surgical and non-surgical treatments, and quotes from an article by Keating and Will, 2011 (to the effect that the main benefit of surgery is briefer immobilisation and lower risk of re-rupture), and to other articles showing “no material difference in long term function”. He concludes: “the objective evidence clearly shows that the relevant risks are not materially different.”
I note at this point that Mr Gillan’s claim had never included any suggestion:
(a)that the treatment actually provided to him was provided negligently; or
(b)that surgical treatment was the only appropriate treatment for a ruptured Achilles tendon (which seems to be the kind of claim that might be refuted by evidence that the long-term outcomes of the two different kinds of treatment are not materially different).
Letter dated 14 January 2014, ACT to Mr Gillan
In this letter, the writer:
(a)refers to Dr Lunz’s report dated 18 November 2013;
(b)encloses copies of seven articles from medical journals (the journal articles) about treatment of Achilles tendon ruptures;
(c)asserts (relying on the journal articles) that Dr Lunz’s opinion, that “there is a greater than 50% chance that Mr Gillan’s ongoing difficulties would have been avoided if a surgical reconstruction had been undertaken”, is at odds with majority opinion about such matters;
(d)asks a series of further questions about what Dr Lunz says or means; and
(e)seeks access to all correspondence and file notes between Dr Lunz and Mr Gillan’s solicitors.
Letter dated 22 January 2014, Mr Gillan to ACT
The writer:
(a)notes the journal articles provided;
(b)asserts that they do not advance the defence or discredit or diminish Dr Lunz’s opinion;
(c)attempts to explain Mr Gillan’s case (that he was not diagnosed properly, and was not offered the choice of surgical and non-surgical treatment, in which case he would have chosen surgery); and
(d)rejects what the writer describes as the ACT’s attempt to informally cross-examine or interrogate Dr Lunz.
Letter dated 5 February 2014, Mr Gillan to ACT
This letter sets out an offer of settlement in the amount of $97,000 plus costs and disbursements, and states that the offer remains open for 14 days.
Letter dated 12 February 2014, ACT to Mr Gillan
In this letter the ACT rejects Mr Gillan’s offer of 5 February 2014.
Letter dated 20 February 2014, Mr Gillan to ACT
This letter repeats Mr Gillan’s offer of 5 February, but identifies it as a Calderbank offer which will remain open for 28 days.
Letter dated 24 February 2014, ACT to Mr Gillan
This letter encloses four letters to Dr Saxby (dated 15 April and 26 June 2013, and 29 January and 10 February 2014) and two reports from Dr Saxby (dated 23 July 2013 and 18 February 2014), advises that counsel are to be briefed, and seeks information about Mr Gillan’s availability for trial.
File note dated 3 March 2014, made by solicitor for Mr Gillan
This file note records a conversation between the solicitors acting for Mr Gillan and the ACT respectively, to the effect that the ACT is to brief counsel and that the ACT thinks that Mr Gillan cannot win because of Tabet v Gett. Mr Gillan’s solicitor notes:
I noted our view that we have enough to win, noted the argument in respect of the actual disability which came home, on the balance of probs, would not have occurred had the client undergone operative tx [treatment?].
The journal articles
The articles are mentioned on several occasions in the correspondence summarised above. Their significance was addressed at some length in my judgment on the appeal, as follows:
75. Three papers reporting studies of “complications” of treatment for tendon rupture were in evidence: all of the papers considered re-rupture, and mentioned some or all of other identified complications including sural nerve damage; wound healing problems; thickening of the tendon; deep vein thromboses; and tendon lengthening.
76. It is clear that the incidence of particular “complications” differs between the surgical and non-surgical treatments, with, for instance, increased infections but reduced re-rupture and tendon lengthening among patients treated surgically rather than non-surgically.
…
83. Irrespective of the answers that were given by the various doctors, in cross-examination, to seriously vague questions about these papers, I cannot see that any of the papers relied on permits the conclusion that the ACT apparently seeks to assert. That conclusion, which would respond to the claim that Mr Gillan ought to have been offered surgery as an alternative treatment and to have been given advice sufficient to enable him to make an informed choice about which treatment to accept, seems to be that for any particular patient, the choice between surgical or non-surgical treatment is meaningless because the outcome for the particular patient will in the longer term be the same either way. The conclusion does not seem to be supported by the literature put before the Court.
(Emphasis in original)
Amendment of pleadings
The statement of claim was amended, without objection from the ACT, by a document filed on the first day of the Magistrates Court trial. In oral submissions, the ACT said that there was no objection because the ACT was trying to be cooperative, and to avoid delaying matters.
The duty of care, and the breaches of that duty, identified in the unamended pleadings related to the duty to advise Mr Gillan and the failure to advise Mr Gillan (on two occasions) that surgery was an appropriate treatment, and that in his case surgery was the most appropriate treatment.
The significant duty and breach added by the pre-trial amendments to the Supreme Court were the duty to warn Mr Gillan and the failure to warn Mr Gillan (on the same two occasions) of the risks of the non-surgical treatment, being the risk of re-rupture and the risk of tendon lengthening and a resulting weakness of plantar flexion.
Relevant orders
In the Magistrates Court, judgment was given for Mr Gillan in the amount of $81,514.80, and the ACT was ordered to pay Mr Gillan’s costs.
In the Supreme Court, the ACT’s appeal was dismissed, but Mr Gillan’s appeal against the amount of damages awarded was upheld and judgment was given for Mr Gillan in an amount totalling $245,302.05.
Application for indemnity costs
Mr Gillan now seeks orders setting aside the Magistrates Court costs order, and ordering the ACT to pay his costs on a party/party basis until 20 March 2014, and on an indemnity basis from 21 March 2014. This application is based on the ACT’s failure to accept a Calderbank offer made by Mr Gillan on 20 February 2014, to remain open for 28 days, in the amount of $97,000 plus professional costs and disbursements.
The law
Rule 5052 of the Court Procedures Rules 2006 (ACT) is relevantly as follows:
5052Appeals to Supreme Court—general powers
(1) For an appeal to the Supreme Court, the court—
(a)has all the powers and duties of the court or tribunal that made the order appealed from; and
(b)may draw inferences of fact; and
(c)may, on special grounds, receive further evidence about questions of fact, either orally in court, by affidavit or in another way; and
(d) may make any of the following orders:
(i)an order confirming, amending or setting aside the order of the court or tribunal appealed from;
(ii)an order remitting the case to be heard and decided again, either with or without the hearing of further evidence, by the court or tribunal in accordance with any direction the court considers appropriate; and
(e)may make any other order that it considers appropriate.
The rule empowers the Supreme Court hearing an appeal to make orders “confirming, amending or setting aside the order of the court or tribunal appealed from” and “any other order that it considers appropriate” (see r 5052(1)(d) and (e)). It is not clear that making “any other order that it considers appropriate” includes setting aside an order of the lower court or tribunal that has not been appealed against, but in the absence of any challenge on this basis I have accepted that r 5052(1)(e) confers in this case the power to revisit the costs order made by the Magistrate and, if appropriate, to replace it with a different costs order.
Where a Calderbank offer is rejected or not accepted, and the offeror ultimately achieves a better result in the proceedings, the offeror may seek to have its costs paid by the other party on an indemnity basis for the period after the relevant date relating to the offer. However, what is relevant in determining whether such a costs order should be made is not simply that a reasonable offer was not accepted but whether it was unreasonable for the offeree not to accept the offer (Gretton v Commonwealth of Australia [2007] NSWSC 149 at [16]).
In SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323, Giles JA explained the significance of Calderbank offers at [37] as follows:
The making of an offer of compromise in the form of a Calderbank letter, where the offeree does not accept the offer but ends up worse off than if the offer had been accepted, is a matter to which the court may have regard when deciding whether to otherwise order, but it does not automatically bring a different order as to costs. All the circumstances must be considered, and while the policy informing the regard had to a Calderbank letter is promotion of settlement of disputes an offeree can reasonably fail to accept an offer without suffering in costs. In the end the question is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure:
(Citations omitted)
In Brian JohnHarris v Mark Harris (No 2) [2013] NSWSC 1157, and later in Lowe v Lowe(No 3) [2015] NSWSC 1800, Kunc J summarised the applicable legal principles as follows (at [6] and [26] respectively):
(1) The Court's power in relation to costs is discretionary subject to the rules of Court. The general rule is that costs follow the event and are assessed on the ordinary basis.
(2) Where a Calderbank Offer has been made public policy objectives of encouraging an early end to litigation and discouraging wasteful and unreasonable behaviour by litigants underpins the making of favourable costs orders.
(3) The making of a Calderbank Offer does not automatically result in a favourable costs order, notwithstanding that the judgment is more favourable to the party making the offer than the terms of the offer.
(4) Two guides have been developed as to how the discretion might appropriately be exercised when a Calderbank Offer has been made: first, that the offer is a genuine offer of compromise; and, second, whether it was unreasonable for the offeree not to have accepted.
(5) The question of unreasonableness is to be approached objectively in the circumstances known (or which should reasonably have been anticipated) by both parties at the time the offer was made.
(6) The discretion is to be exercised having regard to all the relevant circumstances in the case.
(7) The onus is on the party making a Calderbank Offer to satisfy the Court that it should exercise the costs discretion in its favour.
In Lowe v Lowe at [27], Kunc J went on:
Sub-paragraph (4) of my summary can be expanded to include factors which the Court of Appeal has identified as relevant to the question of whether the rejection of an offer was unreasonable … [which include]:
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree's prospects of success, assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed;
(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it.
(Citations omitted)
The Calderbank offers
In this case, the offer in question was made when the proceedings had been on foot for nearly 12 months, and about 9 months before the trial began. Mr Gillan says that this was before significant costs had been incurred, and the ACT does not seem to dispute this claim. The offer was made some 4 months after the ACT:
(a)had declined to take part in an informal settlement conference (expressing the view that Mr Gillan could not possibly succeed in the case); and
(b)had made a Calderbank offer to agree to the case being dismissed with no order as to costs (which was rejected).
Mr Gillan’s Calderbank offer repeated an offer of compromise that had been made two weeks earlier and had been rejected by the ACT. The new offer was expressed to remain open for 28 days. The letter identified the offer as a Calderbank offer and foreshadowed an application for indemnity costs from the day after the Calderbank offer expired. The Calderbank offer was not accepted.
There is no suggestion that the terms of the Calderbank offer were in any way unclear.
Accordingly, the relevant issues in considering whether the ACT acted reasonably in failing to accept the Calderbank offer made by Mr Gillan are:
(a)the extent of the compromise offered; and
(b)the offeree's prospects of success, assessed as at the date of the offer.
Apart from some half-hearted submissions to the effect that Mr Gillan’s offer did not represent a significant compromise (at [45] below), the submissions made by the parties relate almost entirely to the ACT’s assessment of its prospects of success, and depend almost entirely on the extent to which the ACT understood Mr Gillan’s case.
Mr Gillan’s submissions
Counsel for Mr Gillan says, in effect, that the ACT unreasonably rejected the Calderbank offer because of the ACT’s “continued yet manifestly unsubstantiated belief” about Mr Gillan’s case. The assertion that the ACT misunderstood Mr Gillan’s claim might be problematic for Mr Gillan if he or his representatives appeared to be responsible for that misunderstanding. Thus, the submissions point to evidence to the effect that the ACT had access to the information it needed in order to understand Mr Gillan’s case correctly (despite the very late amendment of the Supreme Court), and imply that the ACT had an obligation to understand his case.
In support of these submissions, Mr Gillan relies on exchanges between the parties from at least 18 October 2013. On that date (in the letter summarised at [9] to [12] above), the ACT wrote to Mr Gillan setting out the then current parts of the statement of claim, which made it clear that the substance of Mr Gillan’s complaint was that he was not advised at any relevant time that surgery would have been the appropriate treatment for his ruptured tendon. The ACT then accurately summarised the elements of Mr Gillan’s claim that he would need to prove, being:
(a)that he was not offered surgical treatment
(b)that if he had been offered surgical treatment he would have accepted it; and
(c)that if he had received surgical treatment it was probable that the asserted injuries or disabilities would not have occurred, or would have been “less”.
As well, counsel notes the letter from the ACT to Mr Gillan on 14 January 2014 (which again reflected an understanding of how Mr Gillan was putting his case) and the letter from Mr Gillan to the ACT on 22 January 2014, which summarised Mr Gillan’s claim as follows:
… had the plaintiff being diagnosed correctly and offered surgical intervention, he would have taken that option. … on the balance of probabilities, the particular events that occurred, would not have occurred had surgery been undertaken.
In the 22 January 2014 letter, Mr Gillan also responded to the ACT’s provision of the journal articles, suggesting, in effect, that they were irrelevant because “this is not simply a case of the merits of one treatment over another”.
In written submissions, counsel for Mr Gillan noted that the ACT had never served any medical evidence disputing Dr Lunz’s evidence “to the effect that more probably than not, had surgery been undertaken the subject disability would not have occurred”.
In submissions in reply, counsel for Mr Gillan also notes:
(a)that the ACT did not object to the amendment of the statement of claim at the beginning of the Magistrates Court hearing;
(b)that the ACT’s 2013 letter of instruction to Dr Saxby as reflected in Dr Saxby’s report in response (dated 23 July 2013) indicated the ACT’s understanding of the way Mr Gillan’s case was put; and
(c)that there was no basis in the medical evidence available by that time for the ACT to reject the Calderbank offer (which included what turned out to be quite a modest settlement amount).
The ACT’s submissions
As to the extent of the compromise offered, the ACT says that the amount awarded by the Magistrate, being $81,514.80, was quite a lot less than Mr Gillan’s offer of $97,000, so Mr Gillan’s offer was not much of a compromise when it was made, and rejecting it was not unreasonable.
In response to Mr Gillan’s submission that the ACT acted unreasonably in rejecting the Calderbank offer, the ACT agrees that it did not understand Mr Gillan’s case, but says that this resulted from Mr Gillan’s conduct of the case.
The ACT says, in effect:
(a)that Mr Gillan’s real case was not reflected in the pleadings, and the statement of claim was not amended appropriately until November 2014 (at the beginning of the trial, albeit without objection); and
(b)that the first time Mr Gillan’s case was made clear in correspondence was in the letter of 22 January 2014, around 12 months after the case was begun.
The ACT says that a party is entitled to rely on the pleadings, and that:
If the Respondent’s case was different to that pleaded and it was apparent, as asserted by the Respondent, that the Appellant was labouring under a misapprehension as to the way the Respondent intended to put his case at trial, the Respondent was under an obligation to amend the pleadings at an earlier stage than occurred.
This submission implies that if Mr Gillan believed or suspected that the ACT had misunderstood his case, he should have addressed that by amending his pleadings promptly, and that until that was done, the ACT was entitled (in assessing the strength of its case) to ignore even the explanations that it concedes were provided in Mr Gillan’s correspondence before the date of the Calderbank offer (at [47(b)] above).
The ACT also pointed out that it may be appropriate for a court to refuse indemnity costs where the plaintiff succeeds on a relevantly different case from that set out in the pleadings (Fowdh v Fowdh (Unreported, New South Wales Court of Appeal, Acting President Mahoney, 4 November 1993).
In oral submissions, counsel for the ACT said that it was not unreasonable for lawyers to misunderstand the evidence or misconceive the issues sometimes. He:
(a)noted that lawyers often have to rely on expert witnesses;
(b)said that there was no evidence that the information found on the internet (the journal articles) had not been put to any of the expert witnesses; and
(c)could not “advise either way” whether there was any evidence that the articles had been put to any of the expert witnesses.
Consideration
Extent of compromise
The ACT claimed that because a judicial officer (the Magistrate) awarded damages to Mr Gillan that were less than the amount claimed in Mr Gillan’s Calderbank offer, it had not been unreasonable for the ACT to reject the offer. Cases in which indemnity costs are claimed after the rejection of a Calderbank offer routinely involve a judicial decision that is more favourable to the rejecting party, but the test is not simply whether the rejecting party did better out of any judicial determination than it would have done from the offer but whether rejecting the offer was unreasonable (at [30]–[33] above).
Thus, the fact that the primary judicial decision was more favourable to the ACT than the outcome proposed in the Calderbank offer does not of itself prove that the ACT’s rejection of the Calderbank offer was reasonable; in this case it simply draws attention to the fact that the conclusion of another judicial officer was considerably less favourable to the ACT: the Magistrates Court award was not quite 85% of the amount claimed in Mr Gillan’s Calderbank offer, but the Supreme Court award was just over 250% of the amount claimed in the Calderbank offer, or, to put it another way, the compromise offered by Mr Gillan was nearly 120% of the Magistrates Court award, but only 40% of the Supreme Court award).
The ACT’s failure to understand Mr Gillan’s case
The parties seem to agree that the ACT misunderstood Mr Gillan’s claim over an extended period, and this is borne out by the conduct of the proceedings: particularly relevant are Tabet v Gett, the state of the pleadings, and the ACT’s reliance on the journal articles.
Tabet v Gett
Tabet v Gett is a High Court decision that, relevantly, excludes recovery in medical negligence claims in which the better result of which the plaintiff was deprived cannot be shown to have been more probable than the alternative. It is accordingly unlikely that a plaintiff would seek to rely on that case (as distinct from recognising the need to meet the more burdensome test of causation applied in that decision: at [10] above).
At lunch time on the first day of the Magistrates Court hearing, counsel for the ACT told the Magistrate that counsel for Mr Gillan put the case “on the basis of … the loss of a chance for a better outcome had he got surgery”, and that “you can’t get damages for loss of a chance, as the High Court said in Tabet v Gett”. Counsel for Mr Gillan agreed immediately that damages were not available for “a mere loss of a chance”, but said that “if you prove that it’s more probable than not that an event would have occurred, then you have proved your causation”.
In closing submissions, counsel for Mr Gillan said that “this is not a Gett v Tabet case” (Gett v Tabet being the citation in the NSW Court of Appeal), because Mr Gillan’s case was that his injury “more than probably” came about because of the ACT’s claimed breach of duty; there was no suggestion that the chance of avoiding Mr Gillan’s injury if the ACT had not breached its duty was less than 50%.
Towards the end of the Magistrates Court hearing, counsel for the ACT was asked whether he relied on Tabet v Gett, and said: “my friend’s not putting his case on that basis any more so therefore it doesn’t assist”. Presumably, having regard to the significance of Tabet v Gett, the ACT’s counsel used “that basis”, to refer to a claim (that Mr Gillan lost a less probable chance of a better outcome) that counsel had believed Mr Gillan would assert and that counsel believed would fail on the basis of the decision in Tabet v Gett.
That is, it was only towards the end of the Magistrates Court hearing that the ACT’s counsel finally indicated a realisation that Tabet v Gett was not relevant to Mr Gillan’s case (although even that did not stop the Tabet v Gett reference being included in the notice of appeal).
The pleadings
The ACT’s attempt to attribute its misunderstanding of Mr Gillan’s case to Mr Gillan’s failure to amend his pleadings is not convincing.
As early as October 2013, the ACT provided an analysis of the evidence Mr Gillan would need to bring (at [10] above) that suggested an understanding (if only momentary) of Mr Gillan’s real complaint (that he had not been offered a choice of treatment, and that if he had, he would have chosen the treatment with the significantly lower risk of tendon-lengthening).
There were also indications in the Magistrates Court that the ACT understood Mr Gillan’s case. In my judgment on appeal (at [13]), I noted that in the Magistrates Court, counsel for the ACT summarised Mr Gillan’s case as:
(a) that he should have been told of the surgical option as an alternative to non-surgical treatment, and should have been advised of the advantages and disadvantages of the two options, so that he could make a choice; and
(b) that he would have chosen surgery.
Furthermore, while the amendments in the pleadings expanded the content of the ACT’s asserted duty and the breaches of that duty, the additional aspect of the duty and of the asserted breaches did not significantly change Mr Gillan’s case, and in particular did not change it from the case as the ACT apparently understood it to a different case on which Mr Gillan ultimately succeeded.
That proposition is supported by the fact that the ACT did not object to the amendments being made on the first day of the Magistrates Court trial. I note the ACT’s claim at [22] above that the absence of objection reflected a wish to cooperate and to avoid delays; I am not however convinced that such commendable intentions would have prevailed if the ACT had considered at the time that the amendments had significantly altered Mr Gillan’s case.
I am satisfied that, while the case as finally pleaded and on which Mr Gillan succeeded was specified in more detail than it had been at the time of the Calderbank offer, it was not a different case.
I note also that there might be advantages in a system in which litigation is conducted, day by day, entirely on the pleadings as filed from time to time, but there might also be significant disadvantages in terms of the costs and general efficiency of litigation. In this case, the ACT’s legal advisers had relevant information about the specific argument that would be made in Mr Gillan’s case well before the Calderbank offer was made. They had this information, at least in some form, before the ACT’s advisers wrote the October 2013 letter, and certainly by the end of January 2014. The costs of their apparent failure to take proper account of that information in advising on the ACT’s response to the Calderbank offer should not be borne by Mr Gillan.
If the ACT’s submission is really intended to assert that it was reasonable for the ACT, in assessing its prospects of success in considering the Calderbank offer, to rely purely on the pleadings and to ignore the exchanges in the correspondence from October 2013, I reject that submission.
Reliance on journal articles
In the Magistrates Court, the ACT did not recognise the irrelevance of the journal articles to the case being run by Mr Gillan (at [21] above).
Significance of simply being wrong
I do not disagree with the ACT’s submission to the effect that it is not unreasonable as such for a party, or a party’s lawyers, to make mistakes. However, there must be a point at which clinging to a mistaken belief about one’s opponent’s arguments, in the face of repeated challenges to that belief, becomes unreasonable. This is especially so when those challenges come from people – relevantly in this case, Mr Gillan’s lawyers in correspondence and discussions – who might be expected to have a proper understanding of the nature of the case being put by Mr Gillan.
Conclusions
The correspondence outlined at [9] to [17] above suggests that the form of the pleadings at the date of the Calderbank offer was not the problem: rather, the problem was that despite having described Mr Gillan’s case quite accurately in the October 2013 letter, and despite having that case confirmed clearly in the 22 January 2014 letter from Mr Gillan, the ACT seems to have remained entirely focused, at the time of the Calderbank offer, on the significance of Tabet v Gett and on the contents of the journal articles.
That focus was in turn problematic in that neither of those matters seems to have been particularly relevant even to Mr Gillan’s case as set out in the unamended statement of claim: Mr Gillan’s case was clearly about the impact of different treatments in his particular circumstances, and about the probability of a better outcome from a different treatment. That probability was consistent with the advice from Dr Saxby, commissioned by the ACT to give evidence, in his report dated 18 February 2014, to the effect that the complication experienced by Mr Gillan was up to five times more likely after non-surgical treatment than after surgical treatment.
I am satisfied that Mr Gillan’s Calderbank offer made on 20 February 2014 was a genuine offer of compromise, that it was unreasonable of the ACT to reject the Calderbank offer, and that the ACT should pay Mr Gillan’s costs of the Magistrates Court hearing on the ordinary basis to and including the date on which Mr Gillan’s Calderbank offer expired, and on an indemnity basis from and including the following day.
Supreme Court appeal and cross-appeal
After the appeal and cross-appeal were filed, Mr Gillan did not renew the original Calderbank offer, or make a new Calderbank offer. Nor did the ACT make any kind of offer of compromise.
At the beginning of the hearing of the costs submissions, counsel for Mr Gillan sought indemnity costs in respect of the ACT’s appeal, but accepted that the ACT should not have to pay the costs of the cross-appeal on an indemnity basis. At some point during the hearing counsel had a change of heart, and his later submissions were to the effect that the ACT should pay Mr Gillan’s costs of both appeals on an indemnity basis. As I understand it, those later submissions reflected an assertion that ACT acted unreasonably in connection with both appeals.
To make out the claim of unreasonableness, however, Mr Gillan seeks to rely not just on the ACT’s conduct of the appeals but also on its conduct before and throughout the Magistrates Court proceedings, which is described above.
Indemnity costs based on Calderbank offers
As to the fact that, in the Supreme Court proceedings, Mr Gillan did not either renew the original Calderbank offer or make a new one, I note first the ACT’s submission, and Mr Gillan’s concession, that there are cases suggesting that a fresh Calderbank offer should normally be made on appeal if it is to be relied on in argument about costs on appeal (Baresic v Slingshot HoldingsPty Ltd (No 2) [2005] NSWCA 160, and see Walker Group Constructions Pty Ltd v Tzaneros Investments Pty Ltd [2017] NSWCA 27; 94 NSWLR 108).
However, I also accept in general terms Mr Gillan’s submissions that the original Calderbank offer remains relevant and that the failure to renew the Calderbank offer on appeal does not exclude the court ordering indemnity costs in the Supreme Court.
Indemnity costs based on unreasonable conduct
In the absence of a renewed Calderbank offer, however, Mr Gillan bases his case for indemnity costs in respect of the appeals on the unreasonableness of the ACT’s conduct of the case, including in the Magistrates Court.
Mr Gillan’s counsel identified several cases in which courts had discussed the scope for ordering indemnity costs based on unreasonable conduct by a party, as well as examples of cases in which particular kinds of conduct by a party were found to justify an award of indemnity costs to another party.
First, counsel for Mr Gillan relied on Rosniak v Government Insurance Office (1997) 41 NSWLR 608 (Rosniak) at 616 for the proposition that it was not necessary, in order to justify an award of indemnity costs in relation to the appeals by reference to unreasonable conduct, to show that the ACT was “ethically or morally delinquent” in the conduct of the appeal
I note, however, the comment of McDougall J in Ingot Capital Investment v Macquarie Equity Capital Markets (No 7) [2008] NSWSC 199 (Ingot), quoted at [83] below, that the reference in the judgment of Gaudron and Gummow JJ in Oshlack v Richmond River Council[1998] HCA 11; 193 CLR 72 (Oshlack) to:
"some relevant delinquency" [permitting an award of indemnity costs] does not mean moral delinquency or some ethical shortcoming, but delinquency bearing a relevant relation to the conduct of the case.
I note also that Gaudron and Gummow JJ in Oshlack explained at [44] that indemnity costs are awarded:
more fully or adequately to compensate the successful party to the disadvantage of what otherwise would have been the position of the unsuccessful party in the absence of such delinquency on its part.
In Ingot McDougall J made the following comments about the principles applicable to whether indemnity costs may appropriately be ordered:
24 I attempted to summarise the applicable principles in my judgment on costs in White ACT (in liquidation) v G B White [2004] NSWSC 303 at paras [5]-[11]. The parties accepted that what I there said could be applied to the present case, although they referred to additional authority. I said:
“The basic rule is that a successful party is entitled to its costs on a party and party basis: see for example Pt 52A r 32. See also the judgment of Mason P in Rosniak v Government Insurance Office (1997) 41 NSWLR 608, 616.
It is clear, of course, that there is a discretion to award costs on the indemnity basis. That follows from, among other sources, s 76(1) of the Supreme Court Act and Pt 52A r 32.
The basis upon which the discretion to award indemnity costs should be exercised has been examined in a very great number of cases. But, as those cases make clear, the discretion is not confined or limited except to the extent that it is required to be exercised judicially: see for example Harrison v Schipp [2001] NSWCA 13 at [139] (Giles JA, with whom Handley and Fitzgerald JJA concurred); see also Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248, 256-257.
What is required, in any case, is that the Court examine the facts of that case in the light of such statements of principle as may be relevant. In the ordinary way, the Court will take into account, as offering guidance, statements of principle made by those to whom the particular judicial officer should have regard.
At the most basic level, the statements of principle indicate - not unsurprisingly - that there must be some sufficient special or unusual feature to justify departure from the ordinary rule.
I take the basic principle to be as stated by Gaudron and Gummow JJ in Oshlack v Richmond River Council[1993] HCA 11; (1998) 193 CLR 72 (Oshlack). Their Honours said at [44] (I omit citations):
“It may be true in a general sense that costs orders are not made to punish an unsuccessful party. However, in the particular circumstance of a case involving some relevant delinquency on the part of the unsuccessful party, an order is made not for party and party costs, but for costs on a 'solicitor and client' basis, or on an indemnity basis. The result is more fully or adequately to compensate the successful party to the disadvantage of what would otherwise have been the position of the unsuccessful party in the absence of such delinquency on its part.”
I read what their Honours said on the basis that "some relevant delinquency" does not mean moral delinquency or some ethical shortcoming, but delinquency bearing a relevant relation to the conduct of the case: see for example Council of the Municipality of Botany v Secretary, Department of the Arts, Sport, the Environment, Tourism and Territories(1992) 34 FCR 412, 415; NMFM Property Pty Limited v Citibank Limited (No 2) (2000) 109 FCR 77.”
25 The defendants referred also to the judgment of Sheppard J in Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 428. His Honour dealt at length with the principles relating to indemnity costs. In a passage that is frequently quoted and applied, his Honour at 256-257 distilled a number of principles out of the cases to which he had referred.
It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred:
1. The problem arises in adversary litigation, ie litigation as between parties at arm's length. Different considerations apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg a government agency or statutory authority.
2. The ordinary rule is that, where the court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis. In this court the provisions of O 62, rr 12 and 19, and the Second Schedule to the rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.
3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of court) or a decision of an intermediate Court of Appeal or of the High Court would be required to alter it. No doubt any consideration of whether there should be any change in the practice would require the resolution of the competing considerations mentioned by Devlin LJ in Berry v British Transport Commission and Handley JA in Cachia v Hanes on the one hand and by Rogers J in Qantas on the other. The relevant passages from the respective judgments have been earlier referred to.
4. In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes (39 Ch D at 141) said the court had a general and discretionary power to award costs as between solicitor and client ``as and when the justice of the case might so require'’. Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston ([1982] 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo: “the categories in which the discretion may be exercised are not closed”. Davies J expressed (at 6) similar views in Ragata.
5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes; (1989) 92 ALR 131 at 152 evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp);the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson(1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2)(1992) 27 NSWLR 721 at 724(Court of Appeal); Crisp v Kent (SC(NSW)(CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.
26 Nonetheless, it is important to bear in mind that the principles distilled by his Honour out of the authorities are guides to the exercise of the discretion. They neither define the circumstances in which the discretion is to be exercised nor limit its width. It remains, as I said in White ACT, a discretion that is constrained only by the requirement that it be exercised judicially. That is to say, it is a discretion to be exercised on a consideration of all (and only) relevant facts, taking into account relevant statements of principle and revealing a conclusion supported by principled and logical reasoning. A party is not entitled to indemnity costs simply because (for example) one or more of the factors identified in cases such as Colgate Palmolive is present. Nor is a party disentitled to indemnity costs simply because none of those factors is present.
Counsel for Mr Gillan referred me to several other judgments confirming particular aspects of these comments, none of which need to be cited here, and to several cases providing examples of circumstances in which indemnity costs had been awarded, including:
(a)where the plaintiffs, if properly advised, should have realised that their evidence could not prove one of the elements of their claim (Ingot at [65]);
(b)where a party unreasonably refused to abide by certain terms of an agreement such that the other party had to take proceedings to enforce the agreement (Xia v Yu [2018] NSWSC 1725;
(c)where a party had no reasonable prospect of success (Rosniak v GIO (1997) 41 NSWLR 608);
(d)where it was plain that a party was not going to be able to prove its case (White Constructions (ACT) Pty Ltd (in liq) v White [2004] NSWSC 303;
(e)where the party concerned should have known its case was bound to fail (Sharn Stanley v QBE Management Services Pty Ltd [2012] FWA 10164); and
(f)where a party had misconducted itself in the litigation and in the witness box, and had pursued a case that lacked merit (Degman Pty Ltd (in liq) v Wright (No 2) [1983] 2 NSWLR 354).
Both parties relied on Beagle v ACT and Southern NSW Rugby Union Ltd (No. 2) [2017] ACTCA 40 (Beagle), in which the ACTCA said:
23. In our view, the better approach is to recognise that the award of costs in an appeal is at the discretion of the appellate Court, and to further recognise that the fact that a pre-trial offer of compromise was made and rejected is one of the factors the appellate Court can take into consideration in exercising its discretion.
24. In this case, Mr Beagle submitted that the respondent made no renewal of offers of settlement in the appeal process which would have made it unreasonable for him to exercise his right to challenge the first instance decision. While there is authority that a failure to renew a Calderbank offer during an appeal may be a relevant consideration in the Court declining to make an order for indemnity costs in the appeal (Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [21]), we consider this a somewhat curious principle. Why should it be to the respondent’s prejudice that, in circumstances where it had been successful at first instance, it chose not to make an offer of settlement favourable to the appellant to deter him or her from prosecuting an appeal? The respondent was successful, and was entitled to the fruits of that success. As a general proposition there is no reason for it to do other than insist on enforcement of its judgment.
25. Appeals from superior Courts are creatures of statute: Grierson v The King (1938) 60 CLR 431, 435; Da Costa v Cockburn Salvage & Trading Pty Ltd (1970) 124 CLR 192, 202; Fox v Percy [2003] HCA 22; 214 CLR 118, 125. In the ACT the relevant legislation is pt 2A of the Supreme Court Act 1933 (ACT) and pt 5.4 of the Court Procedures Rules 2006 (ACT). Mr Beagle was entitled to appeal the decision of the primary Judge without leave. No question of competency arose in respect of Mr Beagle’s appeal. While there was extensive – and in our view, unnecessary – repetition in the grounds of appeal, requiring engagement by the respondent, we do not consider that the notice of appeal was attended by delinquency on the part of Mr Beagle or his legal advisers, or that the appeal could be characterised as futile. On balance, we do not consider that the circumstances warrant an order for indemnity costs in the appeal. The appropriate order is that Mr Beagle should pay the costs of the respondent of and incidental to the appeal on a party/party basis.
Costs of the ACT’s appeal
The ACT’s appeal challenged only the Magistrate’s decision on liability.
Mr Gillan’s submissions
In relation to the significance of the first-instance Calderbank offer and the absence of any Calderbank offer in connection with the appeals, counsel for Mr Gillan said that the cases indicating the desirability of making or renewing a Calderbank offer after an appeal is begun rest on the proposition that there are “different dynamics at work on appeal”. In the current case, counsel said:
(a)the relevant dynamics continued from the time of the original Calderbank offer up to and including the conduct of the appeal;
(b)the ACT’s conduct showed continuing unreasonableness in the treatment of the offer of compromise and through the conduct of the appeal; and
(c)the unreasonableness was clear, even in the absence of a renewed offer, from the fact that (as indicated in the appeal judgment) the ACT in the appeals simply repeated the same unconvincing and largely irrelevant arguments as had been used in the Magistrates Court, including arguments often relevant only to propositions that were not and had never been part of Mr Gillan’s case.
I do not claim to understand completely counsel’s references to the “dynamics” of the proceedings, but what seems to be relied on is that in both the Magistrates Court and the Supreme Court, the ACT relied on the same apparent misinterpretation of Mr Gillan’s case, and the same (possibly related) misunderstanding of the significance of the journal articles, and did not adjust its approach even though Mr Gillan’s real argument had been explicitly recognised, explained and addressed in the Magistrates Court.
Counsel for Mr Gillan relied on Beagle at [23] (quoted at [85] above) to support the submission that the ACT’s “unreasonable rejection” of Mr Gillan’s Calderbank offer should be taken into account in deciding whether to award indemnity costs to Mr Gillan in respect of the ACT’s unsuccessful appeal.
Counsel for Mr Gillan also drew attention to my comments in the appeal judgment to the effect that:
(a)it was possible (albeit with some effort) to discern his Honour’s correct assessment of Mr Gillan’s case and how it was established by the evidence; and
(b)the ACT had sought to rely on an asserted conflict in the medical evidence that in my view had not existed by the time all the evidence was in.
The effect of those comments was that none of the appeal grounds had identified a genuine error in the Magistrate’s conclusions. This, said counsel for Mr Gillan, meant that the appeal was unmeritorious and could be described as “a highly speculative challenge” (Rosniak at 617).
Counsel for Mr Gillan also:
(a)noted references to Tabet v Gett even in the ACT’s amended notice of appeal (at [102] below) and in counsel’s summary of argument prepared for the appeal hearing; and
(b)noted that the ACT, in effect, had raised a further appeal point during oral submissions, which was dealt with (and rejected) in the appeal judgment (at [97] of the judgment) as based on Mr Gillan’s evidence having been selectively sampled rather than taken as a whole.
The ACT’s submissions
In general terms the ACT’s written submissions were to the effect that the ACT had not been unreasonable in its conduct of the appeal. I have struggled to make sense of some of these submissions, because they seem to have been affected either by confusion about which party is being referred to, or by misleading double-negative constructions. For instance, the submission that the ACT’s conduct of the proceedings was not unreasonable because, until the start of the Magistrates Court trial, the ACT’s position in relation to liability “was not unassailable” makes very little sense (unless it was intended as a frank if obscure admission that the ACT’s case was so weak that its only option in dealing with Mr Gillan was to seek to confuse the issue).
The ACT referred to my comments about the relative difficulty in discerning the Magistrate’s reasoning (at [89] in the judgment) in submitting that “it cannot be correctly asserted that the appeal reflected any continued unreasonable conduct by [the ACT]”.
In respect of Mr Gillan’s failure to renew the Calderbank offer after the appeals were instituted, the ACT said in written submissions that:
if [Mr Gillan’s position] is as strong as he contends, then he should have renewed his offer during the appeal. The failure to do so undermines his claim for indemnity costs of the appeal and cross-appeal.
The implication seems to be that renewing an offer of compromise during an appeal is a sign of a party’s confidence in the strength of its case; it is not clear to me why that should be so.
Counsel for the ACT relied on Beagle at [25] (quoted at [85] above) as authority for the proposition that “[a] simple lack of success on appeal is not sufficient to warrant a departure from the usual orders”. In that case, the ACTCA said that the appeal had been competent, and could not be said to have been futile, and that, although there had been unnecessary repetition in the specified grounds of appeal, there was no delinquency “attending” the notice of appeal and no basis for awarding indemnity costs.
In short, the ACT submitted, “there is no reason in relation to the appeal and cross-appeal to depart from the ordinary rule that costs follow the event”, and accordingly the ACT should pay Mr Gillan’s costs of both appeals on a party/party basis only.
Consideration
I accept Mr Gillan’s submission, relying on Rosniak, that he is not required to show that the ACT was “ethically or morally delinquent” in the conduct of the appeal in order to justify an award of indemnity costs on the basis of unreasonable conduct, but also note that this does not exclude the relevance of other forms of “delinquency” in relation to the conduct of the case (at [80] – [82] above).
The aspects of the Magistrates Court proceedings that led me to the conclusion that it had been unreasonable of the ACT to reject the Calderbank offer made by Mr Gillan before the Magistrates Court trial are not in my view directly relevant to the issue of unreasonableness in the conduct of the appeals. However, some of those aspects were repeated or relied on in the bringing of the appeal and in the ACT’s conduct of the appeal hearing.
Appeal grounds
The amended notice of appeal contained six grounds of appeal (one ground, relating to the calculation of interest on the damages awarded, had been abandoned before the hearing began).
At the beginning of the hearing, another ground was abandoned. That ground complained that the Magistrate had not given reasons for rejecting the ACT’s argument, based on Tabet v Gett, that Mr Gillan had been suing for loss of a chance and therefore could not succeed. The inclusion of this ground in the notice of appeal at all is odd, given that counsel who appeared on the appeal was the same counsel who had apparently abandoned any reliance on Tabet v Gett during the Magistrates Court hearing (at [58] and [59] above).
The remaining grounds, which provided the basis on which the appeal was argued, consisted of:
(a)three complaints about the Magistrate’s determination of the duty of care owed to Mr Gillan;
(b)one complaint about the weight given by his Honour to the evidence of the three expert witnesses about the appropriateness of the treatment that was in fact provided to Mr Gillan; and
(c)one complaint about his Honour’s treatment of what the notice of appeal referred to as “the conflicting medical evidence”, in a situation where there was, in effect, no conflict in the relevant medical evidence.
Conduct of appeal
It is an unfortunate fact that the Magistrate’s decision was not as clear as it might have been, and in particular did not express clear conclusions about the content of the duty of care owed by the ACT to Mr Gillan. However, as noted in my judgment on the appeal at [52], his Honour’s somewhat garbled discussion of the duty of care and the applicable standard of care that was challenged in the appeal grounds related to whether there should have been further diagnostic action taken before treatment was determined. There was other evidence that left no doubt that Mr Gillan’s ruptured Achilles tendon had been detected; this was enough to raise the question of treatment options, and to identify a duty on the ACT’s part to advise Mr Gillan about those options and their respective benefits and disadvantages.
Between the clear diagnosis of a ruptured tendon, and the clear indication in the Wrongs Act provision that the actual content of the standard of care owed by a defendant will vary depending on the information in the defendant’s possession at the relevant time, the first three appeal grounds turned out to be largely if not entirely irrelevant.
The ACT’s complaint about the weight given by the Magistrate to the evidence of the three expert witnesses about the appropriateness of the treatment provided to Mr Gillan was also effectively irrelevant, given that Mr Gillan’s real complaint was not about whether the treatment he received was inappropriate but whether he should have been given the chance to choose another more appropriate treatment.
The ACT’s complaint about the Magistrate’s treatment of the “conflicting medical evidence” also turned out to be irrelevant, because there was no significant conflict in the evidence given by the three expert witnesses.
In oral submissions on the costs application, counsel for the ACT said that by the time the ACT had abandoned the Tabet v Gett point in the Magistrates Court, the medical witnesses “had turned and agreed with each other”. In response to my question whether the medical witnesses had departed from the contents of their reports, so that their evidence had come as a surprise to the ACT, counsel later provided the following statement:
The evidence of Dr Lunz for the plaintiff did not vary significantly from what he had written in his report.
The evidence of Dr Saxby extended to matters beyond what he had written in his report.
Ultimately both Dr Lunz and Dr Saxby agreed that the plaintiff ought to have been advised of the relative merits of surgical as opposed to non-surgical response to the plaintiff’s injuries.
This statement does not suggest that Dr Saxby had changed his views, but it may indicate that before he gave evidence, he had not been asked about some of the issues that turned out to be raised by Mr Gillan’s case. This would have been consistent with the ACT’s ongoing misunderstanding of Mr Gillan’s case.
The journal articles
As he had done in the Magistrates Court, counsel for the ACT focused his efforts almost entirely on the journal articles as the answer to Mr Gillan’s attempt to prove that he was at greater risk of tendon-lengthening from non-surgical rather than from surgical treatment. Indeed, counsel opened his submissions in the appeal hearing by asserting that at trial:
There was evidence from experts, backed up by literature, that treatment by surgical; as opposed to non-surgical results has no different outcome in the long term. The outcome will be the same, whichever one you choose.
Pressed about this claim later, counsel provided the following explanation:
MR STRETTON: First of all, the first proposition that regardless of which of the two methods is chosen - - -
HER HONOUR: Yes.
MR STRETTON: - - - the end outcome is the same. Now obviously there will be a difference in the first couple of months because if you have surgery, you are going to be laid up. If you are in a boot, you are going to be restricted in the way you can get around. But leaving aside that initial period of a couple of months, the end result is going to be the same. In other words, there is no medical view that one form of treatment over the other will lead to a different long-term outcome.
HER HONOUR: Well, but long term is two months or - - -
MR STRETTON: Yes.
HER HONOUR: - - - two years or - - -
MR STRETTON: After the initial - - -
HER HONOUR: - - - eight years or - - -
MR STRETTON: No. You can take it – take a period of six months and that will be more than adequate, that is probably too long but we are not talking about a long period.
HER HONOUR: So there is also a risk of the tendon lengthening if you have surgery?
MR STRETTON: There are different risks with surgery. With conservative treatment there is a known risk and it is the risk that actually transpired in this case, namely that the tendon will heal in a lengthened position.
HER HONOUR: Right.
MR STRETTON: With surgery there are entirely different risks. There [are] risks for example of infection, risk with anaesthetic and different types of risks altogether.
HER HONOUR: Hang on. What you were putting to me before was that at the end of six months, you will finish up with the same outcome.
MR STRETTON: Whether you have had surgery or whether you have had a conservative treatment.
HER HONOUR: But what I am hearing now is possibly that a statistical examination of people treated in the two different methods over six months, after six months will indicate that in effect the chance of a satisfactory outcome may be, it is pretty much the same but that is not the same as saying the end result, the state of your tendon, will be the same at the end of six months. All it seems to be saying, all it may be saying, because you have disclaimed that proposition that your tendon will be in the same state, [is] that because there are risks of each of them, your chances of a satisfactory outcome over the long term, over the six month term, are statistically similar. All right. So let’s say non-surgical is – may leave you with 10 per cent chance of a lengthened tendon and surgical may leave you with a 10 per cent chance of a serious infection.
MR STRETTON: Yes.
HER HONOUR: But the other 90 per cent – well, perhaps that is part of the answer, that the other 90 per cent have all healed up fine and everything is okay. So there is – I am hearing two different versions of “it will all be the same after six months”.
MR STRETTON: I think – I will try and put it in a different way and see if that assists your Honour. There are two recognised ways of treating an Achilles tendon - - -
HER HONOUR: Sure.
MR STRETTON: - - - tear. One non-surgical, two surgical. The end result of either procedure will be the same.
HER HONOUR: All right. And what do you mean - - -
MR STRETTON: So after - - -
HER HONOUR: - - - by - - -
MR STRETTON: After six months, the result, whether you have surgery or not surgery will be the same.
HER HONOUR: All right. Now what do you mean by the “end result”?
MR STRETTON: The position reached after six months.
HER HONOUR: What do you mean by “the position reached after six months”? Do you mean the state of your tendon?
MR STRETTON: Yes. The stabilisation. Well - - -
HER HONOUR: No.
MR STRETTON: It can’t be the same because in the sense that surgery brings together the ruptured ends of the tendon, so that they are sewn together.
HER HONOUR: Right.
MR STRETTON: In the other – with conservative treatment, there is a healing but in a lengthened position. In other words, whereas the foot might be in a position like that after the tendon is knitted - - -
HER HONOUR: Yes.
MR STRETTON: - - - it is in a lengthened position. Does that – I hope that - - -
HER HONOUR: Well, sorry. Yes. So in one case the tendon is sewn together, the two bits of it. In the other case, it heals itself - - -
MR STRETTON: That is right.
HER HONOUR: - - - in a lengthened position.
MR STRETTON: That is it.
HER HONOUR: So how – on what basis do you say those are the same result?
MR STRETTON: The - - -
HER HONOUR: You have just described them as different.
MR STRETTON: Well, the result in terms of a disability or the ability to do things is apparently the same. That’s what we say.
HER HONOUR: So what – because in one case you finish up with a lengthened tendon?
MR STRETTON: Yes.
HER HONOUR: And the other case you finish up with what? A sewn together tendon?
MR STRETTON: Tendon.
HER HONOUR: And why is the sewn together tendon – what disability does that cause?
MR STRETTON: Well, it doesn’t cause any disability if it – the tendon has - - -
HER HONOUR: So how can you say - - -
MR STRETTON: - - - sewed together - - -
HER HONOUR: - - - that the result is the same? If what you are saying is successful surgery, you will be back to normal, successful healing, you are likely to have a lengthened tendon.
MR STRETTON: In terms of disability what you can and can’t do remains the same at the end of the process.
HER HONOUR: So the lengthened tendon doesn’t actually cause any disability?
MR STRETTON: Not in real terms, your Honour.
HER HONOUR: Well, what do you mean by “not in real terms”?
MR STRETTON: Well - - -
HER HONOUR: I mean presumably your tendon is there for something.
MR STRETTON: Yes. And your Honour, after the conservative treatment, the tendon has repaired. Now - - -
HER HONOUR: But not at the same length?
MR STRETTON: - - - it’s repaired in a slightly – in a slightly different position, as I have indicated to your Honour. But that repair, in a slightly different position, does not produce ongoing disability.
HER HONOUR: Okay. And so Mr Gillan didn’t have an ongoing disability from his lengthened tendon. Is that what you are saying?
MR STRETTON: We say that after a period, no he didn’t have a disability.
By the end of this exchange, counsel’s claim that the outcomes of surgical and non-surgical treatments were the same had turned into to a claim that Mr Gillan’s lengthened tendon was not a cause of disability.
The claim that a lengthened tendon was not a cause of disability had not been pursued in any serious way in the Magistrates Court.
Mr Gillan’s disabilities were pleaded in the statement of claim.
In the defence, the ACT said that the disabilities were neither admitted nor denied, but that any disability was not caused by a breach of the duty of care owed by the ACT to Mr Gillan.
Mr Gillan was cross-examined about the extent of the difficulties caused by the lengthened tendon, and the ACT made brief submissions about the impact of the disability in the course of submissions about the assessment of damages, but counsel for the ACT, while examining witnesses in the Magistrates Court, routinely referred to the disabilities suffered by Mr Gillan.
There was no support in any of the Magistrates Court evidence (or in the journal articles) for the proposition that Mr Gillan’s lengthened tendon did not affect his physical capacities, and there was specific evidence from Mr Gillan and from expert witnesses that he was suffering disability as a result of his lengthened tendon. There was no challenge in the appeal grounds to the Magistrate’s acceptance that Mr Gillan suffered a disability.
I consider that the ACT’s continued reliance on the journal articles appears to have been based on a superficial reading of those articles, and a failure to consider what the results of the studies concerned could logically prove in relation to a personal injury claim that arose from the experience of a particular individual with particular characteristics and needs.
Conclusion
While bearing in mind that examples (such as those collected at [84] above) may indicate the scope of the power to order indemnity costs, but do not define the limits of that power, I turn to consider the significance of the conduct identified above.
In summary, the ACT’s appeal grounds all turned out to be either irrelevant or unable to be established. The other complaints that were not mentioned in the notice of appeal but emerged during the hearing either could not be made out (the causation argument, discussed in the appeal judgment at [90]-[97]), or amounted to asserting a gap in Mr Gillan’s case that had not been pursued before, and was not pursued after, counsel identified that gap (whether Mr Gillan had a disability at all: at [112] above). Counsel’s persistence in relying on the journal articles absorbed a considerable amount of court time.
Whether this approach to Mr Gillan’s claim amounted to unreasonable conduct of the ACT’s case, either at some point or throughout the proceedings, is another matter.
First, I accept that no ethical or moral delinquency by the ACT has been established.
Secondly, it is not clear to me that, before the end of the Magistrates Court proceedings, the ACT should have recognised its case as hopeless (whether that is described as bound to fail, unable to be proved in an essential respect, having no reasonable prospects of success or lacking merit: at [84] above). In particular, the ACT could not have been sure whether Mr Gillan’s claim that he would have opted for surgery if that treatment had been offered would have survived cross-examination, or whether surveillance footage of Mr Gillan working on his daughter’s car might have undermined his claim of ongoing disability.
However, I am satisfied that, by the end of the Magistrates Court proceedings, the ACT should have understood the basis of Mr Gillan’s claim (and indeed did), and therefore should have recognised (but apparently did not):
(a)that while there was agreement between the expert witnesses that non-surgical treatment of the tendon rupture could be an appropriate response, there was also agreement that such treatment carried a greater risk of the problem suffered by Mr Gillan, being the lengthening of his tendon; and
(b)that the journal articles comparing various different kinds of outcomes of surgical and non-surgical interventions in cases of ruptured Achilles tendons, and offering general conclusions reflecting the overall statistical similarities of the results for different kinds of intervention, had nothing to say about the particular risks and benefits of different approaches for the particular plaintiff in the instant case; and
(c)that, while the treatment offered to Mr Gillan was in general terms not inappropriate, that fact as such provided no answer to Mr Gillan’s complaint:
(i)that he was not told about alternative treatment options and given a chance to choose the one that better suited his particular attributes and circumstances; and
(ii)that as a result his outcome was not as good as it would otherwise have been.
The weaknesses in the ACT’s case and in the way it was conducted in the Magistrates Court are dealt with by the award of indemnity costs in respect of the Magistrates Court proceedings. However, the institution of an appeal based almost entirely on a continuing misunderstanding of Mr Gillan’s case, complaints about the Magistrate’s treatment of matters irrelevant to Mr Gillan’s real case, and misplaced reliance on journal articles whose conclusions were also irrelevant to Mr Gillan’s real case imposed an unnecessary burden on Mr Gillan.
It is unfortunate that the lack of clarity in the Magistrate’s reasons for his conclusions offered an opportunity for the ACT to seek a second chance to defend the action. However, that lack of clarity did not in my view excuse the ACT from thinking more carefully, before launching an appeal, about the case that his Honour had in fact decided and the evidence on which he so decided, and about whether there was anything actually wrong with the conclusion that his Honour had reached about the ACT’s liability.
I am satisfied that the ACT should meet Mr Gillan’s costs of the appeal on an indemnity basis.
Costs of Mr Gillan’s cross-appeal
The cross-appeal involved complaints about an entirely different aspect of the Magistrate’s decision, being the assessment of damages, and accordingly seems to raises different issues as far as costs are concerned.
Mr Gillan’s submissions
The late decision by counsel for Mr Gillan to extend the application for indemnity costs to the cross-appeal was supported only by brief oral submissions to the effect that such an award was justified because:
(a)the Magistrate’s calculation of damages was manifestly wrong, because he didn’t appreciate the damages evidence; and
(b)that the ACT’s response to the cross-appeal was quite unmeritorious given the evidence.
The ACT’s submissions
The ACT noted only that Mr Gillan’s failure to renew the Calderbank offer in conjunction with the cross-appeal is relevant in considering the costs of the cross-appeal.
Conclusion
There is in my view no particular criticism to be made of the ACT’s conduct of that part of the Magistrates Court proceedings dealing with the assessment of damages, or of the relevant part of the appeal hearing. The Magistrate’s confusion about the proper calculation of Mr Gillan’s economic loss (and in particular about the distribution of work among Mr Gillan and his senior colleagues, at [117]-[123] of the appeal judgment) seems to have had little or nothing to do with the way the ACT put its case on damages.
I cannot see any reason why the ACT should meet Mr Gillan’s costs of the cross-appeal on anything other than the ordinary basis.
Orders
The orders resulting from my conclusions would be that:
(a)the ACT is to pay Mr Gillan’s costs in the Magistrates Court proceedings on an indemnity basis;
(b)the ACT is to pay Mr Gillan’s costs of the appeal on an indemnity basis; and
(c)the ACT is to pay Mr Gillan’s costs of the cross-appeal on the ordinary basis.
However, I am conscious that such orders would require the assessment of Mr Gillan’s costs of the appeal separately from his costs of the cross-appeal. If the parties can agree on a costs order that would simplify the process of assessing the costs of the Supreme Court matters while still providing a generally appropriate outcome, I would be willing to make a single order in such a form instead of the two separate orders relating to the two Supreme Court appeals.
Accordingly, I propose at this stage to make the following orders:
1. The ACT is to pay Mr Gillan’s costs in the Magistrates Court proceedings on an indemnity basis.
2. The ACT is to pay Mr Gillan’s costs of the appeal on an indemnity basis.
3. The ACT is to pay Mr Gillan’s costs of the cross-appeal on the ordinary basis.
4. Orders 2 and 3 are stayed until further order.
After hearing from the parties, I shall make any further orders appropriate for the resolution of this matter.
| I certify that the preceding one hundred and thirty-six [136] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice Penfold. Associate: Date: 2 August 2019 |
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