Checchia v Insurance Australia Ltd t/as NRMA Insurance (No 2)
[2014] NSWSC 748
•06 June 2014
Supreme Court
New South Wales
Medium Neutral Citation: Checchia v Insurance Australia Ltd t/as NRMA Insurance (No 2) [2014] NSWSC 748 Hearing dates: On Written Submissions Decision date: 06 June 2014 Jurisdiction: Common Law Before: Hall J Decision: (1) The plaintiff is entitled to pre-judgment interest at a rate of 5% per annum.
(2) The plaintiff is entitled, in respect of the first trial, to an order for 50% of his costs of that trial on the ordinary basis.
(3) The plaintiff is entitled, in respect of the second trial, to an order for 40% of his costs on the ordinary basis.
Catchwords: COSTS - costs awarded on the ordinary basis - finding of false and misleading conduct within the meaning of s 118 Motor Accidents Compensation Act 1999 in the principal judgment - exercise of discretion as to costs - costs awarded in respect of both trials at a reduced rate
INTEREST - interest awarded at a reduced rate - interest rate previously prescribed in settlement agreement - exercise of discretion to award interest at half the rate provided for in the settlement agreementLegislation Cited: Civil Liability Act 2005
Civil Procedure Act 2005
Motor Accidents Compensation Act 1999
Uniform Civil Procedure Rules 2005Cases Cited: Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304
Brittain v The Commonwealth (No 2) [2004] NSWCA 427
Checchia v Insurance Australia Ltd t/a NRMA Insurance [2013] NSWSC 674
Insurance Australia Limited t/as NRMA Insurance v John Checchia [2011] NSWCA 101
Malpas v Malpas (1885) 11 VLR 670
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Ryan v Caelli (1903) 9 ALR 109
Stewart v McKinley (1885) 11 VLR 802Category: Consequential orders Parties: John Checchia (Plaintiff)
Insurance Australia Ltd t/as NRMA Insurance (Defendant)Representation: Counsel:
BJ Gross QC; S Dixon (Plaintiff)
K Rewell SC; B Kelleher (Defendant)
Solicitors:
Young & Muggleton Solicitors (Plaintiff)
Moray & Agnew Solicitors (Defendant)
File Number(s): 2007/263856
Judgment ON INTEREST AND COSTS
The plaintiff claimed damages under the Motor Accidents Compensation Act 1999 ("the MAC Act") in respect of injury and losses arising out of a motor vehicle accident that occurred on 21 January 2003. On that occasion he was riding his bicycle when it was struck by a motor vehicle.
On 20 October 2006, the plaintiff and the defendant insurer, NRMA, at a settlement conference directed pursuant to s 80 of the MAC Act, entered into a settlement agreement in the amount of $1,225,000 (inclusive of costs and disbursements). The net settlement amount payable to the plaintiff was approximately $1,185,000.
NRMA subsequently determined that the plaintiff had, in relation to the settlement, engaged in misleading and false conduct within the meaning of s 118 of the MAC Act and declined to pay the amount due under the settlement.
NRMA based its refusal to pay the settlement monies upon the fact that the plaintiff had sustained a back injury in an earlier accident in 1993 and had deliberately not disclosed that fact.
In the initial proceedings in this Court, the plaintiff claimed damages for what he alleged was NRMA's breach of the settlement agreement that led to "the first trial" on 13 and 14 October 2010. NRMA relied upon the provisions of s 118 of the MAC Act.
Judgment in the first trial was delivered in the plaintiff's favour on 29 September 2009. NRMA appealed from that judgment to the Court of Appeal: Insurance Australia Limited t/as NRMA Insurance v John Checchia [2011] NSWCA 101.
The appeal was allowed and the orders made by the trial judge on 29 September 2009 were set aside. A new trial was ordered on all issues:
A stay of the judgment in the first proceedings was granted by the trial judge on the condition that the defendant pay the plaintiff the sum of $800,000.00. That sum was paid on 26 March 2010.
The second trial was heard by me on 30 July 2012, 1 August 2012, 6 August 2012 to 8 August 2012, and 27 August 2012 to 28 August 2012.
On 30 May 2013 I delivered judgment ("the principal judgment"): Checchia v Insurance Australia Ltd t/a NRMA Insurance [2013] NSWSC 674.
I subsequently received written and oral submissions on behalf of the parties on two issues:
(1) Interest; and
(2) Costs of the first and second proceedings.
Plaintiff's Submissions on Claim for Interest
In the plaintiff's submissions it was contended that s 100 of the Civil Procedure Act 2005, not s 137 of the MAC Act, was the relevant statutory power for awarding interest. Section 137, it was submitted, only related to the right to claim interest on damages payable in a claim under the MAC Act: Plaintiff's Reply Submissions on Interest and Costs at [2].
The plaintiff's claim for interest at 10% per annum relies upon the provisions of clause 5 of the settlement agreement which was said to coincide with the average prescribed rate of interest under s 100 of the Civil Procedure Act.
It was submitted that the rate prescribed by the settlement agreement "... is not expressed or inferred to be operative only if there is no untoward behaviour by the plaintiff": Plaintiff's Written Submissions on Interest and Costs at [3]. It was further argued that the settlement agreement had remained on foot, subject only to the reduction authorised by s 118 of the MAC Act. It was contended for the plaintiff that s 118 does not authorise a reduction of interest provided for in the settlement agreement.
In the principal judgment, delivered on 30 May 2013, a finding was made that "the proper settlement value of the Plaintiff's claim as at 20 October 2006" was $1,031,981: at [412]. On that basis it was determined that the "financial benefit" to which the plaintiff was not entitled in terms of s 118(2) of the MAC Act was the amount of $193,019: at [413].
The Claim for Interest
The plaintiff claims interest at a rate of 10% per annum on the amount of $191,981 (being the judgment sum of $1,031,981 less the part payment of $800,000 less $40,000 for costs from 27 March 2010) to date. The rate of 10% per annum, as earlier noted, was based upon the rate specified in clause 5 of the settlement agreement.
NRMA submitted that there should be no interest awarded on any part of the judgment amount upon the basis that the plaintiff persisted in fraudulent conduct and gave dishonest evidence: Defendant's Written Submissions as to Interest and Costs at [11].
Alternatively, if an award of interest were made, NRMA submitted that the Court should exercise its discretion to award interest at a lower rate, not exceeding 5% per annum: at [12].
It was argued for the plaintiff that the defendant, in effect, elected to keep the settlement agreement on foot and in doing so it "... took the advantage of retaining the settlement, which put a lid or ceiling on the amount of damages to which it would be exposed...": Plaintiff's Written Submissions on Interest and Costs at [10].
The plaintiff further contended that having done so NRMA, could not escape the burden by in effect treating the settlement agreement as not having been reached at all so that a different set of rules applicable to tortious claims under the MAC Act are instead to be applied.
Finally, it was submitted for the plaintiff that if the defendant wished to contend for some other rate of interest, it should support such a claim with appropriate evidence and argument: at [11].
I have concluded that the plaintiff is entitled to an order for interest made in his favour at a limited rate, as discussed below.
In arriving at that conclusion, I have had regard to all matters raised in the submissions on behalf of the parties. On balance, the fact that the plaintiff offered to have the settlement agreement set aside, that NRMA have had the benefit of the balance of the monies owing (above the part payment) and that the plaintiff has been denied the use of that money, indicates that the just and proper exercise of the discretion on interest is an award at the rate of 5%, being half the rate of 10% as specified in the settlement agreement.
The lower rate is, in my assessment, an appropriate one having regard to the plaintiff's failure to disclose the 1993 injury and the actual level of his pre-injury earnings, which conduct contributed to the delay resulting from the proceedings brought under s 118 of the MAC Act.
The Claim for Costs
The plaintiff seeks an order that the defendant insurer pay the costs of both the first and second trials on the ordinary basis pursuant to Uniform Civil Procedure Rule 42.1.
The defendant in its written submissions stated:
"The Defendant submits that in this case, 'some other order should be made' as to costs, having regard to the Plaintiff's dishonesty and falsification of documents (which led to the court proceedings being commenced), and further by reason of the Plaintiff's persistent refusal to admit to his false and misleading conduct and to his falsification of documents, both at this trial and at the previous hearing before Rothman J.
The Defendant submits that this is one of those rare cases where the court should exercise its discretion to order that the Plaintiff pay the Defendant's costs of both trials, notwithstanding that the Plaintiff ultimately has a judgment in his favour (as to which see Ritchie's Uniform Civil Procedure NSW, note 42.1.25 to UCPR r 42.1). (Defendant's Written Submissions as to Interest and Costs at [14] and [15])
As noted above, the settlement reached on 20 October 2006 was in the sum of $1,225,000 inclusive of out-of-pocket expenses and inclusive of costs. It is agreed between the parties that out-of-pocket expenses were $149,000.
It is necessary at this point to make a number of observations about the way the proceedings were conducted in the first and second trials and the issues pursued by NRMA at each hearing.
The First Trial
In the first trial, in essence the following issues were pursued by NRMA:
(i) The plaintiff's failure to disclose the 1993 injury prior to the settlement agreement.
(ii) The plaintiff's pre-injury earnings, that is, their true level and the plaintiff's fabrication of records as to his earnings.
(iii) The plaintiff's level of disability and incapacity and the defendant alleging that the plaintiff was wilfully exaggerating his back disability. This involved the plaintiff being cross-examined at length to establish that any disability was well below that claimed. Medical evidence to support the defendant's challenge to the level of disability was also called by it in its case.
As to (i), as noted in the defendant's written submissions at [27], a finding was made that the plaintiff had concealed his 1993 work injury which involved a disc protrusion at L4/5 and a fracture at the endplate of L4.
As the principal judgment delivered in the second trial on 30 May 2013 indicates, the defendant, unlike in the first trial, did not rely upon the 1993 injury as having any material causal significance to the plaintiff's disabilities and impairment following the 2003 accident. The medical evidence strongly established that the plaintiff's disabilities and incapacity for which he claimed compensation was wholly due to the accident of 21 January 2003 and the 1993 injury was not a contributing cause. Whilst significant time was expended by the defendant in pursing the 1993 injury as causally significant in the first trial, no significant time was devoted to the earlier injury in the second trial.
The pursuit of the 1993 injury by the defendant in the first trial, by cross-examination of the plaintiff and medical witnesses and calling evidence on that aspect, proved to be a fruitless endeavour in an attempt to undermine the plaintiff's medical case. The medical evidence, in particular that of treating specialists, established that the 1993 injury was causally of no significance to the nature and extent of the plaintiff's disabilities arising from the subject accident. Additionally, the lay evidence was that the plaintiff had worked, following recovery from his 1993 injuries, for some years in the hospitality industry until his 2003 accident. The time expended in the pursuit of the 1993 injury is to be taken into account in determining the costs of the first trial.
Senior Counsel in the second trial, Mr Rewell SC, with respect, properly recognised that the 1993 injury was not a "real issue" in terms of s 56(1) of the Civil Liability Act 2005 and did not, as I have indicated, seek to pursue it in the second trial.
As to the issue of the plaintiff's pre-injury earnings, (ii) above, the defendant's case against the plaintiff was ultimately decided, in the second trial, favourably to the defendant. The extent of the order made in respect of the "financial benefit" received by the plaintiff, and its relevance to a costs order, will be considered below.
As to the plaintiff's incapacity, (iii) above, in the first trial the defendant's case, in particular in cross-examination of the plaintiff, went well beyond the particular factual matters related to the "false or misleading conduct" alleged under s 118 of the MACAct. A detailed and prolonged attack upon the plaintiff in the first trial, however, was made with a view to establishing that, notwithstanding the strong medical evidence from treating doctors and other medical evidence as to the plaintiff's physical disabilities, he was not as incapacitated as he claimed. In this respect there was substantial cross-examination of the plaintiff based on video surveillance material and medical evidence led from medical witnesses in an endeavour to establish that the plaintiff was not as incapacitated as he claimed.
The medical evidence established that the plaintiff had undergone three significant spinal operations in respect of the 2003 injury. The conduct of the defendant at length on the issue of the plaintiff's impairment and level of incapacity is a matter of significance on the issue of the costs of the first trial.
However, before examining relevant factual matters, it is necessary for attention to be given to the nature of the proceedings arising under s 118 of the MAC Act, including onus of proof as to the defence raised under s 118, the consequences arising from any "false and misleading" conduct, namely "the extent of the financial benefit" (s 118(2)(a)), and the issues litigated in the first trial and those pursued at the second trial.
Beazley JA (as her Honour then was) stated in Insurance Australia Limited t/as NRMA Insurance v John Checchia [2011] NSWCA 101 at [49]:
"As the appellant raised s 118 by way of defence, it bore the onus of establishing both that the respondent's conduct fell within s 118(1) and the amount in respect of which it was relieved of liability."
Her Honour observed that the appellant (that is, the defendant in the present proceedings) raised challenges to the trial judge's factual findings, these falling into two categories:
(1) The extent of the respondent's disabilities arising from the 2003 accident. Her Honour referred to this as "the medical issue".
(2) The respondent's earnings (the "income claim").
The broad scope of the defendant insurer's defence under s 118 pursued in the first trial, as noted above, went well beyond any issue of causation attributable to the 1993 injury. As her Honour observed, the insurer challenged the plaintiff's claimed level of disability:
"The appellant contended that the respondent had exaggerated any disability from which he was suffering and that any disability he in fact suffered was partly attributable to the 1993 accident." (at [56])
As discussed below, a considerable amount of time in the first trial was taken up by the cross-examination of the plaintiff and the calling of evidence in an endeavour to establish that the plaintiff had:
(1) Suffered an injury in 1993 that was causally related to his post-2003 disabilities;
(2) Exaggerated his level of disability;
(3) Was capable of working; and
(4) Been able to sit and stand for extended periods and walk in a manner and extent that was inconsistent with his claimed level of disability.
Substantial submissions were directed at establishing that the plaintiff's disabilities were not such as to prevent him working. The case conducted by the defendant insurer in the first trial was that, in assessing the plaintiff's level of disability, he was not to be accepted as a truthful witness.
In the principal judgment, I examined the medical evidence, including in particular, the evidence of the treating specialist, Dr Parkinson, who considered that the plaintiff had an ongoing spinal disability of an incapacitating nature: see judgment at [289]-[312].
Particulars of surgery undertaken on the plaintiff, in summary form, are:
- 9 April 2003 - right L4/5 discectomy (Dr Parkinson);
- 2004 - laminectomy with decompression (27 January 2004); and
- 20 November 2005 - laminectomies, L4/5 pedicle screw fusion.
As noted at [290]:
"Surgical intervention itself produced complications. These included the development of post-operative granulation tissue causing further compression of nerve roots and pain: Report Dr Robin B Fitzsimons, neurologist, report - 10 March 2006: (Blue AB 3, 185)."
The combined surgery on the plaintiff was referred to in evidence as "failed surgery" and the evidence of Dr Parkinson and other medical examiners supported a significant level of ongoing spinal disability producing a substantial level of incapacity both before and after each of the operations performed on the plaintiff. The findings I recorded in the principal judgment, at [363], were as follows:
"(i) The evidence relied upon by the defendant on the level of the plaintiff's activities the surveillance evidence is not inconsistent with a significant level of disability and in some respects as noted above corroborates the plaintiff's spinal disability.
(ii) There is an objective pathological or organic basis that supports the existence of a significant level of disability and incapacity, the assessment of the same does not, in the main, depend or turn upon the plaintiff's subjective symptoms.
(iii) The medical evidence plainly establishes that the plaintiff was effectively totally incapacitated for work up to 20 October 2006.
(iv) The medical assessment of the existence and extent of the plaintiff's disability is reflected, inter alia, in the substantial assessments made by the insurer's legal advisers prior to settlement, namely:
(i) Senior Counsel, 4 October 2006: Blue AB 2, 678-684.
(ii) Junior counsel, 20 September 2006: Blue AB 2, 652-670.
(iii) The defendant's solicitors, 16 October 2006: Blue AB 2, 686-689.
(v) Surgical intervention, in particular back surgery, is conventionally regarded as treatment of last, not first, resort and is only undertaken where there exists cogent and clear evidence of a pathological basis responsible for spinal symptoms warranting intervention. In the present case there is cogent medical evidence in support of the genuineness and seriousness of the plaintiff's injury and disability consequent upon the subject motor vehicle accident and the need for surgery.
(vi) With respect to the findings of exaggeration made by the trial judge to the extent that it was said to have been based upon the plaintiff's appearance in the witness box, I consider that the evaluation of the actual level of disability is primarily to be gauged by the medical and other evidence rather than by the presentation or appearance in the course of giving evidence.
(vii) The medical evidence supports the conclusion that as a consequence of his back injury the plaintiff has been and is likely to continue to be incapacitated for his pre-injury work as a waiter and for any form of work involving repeated lifting, bending and/or prolonged standing due to the effects of injury sustained in the 2003 accident.
(viii) That whilst the evidence overall establishes that the plaintiff has a residual earning capacity, given the medical evidence as to the level and extent of the disability, the plaintiff's age and his limited qualifications, his residual physical capacity for work is and has, since 8 April 2003, in my assessment, been very limited."
Whilst in the first trial the defendant's case pursued at length the 1993 injury as having contributed to the ongoing disability/incapacity, that was not an issue pursued in the second trial.
Similarly, the issues of exaggeration and incapacity as pursued by the defendant in the first trial were not the focus of attention in the second trial.
The first trial involved an extremely protracted hearing commencing on 10 June 2008 and continuing on 12 June, 25, 26, 27, 28 and 29 August 2008 and 22, 23, 24 and 25 September 2008, on which latter date the evidence was completed.
The parties relied upon written submissions, and the oral submissions proceeded over two further days on 17 and 19 November 2008.
In the first and second trials the plaintiff's "income claim" was a central issue of importance in respect of which I made a number of adverse findings to the plaintiff: see principal judgment at [175], [176], [178] [182] and [263]. There has been no criticism by Mr Gross, Senior Counsel for the plaintiff, as to the conduct of the first or the second trial in relation to the "income claim" issue nor could there have been.
In addition to the 1993 injury issue, the defendant's case at the first trial was directed to mounting a challenge of the plaintiff and the medical witnesses called in his case, including in particular his treating surgeon, Dr Parkinson, and Dr Peter Nakhle. Dr Parkinson undertook spinal surgery on the plaintiff on the above occasions and Dr Nakhle treated him on and after 27 March 2003. Both medical practitioners were cross-examined extensively, in particular, upon surveillance material relating to the plaintiff with a view to establishing that he was exaggerating his medical condition and was not as disabled and incapacitated as he maintained to them and to examining doctors. I will return to the hearing time devoted in the course of the first trial on such issues. It is sufficient to state that ultimately in the second trial a radically different approach was taken by the defendant insurer.
In the second trial, for the purposes of determining the settlement value of the claim as at October 2006, it was accepted as discussed below that the plaintiff had and has significant pre- and post-operative disability and impairment with little, if any, significant residual working capacity. In light of what was referred to in evidence as "failed surgery", such acceptance was unsurprising.
In proceedings in which an insurer relies upon a defence under s 118, namely, the obtaining of "financial benefit" through false and misleading conduct, the nature and range of issues pursued will depend upon the nature of the "conduct" and the evidence that supported a plaintiff's claim, in this case being a claim for damages for personal injury.
In a case where the "conduct" is at the extreme end of the spectrum, such as conduct falsely constructing the occurrence of an accident, the circumstances of an accident or conduct involving the fabrication of "injury", the factual issues in s 118 proceedings may be expected to be broad-ranging. The present case, of course, is not of that kind. It involved "conduct" as to: (1) the 1993 injury and the failure to disclose; (2) the issues concerning the "income claim" and, in the first trial; (3) an issue or issues concerning the nature and level of disability/incapacity.
The defendant insurer in the first trial, as earlier noted, sought to mount a substantial defence by challenging the plaintiff's evidence and the medical evidence in the plaintiff's case and additionally calling evidence to establish an affirmative medical case and a case based on surveillance product derived from observations of the plaintiff. The period occupied by this aspect of the case was substantial. Whilst precision is difficult in calculating the time taken from an examination of the transcript, an estimate is possible. This is a matter discussed below.
A retrospective review of the proceedings, that is an examination of the conduct of the first trial and the issues pursued by the defendant insurer, made after or subsequent to the second trial, provides a basis for determining whether costs of the first trial should wholly or in part be awarded to one party or the other. Before examining that issue I refer to relevant principles that apply in determining costs following the conclusion of multiple trials.
Costs: Multiple Trials - Principles
The general rule is that, save in special circumstances, where there is a new trial the costs of the first trial abide the event of the second trial: Malpas v Malpas (1885) 11 VLR 670 at 710-711; Stewart v McKinley (1885) 11 VLR 802, 808-810; Ryan v Caelli (1903) 9 ALR 109.
In Brittain v The Commonwealth (No 2) [2004] NSWCA 427, McColl JA (with whom Handley and Tobias JJA agreed) at [30] stated the logic of the general rule, in that where a new trial is ordered, the parties' rights have not been determined and the identity of the successful party has not been established. That is necessary before the costs follow the event principle can apply, although it was noted that that is subject to the Court's "plenary discretion" concerning costs: s 76, Supreme Court Act 1970. The power under that provision is to be exercised judicially: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [22].
Relevant principles were, in part, summarised as follows in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38]:
"In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal.
...
Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed)."
In the exercise of the discretionary power as to costs in a manner that gives effect to the principles that apply to it, it is necessary to consider the relevant matters litigated, the degree of success achieved by one or other parties in the result along with some regard to context including (a) the basis upon which a retrial was ordered and (b) the way or manner in which either party conducted the first and second trials. These matters are examined below.
As to (a), I note that one basis that led to the Court of Appeal setting aside the orders made in the first trial was an error made in the construction and application of the provisions of s 118.
The principle that a successful party in litigation is entitled to an award of costs in its favour is an important one. The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of it discretion: Oshlack, supra, at [69] per McHugh J. This includes the conduct of litigation, in particular, by the protracting proceedings.
An important factor throughout the consideration of costs in these proceedings is the fact that the conduct of the plaintiff occasioned the proceedings under s 118 and that, by the principal judgment in the second trial the defendant insurer established that the plaintiff had obtained a financial benefit in terms of s 118(2) of the MAC Act in the amount of $193,019, being approximately 15-16% of the settlement sum of $1,225,000 (inclusive of costs). Whilst that was less than contended for by the defendant, it represented a measure of success in reducing the above settlement amount.
I turn to the first trial and the issues pursued by the defendant insurer.
The Evidence of Mr Najdzion
Mr Najdzion swore an affidavit on 5 June 2008. Mr Najdzion was the defendant's CTP Insurance Claims Team Manager. His evidence was directed to the basis upon which instructions were given to settle the proceedings and his assessment of the plaintiff's claim leading ultimately to the settlement in the amount of $1,225,000 inclusive of costs: at [1]-[36].
Mr Najdzion then gave evidence in his affidavit as to the significance, in his opinion, of the "true facts" as to the plaintiff having suffered a back injury in 1993: at [37]-[56].
He stated that having regard to the 1993 injury, and the material referred to in his affidavit, had he known of the 1993 injury he believed that he would have looked to settle the matter for about $300,000 to $450,000 inclusive of workers compensation "payback" and costs and would not have recommended more than $600,000 on the same bases.
However, as events transpired, the 1993 injury was not an issue pressed at the second trial by the defendant as having causal significance. The medical evidence led in the first trial from treating doctors and other evidence in the plaintiff's case and in the second trial established, as found in the principal judgment, that the 1993 injury was without any causal significance in assessing the plaintiff's entitlement to damages for non-economic loss and economic loss.
The evidence given in the first trial by Mr Najdzion occupied considerable time over a number of days based upon a review of the transcript of the trial contained in the Black Appeal Books as follows:
Day 1 - 18 June 2008:
In chief: AB 28-30
In cross-examination: AB 30-43
Day 5 - 25 August 2008
In chief: AB 92-94
In cross-examination: AB 97-98
Day 6 - 26 August 2008
In chief: AB 116
In cross-examination: AB 116-133
In re-examination: AB 134-140
In the second trial no reference or reliance was placed upon any evidence given by Mr Najdzion in the final written submissions of Mr Rewell SC who appeared for the defendant insurer on the second trial, but not in the first trial. This was no doubt in recognition, with respect properly, that the evidence given by Mr Najdzion was not in fact of significance to the real issues for determination. That evidence had been led in the first trial on the basis of the 1993 injury and its supposed significance. Further, it was not evidence that was probative of the quantum of "financial benefit" alleged to have been received.
The cross-examination of the plaintiff was extensive and continued over three days, 27, 28 and 29 August 2008. It covered a range of subjects including, as noted above, firstly the question of the plaintiff's physical capacity and the issue of his impairment and incapacity, and secondly, matters related to the "income claim".
As to the former, the plaintiff was cross-examined extensively as to his claim founded upon a total incapacity basis including injuries, treatment, symptoms, incapacity including cross-examination on surveillance material, time spent in hotels, his expenditure on gaming, credit card entries and the nature and level of his complaints associated with his spinal disabilities.
As earlier stated, precise quantification of time spent in cross-examination on such issues is difficult where, as occurred, the cross-examination at times switched back and forth on different topics. However, an approximation of time spent in cross-examination of the plaintiff over a number of days on such matters, may be seen from the following appeal book pages.
27 August 2008: AB 165-266
28 August 2008: AB 274-344
29 August 2008: AB 378-412
Additional time was spent in the first trial (in cross-examination and in calling evidence) on the issues of video surveillance and nature and on the extent of the plaintiff's spinal disability and its attributability to the 1993 accident and subject accident, with medical witnesses called for the plaintiff and the defendant. See, for example, Dr Parkinson, treating surgeon at Black AB 451-482, and Dr Nakhle at Black AB 574-600.
In the second trial, but not the first, I have earlier referred to the opinion evidence of Mr Roberts SC called in the defendant's case on a recommended settlement range for the claim as at October 2006. Mr Roberts carefully reviewed all the available medical evidence and expressed his conclusion in his first report of 14 June 2012 at paragraph [80].
In noting that the plaintiff had suffered lumbar disc damage in the accident, and that "none of [the three attempts at surgery] has led to a significant improvement in his condition although the 2005 fusion probably led to some improvement in his right sciatica" (at 80.2), Mr Roberts additionally expressed his opinion:
"The plaintiff remains unfit for his pre-injury employment and his employment opportunities are extremely limited. At best he may be able to obtain employment on a part time basis in some sedentary position for which he has little training." (at 80.5)
I referred in the principal judgment to Mr Roberts' oral evidence that indicated, in his view, that the plaintiff had little by way of residual work capacity, a conclusion I also reached having read and heard all the evidence: principal judgment at [363](vii) and (viii).
In the second trial the extensive evidence that was elicited in the first trial as to the nature and extent of the plaintiff's incapacity and the other matters to which I have referred above, was, with respect, properly not pressed by the defendant, consistent with Mr Roberts' abovementioned assessment that the plaintiff was, and had been since the accident, significantly incapacitated.
The fact that the first trial, however, pursued the issue of disability/incapacity and the other matters to which I have referred at length must, in my assessment, be taken into account in determining the party entitled to any costs order for the first trial and the proper amount to be awarded in that respect.
As to the second trial, I have earlier referred to the extent of the "financial benefit" established by the defendant, namely 15-16% of the total settlement amount.
Mr Roberts provided his supplementary report based upon "additional matters" which were provided to him by the defendant's solicitors following his first report.
Mr Roberts initially assessed a likely range of damages that could be awarded to the plaintiff between $718,062 and $956,438: at paragraph [5]. This assessment was referred to in the principal judgment at [278]-[279].
In his further assessment, taking into account the additional "assumed facts" he had been asked to accept, Mr Roberts revised the above range down to $525,985 to $779,326: principal judgment at [286].
The settlement value of the plaintiff's claim as at 20 October 2006 was assessed, as recorded in the principal judgment at [412], namely, at $1,031,981. Accordingly, the defendant, though establishing a "financial benefit" under s 118(2), the amount of that benefit, $193,019, was considerably less than that which had been contended for by the defendant.
Given the extent of the plaintiff's incapacity and other matters referred to in the principal judgment, the amount of "financial benefit" ($193,019) produced an outcome whereby the plaintiff retained approximately 84% of the settlement amount.
It does not, of course, follow that the plaintiff is entitled to 84% of the costs of the second trial. As earlier noted, the matters that fall for consideration in the exercise of the discretion under s 76 of the Supreme Court Act in determining whether the plaintiff is entitled to costs, and if so, the percentage of costs of the first and the second trial, include:
1. The conduct of the first trial. In particular, in that respect, the prolongation of that trial over many days by the extensive pursuit by the defendant of the issues discussed above, including the evidence of Mr Najdzion, the 1993 injury as an alleged causal event, and the issue of incapacity in circumstances in which the medical evidence demonstrated firstly, that the multiple surgeries had failed, and secondly, the plaintiff's ongoing disability giving rise to permanent incapacity approaching or amounting to total incapacity.
2. The "conduct" of the plaintiff within s 118(1) and the defence of the proceedings under s 118 directly arising in consequence.
3. The nature and extent of the false and misleading conduct.
4. The plaintiff's evidence in these proceedings in which he denied being party to any falsification of documents relevant to his "income claim".
5. The adverse findings made against him in the principal judgment.
6. The extent of the "financial benefit" he obtained by his conduct under s 118(1) (approximately 15-16% of the settlement amount).
7. The corresponding amount to which the plaintiff was entitled under the settlement of October 2006 from that date until judgment was delivered on 30 May 2013, namely approximately $1,031,981 (or approximately 84% of the settlement amount) and judgment being entered in the proceedings against the defendant in that amount.
8. The level or extent of the "financial benefit" the defendant alleged or sought to establish against the plaintiff as against the actual quantum of the "financial benefit" in fact received by the plaintiff as determined in the principal judgment (see 6 above).
Decision and Orders
In determining the issue of costs, including, in particular, the costs of the second trial, I have taken into account the observations of Beazley JA in the Court of Appeal judgment in these proceedings at [198]. Those observations concerned the issue of reducing costs, even in the event of the plaintiff establishing an entitlement to judgment on the settlement sum. I have, in particular, taken into account the matters to which I have referred in determining the appropriate extent of the reduction in costs to be awarded to the plaintiff.
In determining the appropriate orders as to costs of the first and second trials, I have additionally brought into account, in the exercise of the costs discretion, the principles and matters to which I have referred above. In doing so I have sought to give the same an appropriate weighting in arriving at a proper and fair result, there having been, in relation to both trials, competing factors operating for and against each party.
I consider that although the plaintiff has been successful in the proceedings insofar as he has obtained a judgment in the amount of $1,031,981, in light of the adverse findings made against him and the determination as to the "financial benefit" defence under s 118, that his costs of the proceedings in the second trial should be reduced to 40%.
I have, upon consideration, determined that the appropriate orders as to costs are as follows:
(1) The plaintiff is entitled, in respect of the first trial, to an order for 50% of his costs of that trial on the ordinary basis.
(2) The plaintiff is entitled, in respect of the second trial, to an order for 40% of his costs on the ordinary basis.
I make orders accordingly.
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Decision last updated: 06 June 2014
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