Clarke v Greater Shepparton City Council (Costs)

[2016] VSC 593

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMON LAW DIVISION

S CI 2011 04781

STEVEN GRAHAM CLARKE	Plaintiff
v
GREATER SHEPPARTON CITY COUNCIL	Defendant

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JUDGE:	KEOGH J
WHERE HELD:	Melbourne
DATE OF HEARING:	15 September 2016
DATE OF RULING:	5 October 2016
CASE MAY BE CITED AS:	Clarke v Greater Shepparton City Council (Costs)
MEDIUM NEUTRAL CITATION:	[2016] VSC 593  First Revision, 5 October 2016, [16].

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TORTS – Personal injury – Damages – Rate of interest payable on damages for gratuitous attendant care services – Rate of interest payable on past general damages – Whether interest payable on past medical expenses – Costs and certification of counsel’s fees – Grincelis v House (2000) 201 CLR 321, MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T Monti QC with Mr M Seelig	Nevin Lenne Gross
For the Defendant	Mr C Blanden QC with Mr D Oldfield	Moray & Agnew

HIS HONOUR:

1. The plaintiff suffered injury on 14 September 2008, when he tripped and fell onto a concrete stormwater pit lid in suburban Shepparton, Victoria.  The trial of the matter commenced as a cause before me on 23 May 2016 in Wangaratta, and ran for five days.  I delivered judgment in favour of the plaintiff on 8 September 2016.[1]  I determined that the plaintiff was to be awarded the sum of $275,000 in general damages; $12,710 for past medical expenses; $25,000 for future medical expenses; and $120,000 for past and future gratuitous attendant care services. The composite figure was reduced by 15 per cent for contributory negligence, leaving a total award of damages of $367,803.[2]

   [1]Clarke v Greater Shepparton City Council [2016] VSC 542.

   [2]There is an error in [132] of the judgment which records future medical expenses of $15,000, rather than the $25,000 allowed in [125].

1. The parties have been unable to reach agreement as to the calculation of interest applicable to the various heads of damages, or certification of counsel’s fees.  Counsel for the plaintiff seeks interest in respect of the past component of damages payable for gratuitous attendant care, past general damages and past medical costs.  Each is disputed.  I shall deal with each in turn.

1. The parties agreed that the penalty interest rate was the appropriate measure of interest on the sum of $50,806[3] damages awarded for past gratuitous attendant care services.[4]  It was agreed that interest should run for a past period of four years and 12 weeks (the ‘part interest period’).  Counsel for the defendant submitted that the current penalty interest rate, being 9.5 per cent, should apply, and that the Court ought to apply the full rate of interest to half of the four-year and 12-week period, and no interest to the other half of that period, so that the final figure would accurately represent the spread of interest on the damages as they accrued.  I accept that this is an appropriate shorthand method of calculating the interest applicable to the part interest period.[5] However, interest should apply for the whole period in respect of damages which had accrued by the commencement of the part interest period.  Counsel for the plaintiff submitted that it is inappropriate to apply the 9.5 per cent interest rate to the entire period, given that for most of that period the applicable penalty interest rate was higher.[6]  I agree, and conclude that it is fair and reasonable to apply a rate of 10.5 per cent.

   [3]This figure represents the total sum calculated for past gratuitous attendant care services reduced by 15 per cent for contributory negligence.

   [4]Citing Grincelis v House (2000) 201 CLR 321.

   [5]A similar (though not identical), method was adopted in Grincelis v House (2000) 201 CLR 321, 330 [20]. There, the High Court halved the applicable interest rate and applied it to the period from which interest began to accrue, stating that ‘Where, as in the present case, damages are assessed by reference to costs prevailing from time to time, the interest calculation must be made in a way that reflects the fact that damages comprise amounts accruing over time, not a simple lump sum’.

   [6]Penalty interest rates for the period in question were as follows:  currently 9.5 per cent, set 1 June 2015; prior to that, 10.5 per cent, set 11 August 2014; prior to that, 11.5 per cent, set 3 February 2014; prior to that, 10 per cent, set 7 October 2013; prior to that, 10.5 per cent, set 1 February 2010.  

1. The total attendant care damages which had accrued by the commencement of the part interest period are $25,748.  Interest on that sum at the rate of 10.5 per cent per annum for a period of four years and twelve weeks is $11,437.  The attendant care damages which accrued over the part interest period total $25,058.  Interest on that sum at the rate of 10.5 per cent for half of the part interest period, being two years and six weeks, is $5,565.  On that basis, I calculate interest on attendant care damages in a total sum of $17,002.

1. Counsel for the defendant argued that pain and suffering damages should be split equally between past and future, that interest should accrue at a rate of 4 per cent, and that interest should apply to the total amount of past damages for half the part interest period of four years and 12 weeks to take account of the accrual of damages over time.  Counsel for the plaintiff submitted that the damages should be weighted more heavily to the past, that the penalty interest rate or something close to it should apply, and that interest should be calculated on the entire past sum for the full four-year 12-week part interest period.

1. Section 60 of the Supreme Court Act 1986 (Vic) (‘the Act’) provides:

(1) The Court, on application in any proceeding for the recovery of debt or damages, must, unless good cause is shown to the contrary, give damages in the nature of interest at such rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 as it thinks fit from the commencement of the proceeding to the date of the judgment over and above the debt or damages awarded.

1. Counsel for the defendant argued that the ‘good cause’ referred to in s 60(1) encompasses the fact that pain and suffering damages are measured in dollars at current value, rather than at historical value. In support of this proposition, counsel referred to Hardie v The Herald & Weekly Times,[7] which in turn cites MBP (SA) Pty Ltd v Gogic.[8]The High Court in the latter case held as follows:

…the loss or detriment which a plaintiff suffers by being kept out of his or her damages for pre-trial pain and suffering cannot be equated with the amount which those damages, invested at the commercial rate of interest, could have earned during the relevant pre-trial period.  The determinants of rate of interest have been the subject of much dispute among economists.  But it cannot be denied that during periods of significant inflation…commercial rates of interest reflect a component to compensate a lender for the decline, by reason of inflation, in the real value of the principal which occurs during the period of the loan…Damages for pre-trial non-economic loss, however, are assessed in accordance with the value of money as at the time of the award.  In no way is a loss which a plaintiff incurs by reason of being deprived of his or her damages for pre-trial non-economic loss brought about by inflationary factors.  In those circumstances, to award interest on damages for non-economic loss during the pre-trial period by reference to commercial rates is to compensate the plaintiff for a ‘loss’ which he or she has not sustained.

[7][2016] VSCA 130, [14].

[8](1991) 171 CLR 657 (‘Gogic’), 663-4 (Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ) (citations omitted, emphasis added).

1. I accept the argument of counsel for the defendant that a lower rate than the penalty interest rate should be applied to the plaintiff’s past losses for pain and suffering.  For the reasons given in Gogic, I consider it appropriate to apply the same rate of 4 per cent for the purposes of calculation of interest on past non-economic loss damages.  Such damages are not susceptible to the sort of precise calculations applied above to attendant care damages.  Non-economic loss damages were awarded in the total sum of $233,750.  I calculate damages on a past allowance of $120,000 and allow interest on that entire sum for the total period of four years and twelve weeks at the rate of 4 per cent per annum.  On that basis, I will award interest of $20,307 on pain and suffering damages.

1. Counsel for the plaintiff also relies upon s 60 of the Act in submitting that interest on past medical expenses ought to be awarded. As noted in the extract from Gogic above,[9] the function of a payment of interest on a past loss is to compensate for the loss of use of the funds. I was informed by the parties that the past medical expenses of $12,710 represent an amount repayable to the Health Insurance Commission for medical expenses previously claimed by the plaintiff on Medicare. The Health Insurance Commission repayment does not attract interest. Counsel for the defendant relied upon s 60(3)(a) of the Act, and submitted that in these circumstances no award of interest can be made in respect of such damages. I agree that no interest should be allowed on the past medical expenses. I will therefore allow total interest on past damages of $37,309.

   [9]Ibid.

Costs and counsel’s fees

1. The plaintiff seeks an order for indemnity costs pursuant to r 26.08 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’), relying on service of a number of offers of compromise. The defendant does not contest such an order being made.

1. The parties were agreed that I should certify fees payable to counsel for the plaintiff, but disagreed as to some of the amounts sought by counsel for the plaintiff.  There is agreement as to certification of the following fees:

(a)        four days for hearing;

(b)        one day for preparation of written submissions;

(c)        one day for speaking to the submissions on 4 July 2016;

(d)       one day each for senior counsel and junior counsel for a view; and

(e)        eight hours of conferences paid at the hourly rate of 10 per cent of the daily fee.

1. Counsel disagreed in relation to the following issues:

(a)        Counsel for the plaintiff seeks a half day for preparation of written submissions in reply.  Counsel for the defendant opposes any allowance for written reply submissions.

(b)        Counsel for the plaintiff seeks fees for three days’ trial preparation for each of senior and junior counsel.  Counsel for the defendant argues that it is appropriate to allow one day only for preparation.

(c)        Counsel for the plaintiff submits that an appropriate daily fee for senior counsel is $9,000, with a fee of 50 per cent of this amount for junior counsel.  Counsel for the defendant submits that an appropriate fee for senior counsel is $7,700 including GST, plus the appropriate circuit fee.

1. Counsel for the defendant submitted that the claim was largely for general damages, that it was what one would colloquially refer to as a ‘slipping case’, and that the task of statutory interpretation of provisions of the Road Management Act 2004 (Vic) was relatively straightforward, particularly because there were few authorities relevant to the exercise. On that basis, preparation of only one day should be allowed, particularly given the conference fees which had been agreed. Counsel for the defendant argued that the daily fee sought by counsel for the plaintiff was excessive. Counsel for the plaintiff argued that the case was novel and complex, as it dealt with legislation which had not previously been considered by the court and three days’ preparation was required. The daily fee of $9,000 (which I assume to be exclusive of GST and circuit fee) was appropriate having regard to the range of fees certified in other matters.

1. I take account of item 19 of Appendix A of Chapter 1 of the Rules and the criteria set out in item 17. The circumstances of this case were not factually complex. However, I agree that there was some complexity in the task of construction of the various provisions of the Road Management Act 2004, and of the application of those provisions to the facts of this case.

1. Rule 63.30.1 provides:

(1)Subject to paragraph (2), on a taxation on the indemnity basis all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred.

(2)Any doubt which the Costs Court may have as to whether the costs were unreasonably incurred or were unreasonable in amount shall be resolved in favour of the party to whom the costs are payable.

In my view, to some extent fees claimed by counsel for the plaintiff are unreasonable.  A not-unreasonable fee for senior counsel is a daily fee of $8,250 including GST and 50 per cent of that rate for junior counsel.  I will allow preparation for one day only.  I will certify for a half day for each of senior and junior counsel for the preparation of written submissions in reply.

1. I will make orders in the following terms:

1.The defendant pay to the plaintiff damages assessed at $367,803 together with interest of $37,309, being a total of $405,112.

2.The defendant pay the plaintiff’s costs, including any reserved costs, on an indemnity basis to be assessed by the Costs Court in default of agreement.

3.Certify for two counsel with fees allowed as follows:

(a)senior counsel certified at a daily fee of $8,250 including GST for five days of trial and one day of trial preparation, one and a half days for preparation of written submissions and one day for a view; eight hours of special conferences at $825 including GST per hour; together with four days’ circuit fees at $610.50 including GST for the first day and $403 including GST for each subsequent day; and

(b)junior counsel certified at a daily fee of $4,125 including GST for five days of trial and one day of trial preparation, one and a half days for preparation of written submissions and one day for a view; eight hours of special conferences at $412.50 including GST per hour; together with four days’ circuit fees at $610.50 including GST for the first day and $403 including GST for each subsequent day.

4.There is a stay of 28 days on the payment of damages, interest and costs.