Clifton v Dunn (Costs)

[2009] NSWDC 188

CITATION:	Clifton v Dunn (Costs) [2009] NSWDC 188
HEARING DATE(S):	11 June 2009
JUDGMENT DATE:	11 June 2009
EX TEMPORE JUDGMENT DATE:	11 June 2009
JURISDICTION:	Civil jurisdiction
JUDGMENT OF:	Johnstone DCJ
DECISION:	1. The defendant is to pay the costs for which it is liable to the plaintiff, so far as the issue of liability is concerned, on an indemnity basis from the date of the filing of the Defence until the admission of liability. 2. The defendant to pay the costs of this application, on the ordinary basis
CATCHWORDS:	COSTS - At the time of filing the Defence, the defence of inevitable accident was so weak as to be futile and therefore hopeless - indemnity costs awarded as to the issue of liability
LEGISLATION CITED:	Civil Procedure Act 2005: s 3(1), s 98(1)(c) Legal Profession Act 2004: s 364 Uniform Civil Procedure Rules 2005: r 42.2, r 42.5
CASES CITED:	Tetijo Holdings Pty Limited v Keeprite Australia (unreported, Federal Court of Australia, 3 May 1991 per French J) Leichhardt Municipal Council v Green (2004) NSWCA 341 Wentworth v Rogers No 5 (1986) 6 NSWLR 534 Grynberg v Muller; estate of Bilfield (2002) NSWSC 350 at [48] Fowler v Toro Constructions (2008) NSWCA 172
PARTIES:	Corey Thomas Clifton (Plaintiff) Janice Dunn (Defendant)
FILE NUMBER(S):	3167/07
COUNSEL:	Mr H Marshall SC with Mr D J Price (Plaintiff) Ms N Miller, Solicitor (Defendant)
SOLICITORS:	Oliver Campbell Lawyers (Plaintiff) Holman Webb (Defendant)

JUDGMENT

1. Before me is an application by the plaintiff for indemnity costs.

2. The substantive proceedings involved a claim by the plaintiff for damages in respect of injuries received in a motor accident at Cessnock on 20 May 2005. The circumstances of the accident were that the vehicle being driven by the plaintiff was struck from behind with considerable force by the vehicle being driven by the defendant.

3. The substantive claim for damages came before me for hearing on Monday 20 April 2009 and proceeded over the next seven days. Liability, which had been put in issue by the Defence, remained in issue. The defence was based entirely upon an assertion of inevitable accident caused by reason of the defendant having suffered an epileptic seizure. Shortly before lunch on the fourth day of the trial, Thursday 23 April 2009, counsel for the defendant announced that liability was admitted.

4. I then proceeded to assess the damages and gave judgment with written reasons on 29 May 2009.

5. I ordered the defendant to pay the plaintiff’s costs on the ordinary basis but gave leave to apply for some other order.

6. The present application is brought under s 98(1)(c) of the Civil Procedure Act 2005 which empowers the court, subject to the rules, to make an order that costs are to be payable on an indemnity basis. The only relevant rule is r 42.2, which provides: “Unless the court orders otherwise...costs payable to a person under an order of the court...are to be assessed on the ordinary basis”.

7. The ordinary basis is defined in s 3(1) of the Civil Procedure Act 2005 as the basis set out in s 364 of the Legal Profession Act 2004. Indemnity costs, on the other hand, are defined in r 42.5 and are designed to afford a party a more complete indemnity in respect of any liability for practitioner/client costs.

8. An order for indemnity costs requires the exercise of discretion and it has been said the occasion for the exercise of that discretion should remain exceptional; see Tetijo Holdings Pty Limited v Keeprite Australia (unreported, Federal Court of Australia, 3 May 1991 per French J). Caution is to be exercised before departing from making costs order on the ordinary basis; Leichhardt Municipal Council v Green (2004) NSWCA 341.

9. The plaintiff’s submission in essence is that the CTP insurer improperly put liability in issue as it had no prospects of establishing the defence as to which it carried the onus of proving. He submits that there was no proper basis for putting liability in issue, and maintaining that denial, when the defendant herself expressly denied having had an epileptic seizure.

10. Whilst it is true that the defendant herself denied having an epileptic seizure, she did concede in a telephone conversation with the solicitor retained on behalf for the CTP insurer that she blacked out and does not remember the circumstances of the accident, but that if a doctor said she had had an epileptic seizure she would not gainsay that opinion. The defendant also points to a report from Professor Lorenz, to justify the denial of liability. In the opinion of that specialist the cause of the accident was an epileptic seizure. That opinion was a validly held view, properly reached and appropriately reasoned. Whether it was ultimately to be accepted or rejected by the court, especially in the light of other evidence, is not to the point.

11. Mere weakness of a case or a defence is not sufficient to warrant an exercise of the discretion to award indemnity costs: see Wentworth v Rogers No 5 (1986) 6 NSWLR 534. As to the dangers of assessing hopelessness in the light of hindsight see Grynberg v Muller; estate of Bilfield (2002) NSWSC 350 at [48].

12. In my view the evidence falls short of establishing any improper motive or purpose on the part of the CTP insurer in initially maintaining the allegation of inevitable accident. The flaw in the defendant’s argument, however, is that none of its evidence was available at the time of the filing of the Defence. All that was available to the CTP insurer at the time of the filing of the Defence was a report from Dr Wilmont, the defendant’s general practitioner, dated 24 July 2006. The ultimate question is whether that medical evidence provided a proper basis for pleading inevitable accident in the Defence: see Fowler v Toro Constructions (2008) NSWCA 172.

13. It is common ground that Dr Wilmont had been treating the defendant and was aware of her history of epilepsy. In his report he says

“I reviewed Ms Dunn on 26 May 2005, arranging an x-ray of her sternum. I reiterated the advice given by police that she should not drive. Although seizure free for over two years it is likely that Ms Dunn suffered an epileptic event that precipitated her accident. She has been advised accordingly regarding her licence.”

14. Whilst I accept that, combined with the other evidence from the defendant that she blacked out and did not really know what happened, it was sufficient for the insurer to maintain a denial of liability and for it to investigate whether or not the statement by the general practitioner might be substantiated, the ultimate question is whether a bare statement by a general practitioner that someone was likely to have had an epileptic event is sufficient for a party to file a Defence denying liability. That is another question, particularly in circumstances where the Defence is required to be certified by a solicitor under the Legal Profession Act 2004.

15. In my view, what the doctor expresses in that report is not a reasoned medical opinion sufficient to justify the pleading of a defence of inevitable accident in the circumstances of this claim, and it is what I described in argument as a quantum leap.

16. For all those reasons, in my view, as at the date of the filing of the Defence on 11 September 2007, the defendant had no basis to assert a defence of inevitable accident such that the defence was at that time so weak as to be futile and therefore hopeless.

17. In that circumstance, in the exercise of my discretion, I consider that the defendant should pay the costs for which it is liable to the plaintiff on an indemnity basis so far as that issue is concerned, from the date of the filing of the Defence until the admission of liability.

18. This application, being a discrete application, calls for the making of a separate costs order and I order the defendant to pay the costs of this application, on the ordinary basis.