El Tarraf v Linknarf Limited

[2004] NSWSC 244

CITATION:	El Tarraf v Linknarf Limited [2004] NSWSC 244
HEARING DATE(S):	19 December 2003, 20, 27 February 2004
JUDGMENT DATE:	1 April 2004
JURISDICTION:	Common Law Division
JUDGMENT OF:	Studdert J
DECISION:	(1) Judgment for the plaintiff in the sum of $122,680.65. (2) Order that the defendant pay fifty percent of the plaintiff's costs of the proceedings before this Court, excluding the plaintiff's costs for the time lost, the subject of order 3, and that the defendant also pay fifty percent of the plaintiff's costs of the hearing before Newman AJ. (3) Order that the plaintiff pay the defendant's costs thrown away by reason of the disruptions of the hearing before me on 10, 12, 13 and 14 February 2003.
LEGISLATION CITED:	Workers' Compensation Act, ss 63, 151B, 151Z Motor Accidents Compensation Act, ss 50, 130 Supreme Court Act, s 76 Supreme Court Rules, Pt 52A rr 4,33
CASES CITED:	Berrico Estate Pty Limited v Andersen [2003] NSWCA 23 Connors v Simplot Pty Limited [2001] NSWCA 205 Danby v BBC Hardware Limited [2001] NSWCA 89 El Tarraf v Linknarf [2003] NSWSC 1144 Quach v Mustafa (unreported) NSWCA, 15 June 1995 Tabvena v Oag [2002] NSWCA 61
PARTIES :	Joe El Tarraf (Plaintiff) Linknarf Limited (Defendant)
FILE NUMBER(S):	SC 20162/99
COUNSEL:	A.J. Bartley SC (Plaintiff) 19.12.03 K. Rewell SC/C. Thompson (Plaintiff) 20.2.04 C. Hoeben SC/C. Thompson (Plaintiff) 27.2.04 P. Deakin QC/G. Nolan (Defendant)
SOLICITORS:	Carroll & O'Dea (Plaintiff) Sparke Helmore (Sydney (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

STUDDERT J

Thursday 1 April 2004

20162/99 JOE EL TARRAF v LINKNARF LIMITED

JUDGMENT

1 HIS HONOUR: On 8 December 2003 I published my assessment of damages in this matter (El Tarraf v Linknarf [2003] NSWSC 1144) and directed that the matter be relisted to address the issues of interest, judgment and costs.

2 On 20 February 2004 Mr Rewell of Senior Counsel appeared with Mr Thompson for the plaintiff. The Court was then advised that no claim for interest was being pursued. This left the issues of judgment and costs.

3 On 20 February 2004 Mr Rewell submitted that judgment was to be entered for the gross amount of the damages I assessed and that no deduction should be made for workers’ compensation payments that had been made. On an earlier occasion Mr Bartley had submitted that the amount of the “payback” was, in any event, challenged. On 20 February 2004 Mr Deakin tendered two affidavits by Mark Nelson sworn 18 December 2003 and 19 February 2004. Mr Nelson was not required for cross examination but Mr Rewell submitted that the amount of the “payback” was irrelevant for present purposes since it should not be deducted from the damages assessed in determining the proper amount for which judgment was to be entered.

4 Mr Deakin was not in a position to argue this, not having realised previously that the plaintiff challenged the defendant’s contention that the plaintiff was only entitled to judgment for the nett amount after deducting the “payback” figure. Hence that issue was adjourned for argument until 27 February 2004, on which occasion Mr Hoeben of Senior Counsel appeared with Mr Thompson for the plaintiff. I did receive submissions on costs from Mr Rewell and from Mr Deakin on 20 February 2004, but I propose in this judgment to address firstly the issue of the judgment to be entered and secondly the question of costs.

5 At the outset, the affidavit evidence of Mr Nelson satisfies me that the relevant “payback” figure is $80,592.14. The evidence satisfies me that the defendant paid that sum in respect of the plaintiff’s claim for his right knee injury on 4 April 1996. Indeed, there is no contrary evidence. Whilst Mr Bartley submitted last year that there were other injuries for which part of that aggregate sum was paid, there is no evidence to support that contention and I accept the defendant’s evidence in point. Having done so, do I enter judgment for $203,272.79, being the damages I assessed, or for that sum less $80,592.14?

6 Under the previous Workers’ Compensation Act the position was clear. Section 63(5) of the earlier statute made it so:

“Where any payment by way of compensation under this Act has been made, the payment shall, to the extent of its amount, be a defence to proceedings against the employer independently of this Act in respect of the injury.”

7 Section 63(5) has no counterpart in the Workers’ Compensation Act 1987. The latter statute regrettably lacks the clarity of its predecessor on this point.

8 The effect of the recovery of damages from an employer on the payment of compensation is addressed in s 151B of the 1987 statute:

“(1) If a person recovers damages in respect of an injury from the employer liable to pay compensation under this Act:
(a) the person then ceases to be entitled to any further compensation under this Act in respect of the injury concerned (including compensation claimed but not yet paid), and
(b) the amount of any compensation already paid in respect of the injury concerned is to be deducted from the damages (awarded or otherwise paid as a lump sum) and is to be paid to the person who paid the compensation.
(2) This section does not apply to a person who recovers damages for non-economic loss in respect of an injury if the person does not recover any damages for economic loss in respect of that injury because of the operation of section 151H (No damages for economic loss unless injury serious).
(3) A person who recovers damages for economic loss in respect of an injury but does not recover any damages for non-economic loss in respect of that injury because of the operation of section 151G (Damages for non-economic loss) is not prevented from recovering, and is not required to deduct under this section, any compensation under Division 4 (Compensation for non-economic loss) of Part 3 except compensation under section 67 (Compensation for pain and suffering).
(4) In applying subsection (2) or (3) to a particular case:
(a) the reason for the non-recovery of damages for economic loss or non-economic loss (respectively) must be solely the operation of section 151H or 151G (respectively), and not a combination of reasons (including, for example, a partial settlement or partial compromise of a claim), and
(b) the amount of damages for non-economic loss applied in determining the operation of the threshold test in the relevant section must be calculated on the basis of the actual loss, and must not be reduced on the basis of any settlement or compromise or otherwise.”

9 It is to be noted that the scheme of the section above set out is that it is dealing with the situation where a worker “recovers damages” from his employer. In that situation previous compensation payments are “to be deducted from the damages” and are “to be paid to the person who paid the compensation”.

10 The section provides no mechanism for determining a dispute as to the amount of the compensation. Plainly, in the event of dispute under the earlier statute this would be determined by the judge by whom damages were assessed. That is because the payment of workers’ compensation benefits was to be treated as “a defence”. A further observation as to the language of s 151B(1) is that the section contemplates a payment to the person who paid the compensation to reimburse that person for the amount of it. Who is the person contemplated by s 151B(1)(b) who is to make the payment? Ordinarily, of course, where an employee sues his employer, the latter enjoys the benefit of a statutory policy of workers’ compensation insurance, with its common law extension, and it is the employer’s insurer which assumes the conduct of the employer’s defence of the employee’s action. Hence in practise the defendant would not be making the refund payment to itself or its insurer. Notionally any payment would be a payment made by the plaintiff, although I have no doubt that in practice the defendant simply accounts to the plaintiff for the nett balance of any verdict sum, after taking account of statutory payments made to or on behalf of the plaintiff.

11 Section 151B is concerned with the situation of a worker who recovers damages from his employer alone. The section is to be contrasted with s 151Z which applies where there are proceedings to recover damages both from the employer and a third party. Section 151Z provides:

“(1) If the injury for which compensation is payable under this Act was caused under circumstances creating a liability in some person other than the worker’s employer to pay damages in respect of the injury, the following provisions have effect:
(a) the worker may take proceedings both against that person to recover damages and against any person liable to pay compensation under this Act for payment of that compensation, but is not entitled to retain both damages and compensation,
(b) if the worker recovers firstly compensation and secondly those damages, the worker is liable to repay out of those damages the amount of compensation which a person has paid in respect of the worker’s injury under this Act, and the worker is not entitled to any further compensation,
(c) if the worker firstly recovers those damages the worker is not entitled to recover compensation under this Act,
(d) if the worker has recovered compensation under this Act, the person by whom the compensation was paid is entitled to be indemnified by the person so liable to pay those damages (being an indemnity limited to the amount of those damages),
(e) if any payment is made under the indemnity and, at the time of the payment, the worker has not obtained judgment for damages against the person paying under the indemnity, the payment is, to the extent of its amount, a defence to proceedings by the worker against that person for damages,
(e1) if any payment is made under the indemnity and, at the time of the payment, the worker has obtained judgment for damages against the person paying under the indemnity (but judgment has not been satisfied), the payment, to the extent of its amount, satisfies the judgment,
(f) all questions relating to matters arising under this section are, in default of agreement, to be settled by action or, with the consent of the parties, by the Commission.
(2) If, in respect of an injury to a worker for which compensation is payable under this Act:
(a) the worker takes or is entitled to take proceedings independently of this Act to recover damages from a person other than the worker’s employer, and
(b) the worker also takes or is entitled to take proceedings independently of this Act to recover damages from that employer,
the following provisions have effect:
(c) the damages that may be recovered from the person by the worker in proceedings referred to in paragraph (a) are to be reduced by the amount by which the contribution which the person would (but for this Part) be entitled to recover from the employer as a joint tortfeasor or otherwise exceeds the amount of the contribution recoverable,
(d) the amount of the contribution that the person is entitled to recover from the employer as a joint tortfeasor or otherwise is to be determined as if the whole of the damages were assessed in accordance with provisions of Division 3 as to the award of damages,
(e) if the worker does not take proceedings against that employer or does not accept satisfaction of the judgment against that employer, subsection (1) applies as if the worker had not been entitled to recover damages from that employer, except that:
(i) if the compensation paid by that employer exceeds the amount of the contribution that could be recovered from that employer as a joint tortfeasor or otherwise—the indemnity referred to in subsection (1) (d) is for the amount of the excess only, and
(ii) if the compensation paid by that employer does not exceed the amount of that contribution—subsection (1) (d) does not apply and the employer has, to the extent of the compensation so paid, a defence to an action for such a contribution.
(3) This section applies to proceedings taken independently of this Act by a person to whom compensation is payable under this Act in respect of the death of a worker as a result of an injury.
(4) If a worker is liable under subsection (1) (b) to repay any money out of damages recovered by the worker, the worker is not liable to repay the money out of any damages payable after the date of recovery by way of periodic or other payments for loss of future earnings or earning capacity or for future expenses.
(5) For the avoidance of doubt, this section applies and is taken always to have applied to the recovery of compensation or damages, whether or not the compensation or damages were paid under an award or judgment. For example, compensation or damages may be paid under an agreement.”

12 Section 151Z(1)(b) imposes upon the worker the liability to repay compensation out of the damages. The language of s 151Z(1)(b) is to be compared with the language of s 151B(1)(b) but both provisions have in contemplation a requirement that the worker account out of his damages for compensation benefits.

13 Section 151Z(1)(e) introduces a concept missing from s 151B, namely the provision of a defence to proceedings by the worker concerning workers’ compensation benefits received. The payment is expressed to be “a defence”. This same concept of raising payments as a defence is repeated in s 151Z(2)(e)(ii). The contrast between the language of s 151B and the language of s 151Z indicates that the legislature was deliberate in omitting from the earlier section the concept of payments of workers’ compensation as a defence.

14 The explanation for what the legislature has done may well lie, as Mr Hoeben has submitted, in the scheme of the 1987 statute as a whole where rights to damages for injured workers were restored by the 1987 Act. The restoration was limited and thresholds were introduced. The legislature clearly had in mind that any payments previously received by way of workers’ compensation benefits were to be ignored when determining whether the threshold requirements were met.

15 The 1987 statute is to be contrasted with the Motor Accidents Compensation Act 1999. Mr Hoeben drew attention to the language of s 50(9) of that Act and to the language of s 130 of it:

“50. (9) A payment made under this Part before the injured person obtains judgment for damages against the defendant is, to the extent of its amount, a defence to proceedings by the injured person against the defendant for damages.
(Emphasis added)
130. A court must reduce the amount of economic loss of an injured person or deceased person as a consequence of a motor accident by:
(a) the amount of any entitlement to or payment of compensation for expenses under the Victims Compensation Act 1996 for the injury suffered in the accident, and
(b) payments made to or on behalf of the claimant by an insurer or Nominal Defendant in relation to a claim made by the claimant (including payments made under Part 3.2 or Part 4.3), and
(c) any other amount of a kind prescribed by the regulations for the purposes of this section.”

16 For the purposes of s 151B(1)(b), as I read the statute, the damages recovered are the gross damages assessed, that is before bringing into account any “payback” figure. This leaves, however, the question as to the point of time at which the obligation to pay back compensation benefits is to be recognised. Is it to be before or after judgment? Mr Hoeben has submitted that it must be after judgment and certainly that submission is consistent with s 151Z(1)(f) which contemplates in the absence of agreement the bringing of an action to determine a dispute arising under s 151Z(1).

17 Without reference to authority I would have favoured Mr Hoeben’s submissions. However, Mr Deakin has taken me to a number of decisions of the Court of Appeal in which s 151B had to be given effect. I shall deal with these decisions in chronological order.

18 The earliest of the decisions was in Danby v BBC Hardware Limited [2001] NSWCA 89. Following a successful appeal, the court, constituted by Handley JA and Davies AJA, set aside the judgment, substituting a lesser verdict sum of $174,193. Payments had been made under the 1987 statute and in the judgment of the court, delivered by Handley JA, his Honour said:

“Because of s 151B of the Workers’ Compensation Act, there will be judgment for the plaintiff for $149,081.”

19 The court treated the matter on the same basis as if s 63(5) of the earlier statute had applied. The workers’ compensation payments were deducted from the verdict to determine the judgment sum.

20 The next decision was in Connors v Simplot Pty Limited [2001] NSWCA 205. Here the court was constituted by Priestley, Powell and Beazley JJA. The other members of the court agreed with the judgment of Beazley JA. Her Honour considered that the appeal should be upheld and this involved setting aside the verdict and judgment of the trial judge. The case was one involving injury in the course of the appellant’s employment. For present purposes it is necessary only to refer to paras 66-68 of her Honour’s judgment:

“66 His Honour's individual awards were not under challenge. However, his Honour did not specify the amount of the verdict, and as his judgment indicates, he noted the "Fox v Wood" component had not been agreed between the parties and leave was given to the parties to bring in a minute of the "precise figure that was eventually calculated" . That does not appear to have been done.
67 There were other calculations required for the verdict amount to be arrived at. Future economic loss had to be reduced by 15%. Calculations had to be done so as to comply with s 151B(1)(b) of the Workers Compensation Act 1987 (NSW) in relation to past economic loss, medical expenses and out-of-pocket expenses. Finally, it is uncertain whether any claim was pressed for pre-trial interest: see s 151M(4) of the Workers Compensation Act .
68 In those circumstances, it seems that the appropriate course is to direct the parties to bring in short minutes of order as to the verdict amount.”

21 The parties were invited to bring in short minutes of order as to the amount of the judgment but from the paragraphs above recorded, it is plain that the Court of Appeal invited the approach of making the calculations referred to in para 67 to arrive at “the verdict amount” in accordance with para 68. So it was that in Connors the approach of the court was to treat the workers’ compensation benefits as having to be deducted from the verdict sum “so as to comply with s 151B(1)(b).”

22 In Tabvena v Oag [2002] NSWCA 61 the issue arose as to whether, where contributory negligence was found, thus reducing the plaintiff’s damages, there ought to be a corresponding reduction in the “payback” concerning workers’ compensation benefits that had been received. Meagher JA, with whose judgment Powell JA and Mathews AJA agreed, concluded that what should be deducted was the totality of the workers’ compensation benefits. His Honour said at para 9 of his judgment:

“The next issue raised in the appeal concerned the calculation of the reduction which should have been made for worker's compensation paid to the respondent. The amount involved was $169,328.81. The appellant submits that the whole of this amount should have been deducted from the plaintiff's verdict. His Honour, however, held that the amount of the deduction should be limited to 40% of that sum, in view of his findings on contributory negligence. There is very little authority on this issue. The history of continued legislative change in both the Workers Compensation Act 1987 and the Law Reform (Miscellaneous Provisions) Act 1965 dealing with the problem has been set out in an appendix to this judgment. At the date of trial, the matter was governed by s151B(1)(b) of the Workers Compensation Act 1987, which provides:

‘Effect of recovery of damages from employer on payment of compensation
(1) If a person recovers damages in respect of an injury from the employer liable to pay compensation under this Act:
(b) the amount of any compensation already paid in respect of the injury concerned is to be deducted from the damages (awarded or otherwise paid as a lump sum) and is to be paid to the person who paid the compensation.’

In Unver v Liftronic in this Court (unreported, 1 December 1999) it was assumed by everybody that the payment was to be apportioned, but the matter was not argued. In Zampetides v State of New South Wales (unreported, 23 August 2000, Malpass M) the only reported case, apparently, in which the matter was argued, a result favourable to that sought by the appellant was obtained. With great respect, I think the Master was correct. Whatever injustices may flow from that provision, the provisions of the Act are starkly unambiguous: the entire sum must be deducted from a plaintiff's verdict .”
(Emphasis added)

23 The court then set aside the judgment under appeal and in lieu thereof ordered “Verdict for the plaintiff in the sum of $208,268.48” (which was the amount of damages assessed against the employer less the total workers’ compensation benefits the plaintiff had received).

24 In each of the above cases, what the Court of Appeal did resulted in a judgment in which the judgment sum was arrived at after deduction of workers’ compensation benefits. In Danby the verdict was for the gross amount and the judgment for the nett amount; in Connors the verdict, and consequently the judgment, was for the nett amount; in Tabvena the verdict was for the nett amount.

25 In Berrico Estate Pty Limited v Andersen [2003] NSWCA 23 the court was constituted by Giles JA, Hodgson JA and Cripps AJA. This was a case in which the plaintiff successfully sued his employer but in which, by majority, the Court of Appeal set aside the judgment of the court below and ordered the entry of judgment for the defendant. However, in his dissenting judgment, Hodgson JA concluded that the plaintiff was entitled to recover his out of pocket expenses which had been paid under the 1987 Workers’ Compensation Act. His Honour considered the language of s 151B and said:

“34 In my opinion, the words ‘is to be deducted from the damages’ in s.151B(1)(b) contemplate that the verdict will include the amount in question, but this amount is then not paid to the worker but either paid by the employer to its insurer or else retained by the insurer in payment of itself.
35 So on the approach I take, there would be a verdict for the plaintiff opponent in this amount. However, I do not think this verdict would carry costs. Indeed I think the appropriate order would be, in those circumstances, that the plaintiff opponent pay the claimant's costs of the proceedings, because in substance the proceedings would have wholly failed.
36 For those reasons, the orders that I would propose are as follows. Leave to appeal granted, subject to a notice of appeal being filed within fourteen days. Appeal allowed and orders below set aside. Verdict and judgment for the opponent in the sum of $7235.68, with the opponent to pay the claimant's costs of the proceedings. Opponent to pay the claimant's costs of the application and appeal, and to have a Suitor's Fund certificate if otherwise entitled.

26 It is not possible to reconcile the judgment of Hodgson JA in Berrico with the earlier judgments to which I have referred but, of course, his Honour was dissenting in the Berrico judgment.

27 Had it not been for the approach taken by the Court of Appeal in Danby, Connors and Tabvena, I would have been disposed to conclude that the obligation to repay the workers’ compensation benefits did not affect the amount of the judgment for which judgment was to be entered. I would have been inclined to approach the matter as Hodgson JA did in Berrico.

28 Whilst it does not appear that in any of those three decisions of the Court of Appeal the matter was the subject of argument, nevertheless in each case attention was directed to the impact of s 151B and in each of those three cases the Court of Appeal determined that the statutory payments had to be deducted from the damages assessed at least in order to determine the amount for which judgment was to be entered. It seems to me to be proper in the circumstances that I should adopt the same approach here.

29 It is agreed that the assessment of damages does not attract interest and the assessment of damages therefore constitutes my verdict in this case, but judgment is to be arrived at after deduction of the workers’ compensation benefits totalling $80,592.14. The sum for which judgment is to be entered is therefore $122,680.65.

30 I turn to the issue of costs.

31 The plaintiff submits that he is entitled to an order for costs in his favour but the defendant submits that the plaintiff should have no costs. Section 76 of the Supreme Court Act affords to the Court a discretion in relation to costs, but the exercise of that discretion is “subject to this Act and the rules…” (s 76(1)).

32 The relevant rules are to be found in Pt 52A:

“4 Powers of the Court generally
(1) The powers and discretions of the Court under section 76 of the Act (which relates to costs generally) shall be exercised subject to and in accordance with this Part…
33 Claims for money
(1A) …
(1) This rule:…
(b) does not apply:
(iv) to proceedings that have been considered by the Court under section 143 (5) of the District Court Act 1973 and have not been ordered to be transferred to the District Court under section 143 of that Act.
(2) Where:…
(f) in proceedings commenced after 1 October 1997, where a plaintiff recovers:
(ii) in any other case—a sum not more than $225,000,
the plaintiff shall not be entitled to payment of his or her costs of the proceedings unless, it appearing to the Court that the plaintiff had sufficient reason for commencing or continuing proceedings in the Court, the Court makes an order for payment.
(3) Without limiting the generality of subrule (2), it shall be taken to be a sufficient reason if the plaintiff had reasonable grounds at the relevant time for expecting that he would recover an amount in excess of the amount prescribed by that subrule.”

33 These proceedings were commenced after 1 October 1997 and the plaintiff failed to recover more than $225,000. Hence the defendant has submitted that the plaintiff should recover no costs. The plaintiff has submitted that there were sufficient reasons for him to commence and to continue proceedings in this Court and that therefore he should have costs.

34 There has been disagreement concerning the construction of r 33. The defendant submits that the amount the plaintiff here recovered is the amount for which judgment is to be entered. The plaintiff, on the other hand, submitted that the amount recovered for the purposes of r 33 is the amount of the gross assessment of damages. In my opinion, the submission of the plaintiff is to be preferred.

35 Rule 33 is plainly intended to discourage litigants from pursuing cases in this Court which would be more appropriately brought in the District Court. However, sub-r (2) and sub-r (3) recognise that there may be cases in which costs ought to be awarded to a plaintiff notwithstanding the amount recovered. There is to be found no rigorous definition of “reasonable grounds” for the purposes of sub-r (3) nor “sufficient reason” for the purposes of sub-r (2).

36 There are a number of considerations which the plaintiff has asked to be weighed in his application for costs in the present case.

37 However, before dealing with those matters I should first deal with a submission made by Mr Rewell concerning r 33(1)(b)(iv). It was submitted that r 33 does not apply because the court considered whether the proceedings should have been transferred to the District Court and did not order their transfer. On 15 December 1999 Master Malpass, according to the associate’s record of proceedings, said:

“I defer the show cause question pending the hearing of the arbitration.”

38 That notation evidences that the court had in mind consideration of the question as to whether this cause should be transferred to the District Court. The associate’s notation proceeds:

“If the arbitration does not see a resolution to proceedings the matter should be referred back to the Acting Prothonotary to be considered in the light of the evidence.”

39 There is nothing in the court papers to indicate that the question of transfer to the District Court was ever considered after that. However, Mr Rewell submitted that the question had arisen before Master Malpass, as his associate’s notations evidence.

40 I am not attracted by that submission at all. The highest that the court record indicates is that the matter was flagged for future consideration but the court never considered whether the matter should be transferred to the District Court. The subsequent history of the matter was that there was an arbitration with an award on 4 July 2000. Later that same month the defendant applied for a rehearing and Newman AJ conducted that hearing on 3 and 4 May 2001. A verdict was entered in favour of the defendant on 22 May 2001 and the plaintiff appealed. Then, in December 2001, the appeal came on for hearing and the Court of Appeal allowed the appeal and remitted the matter for a new trial on damages. Hence the matter came before me in February 2003.

41 Mr Rewell submitted that the plaintiff had sufficient reason for commencing the proceedings in this court and that the court should therefore allow the plaintiff his costs. He relied upon the following:

(i) At no stage did the defendant seek to have the matter transferred to the District Court and, indeed, in a DCM document filed by the defendant it indicated that the defendant considered the matter appropriate to be brought in this court.

(ii) The range of damages in this case was very much at large. An acceptance of the plaintiff’s presentation would have justified a very substantial allowance for loss of earning capacity, both past and future. This is demonstrated by reference to the plaintiff’s DCM documents filed, and in my judgment I observed (at para 6):

“The plaintiff presents a very substantial claim for damages indeed. Apart from a substantial claim for the non economic aspects of general damages, the plaintiff claims wage loss calculated in excess of $230,000 to date and an allowance for future loss of earning capacity in excess of $220,000.”


Had his case been accepted in its entirety, the plaintiff had very real prospects of recovering damages in excess of $450,000. He was supported by the specialist who carried out an arthroscopy in 1996. Dr Rowden found pathology in the knee in x-rays taken shortly before the rehearing and this pathology afforded an explanation for the plaintiff’s claimed pain and disability. The issue, as my earlier judgment reveals, was not so much a medical issue with competing medical opinions but an issue as to whether the plaintiff was to be accepted and, if so, to what extent. Coupled with this was the issue as to whether the plaintiff had made any real effort to use his residual earning capacity.

(iii) The defendant introduced into evidence for the first time at the rehearing before me filmed activity of the plaintiff which, as my judgment indicates, afforded evidence that influenced my assessment of the plaintiff. The defendant chose not to use that film either at the arbitration or at the first hearing before Newman AJ. In Quach v Mustafa (unreported, NSWCA, 15 June 1995) the Court of Appeal determined that the failure to use film at an arbitration had cost consequences adverse to the defendant. In the course of his judgment Kirby P, with whom the other members of the Court agreed, said:

“As a matter of principle, to secure the operation of arbitration proceedings as the Act appears to contemplate (as a true alternative to a hearing in the District Court and to relieve that court of the burden of hearings), the failure of the appellant to show their film has a consequence. There has been a considerable waste of public and private time and cost. The process of settlement which it is the object of Pt 19A r 9 of the District Court Rules to promote is frustrated. At least in the circumstances of this case, where the films were obviously most significant, the failure to show them before the arbitrator should have cost consequences.”
It does not follow from the decision in Quach that in every case in which the defendant fails to use available film at an arbitration this will have cost consequences adverse to the defendant on a rehearing. So much depends upon the nature of the film. In the present case its impact depended upon what the plaintiff had to say about himself in the witness box and about the significance of his being able to sit on a stool for lengthy periods and to squat. I do not regard this as being a case in which the failure of the defendant to use the film at the arbitration inevitably had cost consequences.

However, because the defendant chose not to use the film, the plaintiff lost the opportunity of making an assessment of evidence that bore upon his expectations as to the likely range of damages.

42 This case presented difficulties of assessment for the parties and for the Court. The damages awarded indicate that this was a case which fell comfortably within the District Court’s jurisdiction but, having considered the competing submissions, I have concluded that the plaintiff had sufficient reason to start the case in the Supreme Court and to leave it here. For its part, the defendant made no application for its transfer.

43 Nevertheless, I do not consider it a case in which it is appropriate to allow the plaintiff full costs. Rule 33(4)(f)(ii) provides for recovery of half costs in a case other than a motor accident claim where more than $225,000 is recovered but not more than $450,000. It seems to me that the time for the plaintiff to reassess his position was after the arbitration hearing and in that arbitration procedure the plaintiff was awarded $246,278 gross. It was proper for the plaintiff to consider after those proceedings that he had very real prospects of recovering at least that much on a rehearing, in which event he would have recovered, by reference to r 33(4)(f)(ii) half of his costs, absent a court order to the contrary.

44 The purpose behind Pt 52A r 33 is clear. Litigants are to be discouraged from bringing proceedings in this court where the issues are appropriate for resolution in the District Court. However, I have concluded in all the circumstances of this case and having regard to the history of the matter, that the plaintiff ought to be allowed some costs and in my opinion justice would be done by ordering the defendant to pay half the plaintiff’s costs of the proceedings.

45 I am also required to deal with the question of costs of the hearing before Newman AJ. It seems to me that I should make the same order concerning those costs, and I do so.

46 There is this qualification. The conduct of the rehearing was disrupted by the late service of Dr Rowden’s report. On 10 February 2003 I indicated that the plaintiff would have to pay the costs thrown away by reason of the late service of the report and time lost on 10 February 2003 by reason of that late service. On 12 February 2003 proceedings were adjourned until 2.00 pm on Friday 14 February 2003, and that meant the loss of hearing time on the afternoon of 12 February 2003, hearing time on 13 February 2003, being a whole day, and half of the hearing time on 14 February 2003. The plaintiff is to have no costs of the time thus lost, but I order him to pay the defendant’s costs thrown away by reason of those disruptions of the hearing before me.

Formal orders

47 1. Judgment for the plaintiff in the sum of $122,680.65.

2. Order that the defendant pay fifty percent of the plaintiff’s costs of the proceedings before this Court, excluding the plaintiff’s costs for the time lost, the subject of order 3, and that the defendant also pay fifty percent of the plaintiff’s costs of the hearing before Newman AJ.

3. Order that the plaintiff pay the defendant’s costs thrown away by reason of the disruptions of the hearing before me on 10, 12, 13 and 14 February 2003.

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Last Modified: 04/01/2004