Fischer v Brown (Ruling as to Costs)

[2021] VCC 106

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMON LAW DIVISION

Revised
Not Restricted
Suitable for Publication

MEDICAL LIST

Case No. CI-19-01350

VICKI FISCHER	Plaintiff
v
TIMOTHY BROWN	Defendant

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JUDGE:	HIS HONOUR JUDGE PILLAY
WHERE HELD:	Melbourne
DATE OF HEARING:	27 January 2021
DATE OF RULING:	19 February 2021
CASE MAY BE CITED AS:	Fischer v Brown (Ruling as to Costs)
MEDIUM NEUTRAL CITATION:	[2021] VCC 106

RULING AS TO COSTS
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Subject:COSTS

Catchwords:              Whether costs should be paid on a standard or indemnity basis – whether rejection of Calderbank offer unreasonable – breach of overarching obligations

Legislation Cited:      Civil Procedure Act 2010 (Vic), s23, s24, s29; County Court Civil Procedure Rules 2018, r63A.23

Cases Cited:Fischer v Brown [2020] VCC 2041; Calderbank v Calderbank [1975] 3 All ER 333; Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; Yara Australia Pty Ltd & Ors v Oswal (2013) 41 VR 302

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P Lamb	Monaco Solicitors
For the Defendant	Mr B Jellis	Avant Law Pty Limited

HIS HONOUR:

1On 22 January 2021, I gave judgment for the defendant in this matter.[1]  I invited the parties to attempt to agree on costs orders flowing from the judgment.  The parties were unable to do so and the matter came before me for argument on 27 January 2021.

[1]Fischer v Brown [2020] VCC 2041. This ruling should be read in conjunction with the primary decision which sets out the relevant facts and findings.

2The parties agree that the plaintiff should pay the defendant’s costs of the proceeding until 11 November 2020 on a standard basis.  The plaintiff submits that after that date, further orders should be made that the plaintiff pay the defendant’s costs on a standard basis, to be taxed in default of agreement.  The defendant, however, argues that from that date, the plaintiff should pay its costs on an indemnity basis, to be taxed in default of agreement.  The reason for this is said to be a Calderbank[2] offer sent on that date by the defendant which, it alleges, proposes a settlement more favourable to the plaintiff than the ultimate result she obtained.

[2]Calderbank v Calberbank [1975] 3 All ER 333

3The parties are then in dispute as to whether or not there should be a stay on whatever costs order is finally decided by the Court.  The plaintiff seeks a stay for 28 days on the costs order, and the defendant argues that there ought be no stay ordered.

4In considering whether a special costs order of the type sought by the defendant should be made, the parties both agree that the principles espoused in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2),[3] particularly at paragraph [25], are relevant.  In considering this matter, I am bound by those principles.  It falls to me to decide whether the rejection of the Calderbank offer made on 11 November 2020 was unreasonable.  If the rejection was unreasonable in all the circumstances, then the Court must exercise its discretion in the defendant’s favour. 

[3](2005) 13 VR 435

5The plaintiff alleges that the Calderbank offer was not reasonable for a number of reasons.  Consequently, the plaintiff argues its rejection could not be determined to be unreasonable.  First, the plaintiff submits that the offer was extremely low, particularly when regard is had to what the plaintiff would have received in her hand after deduction of legal costs, repayments to Medicare and her private health fund.  Secondly, the plaintiff alleges that she had real prospects of success on 11 November 2020 given there were two experts in support of her case and the matter was otherwise a straight factual dispute.  Thirdly, the plaintiff alleges that the offer was uncertain given that it contained clauses for denial and confidentiality and was silent as to previous costs orders.

6Turning to the terms of the Calderbank offer, which are at exhibit HED5 to the affidavit of Hayley Daniel sworn 27 January 2021.  Without repeating the contents of that letter in great detail, I summarise it as first setting out the relevant expert evidence and pointing out the deficiencies in the plaintiff’s expert material.  Secondly, it deals with an argument of causation which it says is not answered on either the facts or the medical evidence.  It then deals with the quantum evidence.  It pointed out that the claim for economic loss was poorly supported and unlikely to succeed, as well as noting significant over-inflation in the special damages claimed.  Lastly, it proposed to compromise the action on the basis of a sum of $375,000 all-inclusive of repayments (statutory or otherwise) and costs.  It broke this figure down to $225,000 for damages and $150,000 for the plaintiff’s party/party costs.  It provided that a response must be received by 17 November 2020 and attached a Deed of Release with terms including a denial of liability and confidentiality.  I pause to note here that the terms of denial and confidentiality are extremely common in litigation of this type in this jurisdiction.

7The plaintiff states that the offer must be looked at during the time it was made from the plaintiff’s perspective.  That is true.  Having performed that exercise, I consider that it was unreasonable for the plaintiff not to have accepted it.  I come to that conclusion for the following reasons. 

8First, the offer was received after a long course of litigation.  It occurred well after discovery, interrogation and mediation.  It occurred just prior to trial when all the issues were extremely well ventilated and there had been numerous discussions between the parties.  The expert evidence was well understood by all the parties to rest on the factual basis that the plaintiff herself alleged existed.  To this extent, the plaintiff was in the primary position to assess the strength of the claim, because it was the plaintiff who was providing instructions to her legal advisers which they then could assess for themselves and also understand was the basis for the expert opinion in the case.  However, as the judgment pointed out at numerous times, the plaintiff’s evidence was inconsistent with many documents in the case.  For example the Beleura nursing records of pain, the absence of the recording of pain and swelling in Nurse Mulholland’s notes, inconsistencies with both Dr Brown’s surgery notes and also those of his nurse.  These inconsistencies were critical to an assessment of the plaintiff’s case.  Even without the plaintiff having given evidence, all this was known to the plaintiff and it must have meant that there was a very significant risk that if the plaintiff was not believed on these inconsistencies, which were apparent as at 11 November 2020, then almost the entirety of her case must fail.  It left the plaintiff with her case based almost solely on the expert medical opinion that opined the appearance of the NAC in the photograph warranted intervention.

9What is also critically important is that at this stage, the plaintiff had not made contact with Nurse Mulholland, who was an absolutely critical witness in the case.  I will return to this point later.

10Secondly, while the plaintiff did have expert material in support of her claim, this was largely predicated, as set out above, on the accuracy of the plaintiff’s instructions as to her symptoms after surgery.

11All that could be said from the above matters is that as at 11 November 2020, there were very real and substantial risks for the plaintiff in conducting her case and the decision to accept or reject the Calderbank offer.  Any such risks would have to be factored into any assessment of the case. 

12Certainly, here the evidence of Nurse Mulholland was critical, and I find the failure to take a proof of evidence from her prior to determining whether to accept or reject the offer was unreasonable conduct. 

13Thirdly, while the time allowed to consider the offer was only seven days, no complaint was made by the plaintiff that this was too short a period in which to consider the offer. 

14Fourthly, the extent of the offer was to cover all matters usually in dispute in a claim such as this.   It covered not only the claim for general and economic loss damages, but also special damages.  It included an amount for costs which was not insubstantial.  It identified for the plaintiff how much had been allocated broadly for damages and that for costs.  Further, I find the terms were entirely clear and run-of-the mill for litigation conducted in this List.  The clarity of the terms of the offer could not reasonably be said to be in issue.  Further, while the plaintiff sought to confirm the day the offer was to expire, she sought no further detail as to previous costs orders, or the confidentiality terms she now complains about.  The fact that the Calderbank offer did not contain any reference to previous costs orders does not lead to any uncertainty, as it was clearly the case that previous costs orders were not to be disturbed on the defendant’s Calderbank.[4]  Lastly, the offer did foreshadow that if it were not accepted, an application of this type  pursuant to Calderbank principles would be made. 

[4]There was one costs order relating to the adjourned trial date which was an order that the plaintiff’s lawyers pay the defendant’s costs thrown away

15In sum then, I consider that the offer was comprehensive and clear.  I consider that the rejection of the offer was unreasonable in all the circumstances.  I find the defendant is entitled to its costs from 17 November 2020 on an indemnity basis.

16I will not accede to the request to order a stay on the order of costs.  There was no evidence produced which would support such a stay.

The Civil Procedure Act 2010 (“the Act”)

17I now wish to turn to an ancillary matter.  During the running of the costs application, an affidavit of Ms Hsiao, a solicitor acting on behalf of the plaintiff, was produced by the plaintiff and relied upon.  It was sworn 27 January 2021 and exhibited, at CH1, a file note between Mr Porthouse, solicitor for the plaintiff, and the plaintiff discussing the Calderbank offer.  It notes that at that time, legal costs and disbursements were in the order of $330,000 and repayment to Medicare/Bupa was in the order of $45,000.  The file note records that the offer was an improvement but still left the plaintiff with little to no compensation after costs. 

18I asked the plaintiff’s counsel at the time of the costs hearing how the figure of $330,000 for costs and disbursements was arrived at.  He indicated to me that from that, approximately $100,000 was in respect of solicitor/client costs, the remainder being for party/party costs and disbursements.  I have not been provided further with a breakdown for the disbursements as at 11 November 2020.  However, as noted above, as at 11 November 2020, the plaintiff’s lawyers had not interviewed a witness of critical importance to her case, that being Nurse Unit Manager, Nurse Mulholland.  In circumstances where the plaintiff was being charged some $330,000 in costs and disbursements, it is completely unclear to me why some of that money had not been expended on obtaining the evidence of this critical witness prior to rejecting the offer or, for that matter, proceeding to trial at all.  I am further concerned that the charging of costs in a personal injuries case of this size is disproportionate in the extreme.  That is, where the case is one with very significant risks, how costs of this magnitude could be incurred such as to mean that very substantial offers to the client could result in almost no compensation whatsoever going to them on the eve of trial.

19I have come to a tentative view that there may be prima facie grounds on which the Court may be satisfied that the plaintiff’s solicitors have contravened their overarching obligations pursuant to the Act in the following respects:

(a) Section 23 – failing to have located and interviewed Nurse Mulholland prior to 11 November 2020 in circumstances where her evidence was critical to the corroboration of the plaintiff’s version of events;

(b) Section 24 – failing to ensure that the legal costs proposed to be charged as of 11 November 2020 were reasonable and proportionate.

20The Court has broad powers under s29(1) of the Act to make any orders it considers appropriate in the interests of justice.[5] This includes the power to order a legal practitioner to pay some or all of the legal costs arising from the contravention of an overarching obligation. Pursuant to s29(2)(b) of the Act and rule 63A.23 of the County Court Civil Procedure Rules 2018 (“the Rules”), the Court proposes of its own motion to consider whether a costs order should be made against the plaintiff’s solicitors[6] in the interests of justice. The Court may, before making any order under rule 63A.23, refer the matter to the Costs Court for inquiry and report.

[5]        Yara Australia Pty Ltd & Ors v Oswal (2013) 41 VR 302

[6]        The plaintiff’s solicitors are Monaco Lawyers, based in Sydney, New South Wales, acting via Melbourne

town agents Maxiom Lawyers

21The proceeding will be adjourned to a directions hearing for the determination of the Court’s own motion inquiry under s29(1) of the Act and rule 63A.23 of the Rules, that orders be made against the plaintiff’s solicitors.

22The Orders of the Court will be as follows:

(1)     Costs are reserved pending the completion of an inquiry by the Court on its own motion as to whether a costs order should be made against the plaintiff’s solicitors in the interests of justice.

(2) Pursuant to rule 63A.23(3) of the Rules, the solicitors on the record for the plaintiff appear before the Court on 5 March 2021 at 9.30am for directions to be given for the hearing and determination of the Court’s own motion inquiry that an order under s29(1) of the Act be made against them.

(3) If the defendant seeks to make an application under s29(2)(a)(i) of the Act for an order in their favour, they are to make, file and serve any application and affidavit in support by 4.00pm on 28 February 2021.

23At the directions hearing on 5 March 2021, it is proposed, subject to hearing submissions from the parties, to make orders in the following terms:

(1)   The plaintiff’s lawyers, being Mr Porthouse of Monaco Lawyers and Mr Fernando of Maxiom Lawyers, deliver up to the Court their files relating to the representation of the plaintiff by including both electronic and hard copy materials 19 March 2021.

(2)   The Court refers the files delivered up by Monaco Lawyers and Maxiom Lawyers for inquiry, assessment and report by the Costs Court as to the:

(a)     party/party costs incurred to 11 November 2020;

(b)     solicitor/client costs incurred to 11 November 2020.

(3)     The plaintiff make, file and serve any affidavit material as to its failure to interview and take a proof of evidence from Nurse Unit Manager, Nurse Mulholland, as at 11 November 2020 by 19 March 2021.

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