Foong v Ghaly; Foong v McLellan (No. 2)

[2017] NSWDC 343

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Foong v Ghaly; Foong v McLellan (No. 2) [2017] NSWDC 343
Hearing dates:	5 December 2017
Date of orders:	05 December 2017
Decision date:	12 December 2017
Jurisdiction:	Civil
Before:	Gibson DCJ
Decision:	(1) Grant leave to Mr Kin Lap Chow of Gerard Malouf & Partners to appear on that firm’s behalf in relation to the application for costs. (2) Grant leave to the plaintiff to file submissions in court notwithstanding the fact that they were only provided to the defendants this morning. (3) Grant leave to Mr Chow to file affidavits in court notwithstanding the fact that they were only provided to the defendants this morning. (4) Vary order (3) of my judgment of 3 November 2017 to order: (a) Each party pay his or her own costs up until 10 March 2014. (b) The plaintiff pay each of the defendants’ costs from 11 March 2014 onwards on an indemnity basis.
Catchwords:	COSTS – plaintiff awarded nominal damages in personal injury proceedings – application for indemnity costs based on Calderbank offer – held not reasonable for the plaintiff to have refused to accept the offer – indemnity costs order made for the period following the Calderbank offer - application by plaintiff’s former solicitor for a gross sum costs order for work performed prior to the Calderbank offer – whether reasonable to commence proceedings in the District Court resulting in nominal damages – whether costs should follow the event where an award is made for nominal damages – no entitlement by plaintiff to any costs order by reason of s 60 Civil Procedure Act 2005 (NSW)
Legislation Cited:	Civil Procedure Act 2005 (NSW), ss 60 and 98 Uniform Civil Procedure Rules 2005 (NSW), rr 42.2 and 42.5
Cases Cited:	Beaumont v Greathead (1846) 2 CB 494 Calderbank v Calderbank [1975] 3 WLR 586 Crossman v Sheahan (No 2) [2016] NSWCA 351 Foong v Ghaly; Foong v McLellan [2017] NSWDC 303 Treloar Constructions Pty Ltd v McMillan (No 2) [2017] NSWCA 146 Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311
Category:	Costs
Parties:	Plaintiff: Yena Foong Defendant (in 2014/115934): Osama Wadea Ghaly Defendant (in 2014/200147): Diane Frances McLellan
Representation:	Plaintiff's former solicitor: Mr K L Chow (Gerard Malouf & Partners) Defendants: Ms L Nicholas (Moray & Agnew)
File Number(s):	2014/115934; 2014/200147
Publication restriction:	None

Judgment

1. The plaintiff commenced proceedings arising about of two motor vehicle accidents occurred on 2 March and 2 September 2011. Although claiming damages in the amount of $20,665,550, the plaintiff was awarded $1,250 in each matter, representing a cushion of $1,000 for past wage loss and a cushion for future medical expenses of $250 in each accident.

2. In each case, I was satisfied, on the medical evidence as well as by reason of contemporaneous documentation (including surveillance film) tendered by the defendants, that the plaintiff’s injuries were of the most minor nature in the form of soft tissue injuries which resolved within one to two weeks at most. In addition, I was satisfied that the plaintiff’s financial loss arose from pre-existing problems such as criminal charges brought in relation to an offence of dishonesty for which she was convicted in the District Court of New South Wales and which resulted in the loss of her real estate licence for an extended period (see Foong v Ghaly; Foong v McLellan [2017] NSWDC 303).

3. Two applications are before the court today. The first of these is an application by the defendants, in accordance with order (3) of my orders of 3 November 2017 for indemnity costs arising from a series of offers of compromise and a Calderbank offer (Calderbank v Calderbank [1975] 3 WLR 586). The second is an application by the plaintiff’s former solicitors for payment of costs incurred while they were acting for the plaintiff.

The Calderbank offer

4. On 10 March 2014, Messrs Moray & Agnew wrote to the solicitors for the plaintiff as follows:

“Gerard Malouf & Partners

DX 27106

PARRAMATTA NSW

Without Prejudice

Dear Sir

Yena Foong v Osama Wadea Ghaly

We refer to the above and advise we now act on behalf of Allianz Australia Insurance Ltd.

We advise we have been instructed to offer your client the sum of $20,000.00 plus costs and disbursements, in full and final settlement of this matter.

Our client’s offer remains open to be accepted for a period of 21 days from the date hereof following which time the offer will lapse.

Any settlement shall be subject to our client’s standard deed of release/consent judgment, a copy of which is available on request.

In the event your client does not accept our client’s offer and ultimately the matter is required to proceed a contested hearing and in the event your client does not establish an entitlement to damages exceeding the extent of our client’s offer, we shall call upon you to produce the original of this letter to the Judge hearing this matter.

We reserve our client’s rights to seek orders, inter alia, that your client pay our client’s costs on an indemnity and/or solicitor/client and/or party/party and/or ordinary basis in accordance with the principles enunciated in the Calderbank case.

Yours faithfully,

MORAY & AGNEW”

5. A letter in similar terms was sent in the Foong v McLellan proceedings.

6. From the bar table, Mr Chow informed me that he rejected that offer on the instructions of the plaintiff. While the letter does not set out reasons for the assessment of the sum (see Treloar Constructions Pty Ltd v McMillan (No 2) [2017] NSWCA 146 at [5]), the circumstances of the claim, namely a soft tissue injury occurred in a motor vehicle accident, in circumstances where both firms specialise in personal injury litigation of this kind, amounted to sufficient reason in my view for the inclusion of such information to be effectively unnecessary.

The relevant legal provisions

7. Rule 42.2 Uniform Civil Procedure Rules 2005 (NSW) (“”UCPR”) provides:

“42.2 General rule as to assessment of costs

Unless the court orders otherwise or these rules otherwise provide, costs payable to a person under an order of the court or these rules are to be assessed on the ordinary basis.”

8. The making (and rejection) of a Calderbank offer is a factor which may cause the court, pursuant to s 98(1)(c) Civil Procedure Act 2005 (NSW) and r 42.5 UCPR, in its discretion order costs on an indemnity basis.

9. In Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311 at [57], Barrett JA explained the circumstances in which an offer will qualified as a Calderbank offer as follows:

“[57] An offer is of the Calderbank type only if the maker of it is shown to intend that the fact of its non-acceptance may be deployed as a basis for seeking a special costs order in the event of that party’s ultimate success in the action. Everything therefore depends on the message conveyed by the offer itself and any covering letter or other attendant circumstance.”

10. That is clearly the case in the offer before the court. The offer in question represented a substantial capitulation, having regard to the very limited nature and extent of the plaintiff’s injuries in relation to each of the accidents in question.

11. At the time the plaintiff already had a wealth of medical material available, in the form of reports from Associate Professor Aggarwal, Dr Lim, Dr Bodel and Dr Hampshire, details of which are set out in my judgment. She had been examined by the doctors for the defendants, including Dr Newland (who examined her on 9 February 2012). The medical evidence was clear.

12. In addition, the plaintiff had appeared before this court in its criminal jurisdiction on 3 September 2012 in her severity appeal from a sentence by the Local Court Magistrate of 15 months imprisonment to be served by way of home detention where his Honour Judge Zahra SC was provided with the information set out at [43] of my judgment. In fact, some of the costs in relation to these criminal proceedings, such as preparing a statement for the plaintiff, appear in the personal injury memorandum of fees in the application for costs by her former solicitors.

13. All of this material was a very strong indication not only to the plaintiff but to anyone advising her that the offer of $20,000 plus payment of legal costs was not merely a significant compromise on the part of the defendant but a good result for her, given the very significant difficulty she would have in establishing any form of economic loss attributable to the accident and any requirement for home care, past or future.

14. The Calderbank offer also allowed for a reasonable time to elapse, namely 21 days (Crossman v Sheahan (No 2) [2016] NSWCA 351).

15. I asked the plaintiff to tell me what ground she would rely upon to argue that it was not unreasonable for her not to accept the offer in the circumstances of this case. She addressed me about issues of fact and law, but these related principally to the merits of her case, for which she had provided a revised assessment of damages.

16. Although not addressed by the plaintiff, I have taken into account there was a claim brought on behalf of her son in relation to the first accident, whose injuries were more substantial. However, I cannot see how that would be a factor which would make it not unreasonable for her not to accept the offer that was made.

17. These were proceedings raising simple issues of fact and law. The settlement amount represented a very reasonable sum for soft tissue injuries which had required little or no treatment and where the extensive inquiries of Associate Professor Aggarwal had failed to identify any problem the plaintiff suffered from, in the three years prior to the offer of compromise being made. The non-acceptance of the offer by the plaintiff in those circumstances was, I find, unreasonable.

Offer of compromise

18. In the event that I have erred in this regard, I note that the offer of compromise for the same amount was served on 3 June 2014 in relation to the Foong v Ghaly proceedings and, in relation to the Foong v McLellan proceedings, an offer of compromise was served on 1 September 2014. The 3 June 2014 offer of compromise contained a mistake in the covering letter, but Mr Chow informed me that this did not cause any confusion in his firm’s office.

19. In the event that I have erred in relation to my findings as to the Calderbank offer, the order for indemnity costs should simply be post-dated to the 3 June 2014 offer of compromise.

Costs prior to the Calderbank offer being made

20. The plaintiff consulted three personal injury firms: Messrs Brydens, Gerard Malouf and Partners and Slater & Gordon. Only Gerard Malouf and Partners brings a claim. Mr Chow has tendered, as part of the affidavit served on his opponent this morning, a memorandum of costs which indicates that the firm’s costs from 2 December 2011 to the date of ceasing to act approximately three years later were well in excess of $10,000 for each matter and asks the court for a gross sum costs order for $10,000 for each of the proceedings.

21. A costs agreement was entered into on or about 2 December 2011 (see Annexure A to the affidavit of Mr Chow). The work in question consisted almost entirely of emails and perusals up until the commencement of proceedings in 2014. It is clear from those costs charges that, when Gerard Malouf & Partners inherited the matter from Brydens, medical reports had already been obtained and the relevant particulars of the nature and extent of injuries had been given.

22. It should have been clear to both the plaintiff and to her solicitors that the plaintiff’s bankruptcy and criminal proceedings were the reasons for her financial difficulties, and that there was little or no evidence to confirm the constellation of medical conditions the plaintiff was claiming to be suffering from. The plaintiff did not withhold from her solicitors information about the criminal proceedings brought against her. A number of the contents of the solicitors’ bill in fact relate not to the personal injury proceedings but to what is described in the memorandum of costs as the “fraud matter” (see for example, the entries from 1 April 2014 onwards), in which they were also acting.

23. It is also clear, from the details of the perusals claimed, that the solicitors had read all of the material obtained on subpoena in August 2014 and this would have made them significantly aware of the considerable difficulties in the plaintiff’s case. Although Mr Chow did not say so explicitly, I infer that the parting of the ways between the plaintiff and her legal advisers occurred by reason of some discussions of this difficulty.

24. The amount of damages awarded to the plaintiff is effectively a nominal sum, and one which is vindicatory rather than compensatory: New South Wales v Stevens (2012) 82 NSWLR 106 at [22] – [26]. In circumstances such as these, the claim resulting in the nominal award should be consisted, in costs terms, in light of s 60 Civil Procedure Act 2005 (NSW):

“60 Proportionality of costs

In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute.”

25. The manner in which the plaintiff’s claim was conducted was wholly disproportionate to the injuries she suffered. This is not accidental but intentional; there is no easy way to reconcile the plaintiff’s evidence in this court as to her medical condition with the evidence provided in the proceedings before Judge Zahra SC.

26. While I appreciate that the solicitors ceased acting for the plaintiff largely because of this inconsistency, they nevertheless acted for her for nearly three years and incurred substantial costs in circumstances where they must have been aware of the inconsistencies in her evidence, the absence of medical evidence in support and her energetic pursuit of university studies at a time when she was claiming to be so mentally afflicted that she was unable not only to work but even to drive a car.

27. Mr Chow acknowledged receiving a file from Brydens, although there were apparently some lien problems, and it must have been apparent from the reading of that file, or relatively soon thereafter, that the plaintiff’s claims of injuries of the significance she claimed were without medical foundation and inconsistent with her instructions in the criminal proceedings.

28. Taking all of the above into account, I am of the view that the appropriate order to make for costs prior to the Calderbank offer (or, if I have erred in this regard, prior to the offer of compromise) is an order on an “each party pay own costs” basis.

Orders

1. Grant leave to Mr Kin Lap Chow of Gerard Malouf & Partners to appear on that firm’s behalf in relation to the application for costs.

2. Grant leave to the plaintiff to file submissions in court notwithstanding the fact that they were only provided to the defendants this morning.

3. Grant leave to Mr Chow to file affidavits in court notwithstanding the fact that they were only provided to the defendants this morning.

4. Vary order (3) of my judgment of 3 November 2017 to order:

1. Each party pay his or her own costs up until 10 March 2014.

2. The plaintiff pay each of the defendants’ costs from 11 March 2014 onwards on an indemnity basis.

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Amendments

12 December 2017 - Representation field amended.

14 December 2017 -

Paragraph 18 - Dates for the offers of compromise amended

Order 4(b) - "4 March 2014" amended to "11 March 2014"

Decision last updated: 21 December 2017