Gordon v Truong; Truong v Gordon (No 2)

[2014] NSWCA 164

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Gordon v Truong; Truong v Gordon (No 2) [2014] NSWCA 164

Hearing dates:

On the papers

Decision date:

26 May 2014

Before:

Basten JA at [1]; Macfarlan JA at [9]; Simpson J at [10]

Decision:

(1)  Vacate so much of Order (2) of the orders made by this Court on 4 April 2014 as relates to the costs order in the District Court;

(2)  Order that the costs of the plaintiff in the District Court be paid by the defendant; order that, for the first three days of the trial, costs be assessed on an indemnity basis, and otherwise on the ordinary basis;

(3)  Order that the appellant pay the costs of this Notice of Motion.

[Note:  The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system.  Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18.  Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

COSTS - trial - motor vehicle accident - breach of duty admitted on first day of trial - contributory negligence and damages in issue at trial - judgment varied on appeal - whether costs ordered against defendant to be assessed partly on indemnity basis - whether claim could have been processed through Claims Assessment and Resolution Service (CARS) had liability been admitted earlier - claim exempted from CARS process due to insurer's denial of fault on part of defendant - costs of motion for costs of trial

Legislation Cited:

Motor Accidents Compensation Act 1999 (NSW)

Cases Cited:

Gordon v Truong; Truong v Gordon [2014] NSWCA 97
Truong v Gordon (District Court (NSW), Phegan ADCJ, 14 December 2012, unreported)
Truong v Gordon (District Court (NSW), Phegan ADCJ, 7 December 2012, unreported)

Category:

Costs

Parties:

Jarryd Adam Gordon (Appellant/Cross-Respondent)
Kim Hung Truong (Respondent/Cross-Appellant)

Representation:

Counsel:
K P Rewell SC/M A Cleary (Appellant/Cross-Respondent)
P Semmler QC/C Thompson (Respondent/Cross-Appellant)
Solicitors:
Curwoods Lawyers (Appellant/Cross-Respondent)
Carroll & O'Dea (Respondent/Cross-Appellant)

File Number(s):

2012/395470

 Decision under appeal 

Jurisdiction:

9101

Date of Decision:

2012-12-07 00:00:00

Before:

Phegan ADCJ

File Number(s):

2011/213377

Judgment

1. BASTEN JA: The plaintiff (Mr Truong) was injured when hit by a motor vehicle driven by the defendant (Mr Gordon). At the beginning of the trial in the District Court, the defendant admitted liability, but maintained a defence of contributory negligence, which was resisted by the plaintiff. The trial also involved an assessment of damages. The trial judge (Phegan ADCJ) held that the plaintiff was in no part responsible for the accident. He assessed damages, but awarded no amount for domestic assistance.

1. Both parties appealed to this Court. On 4 April 2014 this Court delivered its principal judgment, upholding the defendant's appeal with respect to contributory negligence, which was assessed at 35%, and upholding the plaintiff's cross-appeal and awarding an amount for domestic assistance: Gordon v Truong; Truong v Gordon [2014] NSWCA 97. No order was made as to the costs of the proceedings in this Court.

1. The parties were given leave to file submissions in the event that agreement could not be reached in respect of (a) the calculation of the appropriate judgment amount, (b) any proposed variation of the costs order in this Court and (c) as to the orders sought with respect to costs in the District Court. The only outstanding issue requiring resolution is the allocation of the costs of the trial in the District Court. Both parties accepted that that matter should be disposed of by this Court.

1. The trial extended over five days; a submission was made to the trial judge that the defendant should pay costs on an indemnity basis, because of his "persistent denial of liability until an admission on the first day of hearing." The plaintiff further submitted that, had an appropriate admission been made, "the claim could have proceeded through the CARS system [the Motor Accidents Claims Assessment and Resolution Service] resulting in a substantial saving of time and costs." The judge accepted that submission and ordered that costs should be assessed on the indemnity basis in respect of three days of the hearing and otherwise on the ordinary basis.

1. Although there was no specific challenge to the costs order, given the upholding by this Court of the appeal and cross-appeal, it followed that the costs order made by the trial judge would be set aside and the discretion re-exercised. This Court should properly take into account the factors which informed the order as to costs made below, but it is not bound by the findings or the reasons.

1. If liability had been in issue to a significant extent, the matter would not have been dealt with under the claims assessment system. That would be so if there were a continuing denial of liability by the defendant or a claim of contributory negligence in excess of 25%. A denial of liability is merely one end of a spectrum as to the assessment of responsibility for an accident. At no stage did the defendant accept that it bore the major share of responsibility. Given the submissions made at trial and in this Court, it is clear that, had it withdrawn its denial of liability, it would still have asserted a high level of contributory negligence. The fact that no figure was placed on the degree of contributory negligence asserted in the defence (when liability was denied) is of no significance.

1. The acceptance of a degree of liability on the first day of the trial changed the emphasis to be placed on the evidence as to how the accident occurred. It did not avoid, or even diminish, the need to have regard to all aspects of the circumstances surrounding the accident, in order to allocate proportionate responsibility. By contrast with the position of the defendant, the plaintiff appears to have denied any element of responsibility, both before, during and after the trial.

1. The defendant (the appellant in this Court) does not resist an order that he pay the costs of the trial, assessed on the ordinary basis. There was never any realistic likelihood that the matter would not have been exempt from the administrative claims assessment process; accordingly the only basis now relied upon for an indemnity costs order is removed. The plaintiff should be ordered to pay the defendant's costs of the trial, to be assessed on the ordinary basis. The respondent should pay the costs of the present motion.

1. MACFARLAN JA: I agree with Simpson J.

1. SIMPSON J: On 4 April 2014 this Court delivered judgment in an appeal by Jarryd Adam Gordon ("Gordon") and a cross-appeal by Kim Hung Truong ("Truong"): Gordon v Truong; Truong v Gordon [2014] NSWCA 97. The orders made were:

"(1) Allow the appeal and cross-appeal.

(2) Set aside the judgment and order as to the costs of the trial, made in the District Court on 7 December 2012.

(3) In place of the judgment of the District Court, order that the defendant pay to the plaintiff damages in an amount of $265,934, such judgment to take effect from 7 December 2012.

(4) Make no order as to the costs of the proceedings in this Court.

(5) In the absence of agreement, the parties have leave to file and serve within 14 days of the date of this judgment a notice of motion with submissions not exceeding three pages (together with any offers of compromise relied upon) as to:

(a) the calculation of the judgment in order (3) above;

(b) any variation of order (4); and

(c) the orders sought with respect to costs in the District Court."

1. With respect to the issues mentioned in Order (5), the parties have reached agreement as to the calculation of the judgment referred to in Order (3), and are agreed that there be no variation of Order (4). They are unable to agree with respect to the question of costs in the District Court (Order 5(c)).

Background

1. On 8 July 2008 Truong suffered personal injury when struck by a motor vehicle driven by Gordon. On 30 June 2011 he commenced proceedings in the District Court under the Motor Accidents Compensation Act 1999 (NSW) ("the MAC Act"), alleging negligence against Gordon. On 16 August 2011 Gordon filed a defence. Relevantly, he denied breach of duty, denied that Truong suffered injury, loss and damage caused by his (Gordon's) negligence, and did not admit injury, loss and damage as alleged. He alleged that any injury, loss or damage suffered by Truong were caused, either in whole or in part, by his own contributory negligence. On the morning of the day fixed for trial in the District Court (8 October 2012), Gordon changed his position and admitted breach of duty. He maintained the allegation of contributory negligence against Truong. The trial proceeded on that basis and concluded on 12 October.

1. In final written submissions in the District Court, Gordon urged "a significant finding of contributory negligence". He did not further quantify what that finding should be.

1. The trial judge delivered judgment on 7 December 2012: Truong v Gordon (District Court (NSW), Phegan ADCJ, unreported). He found no contributory negligence on the part of Truong, and accordingly entered a verdict in his favour awarding Truong the sum of $322,819, after deduction of amounts that had been paid by Gordon's insurer. He rejected a claim by Truong for a component in the award of damages representing the need for paid domestic assistance in the future. He ordered Gordon to pay Truong's costs. Truong then sought an order that the costs be assessed on an indemnity basis. He advanced two grounds for the application. The first concerned an Offer of Compromise that he had earlier made. Phegan ADCJ rejected that claim, for reasons it is not necessary to explore. The second basis for the application was Gordon's "persistent denial of liability" until the first day of the hearing. Phegan ADCJ observed that had liability been admitted before the commencement of the proceedings in the District Court, the claim could have been processed through the administrative system known as CARS (see below), resulting in a substantial saving of time and costs. He therefore ordered that the costs be assessed on an indemnity basis for the first three days of hearing and thereafter on the ordinary basis: Truong v Gordon (District Court (NSW), 14 December 2012, unreported).

1. Gordon appealed against the finding that Truong was not guilty of contributory negligence. He did not appeal against the costs order. Truong appealed against the rejection of his claim for paid domestic assistance in the future.

1. By majority (Basten and Macfarlan JJA, Simpson J dissenting) this Court upheld Gordon's appeal and found contributory negligence against Truong of 35 per cent. By majority (Macfarlan JA and Simpson J, Basten JA dissenting) the Court upheld the cross-appeal and made an award of damages representing paid domestic assistance in the future. It was on that basis that this Court made the orders set out above.

1. By Notice of Motion filed on 17 April 2014, Truong seeks an order reinstating the costs order made in the District Court (set aside by Order (2) of the orders of this Court) and an order that Gordon pay the costs of the Notice of Motion. Gordon resists the orders sought. While he accepts that he must pay the costs of the District Court proceedings, he submits that the whole of the costs should be assessed on an ordinary basis. Essentially Truong relies upon the facts and the argument that led Phegan ADCJ to make the order he did - that is, that had Gordon's admission of liability been made at an earlier time, the claim could or would have been processed through the CARS system at significantly reduced cost and expense.

1. The arguments require some understanding of the provisions of the MAC Act, and the procedures it implements. The objects of the MAC Act are set out in s 5(1) thereof. The second specified object is:

"(b) to provide compensation for compensable injuries sustained in motor accidents, and to encourage the early resolution of compensation claims" (italics added)

1. Chapter 4 is concerned with "Claims".

Sections 68 and 69 respectively empower the Motor Accidents Authority ("the MAA", established under s 198 of the MAC Act) to issue to licensed insurers "Claims Handling Guidelines" and "Claims Assessment Guidelines". Part 4.3 sets out the duties of insurers and claimants with respect to claims. Section 81 (part of Pt 4.3) requires an insurer who is given notice of a claim:

(i)   as expeditiously as possible to give notice whether it admits or denies liability (sub-s (1)); and

(ii)   if it admits liability for only part of the claim, to include in the notice details sufficient to ascertain the extent to which liability is admitted (sub-s (2)).

1. Part 4.4 deals with the assessment and resolution of claims. For that purpose, a Claims Assessment and Resolution Service (CARS) is established (s 98). The process is extra-curial, and essentially administrative. By s 92, certain claims are exempted from assessment under the CARS scheme. These include claims declared, in the MAA Claims Assessment Guidelines, to be exempt.

1. Pursuant to cl 8.11.1 of the Claims Assessment Guidelines (wrongly referred to in the submissions filed on behalf of Gordon as the Claims Handling Guidelines) exemption is mandatory where liability is denied by the insurer.

1. Pursuant to cl 8.11.2 exemption is also mandatory where the insurer does not deny liability, but alleges contributory negligence against the claimant of more than 25 per cent. However, the precise terms of cl 8.11.2 are of some importance. The clause provides for mandatory exemption from the CARS process where:

"... the fault of the owner or driver of a motor vehicle, in the use or operation of the vehicle, is not denied by the insurer of that vehicle, but the insurer of that vehicle makes an allegation in its written notice issued in accordance with section 81, that the claimant ... was at fault or partly at fault and claims a reduction of damages of more than 25%" (italics added)

1. It is Gordon's position that his assertion, in the District Court, of "significant" contributory negligence on the part of Truong should be read as a claim for a reduction of more than 25 per cent. If that were so, exemption from the CARS process would have been mandatory, and his dilatoriness in admitting liability (or partial liability) had no impact on the process by which Truong's claim was dealt with. He has produced evidence of an Offer of Compromise made on 13 September 2012, in which he expressly claimed contributory negligence to the extent of 60 per cent. He maintained that position in this Court.

1. Accordingly, Gordon argued, even if he had admitted his own breach of duty of care at an earlier time, the claim would have come within the mandatory exemption from CARS assessment, and would still have been litigated in the District Court. In fact, since he did admit breach of duty of care on the first day of the hearing, the issues litigated were contributory negligence, and quantum of damages. An earlier admission of breach of duty would have made no difference to the time taken up or the costs incurred.

1. It is quite clear that the exemption from the CARS process was given under cl 8.11.1, because the insurer denied fault on the part of Gordon. It was not granted under cl 8.11.2. Just what the insurer might have asserted against Truong had it admitted Gordon's breach of duty and asserted contributory negligence in the s 81 notice is a matter of pure speculation. The s 81 notice was not in evidence but it may be assumed that it simply denied liability.

1. So far as the evidence goes, the first attempted quantification of Truong's asserted share of the fault was in the Offer of Compromise made on 13 September 2012. That was well past the time of consideration of exemption from the CARS process.

1. It is correct that if Gordon's insurer had admitted partial liability when issuing the s 81 notice, it may have quantified the contributory negligence it alleged at more than 25 per cent. It did not do so, and the position it adopted by the time of serving the Offer of Compromise cannot, in my opinion, be used to fill that gap. The claim went to trial rather than being resolved through the quicker and more inexpensive CARS process because the insurer denied any liability, contrary to its belated admission.

1. It is also of significance that Gordon did not take any point concerning the costs order on filing the appeal. That does not of itself prevent this Court from not exercising its powers with respect to that order: see Uniform Civil Procedure Rules 2005, 51.52(1)(a). It is, though, relevant to the exercise of discretion.

1. I would make the orders sought in Truong's Notice of Motion. The orders I propose are:

(1)   Vacate so much of Order (2) of the orders made by this Court on 4 April 2014 as relates to the costs order in the District Court;

(2)   Order that the costs of the plaintiff in the District Court be paid by the defendant; order that, for the first three days of the trial, costs be assessed on an indemnity basis, and otherwise on the ordinary basis;

(3)   Order that the appellant pay the costs of this Notice of Motion.

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Decision last updated: 27 May 2014