Hurcum v Domino's Pizza Australia Pty Limited (No. 2)

[2007] NSWDC 74

CITATION:	Hurcum v Domino's Pizza Australia Pty Limited (No. 2) [2007] NSWDC 74
HEARING DATE(S):	28/03/07, 20/04/07
JUDGMENT DATE:	2 May 2007
JURISDICTION:	Civil
JUDGMENT OF:	Gibson DCJ
DECISION:	Vary order 2 of the judgment of 8 March 2007 to provide that the plaintiff’s costs of and incidental to (a) the issue of fraud; (b) the Notice of Motion of 14 June 2006 to vacate the previous hearing date; (c) the costs thrown away by the vacating of the trial which was fixed to commence on 15 June 2006; (d) the retention of Senior Counsel; and (e) the argument in relation to costs on 28 March and 20 April and the written submissions, are to be excluded from the operation of Division 9, Part 3.2 Legal Profession Act 2004 (NSW).
CATCHWORDS:	Costs - application to exclude part of hearing costs for unsuccessful defence alleging fraud from the operation of Division 9, Part 3.2 Legal Profession Act 2004
LEGISLATION CITED:	Civil Liability Act 2002 (NSW) Legal Profession Act 2004 (NSW), Division 9, Part 3.2, ss338 and 341 Uniform Civil Procedure Act 2005 (NSW)
CASES CITED:	Port Stephens Council v Theodorakis (No. 2) [2006] NSWCA 143
PARTIES:	Plaintiff: Wayne Walter Hurcum Defendant: Domino's Pizza Australia Pty Limited
FILE NUMBER(S):	No. 2705 of 2005
COUNSEL:	Plaintiff: G B Hall QC Defendant: J Turnbull
SOLICITORS:	Plaintiff: P K Simpson & Co Defendant: Lee & Lyons

Introduction

1. This is an application by the plaintiff for a special order for costs in relation to an unsuccessful plea of fraud in the defence filed in these proceedings. The plaintiff’s application is brought pursuant to section 98 Uniform Civil Procedure Act 2005 (NSW) and Order 42 paras 42.1.15 and 42.1.20.

The plaintiff’s proceedings for personal injury

2. The plaintiff brought proceedings for personal injury by way of Statement of Claim filed on 30 June 2005 following an injury he suffered when he fell whilst in Domino’s Pizza outlet at 230 Elizabeth Street Surry Hills, NSW. He sought damages for non-economic loss and past and future economic loss and out-of-pockets.

The interlocutory history of the proceedings

3. The defendant failed to raise the claim of fraud in the defence filed on 22 September 2005. Although the claim of fraud was allegedly supported by CCTV footage, the defendant not only failed to answer a subpoena seeking documents relevant to the accident but also failed to include a reference to this CCTV footage (which went missing at an unknown time) in Schedule 2 of a List of Documents it filed, or to refer to CCTV footage in answers to a request for particulars, or otherwise to put the plaintiff on notice as to the proposed plea of fraud at all until the defence was amended on 13 December 2005. That amendment merely asserted that the fall was “fraudulently contrived or staged” (paragraph 9).

4. Although the plaintiff was then on notice as to the allegation of fraud, he was not put on notice of the basis of the allegation, despite seeking this information by taking appropriate interlocutory steps such as discovery and requesting particulars. These particulars (dated 16 February 2006) included a request for systems of reporting complaints, investigation of the plaintiff’s claim and other pertinent questions. Late service of statements by the defendant from the witnesses it intended to call to establish what was on the CCTV (since it could not tender the CCTV footage, which was missing) led to the plaintiff seeking and obtaining on 14 June an adjournment of the “one day plus” hearing that had been set down for 15 June 2006. The costs of the adjourned hearing were reserved.

5. The plaintiff sought further particulars of the matters raised in the statements and the matter was then set down for hearing as a three day hearing (a revised estimate from “one day plus” which is a indication of the additional time required for the parties to deal with this issue). Because the allegation of fraud and the unusual way the defendant intended to prove fraud in circumstances where the most direct evidence of the fraud was missing, the plaintiff retained senior counsel on 27 October 2006.

6. Neither during the hearing, not for the purpose of this costs application, has the defendant provided any or any adequate explanation of its failure to disclose the CCTV footage, together with details of when it was last in the defendant’s possession and the circumstances in which it passed from the defendant’s possession, in Schedule 2 of the List of Documents. Nor has there been any explanation of the failure to produce documents concerning this footage in answer to a subpoena or a request for particulars.

The proceedings and my judgment of 8 March 2007

7. The hearing of the proceedings before me lasted three days. There were four issues before the court. Three of these related to damages, and the amount of time they took was relatively short. These issues were whether the plaintiff’s injuries fell below the threshold under the Civil Liability Act, 2002 (NSW), whether the plaintiff (who had effectively never worked as he was a carer for his invalid mother) could claim past and future economic loss and whether the plaintiff should be reimbursed for past and future economic expenses. The fourth issue was the question of liability. The defendant pleaded that the plaintiff’s claim was fraudulent and called a series of witnesses, namely Okkes Yildiz (the shift supervisor), Nick Knight (the regional manager), Rory Erwin (the trade assistant), Kai Davies (the store manager) and a technician named Salem Zakkaur to give evidence about what they saw on the CCTV tapes of two incidents several days apart that despite being copied onto a computer were subsequently lost or destroyed.

8. The witnesses the defendant called at the trial to give evidence of what happened gave conflicting evidence of what the saw on the tape. These conflicts related to what the plaintiff was doing before the fall, where and how he fell and how long the CCTV film of the event took. I noted in my judgment (at [16]) that about the only issue the witnesses agreed on was that the metal strip in question was loose.

9. Similar unsatisfactory evidence was given about a second missing piece of CCTV when a friend of the plaintiff visited the premises to take a photograph of the piece of metal which (by reason of its dislodgement from the step near the front door) was claimed to be the reason for the fall. In addition, confusing and inconsistent evidence was given by these witnesses as to the circumstances in which not only the CCTV videotape but also computer copies of both incidents had all vanished without trace. Finally, I heard nothing about what kind of CCTV equipment was installed, so I do not know whether this showed the whole of the shop interior, whether the film had clear definition or whether the film was in colour or black and white.

10. The evidence of fraud was essentially the evidence of these witnesses that they saw the plaintiff on the CCTV film moving and walking in such a way as to indicate that he deliberately dislodged the metal strip for the purpose of taking a fall so as to bring a claim for damages. There is no doubt the metal strip was loose; the witnesses conceded as much and the expert report attached photographs of the loose strip (the expert noted that in August 2005 the ceramic tiles around the screw were cracked and broken, indicating that the tiles still did not form a firm basis for securing the metal strip).

11. The defendant did not make any submission concerning negligence other than to assert that the plaintiff staged his fall by taking advantage of the fact that the strip was loose. In rejecting the claim that the plaintiff’s fall was fraudulently contrived I had regard to section 142 Evidence Act 1995 (NSW). However, I went on to note, for the purpose of costs arguments, that the defendant’s case on this issue was a very weak one, and I noted that a prior hearing date had been vacated by reason of the late provision of this evidence.

12. While the plaintiff succeeded on the issue of liability, I rejected his claims for non-economic loss and past and future economic loss. This was because after reviewing the medico-legal reports I accepted the opinions of the plaintiff’s treating doctors (especially Dr Youssef) and the defendant’s medico-legal experts that the plaintiff had suffered a soft tissue injury from which he had quickly recovered. The plaintiff was an illiterate man of modest intellectual capacity who had almost no work history and was the carer for his elderly mother and I found he had suffered no past or future economic loss as a result of his injuries. Accordingly I awarded him the sum of $4,518 for past and future out of pockets, and ordered that the defendant pay the plaintiff’s costs.

The plaintiff brings an application to vary the costs order

13. The plaintiff’s application is that this costs order should be varied to provide that the plaintiff’s costs in relation to the allegation of fraud should be the subject of a special costs order. In other words, in addition to the $10,000 recoverable by the plaintiff pursuant to section 338(1)(a) Legal Profession Act 2004 (NSW), the plaintiff should be entitled, pursuant to section 341 of the said Act, to exclude from the operation of Division 9, Part 3.2 of the said Act, the costs of and incidental to:

(a) the issue of fraud; and
(b) the Notice of Motion of 14 June 2006 to vacate the previous hearing date; and
(c) the costs thrown away by the vacating of the trial which was fixed to commence on 15 June 2006; and
(d) the retention of Senior Counsel; and
(e) the argument in relation to costs on 28 March 2007 and the written submissions thereafter.

14. I shall set out the competing submissions on each of these matters and then consider the entitlement of a party to ask for costs to be excluded from the operation of Division 9, Part 3.2.

The issue of fraud

15. The principal issue in applications such as these is one of proportionality: Port Stephens Council v Theodorakis (No.2) [2006] NSWCA 143 at [13] per Giles JA and [20] per Ipp JA.

16. The reference in section 341 to “delay” creates an inference that time was wasted. The defendant submits that no time was wasted because “no more than 2 or 3 hours of court time” was involved in the bringing of the fraud allegations.

17. I note however that this hearing was originally listed as a one day case (and until the unusual nature of the fraud allegation was made clear, and the fact that both parties then told the court that the hearing would take three days (which it did) is indicative of the significant increase of time involved as well as explanatory of the reason for the vacating of the first hearing date.

18. Section 431 refers to “delay” and “complicate” in the alternative, and adds the adjective “unnecessarily”. The plaintiff’s argument on this basis relies upon the manner in which the fraud case was sought to be proved. If the CCTV footage had been available, and it was shown, it would have been a matter of watching a few minutes of film. However, since the defendant had lost or destroyed all its copies of the film, it sought instead to call witnesses who had not turned their minds to these issues for some years and who gave evidence that was confusing and inconsistent.

19. The plaintiff does not ask for the costs of the issue of fraud to be exempted merely because he was successful on this issue. He asked for these costs to be exempted because the amount of time wasted whilst all these witnesses with obviously poor recollections gave inconsistent accounts is evidence that unnecessarily delayed and complicated the determination of the action. In particular, the late pleading of fraud, the failure to particularise it and to provide details in Schedule 2 of the List of Documents and the novel way in which the fraud was sought to be established are of relevance.

20. The plaintiff submits that it is no answer that he failed to meet the threshold for non-economic loss or failed to establish loss of earning capacity. No matter how modest a claim may be, the bringing of a claim of fraud should not have been embarked upon in this circuitous way.

21. The defendant submits that the manner of pleading fraud was both reasonable and necessary to the conduct of the action, and points to its conspicuous success on other issues in the case, in that the plaintiff recovered only out of pocket expenses.

22. The parties have broken down the issues into the following categories.

The adjournment of the first hearing date (14 June 2006)

23. The defendant submits that the late service of the witness statements is irrelevant because the defendant was simply giving notice pursuant to section 173 Evidence Act, 1995 (NSW) that it intended to adduce evidence of what was on the CCTV footage by relying on the witness statements because the CCTV was missing. These statements were provided more than two weeks before the hearing date. The defendant submits that the vacating of the hearing date is not a matter that would take the costs in proceedings outside the usual order that would be made pursuant to section 338 Legal Profession Act 2004.

24. However, the circumstances in which a hearing date is vacated due to late service of material is a prime example of the kind of costs that a court would be likely to consider as costs that should be excluded from the operation of Division 9 of Part 3.2 Legal Profession Act 2004. These statements were not only served very close to the hearing, but they were served without any warning, they required analysis and further investigation (in circumstances where there was a prior failure to answer subpoenae and give discovery) and they substantially lengthened the trial hearing time.

25. Adjournments of hearing dates a few days before the hearing are capable of being not merely delay, but unnecessary delay, particularly where the hearing date is vacated in circumstances such as the present. Even if the plea of fraud had not been weak, the late service of these documents and the vacating of the hearing date as a result would be matters warranting an order that the costs of the vacated hearing date should be excluded from the operation of Division 9 of Part 3.2 Legal Profession Act 2004.

26. Further, I am satisfied on the facts of this case that the adjournment of the hearing, and the need for a three day hearing to enable the defendant’s witnesses to give evidence of what they saw, was reasonably likely to unnecessarily delay or complicate determination of the claim.

The conduct of the hearing

27. I do not accept the defendant’s submission that the bulk of the time was taken up with cross-examination of the plaintiff and his witnesses. Examination of the transcript shows that much of the cross-examination of the plaintiff was about the fraud issue, including questions about the whereabouts of the person who took the photograph of the strip of metal a few days after the accident. The plaintiff’s mother was a very brief witness; her cross-examination takes up little more than a page. The transcript prepared by the plaintiff (which was necessary because of the difficulty in keeping track of the conflicting evidence of the defendant’s witnesses) shows that apart from the evidence of Dr Neophyton (20 pages of transcript) and the plaintiff’s examination-in-chief (and some of the cross-examination), the evidence in the hearing was principally about the fraud allegations.

28. The fact that the allegation causing the delay was one of fraud is also of relevance. It was an unnecessary complication, particularly in a case where the one issue about which all the witnesses agreed was that the metal strip on which the plaintiff slipped was loose.

29. The bringing of an allegation of fraud, which was pleaded in a novel and time-consuming way, justified the retention of Senior Counsel, and in fact because of Mr Hall QC’s expertise the hearing time was probably shortened.

The nominal size of the verdict and the plaintiff’s failure on other issues

30. The defendant submits that where a plaintiff has recovered barely more than nominal damages, no order for costs should be made because of the size of the verdict: Alltrans Express Limited v CVA Holdings Limited [1984] 1 All E R 685; Anglo-Cyprian Trade Agencies Limited v Pathos Wine Industries Limited [1951] 1 All E R 873.

31. Although the plaintiff failed to recover damages other than out of pocket expenses, this needs to be seen in the context of personal injury proceedings where there are thresholds designed to cut off claims. There is no doubt the plaintiff suffered an injury; his injury did not meet the threshold. The plaintiff may have failed to meet the threshold, but this would not entitle the defendant to answer the plaintiff’s claim with an allegation of fraud which was sought to be proved in a novel and time-consuming way.

32. The defendant relies upon his success in other aspects of the case. However, success in one part of the case does not entitle a party to run other parts of the case in a manner causing unnecessary delay and complication. I reject this argument as well.

Orders

33. I make orders as follows:

Vary order 2 of the judgment of 8 March 2007 to provide that the plaintiff’s costs of and incidental to:

(a) the issue of fraud; and
(b) the Notice of Motion of 14 June 2006 to vacate the previous hearing date; and
(c) the costs thrown away by the vacating of the trial which was fixed to commence on 15 June 2006; and
(d) the retention of Senior Counsel; and
(e) the argument in relation to costs on 28 March and 20 April and the written submissions, are to be excluded from the operation of Division 9, part 3.2 Legal Profession Act 2004 (NSW).