Karabay v Carr

Case [2014] NSWCA 143

Court of Appeal


Supreme Court


New South Wales

  • Amendment notes
Medium Neutral Citation: Karabay v Carr [2014] NSWCA 143
Hearing dates:23 April 2014
Decision date: 08 May 2014
Before: McColl JA at [1];
Gleeson JA at [2];
Sackville AJA at [111]
Decision:

1. Appeal allowed in part.

2. Set aside order 4 made by Hidden J on 27 June 2013 and in lieu thereof order the first defendant to pay the plaintiff's costs of the proceedings on an ordinary basis.

3. Set aside order 6 made by Hidden J on 27 June 2013 and in lieu thereof order the plaintiff to pay the second defendant's costs of the proceedings on an ordinary basis.

4. The appellant pay 90% of the first respondent's costs of the appeal.

5. The appellant pay the second respondent's costs of the appeal.

[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 - Where Offer of Compromise made - Uniform Civil Procedure Rules r 20.26 - Offer of Compromise stated to be "plus costs" - Impact of decision in Whitney v Dream Developments Pty Ltd - Offer of Compromise not valid under the rules
COSTS - General Rule - Costs follow the Event - Uniform Civil Procedure Rules r 42.1 - Determining the "event" or an "admission" - Principles considered in Ziliotto v Hakim
DAMAGES - General Principles - Past and Future Economic Loss - Assessment of reasonable prospects of employment at date of notional trial - Assessment of residual earning capacity - Relevance of evidence relating to subsequent events
PROFESSIONAL NEGLIGENCE - Proceedings against two solicitors - Dismissal of District Court proceedings for personal injury - One solicitor found liable
Professional Negligence - Whether Court erred in finding the other solicitor not liable
Legislation Cited: Civil Procedure Act 2005 s 98
District Court Rules 1973 Pt 1 r 7A, Pt 18 r 3
Uniform Civil Procedure Act 2005
Uniform Civil Procedure Rules 2005 r 20.26, r 42.1, r 42.25
Cases Cited: Bibby Financial Services Australia Pty Ltd v Sharma [2014] NSWCA 37
Coulton v Holcombe [1986] HCA 33; 162 CLR 1
Firth v Sutton [2010] NSWCA 90
Johnson v Perez [1988] HCA 64; 166 CLR 351
Karabay v Malcolm Carr (t/as Forshaws Neill Solicitors) & Anor [2012] NSWSC 1386
Karabay v Malcolm Carr (t/as Forshaws Neill Solicitors) (No 2) [2013] NSWSC 773
Karabay v Torrac Nominees Pty Ltd (DCNSW, Duck DCJ, 22 March 2006, unreported)
Metwally v University of Wollongong (No 2) [1985] HCA 28; 60 ALR 68
Old v McInnes [2011] NSWCA 410
Suttor v Gundowda Pty Ltd [1950] HCA 35; 81 CLR 418
Torrac Nominees Pty Ltd…

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AGLC
Karabay v Carr [2014] NSWCA 143
Case
[2014] NSWCA 143
Decision Date

CaseChat Overview and Summary

This case involved an appeal by Mr Karabay against decisions made by Hidden J concerning damages awarded and costs orders made in proceedings against two solicitors, Mr Carr and Mr Kramer. Mr Karabay had sued both solicitors for professional negligence, alleging that their actions had caused him to lose a personal injury claim. The appeal concerned the quantum of damages awarded against Mr Carr, the dismissal of the claim against Mr Kramer, and the allocation of costs between the parties.

The primary legal issues before the appellate court were whether the primary judge erred in assessing the past and future economic loss suffered by Mr Karabay, whether the claim against Mr Kramer had been wrongly dismissed, and whether the costs orders made by the primary judge were appropriate. Specifically, the court had to consider the assessment of Mr Karabay's residual earning capacity at the notional trial date, the relevance of subsequent events to this assessment, and whether Mr Kramer had fallen below the standard of a reasonably competent solicitor. The court also had to determine the impact of an offer of compromise made by Mr Carr, which stated it was "plus costs," on the application of Uniform Civil Procedure Rules r 20.26.

The court reasoned that the primary judge's assessment of damages for past economic loss and future economic loss was affected by an error in assessing Mr Karabay's prospects of employment. The court found that the primary judge had not adequately considered the evidence regarding Mr Karabay's ability to gain employment as a commercial pilot in regional Australia, particularly in light of his qualifications and the limitations of such employment. The court also found that the offer of compromise made by Mr Carr was not valid under Uniform Civil Procedure Rules r 20.26, as it was not expressed to be "inclusive of costs" but rather "plus costs," which was contrary to the decision in *Whitney v Dream Developments Pty Ltd*. Consequently, the general rule that costs follow the event, as per Uniform Civil Procedure Rules r 42.1, was applied.

The appeal was allowed in part. The order for Mr Carr to pay Mr Karabay's costs on an indemnity basis was set aside and replaced with an order for ordinary costs. Similarly, the order for Mr Karabay to pay Mr Kramer's costs on an indemnity basis was set aside and replaced with an order for ordinary costs. The appellant was ordered to pay 90% of the first respondent's costs of the appeal and the second respondent's costs of the appeal.

Orders

Orders of the court

1. Appeal allowed in part.

2. Set aside order 4 made by Hidden J on 27 June 2013 and in lieu thereof order the first defendant to pay the plaintiff's costs of the proceedings on an ordinary basis.

3. Set aside order 6 made by Hidden J on 27 June 2013 and in lieu thereof order the plaintiff to pay the second defendant's costs of the proceedings on an ordinary basis.

4. The appellant pay 90% of the first respondent's costs of the appeal.

5. The appellant pay the second respondent's costs of the appeal.

[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.]

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

On 13 February 2013 Mr Carr and Mr Kramer filed a motion seeking a special costs order. This motion was heard on 15 February 2013 and judgment delivered on 14 June 2013. His Honour ordered Mr Carr to pay Mr Karabay's costs to 5 May 2009 on an ordinary basis and thereafter Mr Karabay to pay Mr Carr's costs on an indemnity basis. His Honour further ordered Mr Karabay to pay Mr Kramer's costs up to 5 May 2009 on an ordinary basis and thereafter on an indemnity basis: Karabay v Malcolm Carr (t/as Forshaws Neill Solicitors) (No 2) [2013] NSWSC 773 (the Costs Judgment). Mr Karabay appeals against the quantum of the award of damages against Mr Carr, the dismissal of his claim against Mr Kramer, and the costs orders. In particular, Mr Karabay challenges the primary judge's assessment of two components of damages at the notional trial date: $30,000 for past economic loss and a cushion or buffer of $50,000 for future economic loss. As against Mr Carr, in view of his admission of liability, the case focused on the claim for damages in respect of the lost cause of action. For this purpose it was common ground that the notional trial date (that is the date the trial would have taken place had Mr Carr not breached his duty of care) was November 2004. As against Mr Kramer, the case advanced by Mr Karabay at trial was that Mr Kramer had failed to act in accordance with counsel's advice not to delay filing the motion until the matter was ready for trial and had thereby fallen below the standards of a reasonably competent solicitor, according to expert evidence said to have been given by Mr Trainor, a solicitor called in Mr Karabay's case. In his opening at trial, counsel for Mr Karabay stated that the critical issue was "that Mr Karabay's wasting leg and his injury resulted in him never being able to fly a multi-engine aircraft" (Black 17, lines 11-12). This remained the position during the trial, as appears from the following exchange during closing argument: Mr Karabay's case was that he lost the ability to further his commercial flying career as an airline pilot due to the injury. He sought to make out a case that, but for the injury, he would have obtained employment flying small aircraft in regional Australia until he was able to achieve the necessary hours for him to be suitably qualified for, and to be employed in, a position of first officer with either Qantas or Virgin Blue by 1 July 2002, with promotion to captain by 1 July 2006. In support of this claim he relied upon expert evidence from Mr Chesterfield, certain medical reports (including reports of Dr Maclarn), and an accounting report from Mr David Williams. Mr Chesterfield provided a report concerning Mr Karabay's prospects of gaining employment as an airline pilot in the position of first officer with a commercial airline (Blue 708-713). This evidence was later qualified in cross-examination when Mr Karabay's incorrect log-book entry for flying hours in Turkey was drawn to Mr Chesterfield's attention (Black 30, line 13 - 31, line 13). Mr Chesterfield also expressed the opinion that Mr Karabay could possibly gain employment as a commercial pilot in a single engine aeroplane operation. He explained that this was typically restricted to charter organisations offering sightseeing flights and such a pilot could reasonably expect a salary of about $20,000 to $30,000 per year. However, Mr Chesterfield qualified this estimate, noting that many of these operations are seasonal and may not offer full time employment.

Ratio Decidendi

Legal Principle Established

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