Karabay v Carr

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.