Kempster v Healthscope Operations Pty Ltd (No 2)
[2019] ACTSC 285
•18 October 2019
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Kempster v Healthscope Operations Pty Ltd (No 2) |
Citation: | [2019] ACTSC 285 |
Hearing Date: | 10 October 2019 |
DecisionDate: | 18 October 2019 |
Before: | Crowe AJ |
Decision: | See [19] |
Catchwords: | COSTS – Plaintiff successful in substantive claim – plaintiff seeking a costs order in accordance with sub-r 1010(2)(a) of the Court Procedure Rules 2006 (ACT) – judgment more favourable than offer of compromise – defendant seeking a costs order “otherwise” than that prescribed by the rules – whether late service of expert reports and supporting material constitutes “exceptional circumstances” |
Legislation Cited: | Court Procedure Rules 2006 (ACT) rr 1010, 1241 |
Cases Cited: | Forge v Rewers (No 2) [2017] ACTSC 273 Geddes v Talent (No 2) [2017] ACTSC 215 Vale v Eggins (No 2) [2007] NSWCA 12 |
Parties: | Jillian Kempster (Plaintiff) Healthscope Operations Pty Ltd (Defendant) |
Representation: | Counsel A Muller (Plaintiff) M J Walsh SC (Defendant) |
| Solicitors Maliganis Edwards Johnson (Plaintiff) MinterEllison (Defendant) | |
File Number: | SC 277 of 2017 |
Crowe AJ
On 6 September 2019 I delivered judgement in this matter (Kempster v Healthscope Operations Pty Ltd [2019] ACTSC 248). I found in favour of the plaintiff on liability and awarded damages in the sum of $259,706.66. I ordered the defendant to pay the plaintiff’s costs but deferred entry of that order for 14 days, pending notice from either party that it wished to be heard further on that issue.
Notice was given and the parties returned to Court on 10 October 2019 to make competing submissions as to the appropriate costs order.
The plaintiff seeks an order that the defendant pay the plaintiff’s costs on a party and party basis until 31 July 2017 and thereafter on a solicitor and client basis. The date of 31 July 2017 was when the plaintiff commenced proceedings in this Court.
The basis for the order sought by the plaintiff is her offer of compromise made through her solicitors on 30 May 2019 to accept a judgement in her favour in the amount of $250,000. The offer was expressed as open until 5:00 pm on 27 June 2019.
That offer was not accepted. Indeed, the defendant, through its solicitor, expressly rejected the offer by email on 16 July 2019. Of course, the time for acceptance had expired by that date.
The defendant had, on 3 May 2019, made its own offer of compromise in the sum of $50,000. That offer expired on 31 May 2019. In their letter of offer the defendant asserted that the Court would, if the matter went to hearing, be more likely to prefer the evidence of Drs Saines and Malhotra as to the cause of the dysfunction in the plaintiff’s left femoral cutaneous nerve.
The plaintiff relies on r 1010 of the Court Procedure Rules 2006 (ACT)(CPR) (noting that this is a personal injury claim):
1010Offer not accepted and judgment no less favourable to plaintiff
(1)This rule applies if an offer is made by the plaintiff in relation to a claim, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim no less favourable to the plaintiff than the terms of the offer.
(2)Unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff’s costs to the claim---
(a)if the claim is a personal injury claim---assessed on a solicitor and client basis for the whole of the proceeding…
Mr Muller, counsel for the plaintiff, submitted by reference to decisions such as Geddes v Talent(No 2) [2017] ACTSC 215 and Forge v Rewers (No 2) [2017] ACTSC 273 (Forge) that the Court should adopt the “default” position under r 1010. This would lead to the orders as set out in [3] above.
Mr Walsh SC, for the defendant, relied upon history of the service of medical reports to argue that the Court should order “otherwise” than prescribed by r 1010(2)(a).
In summary, the evidence relied upon by the defendant disclosed that by the time of the plaintiff’s offer of compromise she had served only the first three reports of
Dr Brooder. After the expiry of that offer, and shortly before the hearing (which commenced on 29 July 2019), the plaintiff’s solicitors served Dr Brooder’s report dated 4 February 2019 and also the report of Dr Milovic dated 5 July 2019. Dr Brooder’s report was served on 17 July 2019, and that of Dr Milovic on 15 July 2019. In each case
r 1241 CPR required service by not later than three days after the date on which the plaintiff had received the report. In relation to the Dr Brooder report, the plaintiff’s solicitor advised the defendant’s solicitor that it had not been served in accordance with the rule due to an administrative oversight.
The defendant argued that the late service of the reports caused it significant prejudice. The evidence contained in the reports strengthened the plaintiff’s case on both liability and causation. The report of Dr Brooder referred to three articles on which he relied for his explanation of the plaintiff’s neurological symptoms above the injection site. Those articles were not supplied to the defendant’s solicitor until 22 July 2019. In relation to Dr Milovic, it was only through the service of his report that the defendant learned that the plaintiff had complained to him on 13 August 2014 about the way in which the heparin had been injected.
Mr Walsh SC submitted that the late service of such important material constituted sufficiently exceptional circumstances to warrant an order less beneficial to the plaintiff than that which would ordinarily follow under r 1010. He particularly relied on the decisions of the NSW Court of Appeal in South-Eastern Sydney Area Health Service v King [2006] NSWCA 2 (King) and Vale v Eggins (No 2) [2007] NSWCA 12 (Vale).
In reply, Mr Muller argued that it was clear from the terms of the defendant’s letter containing its offer of compromise that the defendant well appreciated the nature of the contest between the neurologists qualified by the respective parties. The “evolving” nature of that contest was far from unusual in medical negligence cases.
He relied on the comment in Oliver v Roberts (No 2) [2018] ACTCA 44 (Oliver) at [11] to the effect that the Court should embark with reluctance upon the retrospective determination of whether at a particular time a party took a reasonable approach to an offer of compromise.
Consideration
Mossop J explained the rationale behind r 1010 in Forge in the following terms (at [31] – [32]):
Finally, the fact that the Rules impose burdensome costs consequences upon defendants in personal injury proceedings who fail to accept an offer of compromise made by a plaintiff who subsequently obtains a more favourable judgment is a consequence that is part of the scheme of the Rules. The fact that the costs consequences are significant and affect that costs liability of the second defendant in relation to the whole of the proceedings is embedded as the default position under the Rules and hence does not provide a basis for the Court to order otherwise. This feature of an equivalent rule in South Australia was remarked upon by Doyle CJ in Shaw v Jordan at [5]:
The rule expressly contemplates that a defendant who does not accept an offer that the plaintiff ultimately betters, will pay the whole of the plaintiff’s costs of action as between solicitor and client. It is part of the ordinary operation of the rule that it affects the amount to be made by way of costs in respect of steps in the action that precede the making of the offer. That is an aspect of the incentive, deliberately created, to respond to an offer, rather than to continue to litigate in the hope of achieving a better outcome. In this respect the operation of the rule can be said to be penal, in the manner that the predecessor rule was described in Whitehead v Maas (1991) 56 SASR 362 at 367. But this operation of the rule cannot, of itself, be a reason to order otherwise. It is part of the very same scheme of the rule.
The Rules appear to reflect a concern that, in order to ensure that proper consideration is given to the compromise of cases by institutional litigants who are defendants in personal injury proceedings, greater consequences must follow for such defendants than for individual plaintiffs. The scheme does not have the neat logic of the New South Wales model or the scheme applying in the Territory in relation to matters other than personal injury matters, but it reflects the economic reality of litigation for parties in this limited category of cases. It reflects pragmatic realism rather than theoretical purity.
It is uncontroversial between the parties here that it is necessary to find exceptional circumstances to order otherwise than the default position in r 1010 of the CPR. The real issue is whether the late service of the two reports referred to in [10] above justifies making what would be a special order under r 1010.
I accept that the service of crucial reports after the expiry of compromise offers could warrant a special order, as indeed occurred in both the King and Vale cases relied upon by the defendant. However, the circumstances in each of those cases are distinguishable from the facts here. The subsequently served evidence in both cases significantly changed the nature of the cases of the party relying on that evidence.
While it is true that the subsequently served evidence did strengthen the plaintiff’s case here, I do not consider that it changed the nature of that case either in relation to liability or causation. As the contents of the defendant’s offer of compromise letter demonstrates, the battle lines between the neurologists were well and truly drawn by May 2019.
It is regrettable that the plaintiff failed to serve Dr Brooder’s fourth report, and the report of Dr Milovic in compliance with the Rules. However, in the circumstances of this case, I see the provision of those reports shortly before the hearing as part of the “dynamic process” which the Court of Appeal referred to in Oliver. I do not regard it as sufficiently exceptional to warrant departure from the “default” costs order prescribed in
r 1010(2)(a).
Orders of the Court
Having regard to the above the orders of the Court are:
(1)To vacate order 2 made on 6 September 2019 and replace it with the following order:
(2)The defendant is to pay the plaintiff’s costs on a party and party basis until
31 July 2017. Thereafter, the defendant is to pay the plaintiff’s costs on a solicitor and client basis.
| I certify that the preceding nineteen [19] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Justice Crowe. Associate: Date: 18 October 2019 |
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