Manhattan Homes Pty Limited v Burnett

[2025] NSWCA 32

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Manhattan Homes Pty Limited v Burnett [2025] NSWCA 32

Hearing dates:

On the papers

Date of orders:

13 March 2025

Decision date:

13 March 2025

Before:

Leeming JA;
Harrison CJ at CL;
Price AJA

Decision:

(1)    Set aside the orders made by Schmidt AJ on 8 February 2024 and in lieu thereof make the following orders.

(2)    Judgment for Gary Burnett against Manhattan Homes Pty Ltd for $1,689,268.75.

(3)    Judgment for Griswold’s Outdoor Xmas Pty Ltd against Manhattan Homes Pty Ltd on the second cross-claim for $1,171,422.61 inclusive of interest.

(4)    Order Manhattan Homes Pty Ltd to pay Griswold’s Outdoor Xmas Pty Ltd’s costs of the second cross-claim.

(5) Note the agreement of the parties that if Manhattan Homes Pty Ltd satisfies the judgment on the second cross-claim, then the amount for the purposes of s 151Z(1)(e1) of the Workers Compensation Act 1987 is $986,218.72 and such sum satisfies Gary Burnett’s judgment against Manhattan Homes Pty Ltd to the same extent.

(6)    Dismiss the first cross-claim.

(7)    Order Griswold’s Outdoor Xmas Pty Ltd to pay Manhattan Homes Pty Ltd’s costs of the first cross-claim.

(8)    Order Manhattan Homes Pty Ltd to pay Gary Burnett’s costs of the proceedings before Schmidt AJ on the ordinary basis up to 10am on 25 August 2022.

(9)    Order Gary Burnett to pay Manhattan Homes Pty Ltd’s costs of the proceedings before Schmidt AJ on the indemnity basis thereafter.

(10)  Order Manhattan Homes Pty Ltd to pay 70% of Gary Burnett’s costs of the appeal.

(11)  Order Gary Burnett to pay Manhattan Homes Pty Ltd’s costs of the cross-appeal.

(12)  Make no order as to Griswold’s Outdoor Xmas Pty Ltd’s costs of the appeal and cross-appeal.

Catchwords:

COSTS – where plaintiff in the court below seriously injured in a fall on a building site – where parties disagree upon some aspects of the final calculations anticipated by the appeal judgment – whether a medical expense incurred after an award of damages can be claimed as an additional out-of-pocket expense – whether UCPR 42.15A should be applied – whether a differential costs order as to costs of appeal should be made

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW), rr 42.15A, 42.16

Workers Compensation Act 1987, s 151Z

Cases Cited:

Ainger v Coffs Harbour City Council (No 2) [2007] NSWCA 212

Doppstadt Australia Pty Ltd v Lovick & Sons Pty Ltd (No 2) [2014] NSWCA 219

El Assaad v Al Haje (No 2) [2025] NSWCA 17

Manhattan Homes Pty Limited v Burnett [2024] NSWCA 219

Sze Tu v Lowe (No 2) [2015] NSWCA 91

Texts Cited:

LexisNexis Butterworths, Ritchie’s Uniform Civil Procedure NSW, vol 1

Category:

Consequential orders

Parties:

Manhattan Homes Pty Ltd (ACN 097 477 417) (Appellant / First Cross-respondent)
Gary Burnett (First Respondent / Cross-appellant)
The Griswold’s Outdoor Xmas Pty Ltd (ACN 106 927 155) (Second Respondent / Second Cross- respondent)

Representation:

Counsel:
J Sexton SC with J Sleight (Appellant / First Cross-respondent)
R Sheldon SC with E Welsh and W Lidden (First Respondent / Cross-appellant)
I Todd (Second Respondent / Second Cross respondent)

Solicitors:
McMahons Lawyers (Appellant / First Cross-respondent)
Brydens Lawyers Pty Limited (First Respondent / Cross-appellant)
Turks Legal (Second Respondent / Second Cross-respondent)

File Number(s):

2024/63874

Publication restriction:

NIL

 Decision under appeal 

Court or tribunal:

Supreme Court

Jurisdiction:

Common Law

Citation:

Burnett v Manhattan Homes Pty Ltd [2023] NSWSC 1431

Date of Decision:

24 November 2023

Before:

Schmidt AJ

File Number(s):

2020/207227

JUDGMENT

1. THE COURT: On 11 September 2024, this Court made the following orders:

1. Allow the appeal in part.

2. Dismiss the cross-appeal.

3. Direct the parties within seven days to file short minutes of order giving effect to these reasons, including orders for the costs of the appeal.

See Manhattan Homes Pty Limited v Burnett [2024] NSWCA 219.

2. Despite the terms of order (3), there remains disagreement upon some aspects of the final calculations anticipated by the judgment in this appeal. Accordingly, written submissions were provided by all parties in order that the outstanding issues might be determined on the papers.

3. The Court received submissions dated 14 October 2024 (Mr Burnett), 18 October 2024 (Manhattan), 22 October 2024 (Griswold), 25 October 2024 (Manhattan in reply), 29 October 2024 (Mr Burnett in reply). Following a short hearing conducted on 17 December 2024 before one of us, a number of matters in dispute, including the judgment amount in favour of Mr Burnett against Manhattan save in one respect and the orders as to costs as between Manhattan and Griswold, were agreed (email dated 18 February 2025).

4. After consideration of the parties’ competing submissions with respect to some issues, considered below, the Court makes the following further orders consequent upon orders (1) and (2) made on 11 September 2024 allowing the appeal in part and dismissing the cross-appeal:

1. Set aside the orders made by Schmidt AJ on 8 February 2024 and in lieu thereof make the following orders.

2. Judgment for Gary Burnett against Manhattan Homes Pty Ltd for $1,689,268.75.

3. Judgment for Griswold’s Outdoor Xmas Pty Ltd against Manhattan Homes Pty Ltd on the second cross-claim for $1,171,422.61 inclusive of interest.

4. Order Manhattan Homes Pty Ltd to pay Griswold’s Outdoor Xmas Pty Ltd’s costs of the second cross-claim.

5. Note the agreement of the parties that if Manhattan Homes Pty Ltd satisfies the judgment on the second cross-claim, then the amount for the purposes of s 151Z(1)(e1) of the Workers Compensation Act 1987 is $986,218.72 and such sum satisfies Gary Burnett’s judgment against Manhattan Homes Pty Ltd to the same extent.

6. Dismiss the first cross-claim.

7. Order Griswold’s Outdoor Xmas Pty Ltd to pay Manhattan Homes Pty Ltd’s costs of the first cross-claim.

8. Order Manhattan Homes Pty Ltd to pay Gary Burnett’s costs of the proceedings before Schmidt AJ on the ordinary basis up to 10am on 25 August 2022.

9. Order Gary Burnett to pay Manhattan Homes Pty Ltd’s costs of the proceedings before Schmidt AJ on the indemnity basis thereafter.

10. Order Manhattan Homes Pty Ltd to pay 70% of Gary Burnett’s costs of the appeal.

11. Order Gary Burnett to pay Manhattan Homes Pty Ltd’s costs of the cross-appeal.

12. Make no order as to Griswold’s Outdoor Xmas Pty Ltd’s costs of the appeal and cross-appeal.

5. As already observed, some of these orders were attended by disagreement. Resolution of those contests is considered in what follows.

Order (2) – the judgment sum in favour of Mr Burnett

6. Following receipt of the email dated 18 February 2025, the only respect in which the judgment sum to be ordered in favour of Mr Burnett against Manhattan is that Mr Burnett wishes to claim an additional amount for out-of-pocket expenses in the sum of $49,922 that he has incurred since her Honour’s award. The issue concerns whether the passage of time since then notionally converts these expenses into past out-of-pocket expenses so that the amount claimed under that head of loss should be revisited, and thus increased, or whether this expenditure on medical costs represents no more than the practical reality that part of the amount awarded as damages for future expenses of this kind have been incurred as anticipated.

7. Manhattan responded to this approach by submitting that there should be no adjustment for post-judgment events, at least without an equivalent reduction in the damages assessed by her Honour for future losses expected to be suffered after judgment. That is said to be particularly so having regard to the relatively short period of time between the judgment below and the orders in this Court: any increase in “past” expenses would correspond to a reduction in “future” expenses.

8. Manhattan submitted that the award for future expenses was assessed on the basis that Mr Burnett would actually have to pay for them out of his lump sum judgment in the future. The circumstance that he has not yet actually paid them does not mean that he should be reimbursed for them as “past expenses” whilst also keeping the component of his lump sum award which covers the same expenses. Further, whilst Mr Burnett’s actual expenses were less than the anticipated expenses as assessed by the primary judge (and which were not challenged on appeal), there is no basis for him now to recover the actual expenses incurred since the primary judgment as past expenses whilst simultaneously retaining his lump sum judgment including the assessed future expenses for the same period.

9. Manhattan’s submissions should be accepted. The damages that were awarded in total for out-of-pocket expenses that had been incurred at the time of the hearing before Schmidt AJ and those that it was predicted would be incurred in the future was not the subject of amendment, adjustment or alteration in this Court. There is no warrant to revisit these sums simply because what was anticipated as a future expense has become a reality with the passing of time.

10. That outstanding issue having been resolved, the parties are agreed that the judgment sum should be $1,689,268.75.

Orders (8) and (9) – Manhattan’s offer of compromise

Manhattan’s submissions

11. For the reasons identified above, the correct judgment sum now ordered by this Court for Mr Burnett against Manhattan is $1,689,268.75. Manhattan submitted that this is materially less than the offer of compromise of $1,800,000 served by it on 24 August 2022 in the following relevant terms:

Manhattan offers to compromise the whole of the claim against it by Mr Burnett on the following terms:

Judgment for Mr Burnett against Manhattan in the sum of $1,800,000.

An order that Manhattan pay Mr Burnett's costs as agreed or assessed on the ordinary basis up to the time this offer is made.

12. In these circumstances, Manhattan maintained that there should be a “straightforward” application of UCPR 42.15A by orders that Mr Burnett pay Manhattan's costs below on the ordinary basis until 25 August 2022 and that Mr Burnett pay Manhattan’s costs below on an indemnity basis thereafter.

13. Although Manhattan did not serve a further offer of compromise in the appeal proceedings, it nevertheless achieved a better result than the offer of compromise. Manhattan submitted that it is appropriate for the costs orders of the hearing before Schmidt AJ to be as it contends: Ainger v Coffs Harbour City Council (No 2) [2007] NSWCA 212 at [41]. None of the “adjustments” contended for by Mr Burnett should affect that result.

14. That includes Mr Burnett’s submissions concerning past out-of-pocket expenses and post-judgment interest, which is not damages for the purposes of the appropriate orders to be made in this Court following re-calculation of quantum as a result of partial success on appeal. Indeed, interest after the date for acceptance of an offer of compromise is not included in the figure for comparison with the figure in the offer of compromise: see Ritchie on UCPR 42.16:

"In determining whether the judgment is 'no less favourable' for the purposes of UCPR 42.14 and 42.15A (or 'no more favourable' in 42.15) only the amount of interest or damages by way of interest as relates to the period before the offer of compromise was made is taken into account: UCPR 42.16; see also Channel Seven Sydney Pty Ltd v Mahommed (No 2) (2011) 80 NSWLR 210; 278 ALR 129; [2011] NSWCA 6; BC201100839 at [52]ff (interest accruing after offer of compromise not to be taken into account in determining whether offeror obtained judgment no less favourable). Interest must therefore be taken into account in determining the amount to be offered in an offer of compromise, but it is not necessary to make provision for interest for the period after the offer is made."

15. This was recently affirmed in El Assaad v Al Haje (No 2) [2025] NSWCA 17 at [39].

16. Moreover, contrary to Mr Burnett’s submissions, there was no impediment to him accepting an offer of $1.8 million plus party/party costs to that date in August/September 2022. It must have been apparent to Mr Burnett that contributory negligence was a significant issue, even although he subsequently persuaded Schmidt AJ to find that there was none. The offer was quite clearly a substantial amount in the circumstances of his claim, which reflected a discount for contributory negligence, not merely an expectation of complete success on primary liability. The opinion evidence of Professor David Carmichael did not derogate from the prospect of a sizable percentage discount for contributory negligence.

17. Nor did the cross claims preclude Mr Burnett as the plaintiff settling with Manhattan as the first defendant. It was open to him to continue to prosecute his claim against Griswold's, if so advised and so inclined. If he had done so, it would have been open to Griswold's to pursue its cross-claim against Manhattan but that was a risk for Mr Burnett, not an impediment for him. Further, if the offer was accepted then Griswold's would have received out of the $1.8 million all of the payments which it had made pursuant to s 151Z, so that it could no longer pursue Manhattan for reimbursement. Raising the spectre of continuing litigation in a straightforward employer/non-employer workplace accident claim is not a basis for denying the operation of UCPR 42.15A following non-acceptance of a significant offer of compromise which was materially better than the ultimate judgment.

Mr Burnett’s submissions

18. In the event that this Court considered that UCPR 42.15A comes into operation, Mr Burnett submitted that it is not appropriate to order that he bear Manhattan’s costs from the date of service of the offer on an indemnity basis. That is because:

1. Mr Burnett’s proceedings were commenced on 14 July 2020.

2. A cross-claim between Manhattan and Griswold’s was filed on 19 April 2021.

3. A defence to that cross-claim was filed on 27 February 2022.

4. Manhattan served a report of Professor David Carmichael on 16 June 2022 which went primarily to the liability of Griswold’s.

5. The offer of compromise was served on 22 August 2022.

19. No evidentiary statements were served by Manhattan until 13 June 2023, two weeks before the commencement of the hearing, when a statement of Nathan Scott Johnson, a Director of Manhattan, was served.

20. At the time of service of the offer of compromise, Mr Burnett was receiving statutory benefits from EML and iCare. The offer did not identify the amount of any repayment to either of those entities and no steps were taken, to Mr Burnett's knowledge, to resolve the outstanding cross-claim.

21. Accordingly, at the time of service of the offer of compromise there were significant outstanding issues on liability and quantum which would not have been resolved entirely had Mr Burnett accepted it. It would still have been necessary for him to be involved in a hearing on the issue of liability and to some degree damages. That is particularly so when Manhattan prosecuted the trial on the basis that it had no liability to Mr Burnett whatsoever.

22. Mr Burnett’s acceptance of the offer of compromise would not have entirely avoided the costs of a hearing and it may be difficult to identify where such savings would have been made.

23. In his submissions in reply, Mr Burnett contended that the accrual of interest after the date of the offer of compromise would be a powerful discretionary factor to “otherwise order” so as to displace the ordinary operation of UCPR 42.15A.

Consideration

24. Manhattan’s offer of compromise prima facie engaged the entitlements to special costs orders in UCPR 42.15A. The fact that the accrual of interest continued after receipt of the offer of compromise does not warrant any departure from the ordinary effect of the rule. Whether or not an offer should be accepted, and the concomitant risk as to costs, is to be assessed at the date the offer is made, as opposed to in light of the position at the end of the trial including the effect of interest accruing after the date of an offer. Acceptance of Mr Burnett’s contrary submission would, in fact, create an incentive favouring the slow prosecution of proceedings by a plaintiff who rejects what would otherwise be an advantageous offer of compromise.

25. For those reasons, the Court’s orders as to the costs of Mr Burnett and Manhattan Homes reflect the entitlement in UCPR 42.15A.

Order (10)

26. Manhattan submitted that the costs of the appeal should follow the event: Manhattan had substantial success in the appeal, reducing the judgment by more than $550,000 as the result of the rejection of the award of $162,754 for future domestic assistance and the finding of contributory negligence which reduced the judgment by a further 20% before the application of s 151Z(2)(c), further reducing the final judgment against Manhattan to $1,689,268.75.

27. Manhattan submitted that, contrary to Mr Burnett’s submissions, the substantive preparation for, and oral argument during, the hearing of the appeal concerned the issue of contributory negligence (Grounds 8A and 8B). Manhattan abandoned other issues raised by the initial notice of appeal which are now referred to in Mr Burnett’s written submissions at [3a-3d] on 14 June 2024 [Orange 11W], well before Manhattan or Griswold’s prepared written submissions. Submissions concerning apportionment as between both Manhattan and Griswold’s (Grounds 8B-8D) essentially reflected the submissions concerning whether there should be a finding of contributory negligence. It is simply wrong to assert that “the failed issues took up the overwhelming majority of the time and paper in the appeal”.

28. Mr Burnett made no concession in this Court concerning either contributory negligence or airfares. Moreover, Mr Burnett’s amended notice of cross-appeal was dismissed entirely.

29. Mr Burnett submitted that this Court should make a differential order as to the costs of the appeal because of the degree of success relative to the grounds of appeal propounded in the amended notice of appeal and the absence of submissions in the Court below challenging the recoverability of airfares.

30. He submitted that Manhattan failed on or withdrew all grounds apart from those dealing with the complaint about air fares and the absence of a finding of contributory negligence. Moreover, despite succeeding on the contributory negligence issue, Manhattan’s liability was not reduced to 50% or below.

31. Manhattan’s submissions at trial did not address the issue of principle concerning the recoverability of airfares. No issue was taken by Manhattan below with the recoverability of damages for “injured worker related travel”. Manhattan’s submissions in reply at Black 349 did not address the recoverability of airfares by way of damages. Manhattan therefore succeeded on this ground on a basis not propounded below.

32. The issues on which Manhattan succeeded were separate from those on which it failed. The failed issues took up the overwhelming majority of the time and paper in the appeal. Some of the grounds of appeal on which Manhattan failed should not have been pressed. These matters conform to the considerations guiding the exercise of the discretion to make a differential costs order in light of limited or partial success, discussed in Sze Tu v Lowe(No 2) [2015] NSWCA 91 from [40] and the cases there cited.

33. Mr Burnett submitted that the appropriate orders were that Manhattan pay 70% of his costs of the appeal and he pay Manhattan’s costs of the cross-appeal.

Consideration

34. Substantially for the submissions advanced by Mr Burnett, this is an appropriate case for a differential costs order. While the costs of the cross-appeal should follow the event, the large majority of the grounds of Manhattan’s appeal failed, leaving Mr Burnett with the benefit of a substantial judgment in his favour.

35. In accordance with the “broadbrush” approach in Doppstadt Australia Pty Ltd v Lovick & Sons Pty Ltd (No 2) [2014] NSWCA 219, we agree with Mr Burnett’s submission that Manhattan should pay 70% of his costs of the appeal.

Conclusion

36. The orders of the Court are as listed at [4] above.

Decision last updated: 13 March 2025