Meas (by his litigation guardian Adcock) v Tipping (No 2)
[2023] ACTSC 237
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Meas (by his litigation guardian Adcock) v Tipping (No 2) |
Citation: | [2023] ACTSC 237 |
Hearing Date: | Determined on the papers |
DecisionDate: | 31 August 2023 |
Before: | Kennett J |
Decision: | See [27]-[28] |
Catchwords: | PRACTICE AND PROCEDURE – COSTS – Where plaintiff made offer of compromise – where offer not accepted and judgment on appeal no less favourable to plaintiff – where proposed settlement would have required Court’s approval and was silent on funds management – where portion of costs incurred prior to insertion of relevant rules – whether offer complied with r 1002 of the Court Procedures Rules 2006 (ACT) – whether reason for departure from default position in r 1010 that costs be ordered on a solicitor-client basis TRUSTS AND TRUSTEES – Where damages judgment included provision for funds management – where plaintiff seeks the Court make a direction to substitute the public trustee and guardian with a private trustee |
Legislation Cited: | Public Trustee and Guardian Act 1985 (ACT) s 25 Court Procedures Rules 2006 (ACT) rr 282, 1002, 1010 Court Procedures Amendment Rules 2014(No 3) (ACT) r 3 |
Cases Cited: | Meas (by his litigation guardian Adcock) v Tipping [2023] ACTSC 187 Royce (a pseudonym) v Australian Capital Territory [2023] ACTSC 69 Watts v Rake (1960) 108 CLR 158 |
Parties: | Daniel Veasna Meas by his litigation guardian Christine Anne Adcock ( Plaintiff) Michael John Tipping ( Defendant) |
Representation: | Counsel D Campbell SC with I Bradfield ( Plaintiff) R Mcllwaine SC with D Crowe ( Defendant) |
| Solicitors Elringtons Lawyers ( Plaintiff) Carroll & O’Dea Lawyers ( Defendant) | |
File Number: | SC 260 of 2015 |
KENNETT J:
Introduction
My reasons for decision, published on 19 July 2023 ([2023] ACTSC 187), noted that there was no dispute between the parties as to the defendant’s liability in respect of the injuries suffered by the plaintiff in a motor vehicle accident on 10 February 2003. I assessed damages in a total of $6,085,323.21 subject to interest being added to certain components of that amount, and ordered the parties to bring in short minutes of order to give effect to my reasons. I also made an order for costs in favour of the plaintiff, subject to any application for a different order being made by 2 August 2023.
Three issues now arise. First, the parties have agreed on the amounts to be added by way of interest and thus the total damages to be awarded. Judgment is to be entered in that amount. Secondly, the plaintiff seeks an order for costs to be assessed on a solicitor-client basis rather than the ordinary party-party basis. The defendant resists that order. Thirdly, orders are sought (and not resisted) for payment of the judgment sum into court and then to Australian Executor Trustees Ltd (AET) to be held on trust for the plaintiff.
Interest
Damages were assessed as follows:
(a)Non-economic loss: $450,000, plus interest
(b)Loss of future income and superannuation: $1,935,000
(c)Past out of pocket expenses: $51,348.54, plus interest
(d)Future out-of-pocket (including medical) expenses: $738,826.45
(e)Past attendant care: $208,244, plus interest
(f)Future attendant care: $1,701,904.22
(g)Funds management: $1,000,000
(h)Total: $6,085,323.21, plus interest to be calculated on items (a), (c) and (e)
The amounts to be added by way of interest, by agreement, are:
(a)Non-economic loss: $64,575.00
(b)Past attendant care: $85,380.00
(c)Past out-of-pocket expenses: $12,091.88
The total interest is $162,046.88. The total of the damages to be awarded, rounded to the nearest dollar, is therefore $6,247,370.
Costs
The plaintiff seeks an order for costs on a solicitor-client basis on the ground that, on 2 September 2022, he served on the defendant an offer to settle the proceedings for a significantly smaller sum that that which is to be awarded. The offer is said to have complied with r 1002 of the Court Procedures Rules 2006 (ACT) (the Rules). The defendant did not accept the offer, but instead served his own offer to settle for an even smaller amount.
Rule 1010 of the Rules provides as follows:
(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 in relation 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; or
(b) in any other case—
(i) assessed on a party and party basis up to the time when the costs are to be assessed on a solicitor and client basis under subparagraph (ii); and
(ii) assessed on a solicitor and client basis—
(A) if the offer was made before the first day of the trial—from the day the period for acceptance of the offer ends; and
(B) if the offer was made on or after the first day of the trial—at and from 11 am on the day after the offer was made.
The defendant submits that the offer did not satisfy the requirements of r 1002 or, alternatively, there should be a departure from the default position set out in r 1010.
The requirements for an offer of compromise, under r 1002, are as follows:
(2) An offer under this rule must—
(a) identify—
(i) the claim or part of the claim to which it relates; and
(ii) the proposed orders for disposal of the claim or part of the claim including, if a monetary judgment is proposed, the amount of the judgment; and
(b) if the offer relates only to part of the proceedings, include a statement—
(i) for an offer by the plaintiff—stating whether the remainder of the proceedings will be abandoned or pursued; or
(ii) for an offer by a defendant—stating whether the remainder of the proceedings will be defended or conceded; and
(c) not include an amount for costs or state that it is inclusive of costs; and
(d) state that the offer has been made in accordance with this part; and
(e) state the period of acceptance.
…
(5) The end of a period of acceptance for an offer—
(a) for an offer made 2 months or more before the date set down for the start of the trial—must be not less than 28 days after the day the offer is made; and
(b) in any other case—must be after a period that is reasonable in the circumstances.
…
(10) A notice of offer purporting to exclude, modify or restrict rule 1010 or rule 1011 is invalid.
The offer is said to have had two deficiencies. One is that it was silent as to the requirement in r 282 of the Rules, which would have applied in this case, for the Court to approve any settlement or compromise of a claim brought by a person under a legal disability. The other is that the offer was silent as to the orders now sought by the plaintiff (and not opposed) relating to funds management. It is submitted that in these respects the offer failed to identify “the proposed orders for disposal of the claim or part of the claim” (r 1002(2)(a)(ii)).
I do not accept these submissions.
(a)The requirement under r 282 is for approval by the Court of the compromise or settlement arrived at by the parties; that is, the manner of disposition of the case that the parties have agreed. It is not an aspect of what the parties need to agree upon, and thus not part of what the offeror needs to “propose” to the offeree by way of orders to dispose of the claim.
(b)While it is correct (as the defendant points out) that at the time of the offer the plaintiff was advancing his damages case on the basis that he was under a disability and required funds management, I do not think it follows that orders putting into place a funds management regime were part of what needed to be proposed to the defendant in order to achieve settlement. The particular regime under which the money received by the plaintiff is to be managed is not a matter that affects the defendant’s interests, and it is difficult to see how the propounding of one kind of regime rather than another could legitimately lead the defendant to accept or refuse the offer (other than by having an effect on the proposed quantum of damages—a topic that clearly was covered by the offer). The orders that the plaintiff now seeks (and which the defendant does not oppose) for payment of the amount received to a trustee could quite properly have been sought by a separate proceeding in the Court’s protective jurisdiction, with no need to join the present defendant as a party.
I therefore conclude that the offer was made in accordance with r 1002, and its non-acceptance by the defendant triggers r 1010. Costs are therefore to be ordered on a solicitor-client basis “for the whole of the proceeding” unless the Court “otherwise orders”.
Two reasons are suggested why there should be a departure from the default position under r 1010.
First, it is submitted that it cannot be assumed that the Court, presented with a settlement for the sum proposed in the offer, would have approved the settlement under r 282. This must be accepted. While I assume that the offer of compromise was made on instructions, and the proposed settlement would therefore have been supported by the plaintiff’s litigation guardian, the significantly larger sum that the plaintiff has obtained in the litigation suggests a possibility that the Court might have entertained doubts about whether the proposed settlement was in the plaintiff’s best interests. In any event it is not possible to know, or appropriate to speculate, what evidence would have been presented on an application for approval under r 282 and what the Court would have made of it.
The difficulty for the defendant is that the points made in the previous paragraph do not really distinguish this case from any other in which a person under a disability makes an offer which is not accepted, then runs their case and betters the offer. Acceptance of the defendant’s submission thus tends to deprive litigants under disability of the benefit of the provisions for offers of compromise. I therefore do not think that the exercise of the discretion in r 1010 should be understood to depend (at least in a direct way) on whether there is certainty that acceptance of the offer of compromise would have put the litigation to rest. The question must be whether it is inappropriate for a party who has rejected an opportunity to end the litigation early, on terms equal to or better than the result achieved by proceeding to judgment, to pay the other party’s costs to the extent they were reasonably incurred.
The reason why there is uncertainty as to whether the Court would have approved the proposed settlement is that approval was never sought because the offer was rejected. It is not suggested that the defendant rejected the offer because of a fear that the Court would not approve it; indeed, the defendant made his own offer of compromise which was even lower. That strongly indicates that he should not now be allowed to escape the ordinary operation of r 1010 by retrospective and hypothetical invocation of r 282. If he did apprehend that the Court might not approve the settlement, the proper course (with the benefit of hindsight, which is inherent in the exercise) was to accept the offer and allow it to be put to the Court for approval. As the Chief Justice recently stated in Ryan v Larkham [2022] ACTSC 151 (at [4]):
… the overriding principle in exercising the discretion whether to approve a settlement is for the Court to consider whether the proposed compromise is or is not beneficial to the interests of the person under the incapacity … that decision is uniquely one for the Court and not the parties.
Secondly, the defendant submits that it would be unduly harsh for him to be ordered to pay costs on a solicitor-client basis “for the whole of the proceeding”. Two aspects of the circumstances are relied on in this regard.
(a)Proceedings had been on foot between the parties since 2 September 2003 and liability was admitted in June 2004. The proceeding was still on foot at the time of the offer (19 years after the first claim was served) because of medical opinion, accepted by the parties and the Court, that further assessment of the plaintiff needed to occur when he was an adult.
(b)Part 2.10 of the Rules, which contains rr 1002 and 1010, took effect from 1 January 2015, by which time proceedings had been on foot—and costs accumulating—for more than 11 years.
The Court Procedures Amendment Rules 2014 (No 3) (ACT), which substituted the current provisions of Part 2.10 of the Rules for an earlier set of provisions, were expressed to commence on 1 January 2015 (r 3) and contained no express transitional provisions. The amendment should be understood to reflect a conscious decision not to preserve any position as to costs incurred before the commencement of the new provisions or insulate those costs from the effects of an offer of compromise made after commencement. The prospect of exposure to solicitor-client costs in respect of the whole proceeding was clearly intended to focus the mind of the offeree on the importance of considering seriously any realistic offer of compromise. That is an important aspect of the way in which Part 2.10 of the Rules seeks to encourage settlement. The award of solicitor-client costs in respect of the whole proceeding, including costs incurred before the commencement of Part 2.10, reflects the provisions operating as intended and should not, without more, be regarded as “unduly” harsh. There is no reason, therefore, to distinguish between costs incurred before and after 1 January 2015.
The unusually long time that the proceedings have been on foot may raise other issues. It has very likely contributed to the magnitude of the costs on both sides. Delay that was attributable to lassitude on the part of the plaintiff’s legal team might very well provide a reason why costs on a solicitor-client basis should not be ordered in respect of the whole of the proceeding. However, it is not suggested that that has occurred. The long delay, so far as one can see from the material, reflects a position accepted on all sides that the extent of the plaintiff’s impairment could not be properly assessed until he reached adulthood.
It might be thought harsh that the costs arising from that delay should fall wholly on the defendant. However, it can also be said that the plaintiff, having succeeded in the proceeding and in engaging the operation of r 1010, should not be left out of pocket by reason of having been a 10 month old baby rather than a teenager or adult at the time he was injured. The law of tort (pursuant to which damages have been awarded) would require the defendant to take the plaintiff as he found him (Watts v Rake (1960) 108 CLR 158 at 160, 164). While that principle is obviously not directly applicable to a decision on costs (which is always discretionary: SMA v John XXIII College (No 3) [2020] ACTSC 236 at [27] (Elkaim J)), it serves to illustrate the point that aspects of a proceeding that are unavoidable because of its subject matter (such as, in this case, the long delay) should not generally be regarded as a basis for depriving the successful party of part of the costs which they would otherwise be entitled to recover.
I am therefore not persuaded that there is a sound basis for departure from the default position in r 1010.
Trust Arrangements
My reasons at [158] included provision for future funds management services in the assessment of damages. This was on the basis that I was satisfied that the plaintiff, as a result of his injuries, was not able to manage a large sum of money and required funds management services (not merely financial advice).
Section 25 of the Public Trustee and Guardian Act 1985 (ACT) provides that, “unless the court otherwise directs”, money ordered to be paid to a person under a disability is to be paid into court and then to the public trustee and guardian. Through his litigation guardian, the plaintiff asks the Court to “otherwise direct” so as to substitute AET for the public trustee and guardian, with the relevant moneys to be held by it subject to the terms of a specific trust deed. The deed is yet to be executed but is before the Court in draft form, having been annexed to an affidavit of Mr Tim Grant-Allen that was read in the proceeding.
The function of the Court and the matters to be taken into account on an application of this kind were discussed by McWilliam AsJ (as her Honour then was) in Royce (a pseudonym) v Australian Capital Territory [2023] ACTSC 69 (Royce) at [17]-[21], referring to the earlier judgment of Refshauge J in Singh (by her next friend Singh) v Calvary Hospital Incorporated (No 2) [2009] ACTSC 57; 3 ACTLR 247 at [25]. It is not necessary to add to that discussion.
Royce also concerned a proposed arrangement involving payment of funds to AET, to be held on trust, rather than to the public trustee and guardian. Relevantly to that issue, her Honour said (at [20]-[22]):
20.There is no concern about either the structural and financial security of the trustee proposed or the skills, investment strategies and experience of the likely appointees. The proposed trust deed was in evidence. It sets out the investment strategy and the trustee company proposed is one that will be subject to appropriate safeguards contained in legislation to protect the contents of the fund. The draft deed also sets out the anticipated management expenses. They appear to reflect market rates and the funding model is the same as that utilised in many of the matters in which the Court has appointed that firm as trustee.
21.In any event, the settlement amount is inclusive of funds management and therefore a matter of the plaintiff’s choice. The plaintiff and his parents have already met with a representative of AET and based on that meeting, it is their particular request for the appointment of AET. When the management of the fund is potentially for a long period of time (depending on the ultimate level of cognitive impairment), ensuring there is a satisfactory working relationship between the plaintiff, his parents and the trustee is a matter of some significance.
21.All of those matters make it abundantly clear that the appointment of AET to manage the sizeable settlement is also in the interests of the plaintiff. I will so order.
The present case is no different. Provision has been made in the damages award to cover the costs of a private trustee and the disposition of those funds is, in any event, a matter for the plaintiff. The matters canvassed in the affidavit of Mr Grant-Allen indicate that there is a working relationship between the plaintiff’s family and AET, which may well assume some importance given the size of the award and the period for which the fund will need to be managed. I am satisfied that the proposed orders are in the best interests of the plaintiff.
Orders
The orders of the Court are as follows:
1) Judgment be entered for the plaintiff against the defendant in the sum of $6,247,370.00.
2) The defendant pay the plaintiff’s costs of the proceeding on a solicitor-client basis, as agreed or assessed.
3) Prior to the payment of the judgment sum into Court, the defendant be authorised to deduct from the judgment sum and pay:
(a) the sum the subject of a Notice of Charge issued by Medicare Australia pursuant to the Health and Other Services (Compensation) Act 1995 (Cth); and
(b) the sum the subject of any recovery notice issued by Centrelink pursuant to the Social Security Act 1991 (Cth).
4) The defendant pay the judgment sum less any amounts paid in accordance with order 3 above, and the notes below, into Court, pursuant to s 25 of the Public Trustee and Guardian Act 1985 (ACT).
5) The sum paid into Court then be paid out forthwith by the Court to the Australian Executor Trustees Ltd (AET), as trustee to be held pursuant to the plaintiff’s Compensation Trust established under the deed which is annexure “D” to the affidavit of Mr Tim Grant-Allen sworn on 1 December 2022 (The Trust Fund).
The Court notes:
1) The agreement between the parties that AET may, if it is in the plaintiff’s interests to do so, transfer the whole or any part of the Trust Fund to a superannuation fund (being a complying superannuation fund for the Income Tax Assessment Act 1997 (Cth)) of which the plaintiff is or becomes a member and shall thereafter manage the plaintiff’s rights as a member of the fund for his benefit.
2) The agreement of the parties that no interest is payable on the judgment sum if the defendant pays that amount not later than 28 days after the latest of the following:
(a) the day the defendant receives a sealed copy of these orders;
(b) the day the defendant receives a Medicare Notice of Settlement or Judgment; or
(c) the day the defendant receives any clearance notice from Centrelink.
| I certify that the preceding twenty-eight [28] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Kennett. Associate: Date: 31 August 2023 |
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