O'Connell v Barnett (Ruling)
[2013] VCC 1340
•16 October 2013
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Revised Not Restricted Suitable for Publication |
DAMAGES AND COMPENSATION LIST
MEDICAL DIVISION
Case No. CI-09-05568
| CATHY MAREE O'CONNELL | Plaintiff |
| v | |
| GEOFFREY ROY BARNETT | Defendant |
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JUDGE: | HIS HONOUR JUDGE O'NEILL | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 23, 24, 25, 26, 27, 30 September and | |
DATE OF RULING: | 16 October 2013 | |
CASE MAY BE CITED AS: | O’Connell v Barnett (Ruling) | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 1340 | |
RULING AS TO COSTS
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Subject: COSTS
Catchwords: Medical negligence proceeding – plaintiff unsuccessful – application by defendant for costs – offer of compromise – whether costs ought be allowed on a party-party or indemnity basis
Cases Cited:Calderbank v Calderbank [1975] 3 All ER 333; Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; Ultra Thoroughbred Racing v Those Certain Underwriters at Lloyd’s London (Ruling No 2) [2011] VSC 636; Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398; Bird v Ford (No 2) [2013] NSWSC 429
Ruling: Application for indemnity costs refused.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | The plaintiff appeared in person | - |
| For the Defendant | Mr A N Murdoch SC with Ms F Ellis | Avant Law Pty Limited |
HIS HONOUR:
1 On 15 October 2013, I handed down judgment in this proceeding.[1] The plaintiff’s claim in both tort and contract failed. Mr Murdoch, for the defendant, sought orders that there be judgment for the defendant, and orders as to costs.
[1][2013] VCC 1336
2 In particular, he sought an order that the plaintiff pay the defendant’s costs, on an indemnity basis, from 22 March 2013. He said on that date, the solicitors for the defendant sent the first of three letters to the plaintiff, or her former solicitors, in which the defendant offered to make no claim as to any legal costs, if the plaintiff withdrew the proceeding.
3 There are four letters sent by the solicitors for the defendant to the plaintiff or her practitioners which bear upon the issue of costs. In a letter of 16 August 2011, the solicitors for the defendant wrote to the plaintiff’s then solicitors, Messrs Arnold Thomas & Becker. In the course of that letter, the following was said:
“We are instructed to offer your client an opportunity to withdraw her claim against Mr Barnett. The offer is open to be accepted until 7 September 2011 and is conditional on the plaintiff signing a release containing a denial of liability and confidentiality clause.
This offer is made in accordance with the principles of Calderbank v Calderbank [1975] 3 All ER 333 and the first defendant will rely on this letter in seeking his indemnity costs should the need arise.”
4 Mr Murdoch concedes that this letter makes no reference to any offer by the defendant to forego costs and thus it is not a proper basis for any indemnity costs order.
5 The next letter is dated 22 March 2013 to the plaintiff’s then solicitors, Messrs Marshalls & Dent. The relevant parts are:
“The defendant offers to settle the plaintiff’s claim on the basis that the plaintiff agrees to discontinue her claim against him with each party to bear its own costs. …
This offer is made in accordance with the principles of Calderbank v Calderbank [1975] 3 All ER 333 and the defendant will rely on this letter in seeking his indemnity costs should the need arise. The offer is made with a denial of liability and if accepted, the plaintiff will be required to sign a release containing a confidentiality clause. The offer remains open to be accepted until 5.00pm on 5th April 2013.”
6 The letter also refers to various aspects of the evidence to be relied upon in support of the defendant’s contention that the plaintiff did not have a proper basis for the claim against the defendant, and had no realistic prospects of success. Further, Mr Murdoch submitted that by this time, the factual parameters of the case were understood by each party and that it was clear at that point that the credibility of each of the plaintiff and defendant was a key issue in the proceeding.
7 The next letter was sent by the solicitors for the defendant to Messrs Marshalls & Dent on 15 August 2013. The relevant parts are:
“We also refer to our discussion of 2nd August 2013 and confirm that the defendant again offers to settle the plaintiff’s claim on the basis that the plaintiff agrees to discontinue her claim against him with each party to bear its own costs. …
We reiterate that the plaintiff does not have a proper basis for the claim against Mr Barnett and there is no realistic prospect that she will succeed. The offer is made in accordance with the principles of Calderbank v Calderbank [1975] 3 All ER 333 and the defendant will rely on this letter in seeking his indemnity costs should the need arise. The offer is made with a denial of liability and if accepted, the plaintiff will be required to sign a release containing a confidentiality clause. As the offer was conveyed to you verbally on 2nd August 2013, it remains open to be accepted until 5.00pm on 22nd August 2013.”
8 By the time of the service of the letter of 22 March 2013, the report of Mr Rubinstein had been served. The report of Mr Archer was not served until some time before the letter of 15 August 2013. By the time of the letter of August 2013, the brochure[2], with Mr Barnett’s markings upon it, had been served and it was clear, said Mr Murdoch, as to the basis of the defendant’s case. The only documents not provided at the time of this offer were the conference notes in respect of the evidence of Messrs Archer and Rubinstein which were produced at trial.[3] These, said Mr Murdoch, contained matters of detail and emphasis rather than substance.
[2]exhibit 11 in the principle proceeding
[3]part of exhibits 8 and 9
9 Finally, a letter of 13 September 2013 was served upon the plaintiff personally. Up until the end of August 2013 she had solicitors acting on her behalf. That letter relevantly provided:
“We have offered to settle your claim on three occasions, giving you an opportunity to walk away from your claim without incurring any costs penalty. …
You do not have a proper basis for the claim against Dr Barnett and there is no realistic prospect that you will succeed. As the offer has been made previously you have until 5.00pm on Friday, 20th September 2013 to accept. The offer will not be made again. If you accept the offer you will be required to sign a release containing a denial of liability and a confidentiality agreement.”
10 The letter also contained a summary of the evidence to be given by the defendant, reference to his clinical notes and reference to revision surgery undertaken by Dr Lesesne in New York.
11 The principles to be considered in determining whether an award of indemnity costs is to be made following a Calderbank offer are well known, and set forth in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2).[4] The Court said:
“The correct approach, in our view, is to treat the rejection of a Calderbank offer as a matter to which the court should have regard when considering whether to order indemnity costs. … .”[5]
[4](2005) 13 VR 435
[5]Hazeldene’s at paragraph [20]
12 The Court said that the critical question was whether the rejection of the Calderbank offer was unreasonable in the circumstances. In determining the reasonableness or unreasonableness of a party rejecting an offer, the following were said to be relevant:
“(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree’s prospects of success, assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed;
(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it.”[6]
[6]Hazeldene’s at paragraph [25]
13 The issue was considered by J Forrest J in Ultra Thoroughbred Racing v Those Certain Underwriters at Lloyd’s London (Ruling No 2).[7] His Honour referred to the decision of the Court of Appeal in Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2),[8] where the Court said:
“There is authority to the effect that where the offer does not involve a genuine compromise, but is in fact either an invitation to capitulate or a derisory or nominal offer, it would not be unreasonable for the losing party to have rejected it.”[9]
[7][2011] VSC 636
[8][2011] VSCA 398
[9]at paragraph [13]
14 His Honour rejected the application for indemnity costs on three bases: first, that aspects of the offer were not clear and there was no detail as to the basis upon which the offeree was to capitulate; second, the legal basis upon which the claim was made, be it under the Fair Trading Act, or in negligence, depended upon findings of fact which were by no means clear cut; and thirdly, the offer was to capitulate at a time when the case could not be regarded as either hopeless, or conducted in bad faith.
15 Mr Murdoch relied upon Bird v Ford (No 2),[10] a decision of the New South Wales Court of Appeal. In that case, it was said:
“There are cases where a walk away offer will involve genuine compromise, because the case which the plaintiff advances is so plainly a weak one. In my view a party advancing such a case, who receives a number of offers of compromise under the Rules, all of which it rejects and none of which it betters at trial, will not easily be able to resist the indemnity costs order which the Rules contemplate will follow such a rejection. Incurring significant costs as the result of a fruitless pursuit of a weak case is not a proper basis for departing from the consequences which the Rules provide will follow from the rejection of such an offer.
To adopt a different approach would fly in the face of the provisions of s 56 of the Civil Procedure Act 2005 [NSW], which requires the court to exercise its powers to facilitate the just, quick and cheap resolution of the real issues in the proceedings. It would also overlook the provisions of s 60, as to the proportionality of costs.”[11]
[10][2013] NSWSC 429
[11]at paragraphs [18] and [19]
16 It should be said that in Bird, it was clear that from an early time the plaintiffs’ prospects of success were “slight”.
17 I have concluded in this proceeding it is not appropriate to order costs on an indemnity basis.
18 The offers to withdraw and bear costs made in correspondence of March, August and September 2013 were relatively clear. The plaintiff was not represented at the time of the third offer, but had solicitors in respect of the earlier two offers. It is reasonable to infer that the offer and the legal consequences which followed, would have been explained to her.
19 The offers were essentially of capitulation and not dissimilar to that considered by J Forrest J in Ultra Thoroughbred. Although each of the letters containing the offer went into some detail as to why it was said there was no proper basis for the plaintiff’s claim and that it had no real prospect of success, it was clear that the issues for determination would depend upon whether the evidence of plaintiff as to what occurred in the pre-surgery conferences, or the evidence of Mr Barnett on the same point, was to be accepted. It is clear from my judgment that the credibility of the plaintiff and the defendant were key issues upon which the plaintiff’s claim, both in tort and contract, turned. It is never an easy matter to predict whether a witness’s evidence will be credible and thus accepted by a court. Much depends on what occurs in a trial. Although Mr Barnett’s evidence was supported by his clinical notes, the nursing notes and the brochure tendered into evidence, if the plaintiff’s version of events was to be accepted, she underwent a different operative procedure from that she had been advised would take place, and with a resultant scar which exceeded that which she had been told she would receive. The plaintiff took the view that her evidence, and that of the consultant plastic surgeon, Professor Marshall, would be accepted. In that sense her refusal to accept the offer was not unreasonable.
20 A further issue is that each of the offers of compromise contained a condition; that is, that the offer would be made with a denial of liability and that the plaintiff would be required to sign a release containing a confidentiality clause. The purpose of such a clause was for the terms of any settlement to remain confidential to the parties, and thus to protect the reputation of the defendant, in particular against any publicity in the press, or disclosure by the plaintiff which might suggest that an offer of compromise was an admission of fault by him. There may be many reasons why a person in the position of the plaintiff, while minded to accept an offer of compromise, would not be prepared to sign a confidentiality clause. Again, in refusing an offer with such a clause attached, in my view, the plaintiff was not acting unreasonably.
21 In all the circumstances, the plaintiff’s rejection of the various offers of compromise was not unreasonable. Accordingly, I shall not make any order as to indemnity costs.
22 I shall make consequent orders as to judgment and costs on a party-party basis.
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