O'Reilly v Western Sussex NHS Trust (No.7)

[2015] NSWSC 233

Supreme Court

New South Wales

Medium Neutral Citation:	O’Reilly v Western Sussex NHS Trust (No.7) [2015] NSWSC 233
Hearing dates:	13 March 2015
Date of orders:	20 March 2015
Decision date:	20 March 2015
Before:	Garling J
Decision:	(1)Judgment for the plaintiff in the sum of $177,900. (2)Defendants to pay the plaintiff’s costs of the proceedings, except for the plaintiff’s costs solely related to the claim by her for personal injury by way of nervous shock. (3)Plaintiff to pay the defendants’ costs solely incurred by them in responding to the plaintiff’s claim for damages for personal injury by way of nervous shock. (4)Order that the costs, once determined, be set off.
Catchwords:	COSTS – general rule that costs follow event – multiple issues – plaintiff successful on some issues – unsuccessful on personal injury claim – otherwise successful in proceedings – whether order for costs should reflect plaintiff’s partial success – defendant to pay plaintiff’s costs of proceedings except for costs related to personal injury claim – plaintiff to pay the defendant’s costs incurred in responding to the personal injury claim
Legislation Cited:	Civil Procedure Act 2005 Fatal Accidents Act 1976 (UK) Uniform Civil Procedure Rules 2005
Cases Cited:	Bostik Australia Pty Ltd v Liddiard (No.2) (2009) NSWCA 304 Cunneen v Independent Commission Against Corruption [2015] NSWCA 46 Hawkesbury District Health Service Limited & Anor v Patricia Chaker (No.2) [2011] NSWCA 30; Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (No.2) [2011] NSWCA 171 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (No.2) [2014] NSWCA 425 O’Reilly v Western Sussex NHS Trust (No.6) [2014] NSWSC 1824 Sydney Ferries v Morton (No.2) [2010] NSWCA238;
Texts Cited:	Not Applicable
Category:	Costs
Parties:	Sue Ellen O’Reilly (P) Western Sussex NHS Trust (D1) Manoj Sen (D2) Mansour Poushin (D3)
Representation:	Counsel: Mr Bartley SC / Mr Toomey (P) Mr Wilson-Smith QC / Mr Cheney SC (D1, D2, D3) Solicitors: Beilby Poulden Costello (P) Kennedys (Australasia) Pty Ltd (D1, D2, D3)
File Number(s):	2011/187028
Publication restriction:	Not Applicable

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Judgment

1. On 19 December 2014, judgment in this matter was delivered: O’Reilly v Western Sussex NHS Trust (No.6) [2014] NSWSC 425 (“the principal judgment”).

2. The Court found that there ought be judgment for the plaintiff, Mrs O’Reilly, against the defendants in a sum to be calculated for damages for the value of the dependency of the late Dr O’Reilly. The parties have undertaken this calculation, and are agreed that the judgment in this respect should be entered in her favour the sum of $177,900. I shall refer to this as the dependency claim.

3. The judgment also concluded that the plaintiff, Mrs O’Reilly, had failed with respect to her claim for damages for personal injury by way of psychiatric harm. It found that judgment ought be entered in favour of the defendants with respect to that claim. I shall refer to this as the personal injury claim

4. The proceedings giving rise to that judgment were a consolidated set of proceedings. As a matter of history, Mrs O’Reilly had in 2009 first commenced proceedings for the dependency claim under the Fatal Accidents Act 1976 (UK). She later in June 2011, commenced proceedings, in a separate action, claiming damages for her personal injury.

5. On 12 September 2011, with the consent of all parties, the Court ordered that the separate proceedings be consolidated pursuant to r 28.5 of the Uniform Civil Procedure Rules 2005 (“UCPR”). Thereafter, the proceedings continued on the basis that it was a single set of proceedings, containing both causes of action.

6. There were considerable common questions of fact and law between both causes of action. Even if the proceedings had not been consolidated, there can be no doubt that the Court would have heard the proceedings together and would have ordered that the evidence in each proceeding be the evidence in the other.

7. The principal judgment was delivered with respect to the consolidated proceedings, containing both causes of action.

Applications for Costs

8. After delivery of judgment in December 2014, the Court directed that any applications for costs ought be made by notice of motion.

9. By Notice of Motion filed on 12 February 2015, the plaintiff, Mrs O’Reilly, sought an order that the defendants pay her costs of the whole proceedings.

10. By Notice of Motion filed by the defendants on 14 February 2015, orders were sought that:

1. the defendants pay 25 per cent of the plaintiff’s costs of the dependency claim; and

2. the plaintiff pay the defendants’ costs of the personal injury claim.

11. Both Motions were heard together by the Court on 13 March 2015. This judgment relates to both Motions.

Personal Injury Claim

12. Although the Motion by the defendants seeking costs with respect to these proceedings is perhaps inelegantly phrased, the plaintiff accepts that she should pay the defendants’ costs of and associated with her personal injury claim for nervous shock.

13. The defendants accept that such costs ought not include the costs associated with establishing whether each of the defendants owed a duty of care to the late Dr O’Reilly, and whether they were in breach of that duty to him.

14. It will be appropriate to make orders reflecting this settled position in due course.

The Dependency Claim

15. The plaintiff claims her costs of the proceedings insofar as this claim was concerned. The defendants accept that they should pay the plaintiff's costs, but argue that the Court’s discretion ought be exercised so as to reduce the plaintiff’s costs by 75 per cent.

16. It is necessary to examine the Court’s power and basis for exercising the costs, and the facts which will impact upon the Court’s exercise of its discretion.

Costs – Power

17. Section 98(1) of the Civil Procedure Act 2005 bestows an ample power with respect to ordering costs. It provides, relevantly:

“98.   Court’s Powers as to Costs

Subject to rules of court and to this or any other Act:

(a) costs are in the discretion of the Court; and

(b) the Court has full power to determine by whom, to whom and to what extent costs are to be paid; and

(c) the Court may order that costs are to be awarded on the ordinary basis or an indemnity basis …”

18. Rule 42.1 of the UCPR, which is also relevant, provides as follows:

“Subject to this Part, if the Court makes any order as to costs, the Court is to order that the costs follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs.”

19. Rule 42.2 of the UCPR provides that unless the Court otherwise orders, the costs payable are to be assessed on the ordinary basis.

20. Having regard to the fact that judgment will ultimately be entered in these proceedings for the plaintiff is in the sum of $177,900 – an amount well within the jurisdiction of the District Court, it is appropriate to have regard to the provisions of r 42.34 of the UCPR. That rule is in the following form:

“(1)   This rule applies if:

(a) in proceedings in the Supreme Court, other than defamation proceedings, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $500,000, and

(b) the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants.

(2)   An order for costs may be made, but will not ordinarily be made, unless the Supreme Court is satisfied the commencement and continuation of the proceedings in the Supreme Court, rather than the District Court, was warranted.”

Costs - Authorities

21. In Bostik Australia Pty Ltd v Liddiard (No.2) (2009) NSWCA 304, the Court of Appeal set out concisely the principles relevant to the exercise of the Court’s discretion with respect to costs where a question about success and failure on a number of issues arises. At [38] the Court (Beazley, Ipp and Basten JJA) said:

“38   The principles governing the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which the successful party in the proceedings or on the appeal did not succeed were reviewed by this Court in Elite Protective Personnel Pty Ltd & Anor v Salmon (No 2) [2007] NSWCA 373. Those principles may be summarised as follows:

•   Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported).

•   In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal.

•   If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27].

•   Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed).

•   A separable issue can relate to “any disputed question of fact or law” before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34].

•   Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261 at 272.

These principles were applied in City of Canada Bay Council v Bonaccorso Pty Ltd (No 3) [2008] NSWCA 57 at [22] and most recently in Turkmani v Visvalingham (No 2) [2009] NSWCA 279.”

22. There is no reason to think that the principles applicable on an appeal are any different from those at trial. See also Sydney Ferries v Morton (No.2) [2010] NSWCA 238; Hawkesbury District Health Service Limited & Anor v Patricia Chaker (No.2) [2011] NSWCA 30; Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (No.2) [2011] NSWCA 171.

23. Recently in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (No.2) [2014] NSWCA 425, Macfarlan JA (with whom Meagher and Barrett JJA agreed) said at [26]-[27] the following:

“The effect of UCPR r 42.1 is that the Court must exercise the discretion as to costs conferred on it by s 98 of the Civil Procedure Act by ordering that costs ‘follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs’.

Consistent with this rule, it has long been accepted that a plaintiff who obtains judgment at trial for a monetary sum will ordinarily be entitled to an order that the defendant pay his or her costs, notwithstanding that the plaintiff might not have recovered the whole of the amount he or she claimed. The circumstances of particular cases may warrant departure from this approach. In particular, where the defendant succeeded on a clearly dominant or separable issue, some variation may be warranted. In Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38], this Court provided the following summary of presently relevant principles …”

24. Most recently, the Court of Appeal reaffirmed these applicable principles: Cunneen v Independent Commission Against Corruption [2015] NSWCA 46 at [14], per Ward JA (Bathurst CJ and Basten JA agreeing).

Submissions of the Defendants

25. The defendants submitted that there were two particular issues upon which the plaintiff failed with respect to the dependency claim, and which ought be accounted for by an order for costs of the kind they urged. Those two issues concerned, first, whether the lesion which the late Dr O’Reilly presented with in November 2003, would, if it had been discovered by the defendants at that time, have been found to be benign or malignant (“the malignancy issue”). The second issue was whether at that time, the lesion, whether benign or malignant, was an in situ tumour or whether it had metastasised to remote organs (“the metastasisation issue”).

26. The defendants submitted that both issues were determined adversely to the plaintiff, and that both of the issues occupied a significant amount of time in preparation for, and at the hearing of, the matter, and in the reasons for judgment.

27. The defendants further submitted that the apportionment for which it contended was appropriate because of an amendment to the Statement of Claim first made in August 2013, which, so the defendants contended, so altered the case with respect to the cause of death of the late Dr O’Reilly, that the costs which they incurred prior to that time were significantly wasted. The defendants went so far as to submit that if the plaintiff had prosecuted at the hearing the case pleaded prior to that amendment, such a case was doomed to fail.

28. Finally, the defendants submitted that as the damages recovered are well below the amount claimed, well below the jurisdictional limit of the District Court and considerably less than the sum of $500,000 referred to in r 42.34 of the UCPR, the proportionality of that sum to the likely amount of recoverable costs, would justify the reduction sought.

29. In this respect, the defendants specifically conceded that, notwithstanding the relatively small question of damages recovered, the commencement and continuation of the proceedings in the Supreme Court was warranted. I regard such concession as properly made.

30. However, the defendants submitted that the costs likely to have been incurred by the plaintiff in the prosecution of the proceedings were likely to be disproportionately high when compared with the damages recovered. Accordingly, the defendants submitted that this was a factor which could be, and ought be taken into account in the exercise of the Court’s discretion.

Submissions of the Plaintiff

31. The plaintiff submitted that, with the exception of separating out the costs relevant to the personal injury claim (which she accepted was a separable issue of the kind to which the authorities refer) the Court ought not make any other adjustment to reflect the issues upon which she was unsuccessful, nor to reflect the ratio between the damages recovered and the likely quantum of costs.

32. With respect to the late amendment, the plaintiff drew the Court’s attention to the fact that the Court, had made an order for costs with respect to that amendment, which she submitted was the appropriate order, and sufficient in the circumstances.

Defendants’ Submissions in Reply

33. In reply the defendants accepted that the Court should not discount the amount of the plaintiff’s recoverable costs by reason of the late amendment issue, unless it also revoked the costs order which it had made at the time. In other words, the defendants accepted that such an order was necessary to avoid any issue of double discounting.

34. In circumstances where they conceded that the proceedings were properly commenced and continued in the Supreme Court, the defendants also accepted that they could point to no authority which supported the proposition contended for that the Court ought discount the sum recovered for costs by reference to the damages recoverable and the likely proportionality between the two.

Discernment

35. These last two issues can be disposed of quite shortly.

36. With respect to the first issue, I am not persuaded that without the late amendment, the whole of the plaintiff’s case would have been doomed to fail. In all of the circumstances, the costs order which was made at the time was the appropriate costs order, it ought stand. In my view it is sufficient to take account of the position with respect to costs occasioned by such amendment.

37. I reject this as a ground for discounting the order for costs in the way sought by the defendants.

38. The second issue which can be readily disposed of is the proposition that there is likely to be such a disproportion between the damages recovered and the costs incurred, that the Court ought discount the sum to be recovered for costs.

39. I am not persuaded that this is a valid factor to take into account in the exercise of the Court’s discretion. In addition, the Court has no evidence before it as to what the quantum of the costs claimed by the plaintiff are likely to be. The Court has no idea, if such claim for costs is contested, what the likely ultimate sum will be, for which a costs certificate is issued. Accordingly, attempting to make an assessment of the proportion between the damages awarded, and the likely recoverable costs, is an exercise upon which the Court has no evidence, and which in any event, would be fraught with uncertainty and difficulty.

40. If a party commences and continues proceedings in this Court, and is ultimately successful, then unless the sum which is recovered can properly be described as nominal damages, and it is not suggested that the judgment which will be entered for the plaintiff is in that category, then the plaintiff is entitled, ordinarily, to their costs of the proceedings, whatever those costs may reasonably be.

41. The concept of proportionality, and the absence of any statutory requirement to adjust costs by reference to judgments recovered, is not a factor which a court ought properly take into account in the exercise of its discretion in the proceedings.

The Malignancy Issue

42. At the hearing of the principal proceedings, the plaintiff contended that the Court ought hold that the lesion which it was ultimately agreed to have been present in the late Dr O’Reilly, was present in November 2003, was likely to be benign and not malignant. The defendants contended for the contrary.

43. It can be readily accepted that a good deal of evidence by way of written expert reports and oral evidence, was directed to this topic. This was not an issue upon which all experts were agreed at the commencement of the proceedings. By way of example, initially the case for the defendants was that there was no such lesion present at all. However, as expert reports were obtained, it became clear that the defendants’ case was that there was such a lesion present, and that it was malignant.

44. The concurrence of expert opinion, at least of the United Kingdom experts, did not manifest itself until during the hearing of their evidence, which was taken concurrently. It manifested itself there because of the joint conclave which had been held shortly prior to that time, and which had produced a joint report, whereupon it became apparent what the state of agreement actually was.

45. Thereafter, the plaintiff sought opinion from its principal oncological expert, Professor Tattersall, who agreed, in general terms, with the joint opinion of the United Kingdom experts. After that point in time, Dr Gavaghan, who was not an oncological expert, maintained his view that from a clinical perspective, the lesion was more likely than not to be benign.

42. The central flaw in Dr Gavaghan’s expert opinion was discussed in the principal judgment at [352]-[360]. One of the main reasons for the Court declining to accept Dr Gavaghan’s opinion was that the tumour-doubling time upon which he relied of 660 days, rather than the much shorter period of 130 days used by Professor Price, the expert United Kingdom oncologist, demonstrated that the tumour must have been malignant at the relevant time. It is to be observed that this apparently obvious reason for discounting of the opinion of Dr Gavaghan, was not the subject of any cross-examination or challenge by the defendants on that basis. There is no doubt that they challenged his general expertise to express opinions of any weight, in comparison with other experts.

43. The fact that the plaintiff ultimately submitted that the Court could be persuaded that the tumour was benign, based on Dr Gavaghan’s evidence may, with the benefit of hindsight, be seen to be clinging to a very thin lifeline, but in my view it is not more than an issue in the proceedings which was clarified by the process of concurrent evidence, and the process of taking further evidence and assessing its weight. The issue was not so clearly separable and distinct from the whole issue of liability in the dependency proceedings as to enable a fair and just apportionment of the order for costs.

The Metastasisation Issue

48. This was a difficult issue. As the principal reasons for judgment show (at [363] and following) it was an exquisitely complex question, even for the experts. As the extracts from the evidence of the experts demonstrated (at [369]-[371]), it was an issue upon which they found difficulty in reaching and expressing their conclusion.

49. The metastasisation issue was central to the question of whether, had the lesion been detected in November 2003, the late Dr O’Reilly would have lived for any period longer than he in fact did. The plaintiff submitted that he would have had a normal life expectancy. The defendants submitted that he would have died at or about the same time as he in fact did. The quantum of damages depended upon this issue. Neither party was successful in arguing for their respective position.

50. Whilst I accept that there was some significant time taken with respect to the elucidation of this issue in evidence, and it may have been done more efficiently, particularly if the experts were not spread between the United Kingdom and Australia, I do not think that it can be said that this was an issue which is so separable, and distinct from other issues in the proceedings, that it can or ought be isolated by the Court with respect to a decision as to costs.

51. As well, I do not accept the defendants' submissions that the plaintiff unreasonably pursued or persisted with an unmeritorious view of the evidence. After all, both sides had a degree of success, and a degree of failure, on this issue. The ultimate finding was one which neither party directly contended for, but it fell between the positions for which they each contended.

52. Accordingly, I reject the submissions of the defendants that this is an issue which ought be regarded as a separate one which would justify the Court denying to the plaintiff her entitlement to recover these costs.

An Overall View

53. Whilst I have examined the submissions of the defendants with respect to individual reasons why the costs to be ordered ought be discounted, as the Court is exercising a discretion, it is necessary to stand back and consider whether having regard to all of the issues which were litigated, the ultimate result as set out in the principal judgment, and the reasons of the Court for coming to those conclusions, there is any reason why the plaintiff ought not recover her costs. In other words, within the meaning of r 42.1 of the UCPR, should the Court “otherwise order”.

54. It is necessary to keep in mind that an order for costs is not a punishment of an unsuccessful party, here the defendants. Nor should it be used as a tool to capriciously adjust the financial outcome of the proceedings.

55. It is necessary to keep in mind that the process of costs assessment, in which any party can choose to engage, is one which is designed to identify and if appropriate, disallow particular items of costs where the experienced costs assessor forms the view that such items were unreasonably or inappropriately incurred.

56. Whether the parties end up agreeing on the sum for costs, or submitted to the costs assessment process does not invalidate this proposition.

57. Looking at the proceedings overall, it is clear that one separable issue in respect of which Mrs O’Reilly was unsuccessful, was her own claim for personal injury damages. She was otherwise successful in the proceedings. They were hard fought. Her case was attacked with vigour and in detail. If the defendants’ submissions were correct, she would have lost her case entirely. All points were in contest. That she was unsuccessful on a number of points or issues is, as I see it, no more than a part of the overall litigation. Not every party is successful on all issues.

58. The UCPR provides that unless the Court otherwise orders, the successful party is to obtain an order for their costs. Here the defendants need to persuade me that the Court should “otherwise order”. I am simply not so persuaded.

59. In my view, the proper exercise of my discretion is to order that the defendants pay the plaintiff’s costs of the proceedings as a whole, by which I mean the consolidated proceedings, including as that does, the two individual proceedings which preceded it, except for such part of the proceedings as solely related to the claim by Mrs O’Reilly for damages for personal injury by way of nervous shock.

Orders

60. I make the following orders:

1. Judgment for the plaintiff in the sum of $177,900.

2. Defendants to pay the plaintiff’s costs of the proceedings, except for the plaintiff’s costs solely related to the claim by her for personal injury by way of nervous shock.

3. Plaintiff to pay the defendants’ costs solely incurred by them in responding to the plaintiff’s claim for damages for personal injury by way of nervous shock.

4. Order that the costs, once determined, be set off.

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Decision last updated: 20 March 2015