Pihler v Genidi

[2001] WADC 74

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CHAMBERS

LOCATION:   PERTH

CITATION:   PIHLER -v- GENIDI [2001] WADC 74

CORAM:   YEATS DCJ

HEARD:   16 FEBRUARY 2001

DELIVERED          :   28 MARCH 2001

FILE NO/S:   CIV 4504 of 1999

BETWEEN:   VESNA ANE PIHLER

Plaintiff

AND

SOAD GENIDI
Defendant

Catchwords:

Costs - Whether successful plaintiff unnecessarily or unreasonably incurred costs by issuing writ and statement of claim before affording the Insurance Commission the opportunity to settle claim - Reasonableness of 90 Day Rule - Whether there was an apprehension of bias

Legislation:

Supreme Court Rules, O 66 r 1(2)

Result:

Appeal allowed

Representation:

Counsel:

Plaintiff:     Mr J G Staude

Defendant:     Mr K S Pratt & Mr S V Forbes

Solicitors:

Plaintiff:     Trewin Norman & Co

Defendant:     Jackson McDonald

Case(s) referred to in judgment(s):

Ebner v The Official Trustee in Bankruptcy and Clenae Pty Ltd & Ors v ANZ Banking Group [2000] HCA 63

Johnson v Johnson [2000] HCA 48

Mann v Brooke (2000) 31 MVR 434

Ottway v Jones [1955] 1 WLR 706

Scherer v Counting Instruments Ltd [1986] 1 WLR 615

Smith v Kay [2000] WADC 257

Case(s) also cited:

Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries [1951] 1 All ER 873

British Dominion Films v Dent [1935] VLR 157

Cretazzo v Lombardi (1975) 13 SASR 4

Donald Campbell & Co Ltd v Pollak [1927] AC 732

Jamal v Department of Health (1988) 14 NSWLR 252

1. YEATS DCJ: This is the defendant's appeal from the decision of the learned Deputy Registrar dismissing the defendant's application pursuant to O 66 r 1(2) of the Rules of the Supreme Court seeking an order that the plaintiff be deprived of her costs of the action wholly or in part and/or to pay the defendant's costs of the action either wholly or in part.

2. The jurisdiction exercised by the Registrar in relation to this matter is a delegated jurisdiction.  A condition of the delegation is the provision for a complete review do novo before a Judge of the District Court.  In conducting such an appeal each party may rely on evidence given in affidavit or orally before the Registrar.  The court need not look for error in the decision of the learned Deputy Registrar; on appeal the court considers the matter afresh  (Hazart Pty Ltd v Rademaker (1993) 11 WAR 26).

Background

1. The Insurance Commission of Western Australia is the compulsory third party insurer of the defendant in this claim by the plaintiff for damages for personal injuries arising out a motor vehicle accident on 25 December 1997.  The plaintiff's solicitors wrote to the Insurance Commission on 11 September 1998 advising that they were acting on behalf of the plaintiff.  On 14 September 1998 the Insurance Commission wrote to the plaintiff's solicitors indicating that the negligence of the defendant would not be denied provided the plaintiff complied with Limitation Act provisions.  There was no other correspondence between the plaintiff's solicitors and the Insurance Commission before the writ of summons issued on 7 December 1999.

2. Earlier that year on 13 April 1999 the Commission wrote to the members of the legal profession including the plaintiff's solicitor advising of the proposal and new policy on the settlement of claims prior to legal proceedings which had been adopted by the Insurance Commission.  This policy is referred to as the "90 Day Rule".  The policy applies to all motor vehicle personal injuries claims for which liability for negligence is admitted in which a claimant has instructed a legal practitioner.  Under the policy the Insurance Commission undertook to endeavour to facilitate and encourage the settlement of claims for damages for personal injuries as soon as it is reasonable to do so and without the necessity for legal proceedings to be instituted.  The policy stipulated in par 4 to this effect:

   "Where it appears that a claimant's medical condition has stabilised to the extent that settlement can be considered, the Insurance Commission will invite a submission towards settlement, to include:‑

   (a)full particulars of the heads of damages including, in respect of any pecuniary loss, the quantification of such loss;

   (b)full disclosure of documents relating to pecuniary and non‑pecuniary loss including

   (i)medical reports;

   (ii)documentary proof of special damages; and

   (iii)in the case of a claim for loss of earning capacity, documentary proof of pre and post‑accident earnings; and

   (iv)documents evidencing loss of earnings, gratuitous services, cost of future treatment etc."

3. The Insurance Commission's policy went on to say that the Commission expects that a legal practitioner will not in ordinary circumstances commence proceedings for damages without providing a submission to the Commission in the form as outlined in par 4.  The Insurance Commission then undertakes as part of its policy within 28 days of receiving a submission to make an offer of settlement or provide advice for any delay in so doing.  The policy provides for negotiations involving a senior claims officer of the Insurance Commission and only where negotiations fail to achieve a settlement will the plaintiff proceed by way of a District Court action.

4. Paragraph 11 of the policy is in these terms:

   "If a legal practitioner:-

   (a)before commencing legal proceedings unreasonably fails to provide a submission or to provide all particulars, information, and supporting documentation to enable the Insurance Commission to make an informed offer of settlement;

   …

   the Insurance Commission may apply for an order for costs pursuant to Order 66 rule 1(2)."

5. The plaintiff's claim seeking in excess of $100,000 in damages was settled at the first pre‑trial conference in the District Court in the amount of $27,000.

6. In these circumstances the defendant submits that the conduct of the plaintiff in failing to provide particulars of its claim to the Insurance Commission prior to the issue of the writ has unnecessarily and unreasonably incurred costs associated with its proceedings in the District Court and that the plaintiff should be deprived wholly or in part of its costs and/or the plaintiff should pay the costs of the defendant incurred in the District Court either wholly or in part.

7. By affidavit sworn 11 September 2000 the plaintiff's solicitor said in par 7:

   "I personally strongly disagree with the policy of the Insurance Commission in requiring Plaintiffs to attend informal conferences prior to the issue of proceedings.  In my view Plaintiffs gain considerable confidence in the integrity of the system by having their claims dealt with in a Court context at a formal pre‑trial conference.  This may be contrasted to a meeting between officers of the Insurance Commission and representatives of the Plaintiff in the Commission building where no mediation is possible and where proceedings are not overseen by the Court."

8. The plaintiff's solicitor further said in par 9 of his affidavit:

   "Finally, I do not believe that it is appropriate or proper for this Honourable Court to lend support to the policies of an insurer which are designed to further its own commercial interests which in fact may be contrary to the best interests of the Plaintiff.  I also believe that this Honourable Court should protect the freedom of the Plaintiff to act in what she considered to be her best interests by using the mechanisms of the Court to resolve her claim."

Apprehension of Bias

1. A preliminary issue arose at hearing when the plaintiff suggested that this may be a matter which could not be heard by any Judge of the District Court because of the apprehension of bias.  The plaintiff submitted that if, as the Insurance Commission suggests, the policy sometimes known as the "90 Day Rule" intended to ensure that negotiations took place prior to the issue of a writ in the settlement of claims had been adopted by the Judges of the District Court and could be expected to be the subject of a rule or practice direction in the near future then any Judge of the Court would be unable to sit to hear this application because of the apprehension that every Judge has pre‑judged this issue.

2. I formed the view that it is a well‑established principle that a Judge is disqualified if a fair minded lay observer might reasonably apprehend that the Judge might not bring an impartial mind to the resolution of the question the Judge is required to decide (Johnson v Johnson [2000] HCA 48: Ebner v The Official Trustee in Bankruptcy and Clenae Pty Ltd & Ors v ANZ Banking Group [2000] HCA 63 In this case the District Court has made no practice direction or rule with respect to the 90 Day Rule. But I do come to consider this matter within a climate of a developing concern over a number of years in all superior courts in Australia that it is in the interests of justice that parties do their best to reduce costs and reduce pressure on courts by negotiating settlements where that is possible. The Rules of the Supreme Court and District Court reflect those concerns.  Many of those concerns were touched on in the Australian Law Reform Commission Report No 89 "Managing Justice:  A Review of the Federal Civil Justice System".

3. In hearing this application the court cannot remove itself from the general trend in case management aimed at reducing costs and increasing efficiencies in the civil justice system. I perceive my role as simply determining two issues based on the particular circumstances of this case. Those issues are: (1) whether the policy of the Insurance Commission offered a reasonable opportunity for settlement of this claim? (2) whether the plaintiff acted unreasonably in failing to utilise the opportunity for pre‑trial settlement of her claim? When the particular questions that need to be addressed are examined the apprehension of bias falls away. The court has not pre‑judged the Insurance Commission's policy nor have I pre‑judged it. My judgment is required to determine as a matter of my discretion whether costs have been unnecessarily or unreasonably incurred by the plaintiff (O 66 r 1(2)). That will depend upon the particular circumstances of this case and would not be affected by any suggested pre‑judgment. For that reason I refused the defendant's application that I should disqualify myself on the grounds of bias.

4. The issues then that I must consider are:

   (1)Did the Insurance Commission's policy offer the plaintiff a reasonable opportunity to settle her claim prior to the issue of the writ?

   (2)Did the plaintiff unnecessarily or unreasonably incur costs by failing to utilise the pre‑writ opportunity for settlement afforded by the Insurance Commission's policy?

Issue 1

1. In his submissions counsel for the plaintiff submits that without a specific rule of court a legal practitioner and client is entitled to conduct the case in their own perceived interests without risking costs sanctions.  The plaintiff's solicitors did provide medical reports to the Insurance Commission and suggest that the defendant was in a position to assess the claim for itself and make a Calderbank offer.  The plaintiff's solicitor takes the view that plaintiffs generally gain considerable confidence from having their claims considered in a court during a pre‑trial conference.  That is to be contrasted with a settlement conference at the Insurance Commission where a Commission officer attends without legal counsel.  The plaintiff submits that it has a right to choose to use the court procedure without complying with the Insurance Commission's policy.

2. The plaintiff submits another factor is that the solicitor's costs of the settlement conference with the Insurance Commission are not paid if the matter does not settle prior to the issue of the writ.  When that occurs and the matter goes to trial there is no provision in the costs orders of the District Court to allow the plaintiff to claim the costs it incurred in complying with the Insurance Commission policy and attending an informal conference (Smith v Kay [2000] WADC 257). The plaintiff submits that it is entitled to decide not to put the plaintiff at risk of reimbursing the solicitor for the costs of an informal conference.

3. Overall the plaintiff's position is that the court should not endorse a policy by the insurer designed to further the defendant's interests when for the reasons stated that policy is not in the best interests of the plaintiff.  The plaintiff should be free to act in the way she considers to be in her best interests and to use the mechanisms of the court to resolve her claim.

4. The defendant submits that without the plaintiff providing particulars of its claim it is not in a position to assess the size of the damages claim being brought by the plaintiff.  It was not in a position to make an offer unless the plaintiff had complied with its policy and provided the particulars of its claim along with the other matters mentioned in par 4 of the policy.

5. The defendant suggests that the Insurance Commission's policy came into operation in a climate in Western Australia aimed at reducing pressures on the court.  The defendant submits that there is a general groundswell of support for negotiated settlements where that is possible so as to avoid the use of the court's limited resources unless it is necessary.

6. The defendant suggests that its policy is in the public interest in two ways; in the first place the Insurance Commission is the insurer under a scheme of compulsory insurance whereby it is a condition of the registration of a motor vehicle that the owner insures in respect of personal injuries sustained by third parties.  Therefore, any reduction or limiting of the overall costs of litigation will directly benefit members of the public who own vehicles and must pay for compulsory third party insurance.  (Mann v Brooke (2000) 31 MVR 434.) The other public interest the defendant relies on reflects the limited and costly resources of the District Court. It is submitted that it is in the public interest to encourage any procedure that has the potential and capacity to lead to the settlement of claims without court involvement. This has nothing to do in the defendant's submission with interfering with a party's right to sue. The plaintiff is fully entitled to commence its action by writ in the District Court. The question is, when that is done without taking advantage of what the defendant suggests is a reasonable and available system for negotiating settlement, whether the plaintiff should be penalised for unnecessarily and unreasonably incurring costs.

The Insurance Commission's policy

1. I am required to consider the reasonableness of the policy of the Insurance Commission.  I accept that it has the deficiency noted by the plaintiff to the extent that the costs of an informal conference prior to issue of the writ will not be met if the matter proceeds in the District Court.  I accept that those costs are not covered in the District Court's scale of costs.  At the same time it seems to be the case that if the matter settles prior to trial that those costs are included in the offer made by the Insurance Commission.

2. I do not accept the plaintiff's submission that it is unreasonable or unfitting for a plaintiff to provide information to a defendant so that an offer for settlement can be made.  I do not think that necessarily in any way detracts from the plaintiff's right to bring her action in the District Court.  It seems to me that it is reasonable in every matter that the parties negotiate prior to approaching the court.  In any claim whether for personal injuries or otherwise a plaintiff would be well advised to indicate to a defendant before issue of the writ what it is seeking and to seek to settle the claim without incurring unnecessary court costs.  To that extent it seems to me that the Insurance Commission policy does provide a sensible and workable system for the benefit of plaintiffs.  In order to make an offer in a personal injuries claim I accept that the Insurance Commission will need the information sought in its policy ‑ that is, full particulars of claim and full disclosure of documents including proof of special damages, proof of pre and post‑accident earnings and any documents on the issues of loss of earnings, gratuitous service or cost of future treatment.  The assessment of personal injuries claims is a complex matter and without that information it would not be possible for an offer to be made by the Commission.  That information would have to have been gathered by the plaintiff's solicitor in any event before a writ and statement of claim could issue.

3. It was suggested that not including a lawyer in the Insurance Commission's informal conference somehow degraded the conference.  I cannot accept that submission.  The settlement officers of the Insurance Commission are the only ones in a position to make offers and to settle claims; negotiation with the Commission is necessary.

4. Having considered all of the issues I am satisfied that the Insurance Commission policy does provide a reasonable opportunity for a plaintiff to negotiate settlement of a claim prior to the issue of the writ.  The failure to provide for the costs of the informal conference when the matter does not settle at conference is a flaw in the policy that should be addressed but it does not detract from the overall reasonableness of the policy itself.  I believe it is in the public interest for a mechanism to be in place such as that established by the Insurance Commission so that plaintiffs have an opportunity to settle their claims without incurring the costs of issuing a writ in the District Court.

Issue 2

1. The plaintiff did not raise any specific matters that made her case unsuitable for settlement prior to the issue of a writ.  On the contrary the matters raised by the plaintiff's solicitor go only to the issue of disagreement with the Insurance Commission's policy.  What I need to consider very closely, however, is whether the plaintiff's case was in fact amenable to settlement and whether there was anything about the case that would mean it was not reasonable for the Insurance Commission policy to apply to it.

2. The plaintiff's statement of claim alleges a number of injuries related to a soft tissue injury to the neck and mid‑thoracic region of her spine.  The medical reports show that the accident happened on 25 December 1997 when she was travelling about 70 kilometres per hour and came into collision with a car that pulled out in front of her.  She had pain and tenderness in her neck and thoracic vertebrae and facet joint problem in her upper thoracic region with a lower lumbar strain.  She commenced physiotherapy on 4 January 1998 and persisted with home exercises and stretching but did not fully recovered from the accident.  She had not missed work although over some weeks she had been partially incapacitated at her work.  She was 23 years old at the time of the accident.  As time went on her symptoms in her middle and upper back caused her pain and stiffness toward the end of each day.  Physiotherapy programmes were devised to strengthen her in that area.

3. The plaintiff is a hairdresser and discovered within a few months that her hairdressing activities aggravated her headache and neck pain.  The medical reports indicated that her symptoms fluctuated until they began to settle.  Her neurologist reported that she was coping with her work as a hairdresser but only because she took on management work and limited her hours to 32 hours per week.  All her medical advisers advised that she would recover completely from this soft tissue injury.

4. My review of the medical evidence indicates to me that the evidence was non‑contentious.  It was not a case where doctors disagreed about her diagnosis or prognosis.  It seems to me that her case was one that was quite amenable to settlement.  The fact that the case was settled at the first pre‑trial conference provides some evidence of that but is not wholly determinative.  In these circumstances I am satisfied that the plaintiff's case was suitable for consideration by the Insurance Commission prior to the issue of the writ.  Because I have found that the Insurance Commission policy does provide a reasonable opportunity to negotiate settlement prior to trial and that the policy is in the public interest, in this case where the plaintiff's case is suitable for settlement, the result necessarily follows that by failing to utilise the pre‑writ opportunity for settlement the plaintiff has unnecessarily and unreasonably incurred costs.

1. I consider it was unnecessary for the plaintiff to issue the writ and statement of claim because the defendant by its policy was prepared to make an offer to settle the matter prior to issue of the writ.  Whether or not it would have settled then is not known, but given the nature of this claim and the fact that it settled at the first pre‑trial conference, I am satisfied it was likely to have settled without incurring the costs of the writ and statement of claim.

2. On the other hand, I consider it was unreasonable in the particular circumstances of this case to issue the writ and statement of claim without any attempt to settle the matter with the Insurance Commission beforehand.  "Unreasonableness" requires the Court to examine the particular reasons the plaintiff relies on for failing to utilise for failing to utilise the policy.  Apart from the costs question, the plaintiff's solicitor has not made submissions based on any reasonable factors.  The plaintiff's submissions are based on the personal views of the solicitor who disagrees with the policy.  The solicitor has rejected the 90 Day Rule because he disagrees with it, not because of any particular features of the plaintiff's case which may have shown the policy to be inappropriate in this case but simply because of his disagreement.  There is no "reasonable" basis for the plaintiff's submissions.  This will not be the case in all actions; there may be particular issues in a case which indicate it as unsuitable for settlement or unlikely to settle.  In such cases it may not be unreasonable for a plaintiff to commence proceedings in the District Court without attempting settlement, at least when the plaintiff's costs of the pre‑writ settlement conference are not recoverable.

Costs

1. The general rule is that the successful party to an action recovers his or her costs (O 66 r 1(1)). But where the conduct of a party before the commencement of the litigation has resulted in costs being unnecessarily or unreasonably incurred the Court may deprive that party of its costs wholly, or in part, and may order the successful party to pay the costs of an unsuccessful party either wholly or in part (O 66 r 1(2)).

2. I accept that there must be special grounds connected with the case to justify departure from the general rule (Ottway v Jones [1955] 1 WLR 706). I am satisfied that special grounds do exist in this case where the plaintiff has both unnecessarily and unreasonably incurred costs. But I do not believe this is a case where the plaintiff should be required to pay any part of the defendant's costs. "Strong justification" is required for such an order (Scherer v Counting Instruments Ltd [1986] 1 WLR 615) and I do not believe the circumstances of this case go that far.

3. While I am satisfied it was likely the case would have settled it is not certain that it would have. If it did not settle the plaintiff would have to bear the costs of that pre‑writ process. Because of these factors the justice of the case does not require the plaintiff to bear all of its costs of the District Court proceedings. I believe a just result consistent with the policy of O 66 r 1(2) would be an order that the plaintiff pay its own costs of the writ and the statement of claim. Otherwise the normal rule would operate so that the defendant would pay the plaintiff's costs of the District Court proceedings.

4. For these reasons the appeal is allowed and I order pursuant to O 66 r 1(2) that the successful plaintiff pay its own costs of the writ and statement of claim.