Ryrie v Tanner (No 3)
[2020] ACTSC 223
•12 August 2020
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Ryrie v Tanner (No 3) |
Citation: | [2020] ACTSC 223 |
Hearing Date: | 11 August 2020 |
DecisionDate: | 12 August 2020 |
Before: | Murrell CJ |
Decision: | Second defendant to pay the plaintiff’s costs on a party and party basis until 17 August 2018 and on an indemnity basis thereafter. |
Catchwords: | PRACTICE AND PROCEDURE – COSTS – Application for costs on an indemnity basis – Whether the plaintiff’s offer was a valid “mandatory final offer” – Whether it was unreasonable for defendant to reject plaintiff’s “mandatory final offer” – Consideration of “pain and suffering” and “non-economic loss” |
Legislation Cited: | Court Procedures Rules 2006 (ACT) r 1721 Road Transport (Third-Party Insurance) Act 2008 (repealed) ss 141, 144(2), 145, 155(3), 156A, 156B Road Transport (Third-Party Insurance) Regulation 2008 (ACT) reg 27 |
Cases Cited: | Albrecht v Insurance Australia Ltd [2016] ACTCA 58; 12 ACTLR 46 Casey v Pel-Air Aviation Pty Ltd; Helm Pel-Air Aviation Pty Ltd (No 3) [2015] NSWSC 857 Ryrie v Tanner (No 2) [2020] ACTSC 104 |
Parties: | Nyssah Ryrie (Plaintiff) Pat Tanner (First Defendant) Insurance Australia Ltd trading as NRMA Insurance (Second Defendant) |
Representation: | Counsel S Whybrow (Plaintiff) D Crowe (Defendant) |
| Solicitors Baker Deane & Nutt (Plaintiff) HWL Ebsworth Lawyers (Defendant) | |
File Number: | SC 352 of 2019 |
MURRELL CJ
Costs application
On 1 May 2020, I gave judgment for the plaintiff in the sum of $370,501. The plaintiff had claimed damages for injuries and disabilities (primarily, lower back pain) that she had sustained in a motor vehicle accident on 17 August 2015: Ryrie v Tanner (No 2) [2020] ACTSC 104.
The plaintiff claimed costs on a party and party basis until 17 August 2018 and thereafter on an indemnity basis on the basis that, on 17 August 2018, the plaintiff made a “mandatory final offer” (MFO) under the Road Transport (Third-Party Insurance) Act 2008 (repealed) (TPI Act).
The defendants said that all costs should be paid on a party and party basis because:
(a)the plaintiff’s MFO did not comply with the TPI Act as the latter speaks of “pain and suffering” rather than “non-economic loss”; and/or
(b)in the exercise of the Court’s discretion, there should be no special costs order as it was not unreasonable for the defendants to reject the plaintiff’s offer; it was made prior to receipt of expert medical evidence that significantly changed the complexion of the case and, inter alia, dealt with the plaintiff’s need for a spinal fusion operation.
The offers
The plaintiff’s offer was:
For the purposes of Section 141 of the Road Transport (Third Party Insurance) Act 2008 (“the Act”), the Plaintiff makes an MFO of $100,000.00, inclusive of all medical expenses in the sum of $,7865.19, inclusive of other statutory charges and plus party\party costs and disbursements.
Of the above amount, pursuant to section 141(5), the Plaintiff identifies the amount of $49,000 as being for pain and suffering.
(Emphasis added)
The insurer made the following MFO on 17 August 2018:
In accordance with Section 141 of the Road Transport (Third Party Insurance) Act 2008, I am instructed to offer your client the sum of $50,000 inclusive of paid and unpaid out pocket expenses and workers’ compensation and Medicare paybacks, plus costs as agreed or assessed and in accordance with the Road Transport (Third Party Insurance) Act 2008 and Regulations, broken down as follows:
1.$20,000 for non-economic loss
2.$30,000 for the balance of the Claimant’s claim.
(Emphasis added)
Neither offer was accepted.
Subsequently, the parties made further offers without prejudice, except as to costs.
The trial
In October 2018, the proceedings were commenced in the Magistrates Court. In July 2019, they were removed into the Supreme Court.
There were two applications in the proceedings on 29 July 2019 and 8 April 2020. The costs of each application were reserved.
At the trial, liability was admitted. The main issues were:
(a)whether the accident rendered the plaintiff’s underlying lumbar condition symptomatic, and if and when her condition would have become symptomatic without the accident;
(b)whether it was reasonable for the plaintiff to undergo a spinal fusion operation; and
(c)damages for non-economic loss, past and future expenses, past and future economic loss, and voluntary assistance.
The defendants maintained that the motor vehicle accident had caused a transient back condition; any ongoing disability was due to an unrelated condition and there was no need for a spinal fusion.
I rejected the defendants’ submissions.
Of the total judgment sum of $370,501, I awarded $160,000 for non-economic loss and $210,501 for damages other than non-economic loss, including $50,887 for past economic loss and $50,000 for future economic loss.
Issues
It was agreed that, having regard to r 1721 of the Court Procedures Rules 2006 (ACT), the award of costs was discretionary, but the exercise of the discretion was informed by the TPI Act.
It was agreed that the costs of the earlier applications should be awarded on the same basis as the general costs.
Consequently, the issues on the costs application were:
(a)Whether the plaintiff’s offer of 17 August 2018 was a “mandatory final offer” within the meaning of the TPI Act.
(b)Whether the Court should exercise its discretion to make a special costs order.
The TPI Act
In the Dictionary to the TPI Act, “mandatory final offer” is defined by reference to s 141 of the TPI Act.
The following provisions of the TPI Act are relevant:
141Mandatory final offers
(1)This section applies if, for a motor accident claim—
…
(b)the motor accident claim is not settled at the compulsory conference.
(2)The claimant and the respondent for the motor accident claim must exchange written final offers (each of which is a mandatory final offer).
…
(5)A mandatory final offer must identify how much of the offer is for non-economic loss.
(Notes omitted)
145 Court proceedings not to begin if mandatory final offer open
(1)A claimant for a motor accident claim must not begin a court proceeding based on the claim if a mandatory final offer for the claim remains open.
(2)If a claimant brings a court proceeding based on a motor accident claim, the claimant must, at the beginning of the proceeding, file in the court a sealed envelope containing a copy of the claimant’s mandatory final offer.
(3)The respondent must, before or at the time of filing a defence, file in the court a sealed envelope containing a copy of the respondent’s mandatory final offer.
(4)The court must not read the mandatory final offers until the court has decided the claim.
(5)However, the court must have regard to the mandatory final offers if making a decision about interest or costs.
(Notes omitted)
156ACosts—awards of damages over $50 000
(1)This section applies if a court awards more than $50 000 in damages in a proceeding (other than an appellate proceeding) based on a motor accident claim.
(2)If the amount of damages is equal to or more than a mandatory final offer made by the claimant, the claimant may apply to the court for an order that the respondent pay the claimant’s costs on a party and party basis up to the day the offer was made, and on an indemnity basis from that day.
…
(5)In this section:
damages does not include an amount for non-economic loss.
(Notes omitted)
156BMeaning of non-economic loss
In this Act:
non-economic loss includes the following:
(a)pain and suffering;
(b)loss of amenities of life;
(c)loss of expectation of life;
(d)disfigurement.
Was the plaintiff’s offer a mandatory final offer within the meaning of the TPI Act?
In 2013, the TPI Act was amended, replacing the expression “pain and suffering” with the expression “non-economic loss”, and “non-economic loss” was defined to include matters beyond “pain and suffering”. The reasons for the amendment are unclear, but it served to clarify the distinction between actual economic loss and more abstract (although equally important) loss.
Nevertheless, in general legal use, the expressions “non-economic loss”, “pain and suffering”, and “general damages” are often used interchangeably.
In Albrecht v Insurance Australia Ltd [2016] ACTCA 58; 12 ACTLR 46, consent orders were made awarding judgment for the plaintiff in the sum of $85,000 “inclusive of payments made and plus costs as agreed or assessed”. The plaintiff’s solicitors provided an assessment of costs and disbursements. Two months later, the NRMA asserted that costs were not payable because s 155(3)(c) of the TPI Act applied and the plaintiff had been awarded an amount equivalent to the defendant’s mandatory final offer.
The Court said (at [16]):
We consider that if there was any intention by the insurer to rely upon s 155(3) when the MFO was made, it should have been clearly stated, particularly given that the statutory cap, understandably described by the appellant’s counsel as “draconian”, would significantly erode the amount of damages which the insurer was offering to pay.
The Court noted that it had been the entry of the consent orders at the insurer’s instigation that had produced the issue in the case: at [17].
The Court said (at [53]):
The rationale underlying s 155 is that, where neither party has accepted the other party’s MFO within the 14 day period prescribed, that must be taken into account in determining costs in the manner set out in s 155. This construction best promotes the object of encouraging settlement prior to trial which underlies both Part 4.8 and s 155, particularly given that most of the preparation for trial must have been completed prior to any exchange of MFOs. Furthermore, at a conceptual level, it can be seen as a statutory variation to the common law principles with respect to Calderbank offers, namely, that the Court may have regard to a failure unreasonably to accept a genuine offer of compromise in exercising the discretion as to costs.
(Emphasis added, citations omitted)
In Haureliuk v Furler [2012] ACTCA 11; 6 ACTLR 151, the Court considered the proper construction of the expression “mandatory final offer” in s 144(2) of the TPI Act as it then was. The insurer had served a “mandatory final offer” of $85,000 “plus costs”, and stated that the sum of $85,000 was “broken down” as “$40,000 for pain and suffering (general damages)” and “$45,000 for the balance of the plaintiff’s claim”. The plaintiff accepted the insurer’s claim and then wrote to the insurer’s solicitors quantifying its claim for costs. The insurer asserted that, as the mandatory final offer was for only $45,000 (excluding non-economic loss), pursuant to s 144(2) and reg 27 of the TPI Act, the plaintiff was entitled to only $5,000 for costs. The Court accepted the plaintiff’s argument that, in determining the amount that the mandatory final offer “is for” within s 144(2), the amount identified for pain and suffering was not to be excluded. The Court said (at [43]):
We can discern no ambiguity or uncertainty in the words of s 144(2) of the Act. The mandatory final offer is the total offer and is not to be reduced by the amount identified in the offer as the amount offered for pain and suffering.
This decision emphasises that, in deciding costs, a court must have regard to the mandatory final offer as a whole. However, it does not deprive s 156A(2) of effect; that provision expressly provides an entitlement to seek indemnity costs from the date of the claimant’s MFO where “damages” (defined to exclude damages for non-economic loss) equal or exceed those in the MFO.
Relevant to the present case, s 145(5) of the TPI Act obliges the Court to have regard to the total amount of the mandatory final offers (written final offers made prior to the commencement of proceedings) made by both the plaintiff and the insurer, but may only take s 156A of the TPI Act into account if the amount of “damages” (damages other than non-economic loss) awarded is equal to or more than the amount of “damages” proposed in the plaintiff’s mandatory final offer.
The offers made by the plaintiff and the insurer on 17 August 2018 were each an MFO within the meaning of the TPI Act; each was a “written final offer”. Consequently, under s 145(5) of the TPI Act, I must have regard to each when deciding the costs application.
In addition, while the plaintiff’s offer refers to “pain and suffering”, it seems that both parties treated this as a reference to “non-economic loss”. It was only when the costs application was made (almost two years after the plaintiff’s offer) that the point was taken by the insurer. Consequently, I find that s 156A applies in the circumstances of the present case.
Alternatively, and regardless of s 141(5), the plaintiff’s offer should be taken into account because, even if technically non-compliant, it addressed the purpose of the TPI Act costs provisions; it was a genuine offer of compromise made before the commencement of proceedings. For general discretionary reasons, it should be taken into account: Casey v Pel-Air Aviation Pty Ltd; Helm Pel-Air Aviation Pty Ltd (No 3) [2015] NSWSC 857.
Should the Court exercise its discretion to make the costs order that is sought?
Prior to the commencement of proceedings, the plaintiff offered to settle her claim for $100,000, being $49,000 for non-economic loss (expressed as “pain and suffering”) and $51,000 for economic loss. The insurer offered to settle the claim for $50,000, being $20,000 for non-economic loss and $30,000 for other loss. The plaintiff recovered $160,000 for non-economic loss and $210,501 for other loss.
Even if the plaintiff’s offer was technically non-compliant with the TPI Act and disregarding s 141(5), the vast difference between the amount offered and that recovered shows that, prima facie, it was unreasonable for the insurer to reject the plaintiff’s offer and make an offer of only $50,000.
Contrary to the insurer’s submissions, as at August 2018, the insurer should have been aware that the plaintiff had suffered a significant back injury. Her treatment records were available and showed that, since the date of the accident (three years before the offers were made), the plaintiff had made frequent complaint and obtained a variety of treatments. Two years before the offers, the plaintiff had consulted a treating specialist (Dr Pik) complaining of chronic pain at the L4/5 spinal level. A spinal fusion had been discussed and the plaintiff was “considering her options”. Prior to the exchange of offers, in May 2018, Dr Pik had reported to the plaintiff’s general practitioner that the plaintiff had degenerative change at L4/5 as well as a congenital abnormality in her lower back. I concluded that it was these conditions that caused the plaintiff’s debilitating back symptoms and that the accident had caused the plaintiff to become symptomatic.
Based on the material known to the insurer at the time when offers were made, it was unreasonable for the insurer to reject the plaintiff’s offer.
Having regard to the offers that were made on 17 August 2018 and other discretionary matters, I order that the second defendant pay the plaintiff’s costs on a party and party basis until 17 August 2018 and thereafter on an indemnity basis.
| I certify that the preceding thirty-five [35] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice Murrell. Associate: Date: |
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