Saad Nakleh Awad & Others v Bebnowski, Squirrell & Noarlunga Health Service (No 2) No. DCCIV-99-1517

SAAD NAKLEH AWAD & OTHERS v BEBNOWSKI & OTHERS (NO. 2)
[2003] SADC 26
Judge Rice
Civil

In this matter, I published reasons for judgment on 23rd December, 2002. At the request of counsel, given the imminent Christmas/New Year vacation, I did not make any orders on that occasion. The 21st January, 2003 was set aside for the making of formal orders in accordance with the published reasons. When the matter came on for that purpose, I heard argument on the question of costs and the formal orders I should make, including orders on the Contribution Notices between all defendants. I deferred the making of any orders until the publication of these reasons.
I have also been called upon to provide detailed reasons concerning an application by the plaintiffs at trial to exclude portion of the evidence of Mr Hall and Dr Ryan. Brief reasons were given at the time and more detailed reasons are provided below.
The various orders proposed and sought on the claims and Contribution Notices as well as for costs are as follows:-
1.That there be judgment in favour of the first plaintiff against the first defendant in the sum of $4,548.00.
2.That there be judgment in favour of the first defendant against the second, third and fourth plaintiffs.
3.That there be judgment in favour of the second and third defendants against all plaintiffs on the claim.
4.That there be judgment in favour of each of the second and third defendants on each of their Contribution Notices against the first defendant (such orders not being opposed by the first defendant).
5.That the first defendant pay the costs of the first plaintiff (such an order being opposed by the first defendant).
6.That the first defendant have its costs against the first plaintiff and that the first plaintiff’s entitlement to damages be set off against the first plaintiff’s liability to pay costs to the first defendant.
7.That the first defendant have its costs against the second, third and fourth plaintiffs.
8.That the second and third defendants have their costs as against the first defendant, those defendants seeking either a Bullock order or a Sanderson order.
9.That all defendants have their costs against the plaintiffs in any event arising from the argument relating to the admission of portion of the evidence of Mr Hall and Dr Ryan.
10.That all defendants have their costs relating to the admissibility of Dr Zimmet’s evidence.
It is appropriate to deal with the admission of portion of the evidence of Mr Hall and Dr Ryan first.
Application concerning Mr Hall and Dr Ryan
For convenience, I reproduce the brief reasons given during the course of the trial for admitting portions of the evidence of Mr Hall and Dr Ryan to which objection was taken:-
“This is an application to exclude evidence from Mr Hall and Dr Ryan. In part, I uphold their reports and oral evidence to the extent that they rely upon medical reports relating to Ms Tan. The set of reports relating to Ms Tan were not provided by the solicitors for the first defendant to Mr Hall and Dr Ryan contrary to an implied undertaking arising from the process of discovery or a comparable undertaking that arises from an interpretation of s.127 of the Motor Vehicles Act.
In my view, the implied undertaking does not attach to the provision of these documents. I also take the view that s.127 of the Motor Vehicles Act is not such as to provide, upon its proper interpretation, an implied undertaking. If I am wrong about both of those matters, I accept that I have a discretion in the matter and I would have no hesitation in exercising the discretion in favour of the inclusion of the evidence and I would, therefore, refuse to exercise my discretion to exclude the evidence. I so rule and as I say, I will deliver detailed reasons at a later time if called upon.”
The objection taken relates to two reports of Mr Hall dated 10th April, 2001 and 4th July, 2001 respectively and a report of Dr Ryan dated 14th January, 2002 (TP1570). The objection does not relate to the entire reports but so much of those reports as rely upon other reports supplied to them relating to the injuries and treatment of the other back seat passenger, Ms Tan. The particular matter in issue was the extent of any injuries to Ms Tan and whether she was wearing a seat belt that was properly adjusted. That matter related to the extent of any reduction in damages that may be awarded to any plaintiff pursuant to s.35A(1)(i) of the Wrongs Act 1936 (see paras.28-57 of my reasons (2002) SADC 157). As the argument proceeded, it seemed to also relate to reports relating to Ms Kasper, the front seat passenger.
The basis of the objection is that the provision of those reports to Mr Hall and Dr Ryan by the solicitor for the first defendant was improper because those reports were obtained by him as part of the discovery process relating to Ms Tan’s claim for damages or, alternatively, those reports were supplied contrary to an implied undertaking contained within s.127 of the Motor Vehicles Act. Assuming either or both of those points were made good, so the submission went, those parts of the reports and any oral evidence on the same topic should be excluded as an abuse of process. It was conceded that there was a residual discretion to admit the reports and evidence notwithstanding any impropriety or illegality (Southern Equities Corporation Ltd (in Liq) and Others v Bond and Others (No. 2) (2001) 78 SASR 554 at 570).
If it be the case that the reports concerned were obtained by the solicitor for the first defendant as part of the Court’s compulsory process of discovery and inspection “....it is subject to an applied undertaking that the person to whom disclosure of the document is made will not use it for a collateral or ulterior purpose not connected with the litigation in which it is disclosed”: (see Bleby J in Morgan v Mallard (2001) 216 LSJS 143 at 147 and cases referred to therein).
As to the first basis of objection, I received an affidavit from the solicitor for the first defendant, Mr P.G. Jones (exhibit D(1)(VD)102). The affidavit makes it plain that, regardless of what he believed at an earlier time, as a matter of fact he received all of those reports prior to the institution of proceedings by Ms Tan. I accept as the position that none of the reports provided to him was received by him as discovered documents. An implied undertaking in the context of discovery does not arise. In any event, Mr Jones obtained the permission of the Court to use the reports relating to Ms Tan, in these proceedings. Even if it be the case that the reports were supplied as part of the discovery process, I accept they were supplied by “genuine mistake” and would exercise my discretion in favour of allowing the evidence to be led.
As to the second basis for objection, namely that an implied undertaking arises from the operation of s.127 of the Motor Vehicles Act, I reproduce the relevant portions of the legislation:-
“Medical examination of claimants
127. (1)    In this section -
“claimant” means a person who has made a claim, or on whose behalf a claim has been made, for bodily injury caused by or arising out of the use of a motor vehicle.
(2)    A claimant must -
(a)     submit himself or herself to any medical examination by a legally qualified medical practitioner nominated by the insurer that the insurer may require; and
(b)    within 21 days of consulting a legally qualified medical practitioner in relation to the injury to which the claim relates, or such longer period as may be reasonable in the circumstances of the case or as the insurer may allow, inform the insurer, by notice in writing, of -
(i)the name of the medical practitioner; and
(ii)the day on which the consultation occurred; and
(c)    within 21 days of receiving (either personally or through a legal practitioner engaged by the claimant) a written report from a legally qualified medical practitioner consulted by the claimant in relation to the injury, or such longer period as may be reasonable in the circumstances of the case, send a copy of that report to the insurer.”
In the context of this case, do those provisions (forming part, as they do, of “Part 4, Third Party Insurance”) give rise to an implied undertaking on Mr Jones’ part that any report he receives from Ms Tan or Ms Kasper following a medical examination pursuant to the section, will not be used for a collateral or ulterior purpose?
In my view, the use of those reports is not limited to an assessment of damages for her or the litigation of an award. It is not necessary to consider the wider position not encompassed by the circumstances of this case. In my view, it is clear that the section at least contemplates reports upon a number of claimants arising out of the same collision being provided to the first defendant’s solicitor. No implied undertaking of the type submitted by the plaintiffs here, arises from the interpretation or operation of the section. There was nothing to prevent any reports obtained relating to Ms Tan or Ms Kasper from being provided to Mr Jones and he, in his turn, providing them to Mr Hall and Dr Ryan. The purpose of the legislative scheme of Part 4 supports that interpretation.
Quite apart from an interpretation of the section and Part 4, there are practical considerations that militate against any implied undertaking. To whom is the undertaking given? Who imposed the undertaking? How would you deal with a breach of the undertaking? What sanction could be imposed?
Assuming I am incorrect about the interpretation of s.127, I would nonetheless have admitted the evidence in the exercise of my discretion (see Bond’s case, supra). Some of the factors that I would have regarded as bearing upon the favourable exercise of the discretion are these.
First, it seems from the material before me that any breach of an implied undertaking was an innocent breach. It was not an action performed with an improper motive. Mr Jones had a genuine belief in the propriety of his conduct. When he believed he had acted wrongly, he instituted proceedings and obtained the appropriate order.
Secondly, the reports could have been obtained by third party discovery in any event.
Thirdly, it is clear from the argument and material presented to me that, even though the plaintiffs were not supplied with these reports until a time later than the first defendant, the plaintiffs have utilised these reports themselves, including seeking an expert’s advice on the seat belt issue.
Finally, it is difficult to see how the plaintiffs have been prejudiced by any breach of an undertaking. It is not the rights of the plaintiffs that would have been trammelled, but those of Ms Tan and Ms Kasper. The plaintiffs have lost nothing and led evidence relating to Ms Tan’s injuries before Mr Hall and Dr Ryan gave evidence on this topic.
The question of costs on this argument is referred to below.
Orders sought, including as to costs
On the basis of my reasons previously published, orders to the effect of paragraphs 1, 2, 3 and 4 above should be made.
As to the application by the first plaintiff that he have his costs against the first defendant, regard must be had to the legislation, rules and authorities in conjunction with the claim, issues, course of evidence and judgment. The first plaintiff succeeded only as to an amount of $4,548.00. The entitlement to solatium, reduced to $900, was never in dispute. An entitlement to compensation for mental or psychiatric injury was strenuously disputed.
S.42(1) and (2) of the District Court Act provide as follows:-
“42    (1)    Subject to subsection (2) and the rules, costs in any proceedings in the Civil Division will be in the discretion of the Court and may be awarded against any person (whether a party to or a witness in the proceedings or not).
(2)    If -
(a)     an action for the recovery of damages or any other monetary sum is brought in the Court;
(b)    the action might have been brought in the Magistrates Court; and
(c)    the plaintiff recovers less than an amount fixed by the rules for the purposes of this paragraph,
no order for costs will be made in favour of the plaintiff unless the Court is of the opinion that it is just in the circumstances of the case that the plaintiff should recover the whole or part of the costs of action.”
The discretion reposed in the Court must be exercised judicially and is controlled and confined by SCR 101.01 Bailey v Manos Breeder Farms Pty Ltd (No. 2) (1990) 159 LSJS 256.
District Court Rule 101.02A relevantly provides as follows:-
“101.02A Except in relation to proceedings under section 11 of the Criminal Assets Confiscation Act 1996 for the purposes of Section 42(2) of the Act the amounts fixed below are the amounts in respect of which no order for costs will be made in favour of a plaintiff unless the Court otherwise orders:-
(a)     ....
(b)    ....
(c)    In an action instituted on or after the commencement date where the claim is for damages or compensation for injury, damage or loss caused by, or arising out of, the use of a motor vehicle - $30,000.”
The first plaintiff, having been awarded only a very modest amount by way of compensation, is precluded from an order for costs in his favour unless, having regard to the discretion of the Court and the justice of the circumstances of the case, he should receive his costs in whole or in part. As I understand s.42 and Rule 101.02A, if the amount awarded to the first plaintiff is less than the figure fixed in the Rules, costs can still be ordered in favour of the first plaintiff. On the basis of the amount awarded to the first plaintiff, he should have commenced his proceedings in the Magistrates Court. Rule 101.02A is designed to ensure that plaintiffs commence their proceedings in the correct jurisdiction.
On behalf of the first plaintiff, it was submitted that there were factors that justified the bringing of proceedings in the District Court rather than the Magistrates Court. Put generally, the first plaintiff relied upon the complicated factual and legal issues that arose from the pleadings, evidence and arguments.
In my view, there can be no doubt that the case gave rise to difficult and complicated legal and factual disputes. Some of those legal and factual disputes were resolved in favour of the first plaintiff over strong opposition. Other issues were resolved against the first plaintiff. In those circumstances, the first plaintiff submits that he should have approximately half of his costs.
In opposing an order for costs the first defendant principally relied upon the small amount of damages awarded in favour of the first plaintiff. That the award was very modest is clear, but that amount belied the complexity of the law and facts that resulted in that award.
The first defendant also sought to place reliance upon two letters, both dated 15th May, 2002 (D1 and D2 on the question of costs), one on the seat belt issue and the other an overall amount to settle all claims of all plaintiffs. The text of each of those letters is as follows:-
Exhibit D1
“Mr Heath Barklay
Mangan Ey & Associates
Lawyers
DX 193 ADELAIDE
Dear Sirs
S Awad & Ors v Bebnowski & Ors
We confirm that as from Wednesday 1 May 2002 the first defendant has offered to resolve the “seatbelt issue” on the basis that any amounts recovered by one or a number of the plaintiffs are to be reduced by 15% on the basis that Ms H Awad (dec’d) was not wearing a properly fitted seatbelt at the time of accident.
We confirm that this offer remains open.
This letter is written “Without Prejudice save as to costs”, and may be tendered in any argument in relation to a claim for costs as between the first defendant and one or a number of the plaintiffs.
Yours faithfully
HUNT & HUNT
Per: (Signed)
PETER G JONES ”
Exhibit D2
“Mr Heath Barklay
Mangan Ey & Associates
Lawyers
DX 193 ADELAIDE
Dear Sirs
S Awad & Ors v Bebnowski & Ors
We confirm that on Saturday 4 May 2002 the first defendant offered to resolve the plaintiffs’ claim for damages in the subject action for $80,000 all-inclusive. The offer was made on the basis that a reasonable allowance for costs would be $50,000.00 with the remaining $30,000.00 being an allowance for damages.
We confirm that this offer remains open.
Would you please note that this letter is written “Without Prejudice save as to costs” and may be tendered by the first defendant in relation to any argument relating to costs.
Yours faithfully
HUNT & HUNT
Per: (Signed)
PETER G JONES ”
The trial commenced on Monday, 6th May, 2002.
However, as I have already observed, a failure to better the amount fixed by the Rules is not the end of the matter. The offers contained within D1 and D2 were also not bettered. Those offers were not in accord with the regime provided by the Rules. D1 and D2 are informal offers that have become known as “Calderbank” letters (Calderbank v Calderbank [1976] Fam.93). In my view, I will have only very limited regard to those letters in the exercise of my discretion.
It is appropriate at this point to include the application by the first defendant for his costs against the first plaintiff. As touched upon, the first plaintiff succeeded in some respects, but nonetheless there were significant issues and time taken at trial upon matters in respect of which he failed. For example, the seat belt issue was decided substantially against the interests of the first plaintiff. On the other hand, the claim for compensation for psychiatric injury was resolved in his favour both as a matter of law and fact, although not as to quantum.
In my view, the appropriate and practical course is to resolve the applications by the first plaintiff and first defendant by the making of one order. Notwithstanding the prima facie operation of s.42 and DCR.101.02A, in the exercise of my discretion and having regard to the justice of the case, the first plaintiff should have 20 per cent of his costs against the first defendant to be agreed or taxed. Costs are to be on the District Court scale. There will be no order as to costs on the application by the first defendant for his costs against the first plaintiff. I have a broad but judicial discretion and have endeavoured to balance the respective successes on issues in combination with the Court time taken upon them.
As to the application by the first defendant to have his costs against the second, third and fourth plaintiffs, that must succeed because those plaintiffs failed in all respects.
I now turn to the application by the second and third defendants that they have their costs against the first defendant and the nature of any such order.
As Mr Stratford, counsel for the second and third defendants, rightly observed, the case pleaded by the plaintiffs against the first defendant was that his negligent conduct caused the death of Ms H. Awad and Mrs Awad. Further, the alternative claim pleaded by the plaintiffs was that the second and third defendants were responsible for the death of Mrs Awad. There was never any suggestion that the second and third defendants were responsible for the death of Ms H. Awad.
In response, the first defendant pleaded that he was not liable for either death because Dr Squirrell’s telephone call (assuming it was as alleged by the plaintiffs) constituted a new intervening act that negated any duty of the first defendant.
The Amended Contribution Notices of the first defendant against each of the second and third defendants claimed contribution on the basis that Dr Squirrell’s negligence contributed to Mrs Awad’s death “....and any injuries suffered by the plaintiffs.” In the result, the second and third defendants were before the Court because of the claims of the plaintiffs and the claims of the first defendant.
In a consideration of costs on the Contribution Notices, I regard the evidence taken at trial as evidence taken on the Contribution Notices. In the circumstances of this case, the issues on each were substantially the same and I cannot see that any other evidence would be available. The costs on the Contribution Notices are really the costs on the trial.

The main argument concentrated upon whether a Bullock order or a Sanderson order should be made, that is, the plaintiffs pay costs to the successful defendants and then recover those costs from an unsuccessful defendant, or that the unsuccessful defendant pay costs directly to the successful defendants: (see Bullock v London General Omnibus Co [1907] 1 KB 264 and Sanderson v Blyth Theatre Co [1903] 2 KB 533).
Mr Stratford referred to Wade v Australian Railway Historical Society (South Australian Division) (t/as Steamranger) and Another (2002) 83 SASR 247 which in its turn referred to an earlier South Australian case. In Wade’s case, Perry J (with whom Williams and Gray JJ concurred) said this (para.18):-
“The correct approach is identified in the following passage from the judgment of King CJ (with whom Jacobs and von Doussa JJ in substance agreed) in Fennell v Supervision and Engineering Services Holdings Pty Ltd (1988) 47 SASR 6 at 7:
‘The principle of justice upon which the Bullock order rests may, in my opinion, be stated thus. The unsuccessful defendant has caused the litigation by his wrongful act and by disputing liability for it. He therefore ought to pay all costs reasonably incurred by the plaintiff in connection with the litigation. If it was reasonable, as between the plaintiff and the unsuccessful defendant, for the plaintiff to sue the successful defendant, the unsuccessful defendant ought therefore in justice be liable to indemnify the plaintiff against the costs of so doing, including those which he is ordered to pay to the successful defendant. In many cases the basis for the plaintiff’s claim of reasonableness in joining the successful defendant will be the conduct of the unsuccessful defendant in placing the blame on the successful defendant. That conduct is, however, secondary to the underlying principle of justice indicated above.’ ”
In the circumstances of Wade’s case (supra) itself, the Court said this:-
“In this case, at the time when he commenced the proceedings, the appellant was faced with a situation in which, apart from himself, there were at least two other parties who had arguably been to blame in causing or contributing to the injuries which he had suffered. There is no question but that prudent counsel would have advised that proceedings be brought against both.
The reasonableness of the decision to sue both was confirmed, to use the expression used by King CJ in Fennell, when both defendants issued contribution notices to each other. It was further confirmed when, at trial, both defendants were found liable. It is nothing to the point that on the appeal one was exonerated. What must be addressed is whether it was reasonable for the plaintiff to bring the proceedings in the first place.”
It was submitted that those comments have direct application here. The reasonableness of the decision of the plaintiffs to sue the second and third defendants was confirmed when the first defendant on the one hand, and the second and third defendants on the other, issued Contribution Notices to each other.
On the material before me it appears very unlikely that the first plaintiff, let alone the other plaintiffs, will be in a position to pay their own costs. It is submitted that a Sanderson order would ensure that the second and third defendants receive their costs.
I do not accept that it is proper for a Bullock or a Sanderson order to be made. The second and third defendants were before the Court at the instigation of the plaintiffs. True it is that the first defendant on the one hand, and the second and third defendants on the other, served Contribution Notices on each other, but those Notices did not give rise to issues that were discrete as between the defendants. The issues were substantially those that arose upon the claims of the plaintiffs against all defendants. The Notices did not add to the length of the trial or issues that needed to be ventilated.
In my view, in that situation, it is not appropriate to make either a Bullock or Sanderson order. I will hear counsel as to whether the second and third defendants seek an order as to costs against all plaintiffs. Such an application was not expressly made during the argument as to costs.
As to the question of costs relating to the admissibility of portion of the reports and evidence of Mr Hall and Dr Ryan (see reasons above), at the conclusion of my ruling the first defendant applied for his costs, including the preparation of Mr Jones’ affidavit. The argument had the potential to impinge on all causes of action against all plaintiffs. Any order will operate against all plaintiffs. The second and third defendants made a similar application.
The total Court time taken on this argument (including time taken during Ms Tan’s evidence) I fix at one day. I indicated at the time that I would make orders in favour of the defendants unless persuaded otherwise. I see no reason to change my view about the applications.
I order that the first defendant have his costs fixed at one day for senior and junior counsel and instructing solicitor, plus his costs for the preparation of Mr Jones’ affidavit. The second and third defendants to have the costs of counsel and an instructing solicitor for one day.
I now turn to the costs concerning the argument as to the admissibility of Dr Zimmet’s evidence. During the course of the trial the plaintiffs applied to call Dr Zimmet, a cardiologist, relating to the cause of Mrs Awad’s heart failure and death. Dr Zimmet’s report was dated the same day it was proposed to call him. Obviously, there was a failure by the plaintiffs to comply with the Rules relating to disclosure of experts’ reports. The plaintiffs sought leave to call Dr Zimmet notwithstanding non‑compliance with the Rules or, alternatively, dispensation from compliance with the Rules. After argument, I permitted Dr Zimmet to be called. All defendants sought their costs of this discrete argument. No time was lost to enable the defendants to meet Dr Zimmet’s evidence.
All defendants are to have their costs in respect of this argument.
Proposed Minutes of Order annexed hereto.
MINUTES OF ORDER
1.That there be judgment in favour of the first plaintiff against the first defendant in the sum of $4,548.00.
2.That there be judgment in favour of the first defendant against the second, third and fourth plaintiffs.
3.That there be judgment in favour of the second and third defendants against all plaintiffs on the claim.
4.That there be judgment in favour of each of the second and third defendants on each of their Contribution Notices against the first defendant.
5.That the first plaintiff have 20 per cent of his costs against the first defendant. Such costs are to be on the District Court scale. There will be no order as to costs on the application by the first defendant for his costs against the first plaintiff.
6.That the first defendant have his costs against the second, third and fourth plaintiffs.
7.That the first defendant have his costs fixed at one day for senior and junior counsel and instructing solicitor, plus his costs for the preparation of Mr Jones’ affidavit (Mr Hall/Dr Ryan argument). The second and third defendants to have the costs of counsel and an instructing solicitor for one day.
8.That all defendants to have their costs of the argument relating to the calling of Dr Zimmet.
9.That the second and third defendants have their costs against all parties.
10.That the second and third defendants have their costs against the first defendant on the Contribution Notices.

[2003] SADC 26

17 February 2003