Serrao (by his tutor Serrao) v Cornelius (No 3)

[2016] NSWCA 293

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Serrao (by his tutor Serrao) v Cornelius (No 3) [2016] NSWCA 293
Hearing dates:	On the papers
Decision date:	31 October 2016
Before:	Leeming JA; Sackville AJA; Emmett AJA
Decision:	1.   In lieu of the orders made by the primary Judge, make the following orders: (1) Judgment for the plaintiff on the cause of action pleaded under Part 1.2 Div 1 of the Motor Accidents (Compensation) Act 1999 (NSW). (2) The amount of the judgment, once quantified, to be paid to the New South Wales Trustee and Guardian pursuant to s 77 of the Civil Procedure Act 2005 (NSW). (3)   Subject to the quantification of the judgment, the proceedings are otherwise dismissed. (4)   There be no orders as to the costs of the proceedings, with the intent that each party bear his or her own costs. 2.   Set aside Orders 6 and 7 made by this Court on 31 March 2016. 3.   In lieu of the orders referred to in Order 2, there be no order as to the costs of the appeal and cross-appeal, with the intent that each party bear his or her own costs of the appeal and cross-appeal. 4.   The parties have liberty to apply on seven days’ notice.
Catchwords:	COSTS – whether usual order that costs should follow the event should be departed from in circumstances where respondent succeeded on cross-appeal and appellant succeeded on Ground 5 of the Amended Notice of Appeal
Legislation Cited:	Civil Procedure Act 2005 (NSW) Motor Accidents (Compensation) Act 1999 Part 1.2 Div 1; ss 7A, 7B Uniform Civil Procedure Rules 2005 (NSW) rr. 28.2, 42.1
Cases Cited:	Serrao (by his tutor Serrao) v Cornelius [2015] NSWDC 4 Serrao (by his tutor Serrao) v Cornelius [2016] NSWCA 60; 75 MVR 58 Serrao (by his tutor Serrao) v Cornelius (No 2) [2016] NSWCA 231
Category:	Principal judgment
Parties:	Daniel Terrence Serrao by his tutor Alicia Serrao (Appellant) Clair Cornelius (Respondent)
Representation:	Counsel:   T Boyd (Appellant) P Deakin QC, D Wilson SC (Respondent)   Solicitors:   Herbert Weller (Appellant) Hall & Wilcox (Respondent)
File Number(s):	2015/67841
Decision under appeal	Court or tribunal: District Court of New South Wales Citation: Serrao (by his tutor Serrao) v Cornelius [2015] NSWDC 4 Date of Decision: 6 February 2015 Before: Hatzistergos DCJ File Number(s): 2013/215744

Judgment

1. THE COURT: This Court has delivered two judgments on an appeal and cross-appeal from a decision of the District Court. [1] The proceedings arose out of a motor vehicle accident that took place on 14 August 2010.

   1. Serrao (by his tutor Serrao) v Cornelius [2016] NSWCA 60; 75 MVR 58 (First Appeal Judgment); Serrao (by his tutor Serrao) v Cornelius (No 2) [2016] NSWCA 231 (Second Appeal Judgment).

2. The ultimate outcome of the appeal and cross-appeal was that the appellant (the plaintiff) failed in his claim against the respondent (the defendant), insofar as the claim was founded on the respondent’s alleged negligence. However, the appellant succeeded in his alternative claim for damages based on the “blameless motor accident” provisions of the Motor Accidents (Compensation) Act 1999 (MAC Act). [2] In the Second Appeal Judgment, the Court reduced the respondent’s total damages, as assessed by the District Court Judge, by 50 per cent by reason of contributory negligence.

   2. MAC Act Part 1.2, Div 1.

3. The Second Appeal Judgment explained the background to the respondent’s blameless accident claim as follows: [3]

“2.   In a judgment delivered on 6 February 2015 (Primary Judgment),[4] the District Court concluded that, subject to an allowance for the costs of funds management, judgment should be entered for the appellant against the respondent in the sum of $1,241,107.80. This amount represented the damages awarded to the appellant by reason of the respondent’s negligence in a motor accident, taking into account a reduction of 40 per cent by reason of the appellant’s contributory negligence.

3.   The primary Judge decided that the question of damages for funds management should be determined separately. On 13 February 2015, judgment was entered for the appellant in the sum of $1,556,378.80. The additional amount of $315,271.20 was awarded in respect of the costs of funds management…

4.   The appellant appealed on the ground that the damages award was inadequate, while the respondent cross-appealed against the finding that she was liable to the appellant. In [the First Appeal Judgment], this Court allowed the cross-appeal and set aside the orders made by the primary Judge. The effect was that the appellant’s claim in negligence failed.

5.   The appellant pleaded an alternative claim based on the “blameless motor accident” provisions of the [MAC Act]…[Neither] the Primary Judgment nor the [First Appeal] Judgment addressed the alternative claim.”

3. Second Appeal Judgment at [2]-[5].

4. Serrao (by his tutor Serrao) v Cornelius [2015] NSWDC 4

4. In addition to allowing the cross-appeal and setting aside the orders made by the primary Judge, the Court in the First Appeal Judgment dismissed Grounds 1-4 of the appellant’s Notice of Appeal (all of which related to the primary Judge’s finding that the appellant had been contributorily negligent). The Court made orders, subject to further submissions, that the appellant pay the respondent’s costs of the appeal insofar as they related to Grounds 1-4 (Order 6) and also that he pay the respondent’s costs of the cross-appeal (Order 7).

5. The primary Judge did not address the appellant’s blameless motor accident claim apparently because his Honour considered that the finding that the respondent had been negligent made it unnecessary to consider the appellant’s alternative claim. The First Appeal Judgment did not address the appellant’s blameless motor accident claim for a different reason. The Notice of Appeal, as originally filed, did not raise any issue concerning the pleaded blameless motor accident claim. However, at the hearing the appellant was given leave to amend the Notice of Appeal to include a contention that the primary Judge should have upheld the blameless motor accident claim. The amendment became Ground 5 of the Amended Notice of Appeal.

6. After receiving further written submissions from the parties, the Court in the Second Appeal Judgment upheld Ground 5 of the Amended Notice of Appeal. The Court concluded that the appellant was entitled to damages against the Respondent pursuant to s 7B of the MAC Act. [5] However, the Court reduced the total damages as assessed by the primary Judge ($2,068,513.00) by 50 per cent to take account of the appellant’s contributory negligence. Accordingly, subject to assessing damages for the costs of funds management, the Court found that the appellant was entitled to damages of $1,034,256.50. The Second Appeal Judgment recorded that the appellant proposed that the assessment of damages for the costs of funds management should be determined separately, pursuant to Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r. 28.2. This proposal was apparently made because the appellant’s advisers took the view that the corpus of the fund to be managed could not be known until all costs issues had been resolved.

   5. Second Appeal Judgment at [71].

7. The Second Appeal Judgment expressed the Court’s tentative views as to costs, as follows: [6]

“74.   Both parties have some success and some failure in this Court. The respondent has succeeded on her cross-appeal [as to negligence] but the appellant has succeeded on Ground 5 of the Amended Notice of Appeal [the blameless motor accident case]. As at present advised, I am inclined to make no order as to the costs of the appeal or cross-appeal, with the intent that each party bear his or her own costs.

75.   The appellant succeeded in his negligence claim before the primary Judge, but that claim has been effectively dismissed on appeal. The appellant has succeeded in his claim for damages, but on a basis that was not addressed at the trial. My present view is that there should be no order as to the cost of the trial, again with the intent that each party bear his or her own costs.”

6. Second Appeal Judgment at [74]-[75].

8. In the Second Appeal Judgment, the Court allowed the appeal on Ground 5 of the Amended Notice of Appeal and directed the parties to bring in agreed short minutes of order. In the absence of agreement, the parties were directed to file proposed short minutes of order on any outstanding issues and written submissions in support of the proposed orders.

Submissions

9. The parties have been unable to reach agreement on the outstanding issues. Each has filed written submissions on costs. The respondent, but not the appellant, has filed proposed short minutes of order.

Appellant’s submissions

10. The appellant seeks an order that the respondent pay the costs of the trial. The appellant points out that he pleaded that his injuries were the result of a “blameless motor accident” as defined in s 7A of the MAC Act. While the respondent denied this allegation in her defence, her counsel conceded on the sixth day of the trial that the appellant had been injured in a blameless motor accident. According to the appellant, counsel for both parties addressed the primary Judge on the blameless motor accident claim but, as has been noted, his Honour did not address the claim.

11. In these circumstances, the appellant submits that he has ultimately succeeded in his claim for damages and that the costs of the trial should follow the event, as provided for in UCPR r 42.1. [7] The appellant contends that a significant portion of the trial related to the assessment of damages, in particular to past and future economic loss. This time was not wasted, so he argues, because the evidence was relevant to his damages claim, whether the claim was based on negligence or on the blameless motor accident provisions of the MAC Act.

    7. Rule 42.1 provides as follows:

12. The appellant further submits that he has enjoyed success on the appeal in that he has retained all but a small proportion of the damages awarded by the primary Judge. He says that it is preferable not to attempt to apportion costs by reference to separate issues in the case, but to make an overall assessment of costs, reflecting the relative success of each party to the appeal. On this basis, the appellant submits that he should receive 50 per cent of the costs of the appeal and cross-appeal.

13. The appellant’s written submissions do not address the question of damages for the costs of funds management beyond saying that it is hoped that the issue will be resolved by agreement.

Respondent’s submissions

14. The respondent adopts the Court’s tentative view, expressed in the Second Appeal Judgment, that there should be no order as to the costs of the trial. However, she submits that the appellant should pay the respondent’s costs of the appeal and cross-appeal.

15. The respondent acknowledges that the appellant ultimately succeeded on Ground 5 of the Amended Notice of Appeal, but points out that the appellant’s blameless motor accident claim played no part in the appeal until the hearing was under way. The appellant received an indulgence from the Court to make a late amendment to the Notice of Appeal. It was this indulgence that enabled him to “resurrect” what would otherwise have been a wholly unsuccessful appeal.

16. The respondent also submits that as she was wholly successful on the cross-appeal (which challenged the primary Judge’s finding that she had been negligent), she should have the benefit of the usual costs order made in favour of a successful party. Accordingly, so she argues, the appellant (the unsuccessful cross-respondent), should pay the costs of the cross-appeal.

17. The respondent agrees with the appellant that no final order as to the quantum of damages can be entered until the issue relating to the costs of funds management is resolved. She submits that this should be addressed by granting the parties liberty to apply.

Costs of the appeal

18. It is convenient to deal first with the costs of the appeal (and cross-appeal). It is unfortunate that the appellant did not include Ground 5 in the original Notice of Appeal. The effect of the omission was that all issues between the parties could not be addressed on the hearing of the appeal and cross-appeal. The appeal was prolonged because the Court had to make directions for the parties to file written submissions on Ground 5 of the Amended Notice of Appeal. Once the submissions were received, the Court then had to prepare a separate judgment dealing with the appellant’s blameless motor accident claim.

19. It seems appropriate to determine the appropriate costs order in relation to the appeal and cross-appeal by reference to the parties’ overall success (or failure) in this Court. We take this view not least because making separate costs orders for the appeal and cross-appeal is likely to require a detailed assessment of each set of costs, a process which may well postpone final resolution of the case. There is also a good chance that the costs orders would very nearly cancel each other out.

20. As has been explained, the appellant failed on the respondent’s cross-appeal and on Grounds 1-4 of the Amended Notice of Appeal, but succeeded on Ground 5. In the result, the appellant retained the judgment in his favour, albeit based on a different cause of action, but lost a relatively small proportion of his damages.

21. The respondent succeeded on the cross-appeal and thus overturned the finding of negligence made by the primary Judge. However, the respondent failed in her contention that the appellant’s contributory negligence defeated his blameless motor accident claim under Part 1.2 Div 1 of the MAC Act.

22. Having regard to the outcome of the appeal and cross-appeal, we see no reason to depart from the view expressed in the Second Appeal Judgment. There should be no order as to the costs of the appeal and cross-appeal, with the intent that each party should bear his or her own costs.

Costs of the trial

23. The parties have made competing assertions, without detailed reference to the evidence, as to the extent to which time at the trial was taken up by the negligence issue or the damages issue. It is clear, however, that a central issue was whether the respondent had been negligent. The appellant, although pleading a blameless motor accident case, placed the negligence claim at the forefront of his case. That case has ultimately failed. On the other hand, the appellant has succeeded in retaining all but a relatively small proportion of the damages award in his favour.

24. We do not think that the costs of the trial should be approached simply on the basis that because the appellant succeeded in his claim for damages he should be awarded costs on the principle that costs ordinarily follow the event. [8] The appellant relied on two discrete causes of action to support his claim. The cause of action upon which he principally relied and succeeded at trial was not upheld on the appeal.

    8. UCPR r 42.1

25. The written submissions by the parties at the trial referred to the appellant’s alternative blameless motor accident case. However, the appellant’s written submissions commenced with the proposition that “this accident was far from blameless”. The alternative case appears not to have been referred to by the appellant in closing oral submissions. The primary judge was not specifically asked during oral addresses to make findings as to the appellant’s blameless motor accident claim if (as his Honour found), the negligence claim was upheld. Had this course been adopted, the primary Judge may well have acceded to the request and addressed the appellant’s alternative case. Had that been done, it is likely that any appeal and cross-appeal would have been conducted in a more expeditious and orderly manner.

26. In the circumstances, justice will be done if each party is required to bear his or her own costs of the trial.

Orders

27. The First Appeal Judgment made orders allowing the cross-appeal, setting aside the orders made by the primary Judge on 13 February 2015 and dismissing Ground 1-4 of the Amended Notice of Appeal. There is no occasion to alter these orders. However, Orders 6 and 7 relating to the costs of the appeal and cross-appeal should be set aside.

28. The Second Appeal Judgment allowed the appeal on Ground 5. There is no occasion to alter that order.

29. To give effect to these reasons for judgment, the following orders should be made:

1.   In lieu of the orders made by the primary Judge, make the following orders:

(1) Judgment for the plaintiff on the cause of action pleaded under Part 1.2 Div 1 of the Motor Accidents (Compensation) Act 1999 (NSW).

(2) The amount of the judgment, once quantified, to be paid to the New South Wales Trustee and Guardian pursuant to s 77 of the Civil Procedure Act 2005 (NSW).

(3)   Subject to the quantification of the judgment, the proceedings are otherwise dismissed.

(4)   There be no orders as to the costs of the proceedings, with the intent that each party bear his or her own costs.

2.   Set aside Orders 6 and 7 made by this Court on 31 March 2016.

3.   In lieu of the orders referred to in Order 2, there be no order as to the costs of the appeal and cross-appeal, with the intent that each party bear his or her own costs of the appeal and cross-appeal.

4.   The parties have liberty to apply on seven days’ notice.

30. The reservation of liberty to apply will enable the parties to take the steps necessary to enable final orders to be made. There should be no obstacle to the parties filing within a short period consent short minutes of order quantifying the judgment in favour of the appellant, thereby finalising the matter.

Endnotes

“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.”

Decision last updated: 02 November 2016