Wharekawa v AEA Constructions Pty Ltd

The plaintiff applies for an order that the defendant pay his costs from 15 April 2016 to the conclusion of the proceedings on the indemnity basis. The plaintiff was successful in his claim for damages for personal injury. I published reasons for upholding the plaintiff’s claim on 17 May 2018 (Wharekawa v AEA Constructions Pty Ltd [2018] NSWSC 684 – “the principal judgment”). On 22 May 2018 I ordered that the defendant pay the plaintiff’s costs. I reserved to the plaintiff that he could make an application regarding the scale at which costs should be assessed. On 23 May 2018 he filed the notice of motion which is now before me.

The plaintiff’s application is supported by an affidavit of his solicitor sworn 23 May 2018 to which is annexed a letter dated 14 April 2016 written to the defendants solicitor. The letter enclosed an offer of compromise made pursuant to r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”). The offer was to compromise “this action in whole” on these terms:

The covering letter referred to the enclosed offer of compromise and stated the following:

There was a difference of $100,000 between the two offers because the plaintiff could not, in the offer of compromise under the UCPR, include an amount for costs or propose a settlement inclusive of costs: r 20.26(2)(c). Neither offer was accepted. In the words of r 42.14(1) the plaintiff obtained a “judgment on the claim no less favourable to the plaintiff than the terms of the offer”, namely, judgment for damages in the sum of $1,486,783. Therefore, in accordance with r 42.14(2)(b), the plaintiff is entitled to indemnity costs from 15 April 2016 “unless the court otherwise orders”.

The defendant contends that the plaintiff’s case changed significantly between the date of his offer and the date of the trial. If such a change could be demonstrated it might well justify an order denying the plaintiff the indemnity basis of his costs: South Eastern Sydney Area Health Service v King [2006] NSWCA 2 at [85]; Vale v Eggins (No 2) [2007] NSWCA 12; Nominal Defendant v Hawkins [2011] NSWCA 93 at [47]-[58] and [73]-[88].

The defendant asserts that two significant changes in the plaintiff’s case occurred after 14 April 2016. First, reports of the expert neurosurgeon Professor Fearnside dated 24 November 2014, 15 December 2014 and 5 May 2015 had not been served at the time of the offer and they were not served until close to the hearing. I gave leave for those reports to be relied upon although they were served out of time: Raymond Wharekawa v AEA Constructions Pty Ltd (unrep, NSW Supreme Court, Fagan J, 11 October 2017) at [18]-[25].

Prior to the offer the plaintiff had served reports of Dr Winder, his treating neurosurgeon, dated 10 January 2013, 12 September 2013, 1 November 2013, 16 January 2014 and 14 February 2014. In broad terms those reports were to the effect that:

At the time of the offer the defendant had received reports from its own expert in neurosurgery, Dr Cochrane, dated 4 September 2015 and 5 April 2016. On the basis of an examination of the plaintiff on 31 August 2015 and consideration of material briefed to him up to that time, Dr Cochrane expressed conclusions in the first of these reports substantially to the same effect as Dr Winder’s:

Dr Cochrane’s second report of 5 April 2016 was written after he had reviewed film of the plaintiff exercising in a gymnasium in January of that year. He considered the plaintiff’s capacity for exercise as shown in the film was “entirely at odds” with what he had seen on examination of the plaintiff seven months earlier.

In a further report of 6 June 2016 (after the offer had been made and after time for acceptance had expired) Dr Cochrane said he was no longer satisfied that significant exacerbation of the pre-existing cervical pathology had occurred in the accident of 9 November 2012. His reservations then were substantially reiterated by him at trial, which I summarised at [80] of the principal judgment and now reproduce for ease of reference:

In Professor Fearnside’s first two reports he expressed an opinion that spinal cord damage had been caused in the accident of 9 November 2012, substantially to the same effect as the opinions of Dr Winder (paraphrased at [7] above) and of Dr Cochrane in the latter’s first report (quoted at [8] above). I am unable to detect any material difference between the medical records, including radiology, cited by Professor Fearnside and the records considered by either Dr Winder or Dr Cochrane. I can see no material difference in the history obtained by Professor Fearnside or in the results of the examination conducted by the Professor, when compared with the history and examination results upon which Drs Winder and Cochrane based their opinions.

Therefore, when Professor Fearnside’s reports were served and his evidence was relied upon at the trial I do not see that any change in the plaintiff’s case occurred. It is true that Dr Winder’s view on causation of neurological symptoms was now endorsed by a second neurosurgeon and that Professor Fearnside provided an additional voice to answer the reservations of Dr Cochrane. But the weight of evidence on the contested issue of medical causation lay in the strength of scientific reasoning, not in numbers of witnesses.

The second significant change in the plaintiff’s case which the defendant now says occurred after it received the offer of 14 April 2016 relates to the cause of the plaintiff being unable to work. At [175] and [182]-[183] of the principal judgment I found that the plaintiff’s loss of capacity for employment, both up to the date of the trial and for the future, is attributable to a combination of neurological deficit (caused by the injury to his cervical spinal cord) and persistent post-traumatic migraine syndrome. The former has disqualified him from resuming heavy manual labouring and the latter has rendered him unreliable to the point of having only a small residual capacity to work in any other field. The defendant says medical reports served by the plaintiff prior to his offer, such as that of Dr Buckley of 10 January 2015, identified only the neurological symptoms as impeding the plaintiff’s work capacity. It is also complained that Dr Tisch, the plaintiff’s treating neurologist, had not expressed a view that migraine headaches precluded the plaintiff from future employment.

Dr Tisch’s report of 7 February 2014 described frequent and severe migraine headaches experienced by the plaintiff from shortly after the accident to the date of that report. Subsequent reports in 2014 continued to record the plaintiff complaining of severe migraines. Then from September 2014 onwards Dr Tisch reported “improvement in migraine control”. He said in a report of 11 June 2015 that “migraine control has improved significantly with botulinum toxin injections”.

The defendant’s complaint that none of Dr Tisch’s reports served prior to the offer of 14 April 2016 identified migraine as an impediment to employment seems beside the point in light of the plaintiff’s own witness statement of 23 September 2015, which the defendant had received by that time. This included the following:

It should have been obvious to the defendant that it would be open to the Court to accept this evidence and to find that such ongoing symptoms would render the plaintiff incapable of holding down regular employment. The description in the plaintiff’s statement was of the severity of his ongoing migraines notwithstanding botox injections, which are apparently the only form of relief Dr Tisch can provide him.

The defendant also complains that after the offer of 14 April 2016 it received a report of Dr Buckley dated 26 June 2017 in which the view was expressed that the plaintiff’s incapacity for employment was attributable to “a combination of his injuries, including … headache”. Dr Tisch first expressed the view that the migraines would “preclude him from taking on meaningful employment” in a report of 13 April 2017.

The Court’s finding as to whether ongoing symptoms and disabilities disable a plaintiff from employment are not dependent upon the expression of medical opinion to that effect. Nor is the Court limited by medical opinion as to which of several medical conditions may interfere, concurrently and/or significantly, with earning capacity. From well before 14 April 2016 the defendant was in possession of evidence from the plaintiff upon which the Court could find as it has done that the plaintiff’s migraine condition has reduced his earning capacity to a very low residual level.

For these reasons I find no reason to depart from the usual rule that the defendant should pay the plaintiff’s costs on the indemnity basis from the day after the offer was made, with one exception. The failure of the plaintiff’s solicitors to serve the reports of Professor Fearnside in a timely fashion gave rise to interlocutory hearings on 10 and 11 October 2017. The costs of those hearings should be excluded from the order in the plaintiff’s favour.

Accordingly it is ordered: