Metro North Hospital and Health Service v Pierce (No. 2)

THE COURT: On 14 February 2018 this Court made orders dismissing an appeal and a cross-appeal. The Court ordered that the appellant pay 60 per cent of the respondent’s costs of both the appeal and cross-appeal (Metro North Hospital and Health Service v Pierce [2018] NSWCA 11). At trial the respondent and cross-appellant, Ms Pierce, had claimed damages from the respondent. The primary judge had awarded damages in the sum of $1,672,790.75 plus costs. Metro North appealed. Ms Pierce cross-appealed claiming that the award of damages was too low. The primary judge had substantially discounted damages for past economic loss and for future economic loss and future care by reason of his finding that the appellant suffered from a progressively deteriorating condition. On the question of costs of the appeal White JA said:

The orders made were as follows:

On 29 March 2018 Ms Pierce filed a notice of motion seeking orders that the costs order made on 14 February 2018 be vacated and an order that the appellant (Metro North) pay Ms Pierce’s costs of both the appeal and cross-appeal on the indemnity basis.

The primary judge, Campbell J, gave judgment on 3 November 2016. On 7 December 2016, his Honour ordered that the costs of the proceedings from 6 June 2015 be paid on the indemnity basis. This order was the result of an offer of compromise served by Ms Pierce.

The appeal was filed on 31 January 2017. The cross-appeal was filed on 13 February 2017.

On 20 March 2017 Ms Pierce served on Metro North an offer of compromise in the following terms:

The offer of compromise of 20 March 2017 was an offer to “compromise the whole of this claim”. The offer identified Metro North as appellant and Ms Pierce as respondent. It did not identify either party in their capacities as cross-appellant and cross-respondent. At the time of the offer there were two claims pending in the Court of Appeal: one by Metro North by which it sought to have the judgment against it set aside, and one by Ms Pierce by which she sought orders which, if made, would have increased her damages from approximately $1.67 million to over $5 million.

The better view of the offer of compromise is that it was an offer to compromise all of the issues arising on the appeal and cross-appeal. That was the “whole of the claim”. It could not have been contemplated that if the offer had been accepted, Ms Pierce could nonetheless have pursued her cross-appeal. Metro North did not submit that it understood the offer to relate only to the appeal and not to both the appeal and the cross-appeal.

Ms Pierce submitted that she had served an offer of compromise on 20 March 2017, after the appeal had been commenced, for a sum that was $100,000 less than the judgment and that if that offer had been accepted it would necessarily have waived a significant amount of post-judgment interest from the time that judgment had been given on 3 November 2016. So much may be accepted. She also referred to offers of compromise made in the court below for lesser sums. She submitted that:

Metro North’s submissions on costs were as follows:

On 21 May 2018, in response to a query from the Court, the solicitors for Metro North advised that it consented to the Court’s making the orders sought by the respondent if the Court determined that that were the appropriate order and it consented to the Court’s making the order indicated in para 5 of its written submissions if the Court determined that that were the appropriate order.

As indicated above, had the offer of compromise of 20 March 2017 been accepted, Ms Pierce would not have been entitled to pursue her cross-appeal. Nor would she have been entitled to claim costs of the proceedings below. She would have been entitled to $100,000 less than the judgment sum. There was a very substantial element of compromise in the offer. The offer of compromise was appropriately made in accordance with r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) as modified by r 51.47.

Division 3 of Pt 42 applies to the offer of compromise of 20 March 2017 (UCPR, r 51.48). Pursuant to r 42.14, unless the court otherwise orders, Ms Pierce is entitled to an order against Metro North for her costs of the appeal and cross-appeal assessed on the ordinary basis as from 21 March 2017 and thereafter on the indemnity basis.

I see no reason to order otherwise. The fact that Ms Pierce pursued her cross-appeal unsuccessfully is not a reason for ordering otherwise, any more than it would be a reason for her to be deprived of indemnity costs because at trial she sought a substantially greater award of damages than she obtained. Had the offer of compromise of 20 March 2017 been accepted, both parties’ costs of the appeal and the cross-appeal after that date would have been avoided.

Metro North’s consent referred to at [11] above is necessarily a consent to the setting aside of the costs order made on 14 February 2018. The order for costs made on 14 February 2018 can be discharged pursuant to UCPR, r 36.15(2). As costs will then not have been finally determined a new costs order can be made in its place. No issue arises under UCPR, r 36.16.

I propose the following orders: