Lau v Anglican Community Services

PAYNE JA: I agree with Harrison AJA.

PRICE AJA: I agree with Harrison AJA.

HARRISON AJA:

Man Hay Lau is the husband of the late Betty Wai Yee Chan and executor of her estate. Between 25 September 2020 and 27 June 2021, Betty was a resident in the high care facility at the Donald Coburn Centre, owned and operated by Anglican Community Services (“Anglicare”). In his capacity both as Betty’s executor and in his personal capacity, Mr Lau brought claims against the respondent alleging that it mistreated Betty when she resided at the centre. Despite originally seeking much broader relief, at the trial he sought only nominal damages for breach of contract for the benefit of the estate and an apology for his benefit and for that of the estate.

The proceedings below were heard by Abadee DCJ: see Man Hay Lau v Anglican Community Services [2025] NSWDC 193. His Honour made an award of nominal damages in favour of Mr Lau in the amount of $200, but declined to order an apology in the form that was sought or at all. Mr Lau sought leave to appeal from this decision upon the single basis that his Honour’s refusal to order an apology was an error. Mr Lau’s challenge to the decision in the Court below is said to involve the following questions:

After hearing Mr Lau’s leave application, it became apparent, particularly having regard to what has become the limited scope of the relief sought by Mr Lau in this Court, that Mr Lau’s contentions at best rose no higher than the merely arguable. They did not support a reason why this Court should grant leave. Accordingly, the Court refused leave to appeal and ordered Mr Lau to pay the respondent’s costs. This was for the following reasons.

Sections 236 and 237 of the ACL provide relevantly as follows:

First, Betty was not found by the primary judge to have suffered any loss or damage. No finding was made that Betty’s estate suffered loss or damage. The primary judge did not decide this issue on the basis that Mr Lau had no standing as an executor to bring the proceedings under s 236.

Secondly, but in a related sense, no evidence was presented at trial showing that any contraventions of the ACL caused harm to Betty. The substantial damages claim originally brought by Mr Lau as executor was abandoned, and no additional loss was identified to support an order under s 237. So much is clear from [6] of the primary judge’s reasons as follows:

Thirdly, it was not shown in this case how an order under s 237 addressed to an executor in the form of an apology could “compensate the injured person” or “prevent or reduce the loss or damage suffered”: s 237(2). A court is not empowered to make orders under this provision unless these objects of the section would be satisfied. Even assuming, contrary to the primary judge’s unchallenged finding, that Betty suffered loss or damage, Betty could not benefit from an apology because she is dead. As I have said, no finding was made that Betty’s estate suffered loss or damage.

Fourthly, there are simply no findings below that Mr Lau himself suffered any loss or damage. Mr Lau does not challenge the primary judge’s findings of fact. Any attempt by Mr Lau to recast his case below in order to contend that he has suffered emotional harm should not be permitted. Without proof of loss or damage, there is no occasion to grant Mr Lau a remedy under s 236.

Moreover, even accepting Mr Lau’s contentions at their highest, there is no basis upon which to intervene having regard to the well-known principles in Botany Bay City Council v Minister for Planning and Infrastructure [2014] NSWCA 141 at [15]:

Here there is clearly no issue of principle or question of general importance raised by Abadee DCJ’s decision. Mr Lau has not demonstrated that there is any basis that conforms with established principles on which this Court could, or should, intervene.

For these reasons the Court refused leave to appeal and ordered Mr Lau to pay the respondent’s costs. The respondent gave timely notice that it wishes to seek a different costs order in accordance with Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) 36.15 or UCPR 36.16. I propose orders at the conclusion of these reasons to permit an application to be made.

On 12 June 2025, the primary judge ordered Anglicare to pay 35% of Mr Lau’s costs: see Lau v Anglican Community Services (No. 2) [2025] NSWDC 211. By its cross-summons seeking leave to cross-appeal, Anglicare seeks leave to appeal from the whole of this decision upon the following grounds:

In order fully to understand the competing contentions of the parties, it is necessary to appreciate the changing ways in which Mr Lau prosecuted his case in the Court below and the manner in which these changes influenced the primary judge’s approach to the question of costs.

Mr Lau started with a large number of complaints about the services provided to Betty as part of her respite care and over the approximately nine months that she was a resident of the centre in Castle Hill before her discharge into a different facility. By his amended statement of claim, Mr Lau claimed $37,150.28 in damages for breaches of contract and also brought a claim in negligence. He also claimed unliquidated damages as compensation under s 267 of the ACL, in particular for alleged contraventions of the consumer guarantees in ss 60, 61(1) and 61(2). Mr Lau asked for an order that Anglicare apologise to him for Betty’s treatment.

On 22 December 2023, Anglicare’s solicitors wrote to Mr Lau’s solicitors inviting him to discontinue the proceedings. They expressly reserved the right to rely upon their letter on the question of costs. Later, on 11 June 2024, and before Mr Lau amended his statement of claim, Anglicare’s solicitors wrote again offering to dismiss the proceedings with no order as to costs. The terms of the letter were such that it purported to be an offer in accordance with UCPR 20.26 or alternatively complying with Calderbank principles. The offer remained open for acceptance until 9 July 2024. The letter also contained a commentary about the lack of merit in Mr Lau’s claim.

Then on 25 March 2025, after Mr Lau had amended his statement of claim, Anglicare’s lawyers wrote a letter in purported compliance with the rules as well as Calderbank principles offering to settle Mr Lau’s claims as follows:

That offer was open for Mr Lau’s acceptance until 5pm on 4 April 2025. The hearing was scheduled to commence on 28 April 2025.

The proposed statement of regret was in the following terms:

On the first day of the hearing, Mr Lau abandoned his claim for substantial damages, for breach of contract and negligence, as well as his claim for compensation under s 267 of the ACL. After the close of the parties’ cases he also abandoned his allegations regarding a non-compliance with the consumer guarantees. Instead, Mr Lau claimed only nominal damages for breach of contract and sought a court-ordered apology under s 243 of the ACL. Anglicare denied all asserted breaches of contract, and therefore any entitlement to even nominal damages, as well as any entitlement to a court-ordered apology.

In the result, Mr Lau succeeded in obtaining an order for nominal damages of $200, based on two findings of breach of contract, but he failed in his action for relief in the form of an apology.

The primary judge recorded the parties’ respective submissions as to costs as follows:

His Honour posed the question, “What was the event”? Following a thorough and uncontroversial review of the authorities dealing with this issue, his Honour said this:

Costs are in the broad discretion of the court with the general rule being that they should follow the “event”: s 98 of the Civil Procedure Act 2005 (NSW); UCPR 42.1; Chandrasekaran v Western Sydney Local Health District (t/as Westmead Hospital) (No 2) [2024] NSWCA 21 at [11].

In ordering Anglicare to pay 35% of Mr Lau’s costs, the primary judge acted on a wrong principle by identifying the relevant event for the purposes of the costs analysis as Mr Lau “successfully” vindicating [sic] his sense of righteous belief that his late wife was mistreated and then exercising his discretion based on that wrong principle. This is because the vast preponderance of Mr Lau’s claims were either abandoned or failed, where his only remaining claims were breaches of contract and contraventions of s 60 of the ACL, for which he sought and received only nominal damages and where the relevant event was Mr Lau’s sense of righteous belief that his wife had been mistreated had been vindicated by the award of nominal damages.

Section 98 of the Civil Procedure Act confers on the court a wide discretion with respect to costs. Under UCPR 42.1, the general rule is that the court is to order that costs follow the event. Ordinarily, if a plaintiff establishes liability and obtains an order for payment of nominal damages, that plaintiff is usually not regarded as the successful party in the action: Mid-City Skin Cancer & Laser Centre v Zahedi-Anarak [2006] NSWSC 1149 at [47]-[52]; Chandrasekaran at [13]; Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd [2008] NSWCA 39 at [100].

Accepting that the “event” may be characterised in more than one way, it generally refers to the practical result of a particular claim: Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No 2) [2018] NSWCA 40 at [6]; Doppstadt Australia Pty Ltd v Lovick & Sons Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15].

Anglicare contended that a practical result is usually the achievement of the relief sought, not some subjective feeling or sense of satisfaction about how the litigation has ended. The relevant event could not therefore be characterised in this case as the vindication of Mr Lau’s “sense of righteous belief” that his late wife was mistreated. Anglicare submitted that any such belief could not substantiate an award of nominal damages. The relevant event was whether the causes of action brought by Mr Lau were established and resulted in an award of substantial damages and/or an apology. Neither outcome was obtained.

While each case must depend upon its own facts, where it is not a primary purpose of proceedings simply to establish a breach or contravention alone, but to recover substantial damages or other relief, ordinarily an award of nominal damages would not entitle a party to the costs of the proceedings: see Thiess Contractors Pty Ltd v Placer (Granny Smith) Pty Ltd [2001] WASCA 166 at [9]. In such a case, the party has obtained something of no real use to them and something which, if they had known it was all that was available, would not have brought proceedings to recover. It would be contrary to modern notions of the efficient and cost-effective use of judicial resources to enable a party to recover its costs of a pyrrhic victory, having substantially failed in the action.

Qualifying the general rule that costs follow the event is the idea that costs should be paid in a way that is fair, having regard to what the court considers was the responsibility of each party for the incurring of costs. Where Mr Lau was unsuccessful in the vast number of claims brought or otherwise abandoned at the latest stage possible, including his claim for substantial damages, and did not obtain the apology he sought, Mr Lau caused both parties to incur significant and unnecessary costs. This should have resulted in a further discount to costs.

With great respect to these submissions, Anglicare has overlooked one important fact. As I have earlier explained, Mr Lau abandoned his claim for substantial damages, on the first day of the hearing. After the close of the parties’ cases he also abandoned his allegations regarding a non-compliance with the consumer guarantees. In that context it is therefore clear that Mr Lau’s claims upon which the trial before the primary judge proceeded were his claim for nominal damages for breach of contract and for a court-ordered apology under s 243 of the ACL. It must be remembered that Anglicare denied all asserted breaches of contract, and therefore any entitlement to even nominal damages, as well as any entitlement to a court-ordered apology.

It is important to understand the boundaries of the cases that deal with an entitlement to costs when an award of only nominal damages is achieved and that the recovery of only nominal damages does not automatically or always foreclose an award of costs. In this respect, the following passages from Chandrasekaran should be noted:

It is equally important in my view to recall what Campbell J said at [52] in Mid-City Skin Cancer & Laser Centre v Zahedi-Anarak:

In the present case, Mr Lau did not recover nominal damages merely as a consolation prize when something more substantial had been sought but not recovered. Whatever might be said about the timing of his late decision, at the commencement of the hearing, to limit his claim to nominal damages, that was his claim. Mr Lau was, in the words of Hamilton J, someone who recovered nominal damages when some other right was vindicated by the judgment. The award of nominal damages in this case represented the establishment of a legal right, sounding in the recognition of his righteous belief, even though no substantial remedy was obtained. That was the limited damages case that he ran and it succeeded.

Nor is Mr Lau’s recovery of only nominal damages a peg, in the sense discussed in Nexus Minerals, on which he is metaphorically scrambling retrospectively to hang an award of costs. His failed pursuit of an apology is irrelevant for present purposes. Mr Lau is not attempting to elevate an unsatisfactory outcome to the status of a victory justifying a costs order. The undisputed fact is that he ultimately went to trial claiming only nominal damages. As his Honour said, the event that Mr Lau was aiming at was to prove that Anglicare mistreated his wife. His Honour correctly characterised the event as Mr Lau’s objective to vindicate his fervent conviction that in many different ways the centre had mistreated his late wife, by whatever it took and whatever was the risk of financial cost to him for doing so.

It follows in my opinion, contrary to Anglicare’s submissions in support of ground 2, that the primary judge did not take into account extraneous or irrelevant matters in determining that a costs order should be made in favour of Mr Lau. On the contrary, his Honour clearly directed his attention when awarding costs to the limited issue that fundamentally inspired Mr Lau’s decision ultimately to persist with his desire to secure an admittedly limited litigated outcome in the proceedings.

It is convenient to deal with this ground of appeal now.

Anglicare submitted that the primary judge’s exercise of his costs discretion was unreasonable or plainly unjust and that his Honour failed properly to consider the matters at [73]-[82] of his judgment when exercising the discretion to award costs.

Those paragraphs were as follows:

Anglicare complains, however, that despite this, the 35% costs order in Mr Lau’s favour appears to commence from the position that he was wholly successful below but with a reduction or discount of 65% in the total amount payable based on his conduct in bringing and conducting the proceedings. This is despite Mr Lau abandoning his substantial damages case at the commencement of the proceedings resulting in the generation of costs ultimately wasted by Anglicare in preparing to meet it.

Anglicare emphasised that it is appropriate to deprive a successful party of costs in whole or in part if the matters upon which that party did not succeed took up a significant part of the trial, either by way of evidence or argument: Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38]. Anglicare contended that the reduction in the present case should be greater than 65%.

Anglicare submitted that if the primary judge had exercised his discretion on the matter of costs taking into account the matters that his Honour dealt with at [73]-[82], it would have obtained its costs in full, including the provision for the costs it unnecessarily incurred because of Mr Lau's conduct.

The problem with these submissions, in my opinion, is that it is clear that his Honour adverted to the very matters that Anglicare contends he should have taken into account when coming to his conclusion that Mr Lau should have only 35% of his costs. It is in these circumstances difficult to accept the contention that his Honour failed properly to consider relevant matters when they are described in his judgment in terms and discussed in some detail.

The real import of Anglicare’s submissions concerning the 35% proportion of costs awarded by the primary judge is that it should have been lower. However, Anglicare’s dissatisfaction with his Honour’s decision is not the determinant of whether the relevant discretion miscarried. Alike with assessments of contributory negligence or contribution between tortfeasors, discretionary decisions concerning allocation of costs should not lightly be disturbed. Accepting that minds may well differ, I am not satisfied that Anglicare has demonstrated that this Court should interfere with his Honour’s conclusions.

The primary judge dealt at [69]-[73] with what should follow from Mr Lau’s failure to accept any of Anglicare’s offers to settle the proceedings under the somewhat curious, if not slightly inapt, heading, “Is there cause to reduce costs payable to Mr Lau?” as follows:

UCPR 20.26 and 42.15 are in the following terms:

Anglicare submitted that, having regard to its offers to settle the proceedings expiring on 9 July 2024 or alternatively 4 April 2025, Mr Lau is only entitled to an order against Anglicare for his costs in respect of his claim at the rate of 35% up to 9 July 2024 or alternatively 4 April 2025, and that Anglicare is thereafter entitled to an order against Mr Lau for its costs in respect of the claim on an indemnity basis. Anglicare submitted that his Honour erroneously failed to find that Anglicare’s settlement offers were valid and in so doing, failed to consider whether the usual rule should be varied in accordance with UCPR 42.15. Anglicare submitted that if the primary judge had correctly determined the matter, he would have ordered that Anglicare’s costs of the proceedings below were payable by Mr Lau on an indemnity basis on and from the date upon which the offers took effect.

The question is whether the primary judge failed to consider the offers of settlement in determining the matter of costs. Mr Lau contends that he did so and relies upon his Honour’s remarks at [69]-[72] reproduced above. Mr Lau contended that, in the light of these remarks, it cannot be said that his Honour failed to consider Anglicare’s offers when deciding whether any different orders for costs should be made.

UCPR 42.15(2) clearly preserves the court’s discretion (“unless the court otherwise orders”) to award costs other than in a manner provided for when an offer of compromise is rejected. Mr Lau submitted that his Honour did so in this case based on the context surrounding the litigation most particularly described by his Honour at [60]-[68]) of his judgment. Those circumstances informed his Honour’s conclusion about whether Mr Lau’s refusal of the offers was disentitling conduct.

The mere fact that the primary judge did not alter the award of costs in the manner prescribed in UCPR 42.15(2) is insufficient to demonstrate that the discretion had been improperly exercised or that the primary judge failed to consider the offers.

Mr Lau perceives that Anglicare’s submissions appear to equate financial gain and what may be considered to be a “better result”. Mr Lau maintained that such a submission should be rejected.

For example, in Leichhardt Municipal Council v Green [2004] NSWCA 341, Santow JA at [23] considered that an offer of compromise with no real element of compromise could not be genuine. Whether this requirement is met is to be assessed with respect to the totality of the circumstances. A similar analysis should be applied to consider whether a “better result” was achieved. The mere fact that Mr Lau did not obtain a better financial result does not necessarily mean that he should be taken to have obtained a result that is less favourable than that in the 25 March 2025 offer. Mr Lau submitted that the 25 March 2025 offer did not provide for a more favourable result than that which he received.

Furthermore, Anglicare’s submissions seem to suggest that his Honour considered an irrelevant matter being whether the offer had the effect of inducing Mr Lau to resolve the proceedings. Mr Lau submitted that those submissions should not be accepted. As Santow JA pointed out in Leichhardt Municipal Council at [14]-[15], both the laws relating to Calderbank letters and statutory procedures for offers of compromise are grounded in the public policy objective of providing an incentive for disputants to end litigation as soon as possible. A related public policy objective is the discouraging of wasteful and unreasonable behaviour by litigants.

Mr Lau also perceives that Anglicare’s submissions suggest that the primary judge was required to find an appropriate form of apology before coming to his conclusions at [71]. Mr Lau contended that those submissions should also not be accepted. There is no requirement for a court to speculate on what may hypothetically be acceptable to a litigant before finding that an offer provides for something that is less favourable than the result.

It is unnecessary in my view to consider in detail the effect of the 11 June 2024 offer of compromise. It was an offer to capitulate and did not amount to a genuine offer to compromise the proceedings. In any event, Mr Lau achieved a result more favourable than the suggestion that he should abandon the proceedings and pay his own costs.

It should be recalled that when the 25 March 2025 offer was made and rejected, Mr Lau was still seeking substantial damages and an apology. He did not abandon his claim for substantial damages until the first day of trial. Plainly, the offered amount of $5,000 was more than the $200 in nominal damages that he obtained in the proceedings. The rejection of the offer was unreasonable in the circumstances where Mr Lau himself ultimately ensured, by restricting his claim to nominal damages, that he was unlikely to obtain a more favourable result at trial.

The only apparent basis for the primary judge otherwise ordering in terms of UCPR 42.15(2) can be found at [71]:

In my opinion, the primary judge acted on a wrong principle in identifying as a relevant consideration the notion that an offer of a financial settlement by Anglicare was alone unlikely to provide a sufficient reason to induce Mr Lau to settle. By definition, any offer rejected by a plaintiff must be taken to have provided an insufficient inducement for that plaintiff to settle the proceedings. Properly understood, Anglicare’s offer was based upon their anticipation or best estimate that the Court would not order an apology and that any award of damages, nominal or otherwise, that Mr Lau might have been expected to receive, would not exceed $5,000.

It is the very essence of what inspires offers of compromise and Calderbank offers that opposing parties’ views about the likely or even possible outcome of contested proceedings may differ. The primary purpose of any such offer is not only to induce an opposing party to settle but to protect one’s position as to costs, including costs that could have been avoided by obviating the need for a contested hearing, in the event that the offer is rejected. In such circumstances, the reasonableness of an offer cannot only be judged by reference to whether the recipient of the offer could ever have been induced to accept it.

In the events that occurred, Anglicare’s offer was rendered even more reasonable by the time the hearing commenced as the result of Mr Lau’s decision to claim only nominal damages. It may be understood to be uncontroversial that Anglicare recognised and accepted that Mr Lau was driven by more than a desire for money, and that a public affirmation by judgment or court-ordered apology acknowledging the substance of his complaints about the treatment of his wife were of paramount importance. However, once it is accepted that Anglicare’s disinclination to apologise to Mr Lau in the terms he required was vindicated by his Honour’s decision, there was no means, apart from an offer to pay money, by which Anglicare, or any defendant in a similar position, could induce Mr Lau to settle the proceedings. Mr Lau recovered a monetary payment and it was significantly less than Anglicare’s offer.

It may be accepted that an informal offer must operate against the background of the court’s discretion with respect to the award of costs which is to be exercised, presumptively, in favour of an order that costs follow the event: Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [7]. However, if a Calderbank offer is made, but not accepted, the court’s discretion to make a special order is enlivened: Lawrence v Gunner; Gunner v Lawrence [2015] NSWSC 1229.

In the present case, the 25 March 2025 offer was a genuine offer of compromise. Mr Lau obtained no better financial result at trial and no other substantive relief apart from costs. It was unreasonable for Mr Lau not to have accepted the offer.

I would, absent the notification by Anglicare that it may seek a special costs order in the appeal, have proposed the following orders in the cross-appeal:

As I have earlier noted, Anglicare have sought the opportunity to seek a special costs order of the appeal. That may, possibly but not necessarily, have an impact on the orders I would propose be made on the cross-appeal. In the circumstances I propose the Court make the following further orders: