McLean v Dr Marshall [2015] NSWSC 463

Supreme Court New South Wales

Medium Neutral Citation: McLean v Dr Marshall [2015] NSWSC 463 Hearing dates: 20 February 2014 Date of orders: 24 April 2015 Decision date: 24 April 2015 Jurisdiction: Common Law Before: Hidden J Decision: Defendant to pay plaintiff's costs on the issue of liability, to be payable forthwith. Catchwords: COSTS – separate trial of issue of liability – child plaintiff – extent of damage not able to be determined for some years – whether costs of liability issue should be payable forthwith. Legislation Cited: UCPR 2005 Cases Cited: Fiduciary Limited v Morningstar Research Pty Ltd [2002] NSWSC 432, 55 NSWLR 1 Gales Holdings Pty Ltd v Tweed Shire Council (No 2) [2013] NSWCA 458 Gangi v Boral Resources (NSW) Pty Ltd (No 3) [2013] NSWSC 1388 McLean v Marshall [2013] NSWSC 1400 Milich v Council of the City of Canterbury (No 3) [2012] NSWSC 1280 State of New South Wales v Quirk [2012] NSWCA 216 Category: Costs Parties: Jorja McLean by her tutor Nicole Shuttleworth (plaintiff) Dr Richard Marshall (defendant) Representation: Counsel: AP Cheshire (plaintiff) J Downing (defendant)

Solicitors: Thomas Julius Goudkamp, Stacks/Goudkamp (plaintiff) Pamela Michael, Avant Law Pty Ltd (defendant) File Number(s): 2012/180670

Judgment 1. The plaintiff in this matter is a 10 year old girl. In June 2012, by a tutor, she brought proceedings in this court against the defendant, a medical practitioner, for damages for negligence. Put shortly, it is her case that she was born with a dislocation and dysplasia of the left hip, which the defendant failed to diagnose at a time when he should have done. It was diagnosed some years later but, as a result of the delay, she suffers ongoing disabilities, which have also had deleterious psychological effects. 2. On 23 September 2013, Barr J ordered the separate trial of the issue of liability: McLean v Marshall [2013] NSWSC 1400. His Honour did so in the light of medical evidence that the full effects of her injuries, both physical and psychological, could not be assessed until she was 14 – 16 years old. The evidence was that the impact of her physical condition could not properly be determined until she is skeletally mature. As to psychological injury, she was diagnosed with adjustment disorder with anxiety and, differentially, with sub-threshold post traumatic stress disorder, but the evidence was that her psychological state had not stabilised and could not be assessed until around her mid-teens. 3. On 20 November 2013, an amended statement of claim was filed. On 28 November 2013, a defence was filed, in which breach of duty and consequential damage were admitted. On 4 December 2013, Registrar Bradford ordered verdict and judgment for the plaintiff on liability, and reserved the question of costs of that issue. It is that question which was argued before me. 4. On behalf of the plaintiff orders are sought that costs in respect of liability be payable forthwith, and on an indemnity basis. The defendant imposes an order that costs be payable forthwith. He accepts that an order for indemnity costs is appropriate, although there is a dispute about the period which should be embraced by that order.

Payable forthwith? 1. The issue of when the costs become payable is governed by UCPR 42.7, which provides: "42.7 (1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including: (a) costs that are reserved, and (b) costs in respect of any such application or step in respect of which no order as to costs is made, are to be paid and otherwise dealt with in the same way as the general costs of the proceedings. (2) Unless the court orders otherwise, costs referred to in subrule (1) do not become payable until the conclusion of the proceedings." 1. Counsel for the plaintiff, Mr Cheshire, submitted that I should exercise the discretion conferred by subrule (2) to order otherwise. In Fiduciary Limited v Morningstar Research Pty Ltd [2002] NSWSC 432, 55 NSWLR 1, a case dealing with a rule to the same effect in the Supreme Court rules, Barrett J (as he then was) considered authority on the discretion conferred by the rule and extracted three considerations relevant to its exercise: (1) whether the costs relate to the determination of a discrete, separately identifiable aspect of the proceedings; (2) whether there is found to be some unreasonable conduct on the part of the party against whom costs have been ordered; (3) whether a lengthy period is likely to elapse before the final disposition of the proceedings. It is the first and, especially, the third of those considerations that are relevant here. 1. Counsel for the defendant, Mr Downing, accepted that the plaintiff was entitled to an order for costs in respect of liability, but argued that an order that they be payable forthwith would be premature. He raised the possibility that the plaintiff might ultimately be refused an order for costs at all because her damages did not meet the monetary threshold set by r 42.34. That rule provides: "42.34 (1) This rule applies if: (a) in proceedings in the Supreme Court, other than defamation proceedings, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $500,000, and (b) the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants. (2) An order for costs may be made, but will not ordinarily be made, unless the Supreme Court is satisfied the commencement and continuation of the proceedings in the Supreme Court, rather than the District Court, was warranted." 1. An affidavit of the plaintiff's solicitor, Ms Mahony, was read. Exhibited to it were medical reports obtained on behalf of the plaintiff and the defendant. Based on that material, Ms Mahony made the best estimate she could of damages likely to be awarded under various heads of damage when the matter does come to trial. Her conclusion was that damages would exceed $500,000. 2. To this Mr Downing responded that it was not possible to make any reliable projection of the damages which might be recovered, noting that it was the difficulty of making that assessment until the plaintiff reached her mid-teens that was the basis for the order for separate trial of the issue of liability. He argued that to order costs to be payable forthwith would have the effect of undermining the discretion under r 42.34 if, in the event, it had to be considered. As he put it in written submission, the judge "who ultimately makes costs orders at the conclusion of proceedings should be in a position to exercise his or her discretion freely, by taking into account liability and quantum considerations." 3. Mr Cheshire argued that r 42.34 is engaged only after damages have been assessed, and does not affect the discretion to order the payment of costs of an interlocutory application before the completion of the proceedings. He added that, even if the monetary threshold set by the rule were not met, it is clear that the commencement and continuation of the proceedings in this court were warranted: subrule (2). On that discretion he referred to a number of cases in this court, on appeal or at first instance, in which the plaintiff received an order for costs, despite an award of damages below $500,000, because of the weight of the issues involved. 4. In State of New South Wales v Quirk [2012] NSWCA 216, a case of malicious prosecution, Tobias AJA at [171] noted that the facts were "complex", involving "not insignificant conflicts of evidence." In Gales Holdings Pty Ltd v Tweed Shire Council (No 2) [2013] NSWCA 458, an action in nuisance, Emmett JA at [6] described the plaintiff's claims as "at least arguable" and the legal questions raised as "by no means straightforward." 5. In Gangi v Boral Resources (NSW) Pty Ltd (No 3) [2013] NSWSC 1388, a personal injury case, Schmidt J observed at [18] that the plaintiff had succeeded on "what was not a straightforward liability case", noting that there were "significant factual disputes and the liability experts also had significant differences of opinion." In Milich v Council of the City of Canterbury (No 3) [2012] NSWSC 1280, another personal injuries case which had been transferred to this court from the District Court, Davies J considered that the plaintiff's damages would have been much more substantial if he had been successful in a claim concerning his lumbar spine: [20], and awarded costs "by reason of the serious nature of the injuries the plaintiff was alleging and the effect those injuries might have had, at least on his earning capacity …": [22]. 6. Mr Cheshire submitted that the issues in the present case were worthy of litigation in this court. The defendant had attended the plaintiff's birth on 4 August 2004, and she had been brought to his practice for examination on several occasions in that year and in the following 2 years. Her case centred in particular upon a consultation with the defendant in early 2006, by which time it is said the diagnosis of her condition should certainly have been made. The medical reports exhibited to Ms Mahony's affidavit, obtained between 2011 and 2013, reveal conflicting opinions on the issue of liability, the experts being called upon to evaluate the defendant's examination of a child under the age of 2 years between 2004 and 2006. Mr Cheshire argued that the issue of liability, before it was conceded, was by no means straightforward. 7. Equally, Mr Cheshire submitted, the assessment of damages raises important issues. As to the plaintiff's physical injuries, reports of Dr Angus Gray describe her current medical condition as reasonable, and her prognosis as "guarded but probably reasonable." However, the doctor considers it "almost certain" that she will develop premature osteoarthritis and will probably need a total hip replacement in her early to middle years. The reports foreshadow an inability to undertake employment involving heavy physical labour and a possible need for domestic assistance. 8. As to the plaintiff's psychological state, a report of Associate Professor Carolyn Quadrio refers to the risk of her developing psychological difficulties during adolescence, a time when young girls become sensitive to physical defects and may develop difficulties with body image and self-esteem. These issues could compromise her school progress, and longer term complications in her physical condition could give rise to "further adjustment problems, especially depression." 9. It may well be that the plaintiff will recover damages of $500,000 or more. However, even if she does not, there is clearly a basis for the exercise of the discretion to award her the costs of the proceedings. Given the length of time before the matter can come to finality, I consider it appropriate that costs of the issue of liability should be payable forthwith.

Indemnity costs 1. As I have said, Barr J ordered the separate trial of the issue of liability on 23 September 2013. On 24 October 2013, the plaintiff's solicitor forwarded to the defendant's solicitor an offer of compromise, pursuant to r 20.26, proposing a verdict for the plaintiff on the issue of liability, with an agreed discount on damages of 10%. The offer was not accepted. As I have also said, the amended statement of claim was filed on 20 November 2013, and the amended defence on 28 November. On 4 December 2013 Registrar Bradford ordered judgment for the plaintiff on liability. 2. Pursuant to r 42.14, the plaintiff claims costs on an indemnity basis from the day after the offer, 25 October 2013 to the day judgment was entered, 4 December. The defendant accepts that the indemnity basis is appropriate from 25 October to 28 November, when the defence admitting liability was filed. Mr Downing pointed out that at that point liability ceased to be an issue, and that costs thereafter should not be on an indemnity basis. 3. The amended defence expressly admits duty, breach and resultant damage. Negligence is asserted in para 12 by reference to a series of particulars. The defence deals with each of those particulars, admitting most of them. One of them is denied in its entirety, and another is not admitted. Of the others, some are admitted in their entirety, while some are admitted in substance but with qualifications. 4. Mr Cheshire's argument, as I understand it, was that the pleading did not wholly resolve the issue of causation. However, I am persuaded by Mr Downing's submission that it did amount to a complete admission of liability, leaving the assessment of the plaintiff's loss and damage as the only issue. Costs as to liability should be awarded on an indemnity basis for the period from 25 October to 28 November 2013.

Order 1. Accordingly, the defendant is to pay the plaintiff's costs of the issue of liability, as agreed or assessed, those costs to be payable forthwith. The costs will be on an indemnity basis for the period from 25 October to 28 November 2013, and otherwise on the ordinary basis.

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