SARA v BALASUBRAMANIAN SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, MAHONEY JA and ROLFE AJA 29 March 1995, 12 April 1995 [1995] NSWCA 417 COURTS and JUDGES — procedural fairness — out-of-pocket expenses announcement of agreement — judge does not allow — meaning of agreement — HELD: (by maj): Departure from procedural fairness — new trial ordered. PRACTICE and PROCEDURE — Court of Appeal — supplementing record — dispute between lawyers — meaning of recorded agreement. MOTOR VEHICLES — insurance — duty to pay reasonable expenses. COURTS and JUDGES — fair trial — procedural fairness — entitlement of party to — personal injuries damages action — parties announce that out-of-pocket expenses are agreed in the sum of $9,615.60 — primary judge (Mahoney DCJ) makes allowance for $4,135 — derives verdict for $15,835 — deducts $8,531.60 as full amount paid by insurer — enters judgment for $7,304 — dispute as to meaning of announced agreement of the parties not resolved by evidence in Court of Appeal — judge fails to raise with the parties directly his rejection of evidence flowing from the agreed out-of-pockets announced — on appeal to the Court of Appeal against the judgment entered in pursuance of the verdict — HELD: (Rolfe AJA; Kirby P concurring; Mahoney JA dissenting): (1) Upon the face of the agreement announced by the parties and the plain terms of the agreement it was a departure from the requirements of procedural fairness to conclude that the agreed figures should not be included in the verdict; (2) Assuming evidence was available to supplement the record, none was provided so that the agreement must be construed according to its terms. Builders' Licensing Board v Mahoney (1986) 5 NSWLR 96 (CA); Vakauta v Kelly (1988) 13 NSWLR 502 (CA); Goktas v Government Insurance Office of New South Wales (1993) 31 NSWLR 684 (CA) considered; (3) Having regard to the exchanges at the trial concerning only the rate of charges made for certain medical expenses, it was not open, without due notice to the parties to reject the inclusion of the agreed out-of-pockets in the verdict; (4) The departure from procedural fairness was not insubstantial and a reassessment by the Court of Appeal on the record was not available; (5) Accordingly, a new trial should be had limited to damages. PRACTICE and PROCEDURE — Court of Appeal — record of trial court — whether may be supplemented by additional evidence — whether parties confined to record — whether, in default of agreement between legal representatives, evidence admissible — held: Unnecessary to determine. Record clear. Builders' Licensing Board v Mahoney (1986) 5 NSWLR 96 (CA); Vakauta v Kelly (1988) 13 NSWLR 502 (CA) and Goktas v Government Insurance Office of New South Wales (1993) 31 NSWLR 684 (CA) considered. MOTOR VEHICLES — insurance — compulsory insurance — out-of-pocket expenses — duty of insurer to make payments which are reasonable and necessary and relate to injury caused by fault — payments made in part — whether open to insurer to contest. Motor Accidents Act 1988, s45(2A), s45(3), s45(4), s79. Kirby P I agree with Rolfe AJA. 2 UNREPORTED JUDGMENTS Mahoney JA The plaintiff was injured in a motor vehicle accident on 21 March 1990. He sued the defendant for damages. The defendant admitted liability. On 1 June 1994, his Honour Judge Mahoney awarded the plaintiff a judgment for $7,304. The plaintiff has appealed to this Court against that judgment. The plaintiff's case was that, as the result of the motor vehicle injuries, he suffered pain and injuries to his arm, his neck, his back and his knee, that he has not been able to work since the accident and that that condition will continue generally into the future. He was by trade a tiler. Apart from a few attempts to work after the accident, he has not been able to work or to earn significant income. He claimed that "I couldn't lift nothing" when he tried to work and that he can "bend gently" but is otherwise restricted. He said that there had been no improvement in his back or his neck and that he was incapacitated, both in relation to his work and in relation to his personal activities. The judge concluded that the plaintiff had suffered essentially a soft tissue injury to his neck and minor injuries elsewhere. He did not accept the plaintiff as a witness of truth in relation to his medical condition. Films had been taken of the plaintiff showing him doing tasks which, as I think the judge inferred, were inconsistent with the accuracy of his evidence. His Honour said that, when confronted in cross-examination "with his proven capacity to carry out physical tasks... he was distinctly loath to concede that his capacity for physical activity extended that far". The judge found him to be "a very unsatisfactory and quite unreliable witness" who "sought to blame on the motor vehicle accident every medical misfortune which has afflicted him since that date". His Honour said: "Generally I found him to be an unsatisfactory witness who exaggerated, is unreliable about details and chronologies, lacks any reasonably appropriate records in his evidence to support his claims of reduced physical and industrial capacity and who is patently wrong on several vital matters such as his pre motor vehicle accident state of health." The plaintiff relied on medical evidence in the form of doctors' reports, ambulance records and a report from the Liverpool Health Service. The defendant tendered, inter alia, reports by Dr Stephenson and Dr Smith. His Honour accepted the view of Dr Giblin in a report tendered for the plaintiff and of Dr Smith, in a report tendered by the defendant. He put aside the written evidence of other doctors, having regard to "the extent to which their opinions are dependent on the subjective honesty and reliability of the plaintiff'. Dr Giblin's evidence disclosed complaints of a neck condition but not of a back condition of which the plaintiff, in evidence, had complained. Dr Smith saw him as exhibiting "an unphysiological restriction in neck and low back movement and has unphysiological hypoaesthesia and weakness in the left upper limb". His conclusion was: "From an orthopaedic point of view then, I cannot find anything objectively wrong with him. He is fabricating his physical signs and has a somewhat histrionic history." The doctor gave his opinion that, assuming the plaintiff had suffered a soft tissue aggravation to the degenerative changes in his lower back and neck and a soft tissue injury to the left knee he would have "substantially recovered from any severe symptoms after six to eight weeks and would have had nuisance value symptoms especially in the neck for a year or two". The doctor said, "I would have thought he would have returned to his normal employment after six to eight weeks, probably three months at most". URJ SARA v BALASUBRAMANIAN (Mahoney JA) 3 On this basis his Honour concluded that "at most the accident would have kept him out of the workforce for three months, which almost covers the time he was seeing Dr Giblin'". He assessed his pre-trial economic loss at $11,700. He did not accept that there would be future economic loss. He found that he was not, at the time of the hearing "significantly impaired" and accordingly made no award for non-economic loss: see s79 of the Motor Accidents Act. On this basis his Honour concluded that the only components of the plaintiffs verdict were: Out-of-pocket expenses $4,135.60 and past economic loss $11,700, totalling $15,835.60. His Honour then deducted from that sum $8,531.60. That sum apparently represents a set-off claimed by the defendant. At the commencement of the trial a note appears in the transcript: "Out of pocket expenses agreed upon in the sum of $9,615.60". By a letter Exhibit Q dated 15 September 1993, the defendant claimed that it had paid "the following treatment expenses in relation to your client's claim". The letter listed expenses totalling $8531.60. The letter then said: "These payment comprise the set-off that the defendant claims pursuant to para4 of the Amended Grounds of Defence. Would you please advise whether your client admits that these payments were made or whether you require an affidavit from a suitable officer of my client confirming same." The letter was apparently written upon the basis that the defendant contended that these sums, though paid, were not paid in respect of matters for which the defendant was liable under the plaintiffs claim and that the defendant was entitled to recover the benefit of them as on a set-off. It was on this basis that the judge saw fit to deduct from the amount of $15,835.60, the total of the plaintiff's damages, the total of the amounts in this letter, viz, $8531.60. The judge apparently took the view that these expenditures had not been brought about by the negligence of the defendant. He took the view, I think, that as the effects of the defendant's negligence had ceased by the end of the short period that he indicated in his judgment and because the plaintiff's complaints thereafter resulted from his own exaggeration or misstatement of his physical difficulties, the amounts incurred for medical and similar expenses after the negligence had ceased to be operative were not incurred because of the defendant's negligence. In principle, there is in my opinion no objection to a judge reasoning in this way. If a plaintiff, falsely and fraudulently, fakes signs and symptoms with a view to increasing the damages which he may recover and, to support the inflated claim, incurs medical expenses and the like, there is no objection in principle to the judge disallowing those expenditures. Of course, all cases are not so simple. Misstatement or exaggeration of symptoms may occur where the plaintiff is not, as such, a cold and calculating defrauder. Such may occur where, for example, the plaintiff has, wrongly, convinced himself that his signs and symptoms flow from the negligence. What may properly be done in circumstances of this and other kinds will require careful consideration. In the present case, the judge was satisfied that there was, at least in one respect, a conscious misstatement by the plaintiff. The judge found that the plaintiffs claim that Dr Boulas had "refused to see him (the plaintiff) on at least one occasion" and his attitude to Dr Giblin had been adopted because "he wanted the Court to view the reports of these two doctors unfavourably and consciously sought to encompass that result". 4 UNREPORTED JUDGMENTS The plaintiff submitted that his Honour could not take the approach that he did for two main reasons: because his findings as to the credibility of the plaintiff as a witness were unjustified; and because at the trial the parties had accepted that the total of the out-of-pocket expenses $9,615.60 was recoverable by the plaintiff. This Court must, as on a rehearing, form its own conclusion as to the signs and symptoms displayed by the plaintiff at the time of the trial and as to the true condition of the difficulties under which he claimed to labour. However, in doing so it must take proper account of the advantage which the trial judge had in assessing the plaintiffs evidence and his credibility as a witness. These matters were dealt with by the High Court in Abalos v Australian Postal Commission (1990) 171 CLR 167. It is clear that the trial judge in this case made use of the advantage that he had in this regard. Prima facie, therefore, I would conclude that the Court should not form a different assessment of the plaintiff and his evidence. It was submitted for the plaintiff that there was strong medical evidence to support the existence of the difficulties of which the plaintiff complained or at least some of them. But, in my opinion, there was medical evidence to support the judge's conclusion. What was said by Dr Smith was to this effect. There was in the evidence no such error or such countervailing material as has been referred to in cases such as Voulis v Kozary 180 CLR 177. The plaintiff's supporting witness did not give evidence which compelled acceptance or, if accepted, would require the conclusion that the plaintiff was, beyond the period selected by the judge, disabled. The judge might well have refused to accept that witness as a credible witness or alternatively as providing evidence requiring or warranting the conclusion that the plaintiff was disabled. I come now to the argument based upon the out-of-pocket expenses. If at the trial the parties agreed that the whole of the out-of-pocket expenses, viz, $9,615.60, was to be included in the plaintiff's verdict, then, in refusing to include $8,531.60, the judge erred. But I am not satisfied that that was so agreed. Ihave had the benefit of reading in draft the judgment of Rolfe AJA. His Honour has set forth the relevant material. Before this Court, counsel could not, from immediate recollection, indicate what the position in this regard was at the trial. As Rolfe AJA has indicated, the matter was in the end left to be determined by inference from such materials. Mr Maconochie QC for the defendant maintained that the allowability of the out-of- pocket expenses remained a live issue throughout the trial. He referred to the fact that in the pleadings the defendant had contended that the relevant portions of the out-of- pocket expenses were not allowable and had, by cross-claim, claimed recovery of the substantial part of them. This was in accordance with the letter of 15 September 1993. He pointed to questions put in evidence in relation to these expenditures and to the fact that the letter of 15 September 1993 was tendered in evidence before the Court. The judge himself must have thought the matter to be a live issue: his deduction of $8,531.60 confirms that this was so. In the circumstances, I would not infer from the material appearing in the transcript that a different attitude had been adopted and maintained by the parties at the trial. If these conclusions be correct, it follows that the judge's judgment should be upheld. In my opinion the appeal should be dismissed with costs. Rolfe AJA INTRODUCTION The plaintiff/appellant sued the respondent/defendant in the District Court seeking to recover damages for personal injuries he alleges he sustained in a motor vehicle accident, which occurred on 21 March 1990. The motor vehicle, URJ SARA v BALASUBRAMANIAN (Rolfe AJA) 5 which the appellant was driving, had been brought to a standstill and, thereafter, a motor vehicle the respondent was driving collided with the rear of it with some violence. The respondent admitted negligence, but denied, in his defence, that any of the injuries or damage alleged by the appellant were sustained in the accident. The matter then proceeded as an assessment of damages. The Amended Notice of Grounds of Defence state, inter alia: "2. The defendant does not admit that the plaintiff sustained the injury, loss and damage as alleged, particularised or at all...... 4. FURTHER, THE DEFENDANT SAYS THAT IT HAS MADE PAYMENTS TO, FOR OR ON BEHALF OF THE PLAINTIFF IN RESPECT OF TREATMENT EXPENSES AND REHABILITATION EXPENSES PURSUANT TO THE PROVISIONS OF THE MOTOR ACCIDENTS ACT AND CLAIMS A DEFENCE BY WAY OF SET-OFF IN RESPECT OF THOSE PAYMENTS, WHICH WILL BE PARTICULARISED PRIOR TO THE HEARING DATE." (emphasis added) Para4 is underlined to indicate it constituted the amendment pleaded. As I understand it the defence raised was that as the respondent had paid the out-of-pocket expenses it was entitled to set off those payments against the out-of-pocket expenses the appellant proved. The proceedings came on for hearing before His Honour Judge Mahoney QC on 25 February 1994. On the hearing before his Honour Mr Twomey of Counsel appeared for the appellant and Mr Fonti of Counsel appeared for the respondent. On the hearing of the appeal Mr Doherty of Counsel appeared for the appellant and Mr Maconachie of Queen's Counsel and Mr Fonti appeared for the respondent. The first four grounds of appeal were: "1. His Honour erred in reducing the agreed out-of-pocket expenses, paid on behalf of the respondent (sic), from $8,531.60 to $4,135.60. 2. His Honour erred in refusing to find that the out-of-pocket expenses paid on behalf of the respondent (sic) constituted an admission by the respondent. 3. His Honour erred in refusing to allow the unpaid out-of-pocket expenses of $1,084.00. 4. Having found that the appellant's out-of-pocket expenses entitlement was $4,135.60, his Honour erred by deducting from the appellant's damages the sum of $8,531.60 being out-of-pocket expenses paid by the respondent, $4,396 of which the appellant was held not entitled to." These grounds of appeal complained that notwithstanding agreement at the hearing that out-of-pocket expenses amounted to $9,615.60 his Honour had refused to allow this amount in his judgment, and he had disallowed certain items the parties had agreed the appellant was entitled to recover. This led to an argument as to the extent of the agreement, which agreement was recorded on the transcript, AB10, as follows: "(Out of pocket expenses agreed upon in the sum of $9,615.60.)" The appellant has contended that it was an unlimited agreement and that there should have been included in the verdict the full amount, and, further, that the agreement encompassed a concession or admission by the respondent that the treatment, which underlay the payments, was rendered necessary by the injuries he sustained in the motor vehicle accident. The respondent has contended that the agreement was no more than an agreement as to amounts, each and every one of which the appellant had to prove as being payable by reason of injuries sustained 6 UNREPORTED JUDGMENTS in that accident. Mr Maconachie and Mr Doherty each stated their instructions conformed to these respective positions and, of course, I accept they were advising the Court correctly what their instructions were. I also have regard to the fact that Mr Fonti was counsel who appeared at the trial and, in so far as Mr Maconachie's statements reflected the respondent's view, I accept they also accorded with Mr Fonti's understanding. However as counsel are unable to agree I consider I must look at the record to come to a view as to the nature of the agreement. I also note Mr Maconachie's frank statement that on a consideration of the record one could be forgiven for thinking that the agreement had the effect for which Mr Doherty contended. The appellant's written submissions deal with this point at some length on the basis, firstly, that the out-of-pocket expenses were agreed, and, secondly, that his Honour should have found, in any event, that the respondent was obliged to pay them. An oblique reference is made to s45 of the Motor Accidents Act 1988, although the matter was developed in the oral submissions, subs2A of which provides: "The duty of an insurer under subs(2) to make payments applies only to the extent to which those payments: (a) are reasonable and necessary; and (b) are properly verified; and (c) relate to the injury caused by the fault of the owner or driver of the motor vehicle to which the third-party policy taken to have been issued by the insurer relates." This subsection makes clear the insurer is only obliged to pay reasonable and necessary expenses, which are properly verified and relate to the relevant injury. subs3 makes it a condition of the third-party insurer's licence that it complies with s45 and subs4 states: "Payments made under this section are taken to form part of any damages payable to the claimant." The respondent's written submissions asserted that the agreement as to out-of-pocket expenses was only that they were "mathematically correct", and that in so far as there had been payment it was "never treated as an admission of attributability or of the reasonableness of the charges'. It was further submitted that an insurer is "justified in making payments subject to their subsequently being proved reasonable and attributable to the injury sustained when the matter is put to trial". Mr Maconachie elaborated on this in his oral submissions. He submitted if amounts were not paid the insurer could place its licence in jeopardy by breaching the obligation to pay. I have doubts about the correctness of that submission. The licence could not be in jeopardy unless it could be shown the three conditions for payment had been satisfied and payment was then refused. also think that the making of payments, if the conditions laid down in subs2A were not met, may equally amount to a failure to comply with s45. I further consider that the pleadings did not accommodate an order that the appellant should repay "over-payments", which order his Honour made. Prima facie the notation of the agreement at AB10 does not suggest to me that it was limited to the mathematical correctness of certain accounts, but rather it suggests an agreement that there should be included in the judgment the amount stated to be agreed for out-of-pocket expenses. If there was the limitation or qualification, for which the respondent contended, it should have been noted unambiguously on the transcript. A CONSIDERATION OF SOME DECISIONS URJ SARA v BALASUBRAMANIAN (Rolfe AJA) 7 Any consideration of the record of the proceedings must be made against the background that the respondent seeks to challenge the initial statement about the agreement, which, prima facie, I regard as unambiguous. The grounds of appeal specifically put the matter in issue, as did the appellant's written submissions. The necessity to ensure that the record in the District Court is accurate, and, if it is challenged, to have evidence, in the absence of agreement, as to what transpired, was considered by Priestley JA, with whom Kirby P and Hope JA agreed, in Builders Licensing Board v Mahoney (1986) 5 NSWLR 96. At 98-99 his Honour said: "Tt frequently happens that in appeals to this Court some importance attaches to the course of the proceedings in the court from which the appeal comes. One example is where counsel for one party in the appeal claims that counsel for the other party is seeking to rely upon a point not argued in the court below. Another is where a question below has been objected to and rejected and on appeal the party seeking to argue for admissibility of the question says that he explained to the trial judge the nature of the evidence which the question was intended to lead into but the transcript either gives no indication at all of what was said to the court at the time or simply notes for example "discussion ensued'. In cases such as these, and there are many more examples, it can be of importance to the Court of Appeal to know with some exactness what it was that actually happened. As the appeals are sometimes heard quite long after the trials the memory of counsel of those things which happened at the trial which were not fully recorded is often hazy and incomplete. Sometimes also the counsel appearing on the appeal did not appear at the trial. In such circumstances as these what is in question are the facts of what took place in the trial court. Such questions of fact can only be resolved in the event of contest between the parties on the appeal by evidence, the most satisfactory kind being by way of affidavit or affidavits from a person or persons present at the hearing. Sometimes the area of dispute can be limited by a degree of agreement or concession by counsel in the appeal. THE COURT CANNOT, HOWEVER, RESOLVE DISAGREEMENT ARISING FROM DIFFERING RECOLLECTIONS OF COUNSEL GIVEN IN ALL GOOD FAITH FROM THE BAR TABLE IN THE COURSE OF THEIR SUBMISSIONS. (My emphasis) Of situations such as this Barwick CJ said in Government Insurance Office of New South Wales v Fredrichberg (1968) 118 CLR 403 at 410 that considerable caution must be exercised in allowing any material to be given supplementary to what appears in the transcript. He added: "Counsel are well able to ensure at a trial that all significant matters are recorded.' Although it may not be quite so easy for junior counsel in the District Court to ensure as full a record of proceedings as Sir Garfield in the course of his own practice, nevertheless it is a matter of potentially great importance for the parties that counsel should take every reasonable step open to them to see that a full and accurate record is kept of proceedings in which they take part." At 100-101 his Honour said: "Tt may well be that in reaching this conclusion I am doing an injustice to the trial judge; it is possible, consistently with the materials in the appeal book and that part of what we were told by counsel that it is proper for the Court to act upon that the substance of what happened was that both plaintiff and defendant did have an opportunity to put their submissions to the Court both on the no evidence point and on the merits of the matter and that his Honour thus decided the question on the merits of the matter in an appropriate way. However, as I have 8 UNREPORTED JUDGMENTS said, on the materials before us which it is proper for this Court to take into account the better view seems to me to be that the error I have described above was made." In the present case the critical issue was the extent of the agreement and this Court was confronted with conflict as to that. No attempt was made to tender any evidence to clarify the area of dispute and, therefore, the matter must, in my opinion, be determined by what appears from the record. In Vakauta v Kelly (1988) 13 NSWLR 502 McHugh JA referred to what Priestley JA had said in Mahoney at 524 and continued: "This statement was a dictum. It was not part of the ratio decidendi of the case. I would venture to doubt whether it expresses the rule which best serves the administration of justice. But at all events when what is in issue is what a trial judge in a court of record has said, an appellate court should not permit evidence to supplement the transcript unless both parties agree as to what was said. Where sound recording equipment exists, no problems concerning supplementing the transcript should arise. Where there is a shorthand reporter, the reporter's account of what was said should be taken as an accurate account of what has occurred unless the parties agree that in some respect it is not accurate. Shorthand reporters record every word of oral evidence. It is impracticable, however, to record every word of a discussion or every statement made by a judge or counsel. If a matter is being discussed which counsel thinks ought to be recorded, it is his duty to ensure that the statement is recorded. Counsel is entitled to have important discussions recorded. If the trial judge or counsel's opponent suddenly makes a statement which ought to be recorded, counsel has a duty to insist that the statement be instantly recorded. It can then be done while the matter is fresh in the recollection of the shorthand reporter, the judge and counsel. If a dispute exists between the parties or the judge as to what was said, the version of the judge must be conclusive. It is difficult to see how the contrary view can prevail without requiring or permitting the judge to give evidence and be cross-examined in the appellate court. Such a course is not merely unthinkable, it is contrary to the function and status of a judge in a court of record. It is to the judge, and not counsel or litigants, that the community has delegated the power of deciding disputed questions of fact. That must include any dispute as to what was said by a witness or even by the judge himself. For a very long time, the practice in New South Wales has been for counsel at the start of each day's hearing of a trial to ask the judge to correct any errors or omissions in the transcript. If counsel differ in their recollection, it is the judge who determines whether the transcript should stand or be amended. Where a transcript is taken, the better practice is to refuse to admit disputed evidence to supplement the transcript of a court of record." The matter in issue in Vakauta was different from that in the present case. However his Honour's statement is authority for the Court looking to the record only. In Goktas v Government Insurance Office of New South Wales (1993) 31 NSWLR 684 Kirby P and Cripps JA referred to the tension between the decisions in Mahoney and Vakauta in relation to the admissibility of evidence to supplement the record. At 686-687 Kirby P said: "Cripps JA is right to point out that McHugh JA's remarks clearly require some qualification to permit of proof of the conduct of the judge and of counsel which, despite every proper effort, is not recorded in the transcript - either because of URJ SARA v BALASUBRAMANIAN (Rolfe AJA) 9 omission, direction or deliberation excision. The suggestion that such evidence could not be offered in an appeal is self-evidently unacceptable. It is also proper to acknowledge (as Priestley JA did in Builders Licensing Board v Mahoney) that in many (probably most) cases, the field of difference between the parties and their representatives will usually be narrowed. This will typically occur by discussions between the legal representatives concerning what happened at the trial, but which is not recorded in the transcript. A high measure of unanimity is ordinarily reached concerning what actually occurred. That can then be placed before the appellate court, just as, largely, it has been in this instance as a consequence of proper concessions made for the respondent. The conventions of our legal system are still such as to promote a very high level of integrity and honesty in dealings with the courts by members of the legal profession. This attitude transcends even the importance of winning the particular case. It helps the courts to get at justice. It is also proper to say that the rule which McHugh JA urged in Vakauta, is strongly to be encouraged as a proper practice. Yet a failure by a legal representative at the trial to note objections and to ask that they be recorded, although often a significant handicap, may sometimes be explained in the forensic setting." As in Vakauta these comments were made in the context of a case of apprehended bias, which is not an issue in this appeal. Cripps JA, with whom Meagher JA agreed, referred to the differences between Mahoney and Vakauta and said at 699: "Notwithstanding the competing submissions, I do not understand the two decisions to be wholly opposed to each other. Priestley JA emphasised the caution that must necessarily be exercised in allowing any material to be given to supplement the transcript. I would not understand McHugh JA to deny an entitlement in an appellant to prove, for example, that what happened was not recorded either because a trial judge improperly directed that the matter not be recorded or because a shorthand reporter improperly refused to record it. Further, I would not take his statements as denying that circumstances may be such that evidence can be given because there may not have been, in a practical sense, any real opportunity to raise the matter at first instance and have it recorded on the transcript - as, for example, where counsel is stopped in his address because the judge says he does not wish to hear him further." In the present appeal the parties did not seek, by evidence, to supplement the record and no relevant concession was made as to the extent and content of the agreement. In these circumstances I must decide from the record, in which I include his Honour's reasons for judgment, whether I am satisfied the agreement was, notwithstanding the terms in which it was initially recorded, limited or qualified. If I am not so satisfied it seems to me that a finding by the trial Judge that the agreement was limited or qualified has acted to the detriment of the appellant, in that unless his legal representatives were put on notice the agreement was to be so considered, and given the opportunity to deal with the case on that basis, they were not able to address properly the case that had to be proved on behalf of the appellant. Mr Maconachie submitted that if there was any doubt about the matter counsel for the appellant at the trial should have sought an adjournment to call any further evidence. That may be so if he was aware of it during the trial. However, for reasons I shall given, I do not think the matter emerged until his Honour gave his reserved judgment, by which time it was too late. 10 UNREPORTED JUDGMENTS HIS HONOUR'S JUDGMENT AND WHAT HAPPENED ON THE HEARING His Honour delivered a reserved judgment on 1 June 1994, and stated, in the course of noting various preliminary matters: "The parties at the hearing agreed that the out of pocket expenses paid on behalf of the plaintiff totalled $8,531.60 (see Exhibit Q) and that the amount unpaid was $1,084, being the total amount of fees charged to the plaintiff by Dr John Bannister (see Exhibit P)." This statement is not, in my view, consistent with a limited or qualified agreement. It is consistent with the agreement recorded at AB 10. If the agreement had been restricted in the way the respondent contended I would have expected his Honour to have so stated. Exhibits P and Q were tendered at the conclusion of the appellant's case: AB80. Exhibit Q set out the amounts paid, which totalled $8,531.60, and concluded: "These payments comprise the set-off that the defendant claims pursuant to para4 of the Amended Grounds of Defence. Would you please advise whether your client admits that these payments were made or whether you require an affidavit from a suitable officer of my client concerning same." The letter did not state that the entitlement to recover the out-of-pocket expenses was in any way contingent upon the appellant's satisfying the Court that the respondent was liable to make the payments. Exhibit P was Dr Bannister's account. It was tendered without objection. If there was to be any suggestion that the appellant was not entitled to recover this amount one would have expected an objection to the tender, at least on the ground of relevance, or, alternatively, a statement at the time of tender that the appellant was required to prove the liability of the respondent for the amount claimed. When Exhibits P and Q were tendered his Honour asked counsel for the appellant whether he could assure him "that these rates are the going rates". I do not understand the relevance of this enquiry. If the agreement was as the appellant contended his Honour was obliged to include the amounts. If it was as the respondent submitted he was obliged to include the amounts he found referable to the accident and excise those which were not. It was never suggested he should adjudicate on the quantum of the amounts. Mr Twomey replied: "Your Honour I can't assure your Honour, but your Honour will see from the next - from the document that's been tendered that the difference between what the defendants' (sic) paid and the out of pocket expenses are made up with that account. But your Honour if there's a question about THE REASONABLENESS OF SOME OF THESE CHARGES your Honour, it was never - they've been paid, other than Dr Bannister's account. There was no query made about them your Honour. It seems now your Honour that there's going to be a query about the payment of accounts." (My emphasis.) Mr Twomey's reference to "reasonableness" and his subsequent submissions made it clear he was not considering whether amounts should or should not be included in the verdict at all. Mr Fonti is not recorded as making any statement to the effect that although payments had been made, proof was required that the respondent was legally liable to have made them. His Honour is recorded as saying: "IT'S COMING FROM ME, IT'S COMING FROM ME. I saw Westside. You see I've had a look at the out of pocket expenses, and I saw nearly $3,000, and Id heard him say manipulation, I thought right, well there's two manipulations, well that will get up to about $500, $600, he must have been in traction for some URJ SARA v BALASUBRAMANIAN (Rolfe AJA) 11 time. And I was waiting for evidence of traction. No evidence of it, no suggestion of it. And I was wondering why it is that he's left in hospital for seven days, except if - I was wondering if there was any reason other than the obvious one. Now the fact that he might have been overcharged by somebody who has managed over the years to develop a bit of a reputation, that's not going to run against the plaintiff in any way, shape or form. What's an intrathecal injection?" (My emphasis.) His Honour's opening remarks, which I have emphasised, make it clear to me that whatever was concerning his Honour emanated from him and not from the parties. His comments were inconsistent with his holding the view that the parties had agreed he should go behind the amounts to determine which should be allowed. There was no suggestion from Counsel for the respondent that as the agreement was limited his Honour had to decide such issues. There was some further discussion about the nature of the injection and where it could be done, but no suggestion that the amount had not been agreed. Nor did his Honour withdraw the observation that if the appellant had been overcharged that would not detrimentally affect his case. The significance of that remark, in my opinion, was that his Honour was suggesting that even if he concluded the amount was excessive, the appellant would not be prejudiced "in any way shape or form" Any prior suggestion that his Honour was contemplating considering for himself whether the agreed figures should be included in ie verdict or not was completely over-ridden by the penultimate sentence I have just quoted. At AB84 counsel for the respondent referred to the payment of $8,531.60 and that he claimed credit for that. He did not suggest there should be any more detailed consideration of ie constituent parts of that amount. The point he was making was that whilst it would be included in the verdict, an appropriate allowance should be made because the respondent had paid it already. The transcript continued: "HIS HONOUR: Under what guise has that been paid, since the out of pocket expenses- FONTI: It's part of those out of pocket expenses your Honour. TWOMEY: That's the sum total your Honour in exhibit - that letter-- HIS HONOUR: They docked Dr Bannister's bill, is that it? TWOMEY: Yes, he is not included, yes your Honour. FONTI: Dr Bannister makes up the entire difference your Honour. HIS HONOUR: Anything in reply Mr Twomey? TWOMEY: No your Honour. HIS HONOUR: Well this is by no means an easy matter as far as I'm concerned, and I'1l have to evaluate the notes of the evidence I've made and the medical evidence over the weekend, and I'll hear from you at 10 o'clock on Monday morning..." Ihave set out this material at some length, because there was no suggestion his Honour was not going to accept the out-of-pocket expenses as having been properly paid in discharge, in part, of the financial liability of the respondent to the appellant. In his judgment his Honour considered the involvement of Dr Bannister and observed there was no report from him. He seems to have viewed this adversely because he said the absence of a report was "despite a claim for fees payable to Dr Bannister in respect of treatment between 8 and 21 August 1991 for $1,084 (Exhibit P)". There was no doubt the claim was being made by the appellant and 12 UNREPORTED JUDGMENTS the amount had been agreed between the parties. The matter on which his Honour relied, if it had been truly in issue, would have led, one would have expected, to an objection to the tender. His Honour continued: "For reasons which may be known to the defendant's insurer, but which do not appear in evidence, the whole of the plaintiff's treatment expenses - apart from the fees claimed by Dr Bannister - have been paid by that insurer. This even includes the Westside Private Hospital charge of $2,978. And this is in the face of a plea traversing that the plaintiff sustained any injury or disability in the accident." If his Honour had been under the impression that the agreement was limited to the mathematical calculation these remarks would have been beside the point. This is the more so when one notes his reference to para2 of the Defence. Before this Court the respondent submitted para2 of the Defence made it quite clear that the admission was restricted. I do not agree. Para2 was always part of the defence and, therefore, the agreement was subsequent to it. There is nothing unusual in putting a party to proof in a pleading and, subsequently, making an admission. Of more significance, to my mind, was the amendment by adding para4. This focussed attention on the way in which the out-of-pocket expenses were sought to be recouped and, hence, on them. His Honour's remarks make it apparent it was not clear to him the agreement was so limited. Indeed he was discussing what he saw as an inconsistency between para2 and the agreement, which is consistent with his understanding being that the agreement was unlimited or unqualified. His Honour referred to certain comments of Meagher JA in Nuthern v Gallo (23 March 1993 - unreported), which seem to have no relevance to the matter he was considering, and continued: "Tn this case I have to determine an issue of attributability WITH RESPECT TO THE ONLY SURGICAL INTERVENTION ON THE PLAINTIFF'S BODY WITHOUT ANY REPORT WHATSOEVER - and after the insurer, which is contesting any monetary liability in the matter, has paid the whole of the cost of hospitalization in respect thereof. This is not the occasion to make any findings about the soundness of the loss containment measures undertaken by the insurer in question. But the question cries out to be put. Indeed, it is such a bizarre situation that I am not disposed to infer that the payment was made in circumstances which inevitably lead to the drawing of an inference adverse to the defendant on a presently relevant issue about why the payment was made. (See Fabre v Arenalis and Anor 27 NSWLR 437 especially per Mahoney JA)." (My emphasis.) These remarks, at least in the first paragraph, are, in one sense, consistent with the view of the agreement put forward by the respondent, although they are inconsistent in that reference is only made to one doctor from whom there was no report. However the initial consistency is immediately contradicted by what appears in the second paragraph. I do not understand, and counsel were not able to assist, what his Honour's reference to "loss containment measures by the insurer" was intended to mean. But if the agreement was understood by his Honour in the way the respondent suggests, these remarks were inappropriate because he would determine what was payable, as he did. There would have been no occasion to have regard to such policy, let alone to suggest there was a question, which cried out to be put, or that there was a bizarre situation. URJ SARA v BALASUBRAMANIAN (Rolfe AJA) 13 Further, his Honour's statement that he was not disposed to infer that payment was made in circumstances, which might lead to an inference adverse to the respondent can only mean that his Honour did not have in mind that the agreement as to out-of-pocket expenses was qualified. Those remarks are totally at odds with such an understanding. The only relevance of Fabre v Arenalis and Anor could have been in relation to the drawing of inferences. If the matter was troubling his Honour the dictates of natural justice and procedural fairness demanded it be raised by him with the parties. This was not done. However the matter did not rest there. At AB189 his Honour refused to allow, in the out-of-pocket expenses and notwithstanding the agreement of the parties, the accounts for hospitalisation ordered by Dr Bannister, on the basis there was no evidence which he accepted linking "whatever need there may have been for such treatment with the motor vehicle accident on 21 March 1990". In my opinion in making that finding his Honour was proceeding on a basis, which, arguably, was at variance with the views he had expressed, in the sense that no such expression had indicated that he should make a decision, save, perhaps, for the first paragraph I have quoted. At AB190-192 his Honour engaged in a detailed examination of the agreed out-of-pocket expenses, and he excluded $285 paid to Dr Sherbon, $332 paid to Dr Boulas and $801 paid to Dr Teychenne. The aggregate of these expenses and the payment to Westside Hospital reduced the amount of agreed expenses from $8,531.60 to $4,396. The position at that stage was that either his Honour decided, of his own motion, to reject the agreement of the parties as to payments of those amounts and, therefore, at least inferentially, to disregard the evidence of Dr Boulas and Dr Teychenne from whom reports were tendered without objection, or there was a genuine mistake as to the nature of the agreement, which caused him to take that course. It was submitted by Mr Maconachie that the cross-examination of the appellant made it clear these items were in issue to the extent, at least, of proving their attributability to his accident. So far as Dr Sherbon was concerned the appellant was only asked who he was, and he was identified as a doctor the appellant saw in Westside Hospital. Dr Boulas is an urologist and the appellant was cross-examined to show he had problems calling for treatment by him prior to the accident. To that extent it may be said there was a challenge to the fees he charged. The appellant was asked by his Honour about being in Westside Private Hospital and about the treatment he received: AB68. His Honour asked whether he was "going to be treated to any evidence as to how the average of $425 a day got charged at Westside Private Hospital", but did not allow Mr Twomey to complete an answer, before saying: "You don't have to answer it now, you can just take that as a question on notice, and let me know in due course. I realise Mr Twomey that the plaintiff himself would not necessarily be responsible for the rate of charge at Westside Private Hospital." Once again his Honour was concerned about "rate of charge" not whether the charge became necessary by reference to the injuries sustained in the accident. If the figure was otherwise agreed, the fact that the respondent may have paid too much does not seem to me to be relevant to what his Honour had to decide. So much seems to have been acknowledged by his Honour in what he said. In the result the out-of-pocket expenses were reduced to $4,135.60 as to which his Honour said. AB 193: 14 UNREPORTED JUDGMENTS "In some ways the allowance of $4,135.60 might seem to be too high a figure for the treatment of the types of traumatic consequences reported on by Drs Giblin and AGL Smith. I feel that it is. But the way the evidence in this case has emerged does not permit of any more detailed dissection and evaluation of the claim. I have therefore erred in favour of the plaintiff, bearing in mind the resources available to the defendant if a lower verdict was anticipated." It may be thought unfortunate his Honour did not take into account the resources available to the defendant in determining whether the out-of-pocket figures should be agreed at all. However his Honour included the amount of $4,135.60 in a verdict of $15,835.60, the other component being $11,700 for past economic loss. After doing that he deducted $8,531.60, being the full amount paid by the respondent and produced a verdict of $7,304. The only claim by the respondent was to recover the amounts it had paid on behalf of the appellant. There was no claim against the appellant for any unjust enrichment or for a payment of money under mistake. In these circumstances his Honour, in my opinion, was in error in ordering the repayment of the amounts which he held were not paid in consequence of any injuries sustained in the accident. As I have said the pleadings do not, in my opinion, accommodate a claim for a complete re-imbursement. The errors in the way in which his Honour dealt with agreed out-of-pocket expenses, including the unpaid amount of $1,084, and his rejection of the evidence flowing therefrom, contravened the agreement the parties had reached, in my opinion, in relation to out-of-pocket expenses. This was done in circumstances where the appellant's counsel was not alerted to the course his Honour proposed to take, so that he could neither make submissions nor seek an adjournment so that further evidence could be called. The subversion of the parties' agreement, which I am satisfied from the record occurred, meant the appellant was prejudiced in the case he presented and was denied natural justice and procedural fairness. The conflicting instructions furnished to counsel, which I have recorded, and the way in which his Honour considered the matter indicate to me there was a misunderstanding between the parties and so far as his Honour was concerned. However the consequence of this misunderstanding is that the appellant has not had a proper trial and that is something to which he is entitled. In my opinion, the departure from the requirements of natural justice and procedural fairness cannot, in this case, be said to be minor or insignificant such as to occasion no apparent injustice. There was a failure to alert the appellant's legal representatives to the way in which his Honour proposed to consider out-of-pocket expenses, and they were allowed to proceed on the basis that the agreement was unlimited or unqualified. This deprived them of the opportunity to call evidence and to make submissions to support not only the propriety of the payments, but, more significantly, to show that the payments were made in respect of treatment necessitated by the injuries sustained in the accident. If such evidence had been called it may have cast a different complexion on the evidence for the appellant. It certainly could not be said that such evidence and the making of submissions based thereon would necessarily have led to the same unfavourable result for the appellant. Thus it cannot be said it is futile to order a new trial: Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145. URJ SARA v BALASUBRAMANIAN (Rolfe AJA) 15 This is not a case this Court can re-try on the record, because of the serious conflicts of evidence and the importance of credibility. Therefore the case is not one suitable for a re-assessment of damages and there must be a new trial. Because of the view to which I have come on this issue, I find it unnecessary to consider the other ground of appeal argued. ORDERS PROPOSED I propose that: 1. The judgment of Mahoney DCJ be set aside save as to the order for costs, which order is confirmed. 2. There be a new trial limited to damages. 3. The respondent pay the appellant's costs of this appeal. 1. Appeal allowed; 2. Judgment of Mahoney DCJ set aside, save as to the order for costs which order is confirmed; 3. Order that a new trial be had limited to damages; and 4. The respondent to pay the appellant's costs of the appeal. Representation: Counsel for the appellant: PJ Doherty Solicitors for the appellant: Somerville and Co Counsel for the respondent: Caruana Kay and Barry Solicitors for the respondent: Caruana Kay and Barry