ROSS BROWN SALES PTY. LIMITED v SJOERD FABER SUPREME COURT OF NEW SOUTH WALES — CouRT OF APPEAL SHELLER JA, GILES AJA and Simos AJA 25, 26 November, 6 December 1996 [1996] NSWCA 456 INDEMNITY COSTS — appeal against quantum abandoned prior to hearing of appeal but after grant of stay of proceedings — appellant ordered to pay costs of plaintiff on indemnity basis in particular circumstances of case. Sheller JA. [No 2] On 26 November 1996 the Court delivered judgment dismissing the appellant's appeal. The question of what order should be made about costs was left open but Mr Rayment QC, who appeared for the appellant, accepted that the dismissal of the appeal meant that his clients should pay the respondents" costs. Mr Glissan QC, who appeared for the first respondent, the plaintiff in the proceedings, applied for an order that the appellant pay the first respondent's costs on an indemnity basis: s 76 (1) (c) of the Supreme Court Act; Maitland Hospital v Fisher (1992) 27 NSWLR 721 at 724. The Court heard argument on this application. The nature of the proceedings is set out in the judgment of Simos AJA on the appeal and it is not necessary to repeat this history. Hunter J found that for some four years following his return to work after the accident of 12 June 1987, the plaintiff continued working as a welder, without loss of time, for his employer, Pro-Krane Pty Limited, the first defendant and second respondent. On 25 November 1991 he contracted a particularly serious illness described as life threatening and diagnosed as inflammatory spondylo-arthritis. There was evidence that he was fit to return to light duties by May 1992. Hunter J observed however that he should not be engaged in employment requiring heavy lifting, defined as anything in excess of fifteen kilograms. While that limitation would not affect his capacity to work as a welder where lifting assistance was available as at Pro-Krane, it clearly would have significant limitations in general industrial work. Hunter J said: This limitation is that designated by Dr Miller who was qualified by the plaintiff to give evidence on his behalf as to his general medical condition following his 1991 illness. This opinion was based upon Dr Miller's assessment of the plaintiff's residual disability from his back condition — unrelated to the sequelae of the accident. His Honour found as follows: J attribute the whole of the period of unemployment to date since his recovery from illness in 1992 to the effects of his accident in the employment of Pro-Krane. Quite clearly that position will not continue indefinitely in the changing economic conditions. He should expect to regain employment either in less demanding work in his chosen trade that does not involve precision welding or in the general labour market. In principle, I think the plaintiff would be reasonably compensated by allowing a total loss of wages since 1992 to the present and for another six months. Thereafter his economic loss should be calculated on the basis of partial incapacity represented by the difference between what he may reasonably have expected to earn as a welder with his backrestriction over and above that which he could expect to earn in restricted welding 2 UNREPORTED JUDGMENTS work that did not include precision welding, working at heights or in the vicinity of moving parts of machinery or carrying loads in excess of 15 kgs. Accordingly, his Honour awarded damages for past and future economic loss. Judgment was given on 3 June 1994. On 1 July 1994 the appellant filed a notice of appeal and, on 13 September 1994, an amended notice of appeal which contained nine grounds only one of which, ground 9, challenged the judgment in favour of the plaintiff. That ground was: 9. That his Honour erred in his assessment of the Plaintiff's economic loss from November 1992 to 3 June 1994 and future economic loss by not taking into account the illness or the extent of the illness suffered by the Plaintiff in November 1992. This ground of appeal founded the grant of a stay of execution on condition that the plaintiff was paid one-half of the verdict. The process of the appeal appears thereafter to have been normal and it was set down for hearing on 25 November 1996 for two days. On 19 November 1996 the appellant filed an outline of argument which began in para 1: 'The appellant's first submission requires an amendment to the notice of appeal.' and finished in para 6: 'The appellant does not press the appeal from the determination of his Honour as to the quantum of the plaintiff's verdict.' This was the first indication the plaintiff had that ground 9 was not to be pressed. With the leave of the Court on the first day of the hearing of the appeal the appellant filed a further amended notice of appeal which omitted the old ground 9 and contained a new ground 1. The plaintiff submitted that it was only because of the challenge to the judgment in his favour contained in ground 9 that the Court stayed execution on the judgment on terms thereby keeping the plaintiff out of part of the damages awarded for over two years. It is said that ground 9 was not a ground of appeal with any prospect of success. In Huntsman Chemical Company Australia Limited v International Pools Australia Limited (1995) 36 NSWLR 242, this Court considered an application by a respondent for indemnity costs against appellants which had abandoned their appeals on the morning of the hearing. The Court divided as to whether indemnity costs should be awarded. The majority favoured refusal of the application. Their judgments referred to a number of matters to be considered in determining whether indemnity costs should be awarded against an appellant which abandons an appeal at or shortly before the hearing. They are: 1. The Court should not by its costs orders discourage the proper but late abandonment of unwinnable appeals or points; 247G. 2. The Court should take note of the reality that party and party costs cover only a proportion of the actual costs charged to clients in proceedings; 248B. This discrepancy has been reduced by the insertion of ss 208Fand 208G in the Legal Profession Act 1987; see Legal Profession Reform Act 1993 which relevantly commenced on | July 1994. 3. In some cases, the ordinary rule of party and party costs may be regarded as imposing a degree of restraint in the accumulation of costs of litigation; 248G. URJ ROSS BROWN SALES PTY. LIMITED v SJOERD FABER (Sheller JA) 3 . The respondent's failure at an early stage to bring to the attention of the appellant its contention that a ground or grounds of appeal have no merit with a warning that if the appeal or ground of appeal is persisted with and is unsuccessful an order for indemnity costs will be sought; 249G. . Ordinarily the abandonment of a hopeless appeal only shortly before the hearing, with the consequence that the respondent has been obliged to incur costs up to the day of the hearing or shortly before, is a factor which will weigh heavily in support of the award of indemnity costs; 251G. Rolfe AJA, who dissented on the point, in a careful judgment adverted to the particular significance that must be attached, when evaluating the prospects of an appeal, to the difficulty in setting aside the trial Judge's findings of fact; Abalos v Australian Postal Commission (1990) 171 CLR 161 and Devries v Australian National Railways Commission (1993) 177 CLR 472. After reviewing a number of the cases, his Honour said at 273, that the authorities support the proposition that a party's persistence in a hopeless case justifies the making of an order for costs on an indemnity basis; 273D. Mr Rayment submitted that the appeal against the judgment in favour of the plaintiff did not amount to an abuse of process and accordingly an order for indemnity costs was not warranted. During the hearing there was argument about the extent to which the intervening illness of 1991-1992 affected the plaintiff's subsequent earning capacity. Ground 9 alleged error by the trial Judge because, it was said, in assessing the plaintiff's economic loss, past and future, he did not take 'into account the illness or the extent of the illness suffered by the plaintiff in November 1992'. It is accepted that 1992' is a mistake. The year was 1991. A reading of the judgment and particularly the passage which I have quoted shows that this ground of appeal had no substance whatever. The way the ground was expressed may be the product of incompetent and unthinking drafting. Nevertheless I see no reason why, in the circumstances of this case, we should accept the appellant's request to treat ground 9 as indicating a general challenge to his Honour's findings of fact about the effect on the plaintiff's economic earning capacity of the 1991-1992 illness. In any event the application of the principle stated in Abalos, and Devries makes this unstated ground of appeal hopeless. In the appeal the real contest presented to this Court was between the appellant, which had supplied the defective gauge, and the third respondent, who had installed it, and concerned the extent of the contribution each should make to the damages awarded to the plaintiff for his injuries. Clearly this contest couldand should have been prosecuted without the need for any delay in payment to the plaintiff of the damages to which he was adjudged entitled. There was no sustainable ground of appeal against the judgment in favour of the plaintiff. I acknowledge the force of Mr Rayment's argument that the more liberal approach prescribed since 1994 for assessing what costs will be allowed on a party and party basis is a circumstance to be considered when the Court exercises its discretion in deciding whether indemnity costs should be ordered. However, despite this change, unless indemnity costs are awarded, the injured plaintiff will have to pay part JOBNAME: No Job Name PAGE: 4 SESS: 1 OUTPUT: Mon Feb 25 18:21:04 2008 /reports/caseml]/case/urj/96079 19 UNREPORTED JUDGMENTS or a greater part of his own costs of the appeal, which should not have been brought, out of the damages intended to compensate him for his injury. The appellant persisted in its appeal, thereby holding the injured plaintiff out of recovery of the damages the Court had awarded to him. In my opinion, the case is one which falls well within that class of case where indemnity costs may be ordered against the unsuccessful appellant. Ultimately the matter is always one for the exercise of the Court's discretion in the particular circumstances of each individual case. The abandonment of hopeless appeals should not be discouraged. Nevertheless, bearing in mind the particular situation of the injured plaintiff, who has been held out of one-half of the damages to which he was entitled for over two years by reason of a stay granted on the basis of the now abandoned ground of appeal, and that the appeal should never have been brought or, alternatively, should have beenabandoned at an early stage, in my opinion, the plaintiffs application for indemnity costs against the appellant succeeds. In my opinion the appellant should be ordered to pay the first respondent's costs of the appeal on an indemnity basis. Giles AJA. I agree with Sheller JA. Simos AJA. I agree with Sheller JA. The appellant to pay the first respondent's costs of the appeal on an indemnity 25 basis. Counsel for the appellant: BW Rayment: QC: with TJ Morahan Solicitors for the appellant: AR Conolly and Co 30 Counsel for the first respondent: JL Glissan: QC: with AR Reoch Solicitors for the first respondent: Lacey and Company Counsel for the second respondent: JD Hislop: QC: with WPY Austron 35 Solicitors for the second respondent: Blake Dawson Waldron Counsel for the third respondent: DF Rofe: QC: with ACA Bridge Solicitors for the third respondent: Shaw McDonald