New South Wales Court of Appeal CITATION: Chapman v Caska [2005] NSWCA 113 HEARING DATE(S): 6 April 2005 JUDGMENT DATE: 12 April 2005 JUDGMENT OF: Beazley JA; Giles JA; Tobias JA DECISION: (1) Appeal allowed in part; (2) Confirm the verdict in favour of the respondent; (3) Set aside the orders of the trial judge made on 16 March 2004; (4) The appellant to pay the respondent's costs of trial assessed on a party/party basis; (5) The respondent to pay the appellant's costs of the costs application determined on 16 March 2004; (6) The appellant to pay 90% of the respondent's costs of the appeal. CATCHWORDS: NEGLIGENCE - prescription of drugs by medical practitioner - development of rare condition (avascular necrosis) - duty of care - causation. COSTS - pre-trial offer of compromise - Calderbank letter - whether trial judge erred in ordering indemnity costs - reasonableness of rejecting the offer of compromise. ND Chappel v Hart (1998) 195 CLR 232; Hobartville Stud v Union Insurance Co (1991) 25 NSWLR 358; House v The King (1936) 55 CLR 499; CASES CITED: Jones v Bradley (No 2) [2003] NSWCA 258; Leichhardt Municipal Council v Green [2004] NSWCA 341; Seltsam Pty Ltd v McGuinness (2002) 49 NSWLR 262; SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323; Norelle Chapman - Appellant PARTIES: John Caska - Defendant FILE NUMBER(S): CA 41154/03 D Higgs SC & J Clarke - Appellant COUNSEL: MJ M Sandford - Respondent Charlton Sherman Read - Appellant SOLICITORS: Tresscox Lawyers - Respondent LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC 2051/01 LOWER COURT JUDICIAL OFFICER: Ainslie-Wallace DCJ OF NEW SOUTH WALES COURT OF APPEAL CA 41154/03 DC 2051/01 BEAZLEY JA GILES JA TOBIAS JA Tuesday 12 April 2005 CHAPMAN v CASKA JUDGMENT 1 THE COURT: As this appeal raises only limited matters for consideration and as the trial judge considered the medical evidence in detail, it is not necessary to revisit that evidence except to the extent relevant to the issues on the appeal. 2 The appellant brought proceedings against the respondent, a medical practitioner, claiming damages arising from the respondent's negligence in prescribing a course of steroids in circumstances where her medical condition did not warrant such treatment. The appellant claimed that as a result of taking the course of steroids she developed avascular necrosis of the femoral head and, secondary to that, osteoarthritis in her hip joint. The trial judge held that the respondent had breached his duty of care. Her Honour held, however, that the appellant had not established that her hip conditions were caused by taking the course of steroids. 3 The appellant accepted, for the purposes of the appeal, that she had not established that her osteoarthritis was caused by taking the steroids. She contended, however, that the trial judge had failed to consider her claim that she developed avascular necrosis from taking the steroids. It was submitted that this was apparent from her Honour's statement at [114] to which we will refer shortly. It was also submitted that her Honour erred in finding at [113] that there "was not even a possibility" of a causal connection between her steroid ingestion and avascular necrosis. 4 Her Honour 's findings in these paragraphs were: "113. A connection between the dose of steroid administered to the plaintiff and avascular necrosis is not even a possibility on the medical evidence, at best it is speculation or an articulation of concern. That is not enough to entitle a court to take it into account when determining causation even if there was a temporal connection between the dose of steroids, the development of avascular necrosis and the resulting osteoarthritis for which the plaintiff contended. In the result, I have found that there is no such temporal connection. 114. It was never the case for the plaintiff that the avascular necrosis and osteoarthritis developed independently of each other, rather it was the plaintiff's case that the osteoarthritis was secondary to the avascular necrosis. That has not been made out on the evidence." 5 The appellant contended that her Honour's statement at [114] was contrary to her submission at trial that even if she was unsuccessful in establishing secondary osteoarthritis, she at all times maintained her claim in relation to avascular necrosis. 6 A possible reading of [114] is that her Honour did consider that the appellant had not advanced a claim based solely on avascular necrosis. If that is correct, the appellant's complaint is understandable. However, for the reasons explained below we do not think that is a proper reading of the paragraph. 7 The appellant's case attributed both the collapse of the femoral head from avascular necrosis and the osteoarthritis to the ingestion of the steroids, the latter secondary to the former. There were obvious reasons for her doing so. In saying, as was correct, that it was not the appellant's case that the osteoarthritis developed independently of the avascular necrosis, her Honour was not denying a case of collapse of the femoral head from avascular necrosis. That reading is supported by her Honour's explanation that the appellant's case had been that the osteoarthritis was secondary to the avascular necrosis and she had not made out that case. 8 This understanding of [114] is also supported by the fact that at [48]-[68] her Honour expressly dealt with the question of the "association of avascular necrosis with steroid use". In doing so, she identified the known risks and the integers of that risk, namely, dose, size and period of ingestion. Her Honour then examined the evidence that related to that issue. She dealt separately at [77]-[109] with the appellant's claim that she had suffered osteoarthritis secondary to avascular necrosis. 9 On a consideration of the whole of the judgment, the Court considers that her Honour dealt with that aspect of the appellant's case. 10 That does not, however, resolve the appeal. The appellant also contended that her Honour erred in finding that on the medical evidence "there was not even a possibility of a causal connection". Her Honour's statement in this regard is quite specific, and an appellate court should be slow to find a trial judge did not mean what was expressly stated. It may be, however, that implicit in her Honour's statement is a finding that the evidence never rose higher than that there was a "mere possibility". If that is correct, there was no error in finding that causation had not been established: see Seltsam Pty. Limited v. McGuiness (2002) 49 NSWLR 262. 11 The appellant contended that her Honour meant what she said and her finding was contrary to the evidence. She relied, in particular, upon the evidence of Drs. Reiter and Solomon and Professors Mashford and Dawson, all of whom advanced a case that even though it is rare for avascular necrosis to develop to the extent it had in the appellant within 9 months of the ingestion of steroids, it was possible. For example, Professor Mashford said (T.278) "… in the absence of other known associations, then the coincidence of a course of steroids, and avascular necrosis occurring at a plausible interval afterwards, that is, a plausible temporal relationship, … makes it likely that it was that the steroids were responsible". 12 Given evidence stated in such terms, (and considered for the purpose of this argument without further analysis by reference to the cross-examination and other evidence), it would have been open to her Honour to find that the ingestion of the steroids in the quantity and over the period prescribed increased the risk of injury. If that was the state of the evidence, her Honour would then have been entitled, but not required, to find that the respondent's conduct in prescribing the steroids materially contributed to her injury: see Chappel v. Hart (1998) 195 CLR 232 per Guadron J at [31] and Callinan J at [129]; Seltsam at [108]-[109]. However, when the whole of the evidence is considered, there are difficulties in the appellant succeeding in this case. 13 When the evidence of the appellant's doctors is analysed it is apparent that the possibility of which they spoke was not directly supported by the scientific literature upon which reliance was placed, or there were no cases of which they were aware which supported their view. The possibility required extrapolation from the effect of higher doses of steroids over longer periods, and sometimes discounting of other known causes, to the point where possibility on the facts of the present case was more than rare: it was in the category referred to by one witness as "Nothing in medicine is impossible". Further, Dr. Sturgess' evidence was particularly compelling. He said that steroids, in the dose and over the period prescribed for the appellant, had been administered to patients for over 50 years and there had been no reported case of avascular necrosis. 14 In our opinion, when regard is had to the other evidence, it is evident that her Honour meant that the possibility was no more than a mere possibility. 15 Even if this be incorrect, it was for the appellant to establish that the possibility eventuated in her case – that there was causation in fact: Seltsam at [105]-[120]. The judge was not satisfied as to this. There were good reasons for her Honour not being satisfied. 16 First, the appellant's evidence was that avascular necrosis occurring after the doses and in the time frame prescribed was rare. It was acknowledged that her case did not rise higher. The evidence was plain that, while some causes of avascular necrosis were known, for example, alcoholism, in a significant proportion of cases (the evidence ranged from 20% to 30%-40%) avascular necrosis was of unknown cause. If other known causes be excluded because, for example, the plaintiff was not an alcoholic and had not suffered trauma, there remained the alternatives of a 20% (or 30%-40%) possibility of avascular necrosis from an unknown cause and a rare possibility of avascular necrosis from the ingestion of steroids. If there was no more, in a finding on the balance of probabilities the judge was entitled to find that the former was to be preferred. 17 Secondly, the evidence of Drs Sturgess and Ellis was that the condition of the plaintiff's hip in March 2000 was so bad that it could not have been, or at the least was very, very unlikely to have been, the result of a process of avascular necrosis initiated by the ingestion of steroids in June 1999. The process required a longer time to reach the advanced avascular necrosis evident in March 2000. This took the plaintiff out of the postulated rare possibility and put her in the 20% (or 30%-40%) possibility, or at best left her in a "very, very rare" category. It was submitted that these doctors were speaking of the condition of the hip together with osteoarthritis not secondary to avascular necrosis, but their opinions were clearly directed to the process of avascular necrosis, quite separately from their opinions in respect of the development of osteoarthritis. Her Honour accepted their opinions, as she was entitled to do. 18 Apart from any other matters, these problems resulted in the plaintiff's failure at trial, and result inevitably in her failing in the appeal in respect of liability. It is not necessary therefore for the Court to consider the appeal in relation to damages. 19 After we reserved our decision the appellant sent to us supplementary submissions in writing. She had no leave to do so, and did not ask for leave when sending them. This should not have occurred. It is necessary to repeat the observations of Mason J in Carr v Finance Corporation of Australia Ltd (No 1) (1981) 147 CLR 246 at 258 - "The impression, unfortunately abroad, that parties may file supplementary written material after the conclusion of oral argument, without leave having been given beforehand, is quite misconceived. We have to say once again, firmly and clearly, that the hearing is the time and place to present argument, whether it be wholly oral or oral argument supplemented by written submissions." 20 We have nonetheless considered the supplementary submissions. We do not think they materially add to the prior written and oral submissions. We did not require the respondent to reply to them. 21 The appellant also appeals against the order in favour of the respondent for indemnity costs of the trial from 3 June 2003. 22 The trial was conducted before her Honour from 11-21 August and further on 20-21 October 2003. Following the trial, the respondent made an application for indemnity costs on the basis that two pre-trial offers to conclude the litigation had been made to the appellant, by way of Calderbank letters. The first offer was made on 24 July 2002. It was repeated on 3 June 2003. The terms of the offer were that the respondent would accept the entry of a verdict for the respondent with each party to pay its own costs. The appellant did not accept the offer on either occasion. 23 The trial judge refused the application insofar as it related to indemnity costs from 24 July 2002, when the offer was first made, on the basis that the medical reports then available supported the contention that the appellant's condition was primary avascular necrosis, a diagnosis that had originally been disputed by the respondent. 24 Her Honour however ordered indemnity costs from 3 June 2003, when the respondent's offer was renewed. In doing so she observed that although Dr. Reiter, a specialist rheumatologist had advanced the proposition that the steroid dose taken by the appellant could have caused her avascular necrosis, in June 2003 Dr. Sturgess' report had been served on the appellant by the respondent. In that report Dr. Sturgess stated that it was rare that avascular necrosis was caused by steroid use and that the degree of degeneration (both necrotic and osteoarthritic) could not have occurred in the time frame in question. 25 Her Honour concluded: "11. There was never any evidence before the court that supported the proposed association between low dose steroids over a short period of time and the development of avascular necrosis. In her evidence at the commencement of the trial Dr. Reiter sought comfort from a study which, she argued, while there was no data in it comparable to the plaintiff's circumstances, would allow a conclusion to be drawn about dosage and the incidence of avascular necrosis. 12. The case for the plaintiff on the association between steroids and avascular necrosis was never higher than that there was a ' suspicion ' although not reported in the literature, that low dose, short duration steroids may be implicated in avascular necrosis. 13. Even taking the plaintiff's evidence at its highest, I am of the view that at 3rd June 2003 when the offer for a verdict for the defendant with no order as to costs was made again, the plaintiff put herself at peril in not accepting it given the conclusions in Dr. Sturgess' report and the lack of supporting evidence in her case." 26 The appellant appeals against the order for indemnity costs that her Honour subsequently made. As her Honour was dealing with a Calderbank offer, the order was made in the exercise of her discretion: see SMEC Testing Services Pty. Limited v. Campbelltown City Council [2000] NSWCA 323, Jones v. Bradley (No. 2) [2003] NSWCA 258. Appellate intervention is only enlivened if error is shown in accordance with the principles stated in House v. The King (1936) 55 CLR 499. 27 It was not argued in this case that the respondent's offer did not involve a genuine compromise: see Hobartville Stud v. Union Insurance Co. (1991) 25 NSWLR 358; Leichhardt Municipal Council v. Green [2004] NSWCA 341. Rather, it was said that her Honour exercised her discretion on the basis of a factual error. It was submitted that, contrary to her Honour's approach in [13], the appellant did have evidence to support her case at the time the offer was renewed on 3 June 2003. 28 It is important not to be blinded by hindsight when considering questions such as are involved here, namely, whether costs should be made on an indemnity basis following upon a failure to accept a Calderbank offer. Although by 3 June 2003 the respondent had served medical evidence on the appellant that was ultimately accepted by the trial judge, the appellant at that time also had medical evidence from eminent and respected senior practitioners that tended to support her claim. 29 Whilst the respondent's medical evidence met the appellant's evidence "head on", it could not be said that, as at 3 June 2003, it completely dispelled the appellant's case. None of the evidence had been tested by cross-examination at that stage. The fact that ultimately the appellant's case was rejected by the trial judge does not mean that, as at June 2003, her case was such that she should have effectively abandoned her claim, save as to the respondent's costs, which he offered to bear himself. It was not unreasonable, therefore, for the appellant to reject the offer of compromise contained in the Calderbank letter received on 3 June 2003. 30 In the circumstances, we are of the opinion that her Honour erred in her approach in [13]. Given that in our opinion it was not unreasonable to reject the offer of compromise, we are of the opinion that that ground of the appeal should be allowed. 31 The appellant's success on this issue should be reflected in the costs of the appeal, and we propose to allow an adjustment of 10% in the final costs order. 32 The orders of the Court are: 1. Appeal allowed in part. 2. Confirm the verdict in favour of the respondent. 3. Set aside the orders of the trial judge made on 16 March 2004. 4. The appellant to pay the respondent's costs of trial assessed on a party/party basis. 5. The respondent to pay the appellant's costs of the costs application determined on 16 March 2004. 6. The appellant to pay 90% of the respondent's costs of the appeal. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.