New South Wales Supreme Court CITATION : Singline v Commonwealth of Australia (No 2) [2008] NSWSC 21 HEARING DATE(S) : 27 August 2007, 17 October 2007, 8 November 2007, 13 December 2007, 20 December 2007 JUDGMENT DATE : 30 January 2008 JURISDICTION : Common Law JUDGMENT OF : Rothman J 1. Orders (3) and (4) of the judgment issued in this matter on 27 August 2007 be set aside and in lieu thereof the following orders be made: "(3) The defendant shall pay damages to the plaintiff in the sum of $714,211, including interest; (4) The defendant shall pay the costs of the plaintiff of and incidental to these proceedings on the following bases: DECISION : (a) Up to and including 2 March 2006 on a party/party basis, as agreed or assessed; (b) On and from 3 March 2006 on an indemnity basis; (c) Such costs to include the cost of attendance by medical practitioners qualified by the plaintiff at examinations required by the defendant in circumstances where said medical practitioner was required to travel from Melbourne to Launceston for the purpose of such attendance." 2. The parties continue to have liberty to apply on the basis of any perceived miscalculation subsequent to the judgment of 27 August 2007 or otherwise in relation to any collateral issue. CATCHWORDS : DAMAGES – reduction for uncertainty – Malec v Hutton – damages in the past for probable course – mistake in the calculation of interest - COSTS – indemnity costs awarded – Offer of Compromise – costs of medical expert qualified by plaintiff attending interstate an examination by the defendant's experts. Limitation Act 1969 (NSW) LEGISLATION CITED : Supreme Court Act 1970 (NSW) Uniform Civil Procedure Rules 2005 (NSW) CATEGORY : Consequential orders Hillier v Sheather (1995) 36 NSWLR 414 Malec v Hutton [1990] HCA 20; (1990) 169 CLR 638 CASES CITED : Morgan v Johnson [1998] NSWSC 367 (CA); (1998) 44 NSWLR 578 QANTAS v Lisica [2007] NSWCA 371 State of NSW v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536 PARTIES : Geoffrey Noel James Singline (Plaintiff) Commonwealth of Australia (Defendant) FILE NUMBER(S) : SC 20783/2001 COUNSEL : G Melick SC / A Gemmell (Plaintiff) R Williams QC / D Brogan (Defendant) SOLICITORS : Hollows Lawyers (Plaintiff) Australian Government Solicitor (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ROTHMAN J DRAFT 30 JANUARY 2008 20783/01 Geoffrey Noel James SINGLINE v Commonwealth of Australia (No 2) JUDGMENT 1 ROTHMAN J: Following the judgment of 27 August 2007, the parties have raised a number of issues relating to the calculation of damage, including the calculation of interest and orders relating to costs. 2 The Commonwealth either has appealed or intends to appeal and a stay has been issued at the request of the Commonwealth on so much of the judgment that requires the payment by the Commonwealth of more than $550,000 in damages. 3 In the judgment of 27 August 2007, liberty to apply was granted to each of the parties because, while the parties gave much attention to the issues of liability (and the extension of time), no significant attention was given to an analysis of the evidence on the calculation of damage. That this was so was most starkly displayed when, during the course of these subsequent hearings, it became clear that, at least on the question of interest, the plaintiff did not have a clear view on the principal or interest disclosed in his expert's report upon which the calculation was based. An adjournment was granted to allow clarification. That clarification was given to the Court on 20 December 2007. 4 The issues raised require the Court to recalculate the damage. There are a number of reasons for this, but one, at least, was that the parties (or one of them), and the Court, misunderstood the expert report (through no fault of the author of the report). There was also an unintended slip in omitting reference to the principles in Malec v Hutton [1990] HCA 20; (1990) 169 CLR 638. 5 Further, there are some consequential issues, namely, the cost of expert witnesses in travelling to examinations of the plaintiff on behalf of the defendant and a claim for indemnity costs. Calculation of Interest and Loss from Expert Report 6 The Report of Cumpston Sarjeant of 4 December 2006 utilises a set of figures described as "Before Tax Income in Period" for a period during which Mr Singline was not in the Navy but for which naval income was claimed. This is adjacent, in the Report, to a set of figures that was explained as the naval "Income per annum for the Period" in question. The resulting figures in two separate columns, it was initially submitted (and accepted), were the difference in income and the interest on the difference. This was not the intent of the author of the document. Rather the two columns of figures simply reflected annual income and the income for the relevant lesser period respectively. No allowance was made in those figures for the income earned outside the Navy for the relevant period. 7 Once such allowance is made, no actual loss of income occurred for the period from 1968 to 1978 (or on the submission of the Commonwealth a loss of $568 over that period). As I have made no allowance for any loss of income thereafter, the compensable losses are confined to the pension and lump sum entitlements, the net value of which is $410,176 (being $471,579 less $61,403) together with interest thereon of $278,640 ($210,481 plus $68,159). 8 These figures are derived from the Report of 4 December 2006 to which reference has been made. They are derived from page 20 of the Report by deducting from the net superannuation value, the amount of Lump Sum - Civilian (both past and future) of $61,403. Since the Civilian figure does not include any superannuation for the period until 1978 (and there was no superannuation benefits earned), no allowance or deduction for the period until 1978 is necessary. Evaluation of Uncertainty 9 An analysis of the calculation of the earnings (and interest) once dissected immediately clarified that no allowance was made for the possibility that Mr Singline would not have stayed in the Navy for a total of 20 years and/or would not have attained the rank of Chief Petty Officer: see Malec, supra; QANTAS v Lisica [2007] NSWCA 371. 10 The probability, which I have assessed as high, is that Mr Singline would, but for the injuries sustained as a result of the Voyager accident, have stayed in the Navy to achieve his pension. All of the losses for which damages have been awarded have occurred in the past. Nevertheless, there are uncertainties involved. The evidence does not admit of any possibility of a pre-existing injury. 11 There are, however, other uncertainties. It is possible that the "Navy culture" (a notion utilised by Dr Ratcliff) may have, without liability, induced drug and/or alcohol abuse and/or dependence. It is possible that a trauma, other than one arising from the fault of the defendant, may have caused Mr Singline the same or similar damage and that, as a consequence, the pressure on him to leave the Navy would have otherwise prevailed. None of those were particularly likely eventualities in the period between 1968 and 1978. 12 It is also possible that Mr Singline's family would have insisted on him leaving the Navy even without injury. Again that is not likely. 13 The above eventualities are unlikely for the following reasons: (a) The defendant now knows what other traumas, if any, could have occurred because of service in the Navy between 1968 and 1978 and no material has been adduced relevant to that issue; (b) In the period between 1968 and 1978 no other traumatic events occurred outside the Navy; (c) The plaintiff married while in the Navy, his wife understood the life, and the plaintiff had significant periods of time not at sea that, if he would not have been suffering injury, would have been quality time with his family; (d) Before the Voyager incident, the character of Mr Singline and his resistance, even as a relatively young man, to the "Navy culture" of drink makes very confident any prediction that the culture of the Navy would not have caused damage, and would not have occasioned change, or dramatic change, in conduct; and (e) Lastly, if not otherwise obvious from (a) and (b) above, the period of uncertainty was a finite, relatively short, period that had concluded over 25 years earlier than when the claim came before the Court. 14 Further, the uncertainties do not all run in favour of decreasing the award. There was, on the evidence, a real possibility that Mr Singline could have attained a rank above Chief Petty Officer. It was a period during which there were shortages of officers in the Navy. His record prior to the incident was very good and, despite his injury, he was able to pass exams for advancement. Mr Sommer, to whom reference was made in the earlier judgment, obtained the rank of Warrant Officer. While I do not consider such an eventuality more probable than not, it is a possibility that, if I were to assess it, must be given no less than a 30% possibility. Such a possibility would have occasioned significant losses in income before 1978 and possibly afterward. I do not, however, take that possibility into account in determining the degree of certainty I have in any outcome. 15 The plaintiff has submitted, in passing, the failure of the Court to take account of the loss of earning capacity in the period after 1978. While I accept that the absence of precise evidence on future (or possible) earnings does not preclude an assessment of damage (State of NSW v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536), the difficulty related to whether the injury, in the context of the employment market in Launceston, occasioned a diminished earning capacity. Whatever the basis, and whether it be right or wrong, it is not a matter that I am entitled to correct at this stage. It was a deliberate choice, not a slip. 16 I return then to the assessment of the uncertainties described in [9] to [13], above, inclusive. As already stated, I consider these uncertainties not to be of great significance: see [13] above. Nevertheless, I assess the chance of Mr Singline remaining in the Navy for the 20 years to 1978 (this being the only significant fact relevant to the damage affected by uncertainty) as being no less than two-thirds, and I fix that as the adjustment to the relevant damage of $688,816 (i.e. $410,176 plus $278,640 at [7] above). The adjusted value of the lump sum and pensions schemes (including interest) would then be $459,211 (i.e. two-thirds of $688,816). I will adjust the verdict accordingly. Indemnity Costs 17 On 3 February 2006, the plaintiff served a Notice of Offer of Compromise on the defendant to settle litigation for $100,000 plus costs, as agreed or assessed. The offer expired on 3 March 2006. 18 The offer was (and even after this adjustment will be) lower than the amount awarded. The offer was to settle the proceedings for $100,000, and clearly took account of the difficulties in the plaintiff's action, not the least of which was that the extension of time had not been granted. Further, a quick settlement was beneficial to the plaintiff, given his health issues. The defendant did not accept the offer. Nor did it offer a different amount. 19 The prima facie position in those circumstances is that the costs are to be assessed on an indemnity basis from 4 February 2006: Uniform Civil Procedure Rules 2005 (NSW), rule 42.14(2)(b). Departure from this regime is exceptional: Hillier v Sheather (1995) 36 NSWLR 414; Morgan v Johnson [1998] NSWSC 367 (CA); (1998) 44 NSWLR 578. 20 Even if I were to disregard the rule and rely on first principles, indemnity costs would be warranted. At the time that the offer was made, the medical reports of Dr Ratcliff had been served (25 June 2004), being the reports upon which the Court relied in assessing liability. So too had the notes of the psychologist, Ruth Crewes, and employment and tax records. The Commonwealth filed and served its evidence on the extension of time in November 2005, well prior to the date of the offer. 21 The offer of compromise was less than the probable costs of the hearing on liability, quantum and the extension of time. It was two-thirds of the general damages awarded (with no account for interest). The Commonwealth must have been aware that, if the extension of time were granted, the value of the pension would be a matter seriously considered. 22 Notwithstanding that the necessity of the plaintiff to obtain an extension of time was a complicating factor, there is no good reason why an offer of this kind was not accepted and there is no good reason why the prima facie position ought not to apply. I award indemnity costs from a time when it was reasonable to have accepted the offer, which is no later than the day before its expiry, namely 3 March 2006. 23 Further, I accept that the costs of the attendance of medical experts, qualified by the plaintiff, at examinations of the plaintiff by the defendant's experts, was a reasonable cost and ought to be recovered. I do so because it was reasonable, in the context of this litigation, the condition of the plaintiff, and his residence in Launceston, to have qualified Melbourne medical practitioners in the various fields and it was appropriate for the qualified experts to attend the examinations. The attendance by these interstate medical practitioners was reasonable and the alternative of qualifying local doctors for such attendance was not, in these circumstances, a reasonable alternative. Conclusion 24 As a consequence of the foregoing, the judgment issued on 27 August 2007 must be amended and/or varied. 25 I make the following orders: 1. Orders (3) and (4) of the judgment issued in this matter on 27 August 2007 be set aside and in lieu thereof the following orders be made: "(3) The defendant shall pay damages to the plaintiff in the sum of $714,211, including interest; (4) The defendant shall pay the costs of the plaintiff of and incidental to these proceedings on the following bases: (a) Up to and including 2 March 2006 on a party/party basis, as agreed or assessed; (b) On and from 3 March 2006 on an indemnity basis; (c) Such costs to include the cost of attendance by medical practitioners qualified by the plaintiff at examinations required by the defendant in circumstances where said medical practitioner was required to travel from Melbourne to Launceston for the purpose of such attendance." 2. The parties continue to have liberty to apply on the basis of any perceived miscalculation subsequent to the judgment of 27 August 2007 or otherwise in relation to any collateral issue. ********** 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.