New South Wales Supreme Court CITATION : Blaxter v The Commonwealth [2007] NSWSC 88 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 06/09/06 JUDGMENT DATE : 16 February 2007 JURISDICTION : Common Law Division JUDGMENT OF : Hidden J at 1 DECISION : Orders as to interest and costs. CATCHWORDS : DAMAGES: - rate of interest on past general damages - interest on costs - costs of earlier application for extension of time - costs in proceedings generally Supreme Court Act 1970 NSW LEGISLATION CITED : Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005 Blaxter v The Commonwealth [2005] NSWSC 941 Blaxter v The Commonwealth [2006] NSWSC 744 Simonious Vischer & Co v Holt & Thompson [1979] 2NSWLR 322 MBP (S.A.) Pty Limited v Gogic (1990 - 1991) 171 CLR 657 Luntz, Assessment of Damages for Personal Injury & Death (4th ed.) CASES CITED : Holt v Wynter (2000) 49 NSWLR 128 Commonwealth of Australia v Smith [2005] NSWCA 478 Commonwealth of Australia v Stankowkski [2005] NSWCA 106 R A Smith v Commonwealth of Australia [2006] NSWSC 796 Spaulding v Commonwealth of Australia (No 2) [2006] NSWSC 81 Brittain v Commonwealth of Australia (No 2) [2006] NSWSC 528 Rosniak v Government Insurance Office (1997) 41 NSWLR 608 PARTIES : Lawerence Gary Blaxter (plaintiff) The Commonwealth of Australia (defendant) FILE NUMBER(S) : SC 20777/1997 COUNSEL : A G Melick SC (plaintiff) R E Williams QC with I McLachlan (defendant) SOLICITORS : James Taylor & Co (plaintiff) Australian Government Solicitor (defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION HIDDEN J Friday 16 February 2007 20777/1997 Lawerence Gary Blaxter v The Commonwealth of Australia FURTHER SUPPLEMENTARY JUDGMENT 1 HIDDEN J: After delivering my supplementary judgment in this matter: [2006] NSWSC 744, I heard submissions about some outstanding questions relating to interest and costs. Interest on General Damages 2 In my original judgment I awarded the plaintiff interest at 2% on 70% of the general damages: [2005] NSWSC 941 at par [54]. Nevertheless, Mr Melick SC, for the plaintiff, made a submission about the assessment of interest which, I must confess, I had initially misconceived. He accepted that the commencement date for the calculation of interest must be 1 July 1972, the date on which the Supreme Court Act 1970 came into effect, including the provision for the award of interest in s94 of that Act: Simonious Vischer & Co v Holt & Thompson [1979] 2NSWLR 322, per Moffitt P at 330-7. However, he argued that, in respect of so much of the damages as is referable to the period from the date of the collision to 1 July 1972, interest should be assessed at the rate of 4% sanctioned in MBP (S.A.) Pty Limited v Gogic (1990 - 1991) 171 CLR 657. 3 To determine the amount of damages referable to that period, he relied upon a further report of the consulting actuaries, Cumpston Sarjeant Pty Ltd, which I admitted as exhibit J. It was agreed that I should determine the question of principle involved and, if that were resolved in the plaintiff's favour, the parties would consider the appropriate amount. 4 It has been the practice to award interest on general damages at the rate of 2%, rather than 4 %, where the non-economic loss has accrued evenly between the date of the injury and the date of judgment. However, a rate of 4% might be applied, for at least some of that period, when the bulk of the loss was sustained in the earlier part of the period: see Luntz, Assessment of Damages for Personal Injury and Death (4th ed.) at [11.3.15] and [11.3.17]. Mr Melick's argument was that the plaintiff could be said to have endured "eight years of completed pain and suffering" in the period between the collision in February 1964 and 1 July 1972, the date from which interest is to be calculated. For that discrete proportion of the non-economic loss, he argued, interest should be assessed at 4%. 5 Mr Williams QC, for the defendant, accepted that interest should be assessed on the whole of the past general damages, albeit calculated from 1 July 1972. He also acknowledged that the rate of interest is very much a matter in my discretion. However, he argued that I should apply a uniform rate of 2%, noting that that had been the approach of other judges in cases arising from the Voyager/Melbourne collision. It is not necessary to name those cases. Mr Melick and Mr Williams are both veterans in the conduct of this series of cases, and Mr Melick told me that he had not mounted the present argument before. 6 I have reflected upon this matter carefully, but I can see no good reason to depart from the existing practice of awarding interest at a uniform rate of 2%. This is not a case in which it can be said that most of the non-economic loss was incurred in the earlier part of the period between injury and judgment. Certainly, Mr Melick did not argue the matter on that basis. The submission was founded only upon the fact that no entitlement to interest arose until some eight years after the plaintiff's injury. Nevertheless, he has the benefit of the inclusion of that period of his loss in the amount upon which interest is to be calculated, and that amount is a very high proportion of the general damages he has been awarded. In all the circumstances, I am satisfied that justice is served by the assessment of the interest at the rate of 2%. 7 I would appreciate the parties' assistance in the calculation of that amount to the date on which judgment is entered. Interest on Costs 8 Mr Melick also sought an order that the plaintiff be entitled to interest on his costs, as agreed or assessed, from 21 days after service of his bill of costs. There is a discretion to make such an order under s101 of the Civil Procedure Act 2005, as there was under s95 of the Supreme Court Act 1970. The order sought is in similar terms to that made by O'Keefe J in another Voyager/Melbourne case, an order left undisturbed by the Court of Appeal: Commonwealth of Australia v Stankowkski [2005] NSWCA 106 at [134] to [139]. 9 It seems that O'Keefe J made the order because he saw costs as "an important matter", given the length of those proceedings. Mr Melick referred to the same considerations in the present case, relying upon the undoubted fact that the proceedings have been protracted and the costs must be substantial. 10 However, I am not persuaded that interest should be awarded. I was informed by Mr Williams that Stankowski is the only Voyager/Melbourne case in which the order has been made. In upholding the order, the Court of Appeal said no more than that no error could be shown in the exercise of O'Keefe J's discretion in that case. The fact remains, as Mr Williams observed, that such an order is most unusual. Unfortunately, a great deal of personal injury litigation is lengthy and expensive. Here, again, I see no good reason to depart from normal practice in the present case. Indemnity costs 11 Mr Melick foreshadowed an application for indemnity costs on the basis of a Calderbank letter of 24 May 2004. However, given my decision about the rate of interest on general damages, it does not seem that the amount of the judgment will exceed the settlement proposal in that letter. If it does, I will need to hear further argument on this aspect. In written submissions the defendant raised discretionary matters in opposition to an award of indemnity costs, and Mr Melick has not yet responded to those submissions. Costs of extension of time application 12 On 29 October 2001 Master Malpass (as he then was) granted the plaintiff an extension of time to bring these proceedings: [2001] NSWSC 957. The application for extension of time had been opposed. His Honour reserved the question of costs. Mr Melick submitted that costs of the application should now become costs in the cause. 13 Mr Williams argued that the plaintiff should pay the costs of the application. He relied upon the statement by Sheller JA in Holt v Wynter (2000) 49 NSWLR 128 at [121] that ordinarily a successful applicant for extension of time, "who has allowed him or herself to get out of time," should pay the costs of the application unless the respondent's opposition to it was wholly unreasonable. He referred also to the review of the authorities on this question by Basten JA in Commonwealth of Australia v Smith [2005] NSWCA 478 at [213] ff. He submitted that the defendant's opposition to the application in the present case was not unreasonable, noting that the plaintiff had not at that stage provided any, or any adequate, notice of the evidence of Mrs Saunders and Mrs Herbert. The evidence of those ladies at the trial proved to be important in establishing his case. 14 The way in which the extension of time application was conducted before Master Malpass was not developed in argument before me. I note that his Honour approached the matter upon the basis that the only issue was whether there could be a fair trial, given the length of time which had elapsed since the collision: see the judgment at [13]. However that may be, I find it unnecessary to examine the evidence before Master Malpass to resolve the present question. 15 Mr Williams also took me to R A Smith v Commonwealth of Australia [2006] NSWSC 796, a successful application for extension of time in which Hoeben J ordered each party to pay his or its own costs. Mr Melick, for his part, referred me to two decisions of Bell J. One was Spaulding v Commonwealth of Australia (No 2) [2006] NSWSC 81, in which her Honour allowed an application for extension of time and ordered that the cost of the application be costs in the cause. The other was Brittain v Commonwealth of Australia (No 2) [2006] NSWSC 528, in which her Honour was the trial judge. In that case, like the present, Master Malpass had granted an extension of time and reserved the question of costs. The plaintiff having succeeded at trial, her Honour ordered the defendant to pay the costs of the extension application. 16 In Brittain (No 2), Bell J referred to r42.7(1) of the Uniform Civil Procedure Rules, which provides: (1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including: (a) costs that are reserved, and (b) costs in respect of any such application or step in respect of which no order as to costs is made, are to be paid and otherwise dealt with in the same way as the general costs of the proceedings. 17 Her Honour noted at [7] that that sub-rule was not determinative of the manner in which her discretion should be exercised. Nor are the cases at first instance to which I have been referred in any way determinative of the discretion which I must exercise. Each of those cases turned upon its own facts. The appellate decisions to which I have referred provide guidance to the exercise of the discretion, but in Commonwealth of Australia v Smith Santow JA emphasised the breadth of the discretion at [160]: However, there is no rule that binds the judge to deny costs to an applicant for extension of the limitation period. A cost order for such an application is a matter of practice and procedure within the discretion of the primary judge. 18 The plaintiff could not fairly be said to have "allowed himself to get out of time": the expression used by Sheller JA in the passage from Holt v Wynter to which I have referred. In Commonwealth of Australia v Smith, Basten JA at [217] suggested that those words might be relevant to the scope of the general principle expressed by Sheller JA. It was a matter which Bell J saw as of significance in Spaulding and Brittain (No 2), as I do in the present case. Moreover, while this also cannot be determinative of the exercise of my discretion, I note that Master Malpass chose to reserve the costs of the plaintiff's application rather than order him to pay the costs of it. 19 In all the circumstances, I think it is appropriate to order that the costs of the application be costs in the cause. Costs generally 20 Mr Williams, while accepting that the defendant was otherwise liable to pay the costs of the proceedings, raised two matters for separate consideration. He relied upon authority that a party who has succeeded overall in proceedings, but has failed in respect of a discrete issue, might be ordered to pay the costs in relation to that issue: Rosniak v Government Insurance Office (1997) 41 NSWLR 608. 21 In written submissions, he argued that the plaintiff should pay the costs of the claim for loss of a pension or, at least, each party should pay his or its own costs in respect of that claim. However, in oral argument he resiled from that position, acknowledging that there was "an intermingling" between that issue and other issues in the case. 22 Nevertheless, he pressed a similar submission in relation to the issue of economic loss which I heard and determined separately and which led to the supplementary judgment to which I have referred in the first paragraph of these reasons. He pointed out that the issue, of loss of earning capacity in civilian life, had not been opened at the trial, had been the subject of only slight evidence, and received no more than passing reference in Mr Melick's submissions at the end of the trial. In my original judgment at [60], I expressed the view that the plaintiff's counsel should have the opportunity to address the matter, as it appeared to me to be a discrete issue which was not addressed in final submissions. 23 The matter involved another day's hearing with further submissions, written and oral. Mr Williams contended that the defendant should have its costs of the issue but argued that, at least, each party should pay his or its own costs. However, the plaintiff succeeded on the issue, albeit to a limited extent. In all the circumstances, I do not think it appropriate to make either of the orders which Mr Williams sought. Conclusion 24 Accordingly, the defendant is to pay the plaintiff's costs of the proceedings generally. Unless the issue of indemnity costs has not been put to rest, judgment should now be able to be entered. If that be so, I request the parties to bring in short minutes giving effect to my decisions in this judgment and in the two judgments which preceded it. ********** 22/02/2007 - File number adjustment. - Paragraph(s) 0 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.