Bogumila Labuda v Anne Maree Langford [2001] ACTSC 126 (20 December 2001)

Last Updated: 24 December 2001

Bogumila Labuda v Anne Maree Langford

[2001] ACTSC 126 (20 December 2001)

CATCHWORDS

INTEREST - statutory interest on damages before judgment - interstate tort - whether interest procedural or substantive.

INTEREST - Motor Accident Act 1988 (NSW) - interest on economic loss - whether defendant had information to make proper assessment of plaintiff's claim to all damages of any kind - nature of defendant's duty to make offer - where defendant makes several offers - whether plaintiff obliged to respond to offer or make counter offer - consequences of non-response by plaintiff.

Supreme Court Act 1933, s 69

Supreme Court Act 1970 (NSW), s 94

Motor Accidents Act 1988 (NSW) ss 43, 73

John Pfeiffer Pty Limited v Rogerson [2000] HCA 36, (2000) 74 ALJR 1109, (2000) 172 ALR 625

Grincelis v House [2000] HCA 42; (2000) 201 CLR 321

Gable v Carlyle [2001] NSWCA 134

No. SC 691 of 1996

Judge: Miles CJ

Supreme Court of the ACT

Date: 20 December 2001

IN THE SUPREME COURT OF THE )

) No SC 691 of 1996

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: BOGUMILA LABUDA

Plaintiff

AND: ANNE MAREE LANGFORD

Defendant

ORDER

Judge: Miles CJ

Date: 20 December 2001

Place: Canberra

THE COURT ORDERS THAT:

1. There be judgment for the plaintiff in the sum of $185,254.81 with costs.

REASONS FOR JUDGMENT ON INTEREST

1. On 16 November 2001, I published my reasons for assessing damages under the various heads. I reserved the question of interest and gave leave to the parties to lodge written submissions. They have done this.

2. The matter of interest, like that of quantification of damages, may raise a jurisdictional or choice of law question. This was not covered by the submissions and I mention it only in case it may be thought to have been overlooked.

3. Interest on damages before judgment was not available at common law. By s 69 of the Supreme Court Act 1933 (the Supreme Court Act), this Court was given the power to award interest. The section is lengthy and I do not set it out here. It was inserted into the Supreme Court Act in 1981. In substance it provides that, in any proceedings for the recovery of money, "the Court shall, upon application, unless good cause is shown to the contrary" order that judgment be given for a sum including interest at such rate as the Court thinks fit on the whole or any part of the money for the whole of the period between the accrual of the cause of action and the date of judgment or any part of that period. Alternatively, the Court may, without proceeding to calculate interest, order that there be included in the judgment sum "a lump sum in lieu of any such interest".

4. In New South Wales the Supreme Court of that State is given a similar power by s 94 of the Supreme Court Act 1970 (NSW). In contrast with the position in New South Wales where the Court may award or refuse interest, in accordance with the open discretion given by statute this Court's discretion is to be exercised in favour of the plaintiff unless the circumstances justify a contrary order.

5. The matter of an award of prejudgment interest in this Court was the subject of the High Court decision in Grincelis v House [2000] HCA 42; (2000) 201 CLR 321. The function of an award of interest to compensate a plaintiff for the loss or detriment which he or she has suffered by being kept out of his or her money during the relevant period was described in the majority judgment at 328 as "very important".

6. It seems to me that interest to be awarded in accordance with s 69, being compensatory in nature as Grincelis v House emphasises, is properly categorised as part of the damages for which a wrongdoer is liable and it is therefore to be assessed according to the law of the place where liability is incurred: see John Pfeiffer Pty Limited v Rogerson [2000] HCA 36, (2000) 74 ALJR 1109, (2000) 172 ALR 625. In contrast, the matter of costs is to be categorised as a matter of procedure to be governed by the law of the forum, the place of the court where the proceedings are brought. In New South Wales the allocation of liability for interest and the assessment of interest is affected by s 73 of the Motor Accidents Act 1988 (the Motor Accidents Act). The general power of the New South Wales Supreme Court referred to above is by-passed. That section provides that a plaintiff has only such right to interest on damages payable in relation to a motor accident as is conferred by the section itself. The section prohibits interest on damages for non-economic loss and for gratuitous domestic services, nursing and attendance. Interest may be awarded on what remains, notably past economic loss, in accordance with s 73(4) which provides:

"(4) Other heads of damages

The following provisions apply to damages, other than damages to which subsection (2) or (3) applies, payable in relation to a motor accident:

(a) Interest is not payable (and a court cannot order the payment of interest) on such damages unless:

(i) information that would enable a proper assessment of the plaintiff's claim has been given to the defendant and the defendant has had a reasonable opportunity to make an offer of settlement (where it would be appropriate to do so) in respect of the plaintiff's full entitlement to all damages of any kind but has not made such an offer, or

(ii) the defendant has had a reasonable opportunity to make a revised offer of settlement (where it would be appropriate to do so) in the light or further information given by the plaintiff that would enable a proper assessment of the plaintiff's full entitlement to all damages of any kind but has not made such an offer, or

(iii) if the defendant is insured under a third-party policy or is the Nominal Defendant, the insurer has failed to comply with its duty under section 45(2) and (2A), or

(iv) the defendant has made an offer of settlement, the amount of all damages of any kind awarded by the court (without the addition of any interest) is more than 20% higher than the highest amount offered by the defendant and the highest amount is unreasonable having regard to the information available to the defendant when the offer was made.

(b) The highest amount offered by the defendant is not unreasonable if, when the offer was made, the defendant was not able to make a reasonable assessment of the plaintiff's full entitlement to all damages of any kind.

(c) For the purposes of this subsection, an offer of settlement must be in writing.

7. It is submitted on behalf of the plaintiff that she is entitled to interest on the damages for loss of past earning capacity in accordance with s 73(4) of the Motor Accidents Act from the time of incurring that loss until the time of judgment. Her claim in this respect is resisted by the defendant. A number of documents accompanied the written submissions and I have also had regard to the documents filed on 7 June 2001 and described as "Judge's Copy Documents".

8. The relevant facts are as follows. The defendant's solicitors wrote to the plaintiff's solicitors making offers in the following terms (formal parts omitted) on the following dates:

Letter dated 9 June 1999:

"We have instructions to offer your client the sum of $25,000.00 inclusive of costs in full and final settlement of her claim.

Before this matter can be settled it is necessary for the Health and Other Services (Compensation) Act, 1995 (Cth) and/or the Health and Other Services (Compensation) Care Charges Act, 1995 (Cth) to be complied with. Pursuant to Section 22 of the Health and Other Services (Compensation) Act, 1995 (Cth) we hereby give you notice that your client may be liable to pay amounts under either or both the abovementioned Acts as a result of the settlement being made.

Would you kindly seek instructions."

Letter dated 12 August 1999:

"We have instructions to offer your client the sum of $20,000 plus costs in full and final satisfaction of her claim.

We are instructed that in the event that the matter cannot be settled for this sum and judgment is handed down for an amount less than this sum we shall be tendering this letter in support of an application for costs on a solicitor/client basis from the date hereof.

Would you kindly seek instructions."

Letter dated 3 May 2000:

"We have instructions to offer your client the sum of $40,000 inclusive of HIC payback and out-of-pocket expenses, plus costs in full and final satisfaction of the plaintiff's claim.

We are instructed that in the event that the matter cannot be settled for this sum and judgment is handed down for an amount less that (sic) this sum we shall be tendering this letter in support of an application for costs on a solicitor/client basis from the date hereof."

9. There is no evidence that the plaintiff's solicitors ever replied to any of these letters or made any counter-offers or offers of any kind by way of informing the defendant's solicitors of what amount the plaintiff would be prepared to accept in settlement of her claim, by way of compromise or otherwise, until 28 February 2001 when, according to the written submissions it was indicated that the plaintiff would settle for $275,000 plus costs.

10. The plaintiff's solicitors wrote to the defendant's solicitors on numerous occasions giving information that was relevant to an assessment of the damages that might be awarded to the plaintiff. Perhaps significantly, the plaintiff's solicitors served Dr Chandran's reports of 25 February and 3 March 1997 on 14 October 1997 which in the context of these belated proceedings may be regarded as almost prompt. But they took no steps to attend to the particulars and they served no more reports until 28 February 2001, a gap of over three years. After that they took relatively vigorous steps to get the case in order. Reports were served as follows.

28 February 2001 Copies of 20 "medico-legal reports" of various doctors dated between 1 July 1992 and 15 March 2000

5 June 2001 Copy of report of Dr Chandran dated 1 June 2001

7 June 2001 Copy of report of Dr Speldewinde dated 4 June 2001

7 June 2001 Report of Dr Griffith dated 30 May 2001

18 June 2001 Copies of reports of Drs Grosveld and Tan (dates unknown)

11. It is relevant to observe that the particulars filed with the statement of claim on 19 August 1996 provide minimal relevant information about the plaintiff's injuries and disabilities and state that particulars of out-of-pocket expenses are "to be advised" and are "continuing and details will be supplied". No particulars of loss of earning capacity are supplied. The statement of claim does not satisfy the requirements of O 2 r 12 and is not in accordance with prescribed Form 4, and the plaintiff should not recover costs from the defendant for preparation and filing of the statement of claim.

12. The written submissions on behalf of the defendant refer to correspondence in 1997 and 1998 which, it is submitted, do not enable a proper assessment to be made of the plaintiff's case. The correspondence is directed in part to the plaintiff's economic loss. It is not necessary to set the correspondence out in detail. The particulars furnished in a letter from the plaintiff's solicitors during 1998 are meagre in the extreme and would not enable any defendant to make any realistic assessment of the plaintiff's loss. They state not much more than that the plaintiff does not recall having time off work after her injury, and, in answer to the question relating to any change in the nature of her duties, the answer given is "nil". Questions about continuing treatment and medication are also given answers of minimal utility. Particulars sought of out-of-pocket expenses are again "to be advised".

13. It was not until the statement of particulars were filed on 14 December 2000 in accordance with the practice direction that the plaintiff's case as presented at trial on the matter of past loss of earning capacity was made known to the defendant to any meaningful extent. At trial the case presented was lengthy, and, as the preceding reasons for judgment illustrate, required detailed findings as to the plaintiff's activities and her work capacity at various times.

14. Although s 73 of the Motor Accidents Act allows interest only in respect of some aspects of economic loss, including loss of earning capacity, for the purpose of offers of settlement s 73(4) is concerned with the proper assessment of the plaintiff's claim as a whole, and is not restricted to an assessment of the claim for loss of earning capacity or any other economic loss. It is concerned with the opportunity given to the defendant to make an offer (where appropriate) "in respect of the plaintiff's full entitlement to all damages of any kind". As already indicated, part of the plaintiff's damages claimed included a substantial component for future loss of earning capacity and past and future out-of-pocket expenses. As the findings already published indicate, the claim for future loss of earning capacity was exaggerated as was the claim for past and future out-of-pocket expenses. The claim for past out-of-pocket expenses was only partly covered by the particulars furnished on 14 December 2000, and, even at the hearing, it was neither well organised or well substantiated. I am not persuaded that the defendant was ever given information that would allow a proper assessment of the plaintiff's claim or that the defendant had on the information supplied a reasonable opportunity to make an offer of settlement in respect of the plaintiff's full entitlement to "all damages of any kind".

15. It was submitted on behalf of the plaintiff that there was an ongoing obligation resting on the defendant under s 73(4) of the Motor Accidents Act to assess and re-assess and keep re-assessing the plaintiff's claim as further information became available to it from time to time during the course of the proceedings, an obligation continuing presumably until the end of the evidence in the plaintiff's case and perhaps beyond. In other words, every time further information relevant to damages is given to a defendant, the defendant stands to be held liable for interest unless the defendant responds with an offer or further offer of settlement based on the new information. In my view, no such obligation was intended to be conferred by s 73 and such an obligation would be intolerable for the proper conduct of litigation. The intention was simply that, should information be given or supplemented by or on behalf of the plaintiff, or, possibly by some other means, the defendant runs the risk of an adverse order for interest if there is not an appropriate response within an appropriate time in relation to an offer of settlement.

16. There was a further and to some extent allied submission put on behalf of the plaintiff that if a defendant made an offer, which the plaintiff refused, the defendant could not rely on that offer once the plaintiff furnished the defendant with further information. Counsel for the plaintiff conceded that this latter submission was in the face of a decision to the contrary by the Court of Appeal of New South Wales in Gable v Carlyle [2001] NSWCA 134. In that case it was not disputed at the hearing of the appeal that the defendant had made an offer under s 73(4)(a)(i) and that as a consequence s 73(4)(a)(ii) did not apply. Although the defendant's offer of $25,000.00 was made well in advance of the hearing and a later offer which far exceeded the judgment sum very close to the commencement of the hearing, on appeal it was not disputed that s 73(4)(a)(i) and (ii) did not apply once an offer had been made and that the adequacy of an earlier offer was not a relevant consideration. Where an offer has been made, s 73(4)(a)(iv) applies and it is the highest offer that is to be taken into account for the plaintiff to show that it is unreasonable having regard to the information available to the defendant when that highest offer was made