On 14 December 2016, his Honour Judge Levy delivered judgment at Sydney District Court[1] in which he awarded damages in favour of the plaintiff, Ms Sangeeta Guru. Importantly, the plaintiff had claimed damages in respect of past economic loss and loss of superannuation entitlements as well as damages for future domestic assistance. 

Based on the evidence before him, his Honour found the plaintiff’s solicitors had not made out a case warranting an award for these heads of damage. The plaintiff’s award of damages was limited to non-economic loss, future economic loss, past domestic assistance and past and future out of pocket expenses.

The defendant, sought an order that Ms Guru’s costs be reduced to account for this. The Application was heard by his Honour and judgment was delivered on 2 May 2017.

Application for reduction in plaintiff’s costs

The award of damages secured by Ms Guru on 14 December 2016, attracted the application of Section 61 of the Legal Profession Uniform Law Application Act, 2014 (Schedule 1, Clause 2) and were capped at 20% of the damages awarded to her.

As Ms Guru had failed to secure damages to the extent pursued by her and her solicitors in the proceedings, the defendant submitted a more appropriate order should be that each party bear its own costs of the proceedings. While his Honour was not inclined to share this view, he was persuaded that a proportionate reduction of the plaintiff’s costs was warranted, albeit Ms Guru’s entitlement to costs was already capped.

His Honour was asked to exercise his discretion pursuant to Section 98(1) of the Civil Procedure Act 2005 on the basis that a need to do so arose, particularly given Ms Guru’s solicitors had prosecuted a claim for several heads of damage that was not sustained on the tendered evidence.

Ms Guru submitted her costs should not be reduced given she had succeeded on the issue of liability and further, that it was the liability issues that required the majority of the time of the hearing.

On the basis that a liability defence was maintained by the defendant and the plaintiff succeeded in overcoming this, his Honour did not accept that an order that both parties should bear their own costs was appropriate.

However, his Honour was persuaded that a proportionate reduction in the plaintiff’s costs was appropriate. In order to assess the extent of the reduction to be applied, his Honour looked to several factors, including the offers exchanged by the parties and the plaintiff’s tendered schedule of damages.

The defendant had conveyed an offer of compromise that more closely reflected his Honour’s award of damages. By contrast, Ms Guru’s offer of settlement far exceeded the award and, it was made after the primary hearing had commenced.

His Honour’s comments on the content of the Schedule of Damages tendered by Ms Guru’s solicitors, is as follows:-

On 2 June 2015, this matter proceeded through the court's case management system where standard orders were made which required the timely service of documents that were to be tendered. Those orders also required the timely service of schedules embodying calculations which interpreted the served evidence. In that sense, the cards were on the table, and it is therefore plain that the evidence served on behalf of the plaintiff would not reasonably support the quantum of the claim that was ultimately advanced on behalf of the plaintiff as set out in MFI "3".”

Judgment on costs application

His Honour determined that it was suitable for a “broad brush” approach to be taken in this matter, to determine what was “fair as to costs in all of the circumstances”. Based on the matters and facts before the Court, his Honour ordered the plaintiff’s costs be reduced by 40%.

Implications

The decision is relevant to all claims for damages brought before the Courts. Even in circumstances where proceedings are successful, a claim for damages that is excessive and does not reflect the evidence tendered before the Court, exposes a plaintiff to an adverse costs order.

A proportionate reduction in costs was made on the basis that the plaintiff had not succeeded in respect of more than one head of damage claimed.

This is a pleasing decision and may act as a warning to plaintiffs, and their solicitors, who progress damages claims without proper preparation or claims that, regardless, have no prospect of success.