(and a warning for plaintiffs)
Also published in adapted format in Law Society Journal, September 2006, Volume 44, page 38
The New South Wales Court of Appeal decision of Boylan Nominees Pty Limited v Williams Refrigeration Australia Pty Limited  NSW CA 100 is clearly welcome news for successful defendants in personal injury actions and a warning to plaintiffs not to rely on the Civil Liability Act for complete protection in the conduct of unmeritorious actions.
Test case clarifies exceptions to personal injury costs cap
By Suzanne Ward, Director Pattison Hardman Pty Limited
In Williamson v State of New South Wales  NSWCA 229[note]Williamson v State of New South Wales  NSWCA 229 30 March 2010, per Hall J;[/note] the New South Wales Supreme Court provided welcome clarification of when the costs capping provisions in the Legal Profession Act 2004 (NSW) do not apply in a situation where damages recovered by the plaintiff are less than $100,000. In the process Hall J also helpfully examined the interaction between Division 9 of the Legal Profession Act 2004 and Part 2 of the Civil Liability Act, and any apparent ambiguity in related provisions.
The plaintiff had commenced proceedings in the District Court of New South Wales on 19 July 2007. The plaintiff sued the State on the basis of vicarious liability for alleged unlawful acts of certain members of the New South Wales Police Service in respect of incidents said to have occurred on Saturday 26 August 2006. The plaintiff’s statement of claim alleged that specific police officers committed a series of intentional torts, namely alleged assault, alleged unlawful arrest and alleged false imprisonment. In the proceedings, the plaintiff claimed that he suffered personal injury, loss and damage. Accordingly, he claimed for damages, aggravated damages and exemplary damages.[note]Above, paragraphs 3 and 4;[/note] The resultant damages agreed were entered into by consent judgment filed 22 December 2008[note]Above, paragraph 33;[/note] for an unspecified sum plus costs as agreed or assessed.
Issues before the Court of Appeal
The plaintiff and defendant were not able to negotiate a reasonable sum for costs as they could not agree on whether the costs cap on personal injury damages applied. In these circumstances, if the plaintiff proceeded to costs assessment there was a real risk that an Assessor would assess costs within the realm of the capping provisions at Division 9 (maximum costs in personal injury damages matters) of the Legal Profession Act and the provisions in Part 2 of the Civil Liability Act and limit such costs in this matter to $16,000 when it was not disputed that costs incurred by the plaintiff exceeded this sum.[note]Above, paragraph 9;[/note]
The plaintiff thus issued an application in the Supreme Court seeking declaratory relief that the costs in his District Court proceedings were not regulated by the cost capping provisions of s.338 of the Legal Profession Act 2004.[note]Above, paragraph 1;[/note]
This was a unique case. As noted by Hall J, the plaintiff’s application:
“…can be seen as a test case in that there is no other decision of this Court on the issue that arises from the interaction of the provisions of s.337(1) of the Legal Profession Act and the provisions in Part 2 of the Civil Liability Act 2002. This, it was said, was particularly so by reason of what was said to be the apprehended reliance by the State upon the earlier decision of King v Greater Murray Area Health Service  NSWSC 914 noting, however, that the relevant legislative provisions have been amended since the date of the decision in that case. The present application, accordingly, is made in circumstances in which there was said to be a real chance that the decision in King (supra) could be followed by an assessor and lead to an assessment of the costs on an incorrect basis. That could result in unnecessary work and expense: Commonwealth Bank of Australia v Hattersley  NSWSC 60; (2001) 51 NSWLR 333 at .[note]Above, paragraphs 11-12. Emphasis added;[/note]
The plaintiff’s submissions to the Court proposed a broad interpretation of the statutory costs-capping regime that brought the plaintiff’s costs outside the cap on personal injury damages. Generally it was argued by the plaintiff that “…s.337(1) defines ‘personal injury damages’, not only by reference to s.11 of the Part 2 of the Civil Liability Act but also by reference to the provisions of Part 2 generally.”[note]Above, paragraphs 37-39;[/note] The plaintiff’s submissions also placed significant reliance on the argument that the provisions of s.3B of the Civil Liability Act mean “…that the Civil Liability Act does not apply to or in respect of civil liability (and awards of damages in those proceedings) of a person in respect of an intentional act that is done by the person with intent to cause injury.”[note]Above, paragraph 39;[/note]
The plaintiff also submitted that “… the phrase ‘personal injury damages’ is a term of art and has a special meaning in the particular context in which it is found. Parliament could not have intended, it was argued, to exclude claims for personal injury damages in respect to the civil liability of persons for intentional acts from the operation of the Civil Liability Act, without also excluding them from the operation of Division 9 of the Legal Profession Act.”[note]Above paragraph 40 [emphasis added];[/note] To the extent of any ambiguity between the provisions, the plaintiff also relied on the Second Reading Speech of the Civil Liability Bill.[note]Above, see paragraph 43;[/note]
Counsel for the defendant submitted that “…s.337(1) does not incorporate the limitations arising under s.3B of the Civil Liability Act, subtitled ‘Civil liability excluded from Act’.”[note]Above, paragraphs 45;[/note] The section, it was submitted, simply “… defines ‘personal injury damages’ by incorporating the meaning of both ‘injury’ and ‘personal injury damages’ in s.11 of the Civil Liability Act. Accordingly, it was argued that s.337(1) is clear and free of ambiguity in providing that ‘personal injury damages’ has the meaning as in Part 2 of the Civil Liability Act untrammelled by the limitations in Part 2.”[note]Above, paragraphs 45-46;[/note]
Counsel for the defendant also argued that “…s.11A in Part 2 does not apply so as to affect the meaning in s.11 in relation to the words ‘personal injury damages’. The section, he contended, speaks to a separate issue concerned with the application of Part 2 … .”[note]Above, paragraphs 46-47.[/note] The defendant also made submissions based on the nature of the plaintiff’s claim in the District Court.14
After consideration of the above submissions and analysis of the history and meaning of costs capping provisions in the Legal Profession Act 2004 (NSW)15 and Civil Liability Act 200216 Hall J made important findings. Specifically, Hall J also noted the importance of the exceptions to the costs cap at Section 3B Civil Liability Act in relation to ‘an intentional act that is done by the person with intent to cause damage…”[note]Above, paragraphs 25-26;[/note] in his findings.
Significantly, His Honour noted that from a statutory interpretation perspective: “All definitions of the meanings of words or phrases used in legislation are to be read either expressly or impliedly as subject to the qualification ‘unless the contrary intention appears”: Hall v Jones (1942) 42 SR(NSW) 203 … Transport Accident Commissioner v Treloar  1 VR 447 at 449 …” Statutory Interpretation in Australia (supra) at [6.62].[note]Above, paragraph 60;[/note]
In relation to the interpretation of the specific costs capping provisions in dispute in this matter Hall J made findings as follows:
“A definition provision in an Act may define in broad terms a subject, matter or a concept. However, the width or scope of its meaning may be narrowed or limited by the terms of other provisions in the same Act. ‘Damages’ is monetary compensation ordered or awarded by a court or tribunal: see s.3, Civil Liability Act. ‘Damages’ under that Act may be awarded, subject to its provisions, as a remedy in certain classes of actions for personal injury (eg, negligence or statutory breach). However, damages in actions belonging in other classes (e.g. specified intentional torts), though involving compensation for personal injury, are not to be assessed and awarded as prescribed by the Act.
“In that way the statutory concept of ‘personal injury damages’ in the latter Act is properly understood as referring, not to both classes of case referred to in the preceding paragraph. It applies to the former class not the latter.
“Section 11A states, in effect, that Part 2 is concerned with that kind of award of personal injury damages, inter alia, that is based on civil liability such as in negligence, statutory breach etc. It makes clear, however, that Part 2 is not directed to prescribing requirements in respect of damages for personal injury resulting from an intentional act that comes within s.3B(1)(a). ‘Damages’ in the latter kind of case are not ‘personal injury damages’ to which Part 2 applies (Part 2 including, as it does, the very definition provisions in s.11).”[note]Above, paragraphs 67-69;[/note]
Hall J then considered the basis of the plaintiff’s claim in the context of the above together with s3B of the Civil Liability Act. His Honour found that “… There is no evidentiary or other material which would establish that the plaintiff’s claim …could be properly characterised as a claim for personal injury, whether physical or mental injury impairment or both. The consent Judgment in the plaintiff’s favour, as earlier stated, having regard to the causes of action pleaded, can be taken as having been an award of damages in respect of the intentional torts alleged by the plaintiff. On examination of the pleadings and evidence, the claims for alleged false imprisonment and unlawful arrest were not personal injury damages claims and accordingly they fell outside the scope and operation of the Civil Liability Act.”[note]Above, paragraph 83. Also see paragraph 72;[/note]
As a result Hall J made a declaration that “the costs of the proceedings referred to in Order (1), the subject of the consent Judgment/Order dated 27 December 2008, are not regulated by the provisions of s.338 of the Legal Profession Act 2004.”[note]Above, paragraph 85(2)[/note]