Unlike the historic position, Plaintiffs’ (patients) who have claims proceed to trial in medical negligence claims in WA, cannot generally recover what is known as indemnity costs, if they win and are awarded more by way of damages than they had earlier offered to accept in settlement of their claim.
The consequence of this, is that from a costs perspective, there is no advantage in a Plaintiff (patient) making a settlement offer before trial and particularly, there is no real incentive to put an ‘acid test’ offer. If the Plaintiff (patient) wins their trial and beats any offer made by the Defendant (the hospital/medical practitioner etc), they will generally recover the same costs, whether they beat their earlier offer or not.
The flip-side is that from the Defendant’s perspective, rejecting an offer and proceeding to trial does not generally worsen their position, if the Plaintiff wins.
The situation that commonly follows is that a Plaintiff succeeding at trial will have a significant part of their legal costs they will need to pay for their own representation, not covered by the costs paid by the Defendant hospital, medical practitioner etc, even in this situation where they had been prepared to take less to settle.
In my opinion this is a lost opportunity to further encourage settlement in such claims.
The capacity for an order requiring a ‘losing’ Defendant to pay the overwhelming majority of legal costs for the Plaintiff if the claim proceeds to trial (which is what happens when ‘indemnity’ rather than ‘contribution’ costs are required to be paid), and the Plaintiff wins more than they (the patient) had been prepared to settle for is:
- much fairer to the Plaintiff,
- perhaps more importantly on a practical day to day basis, a very significant practical incentive for Defendants to do their very best to settle claims and to ‘sweat’ when a 1/2 decent compromise offer is made by the patient.
I understand amendments to our Court Rules are in train, which will re-introduce this discretion for a Trial Judge. It can’t come too soon…..
For a recent example in NSW where such indemnity costs were ordered and our ‘old’ approach continues, see Paul Harris v Dr Michael Bellemore (No 3)  NSWSC 907, delivered on 3 August 2010.
While it is a ‘wild guess,’ had no indemnity costs order been made in such case, my guess is the difference in legal costs the patient Mr Harris would have had to pay for his claim, not covered by the Defendant, would have increased by > $100,000.00.