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Supreme Court 2 February 2023

Spedding v State of New South Wales

[2023] NSWSC 34

Public order & justice offences
INTEREST INTEREST ON DAMAGES INTEREST ON DAMAGES NO DETRIMENTAL RELIANCE BY DEFENDANT PLAINTIFF NOT BOUND TORTS MALICIOUS PROSECUTION

Citation: Spedding v State of New South Wales [2023] NSWSC 34
Court: Supreme Court of New South Wales
Date: 2 February 2023
Judge: Harrison J

Background

This decision followed the principal judgment in Spedding v New South Wales [2022] NSWSC 1627, in which the plaintiff succeeded on claims of malicious prosecution, collateral abuse of process, and misfeasance in public office arising from his arrest and prosecution on historical sexual assault allegations. Those proceedings concluded in the plaintiff's favour when he was acquitted on 5 March 2018. The court had awarded damages totalling approximately $1.484 million, including non-economic loss, aggravated damages, reputational loss, and unreimbursed legal costs from the criminal proceedings.

After judgment, the parties could not agree on the calculation of pre-judgment interest or on whether a special costs order (indemnity costs) should be made. Harrison J invited submissions on both questions. The State accepted that some interest was payable but contested the applicable rate, the base amount on which interest should run, and the date from which interest should be calculated.

  • From what date did the plaintiff's causes of action for collateral abuse of process and misfeasance in public office accrue, for the purpose of calculating pre-judgment interest?
  • Was the plaintiff bound to the 2% interest rate he had nominally claimed during the substantive hearing, or could he claim the higher Practice Note rates at the interest stage?
  • Whether interest on damages should be calculated on the full past-and-future damages award, or only on a portion reflecting past loss.
  • Whether the plaintiff was entitled to indemnity costs, and if so, from which of his three offers of compromise that entitlement arose.

Decision

Accrual of causes of action. The State argued that the causes of action for collateral abuse of process and misfeasance in public office only accrued at the time of the plaintiff's acquittal, on the basis that the arrest was merely the beginning of the exercise of the relevant power. Harrison J rejected that submission. The court found that these two causes of action arose on the date of the plaintiff's arrest, 21 April 2015, meaning interest ran from that earlier date rather than from the acquittal in 2018.

Interest rate: whether the plaintiff was bound by his prior claim. The State submitted that the plaintiff should be confined to the 2% rate he had advanced in his substantive submissions. Harrison J rejected this argument. The court found that the plaintiff is not bound to a rate claimed at an earlier stage of proceedings where the defendant has not suffered any detrimental reliance on that concession. No such reliance was established here.

Apportionment of interest between past and future damages. Because the damages award for non-economic loss included a component for future loss of enjoyment of life, interest could only run on the portion of the award that reflected past loss. The plaintiff adopted an 85% past / 15% future split for this purpose, and the court applied Practice Note rates to that portion, together with rates applicable to the aggravated damages, reputational loss, and unreimbursed legal costs. The total interest awarded was $416,434, bringing the final judgment to approximately $1.9 million rather than the State's proposed $1,619,016.48.

Indemnity costs. The plaintiff had made three offers of compromise. The State contested the first offer, arguing it could not properly evaluate the claim at that time due to significant uncertainty about the scope of the pleaded case, particularly around economic loss which was later wholly abandoned. Harrison J accepted that the State's failure to accept the first offer was not unreasonable in the circumstances, given the state of the pleadings at the time and the State's prompt requests for particulars. However, the State did not contest the second offer made on 20 September 2021. Accordingly, the court ordered indemnity costs from the date of the second offer, with ordinary costs applying up to and including that date.

Orders Made

• Vacate order 3 made on 1 December 2022
• Order the defendant to pay the plaintiff's costs of the proceedings up to and including 20 September 2021 on an ordinary basis
• Order the defendant to pay the plaintiff's costs from 20 September 2021 until 1 December 2022 on an indemnity basis
• Interest to be calculated in accordance with the reasons provided

The judgment directed the parties to bring in a final minute of orders giving effect to the court's reasons on interest and costs, specifically:
- Interest totalling $416,434 to be included in the final judgment.
- Costs on an ordinary basis up to and including 20 September 2021, and on an indemnity basis from that date until judgment on 1 December 2022.

Key Takeaways

  • A cause of action for misfeasance in public office and collateral abuse of process arising from a wrongful arrest and prosecution accrues at the date of arrest, not at the later date of acquittal or final termination of the criminal proceedings.

  • Where a plaintiff nominates a particular interest rate in substantive submissions, that nomination does not bind the plaintiff at the interest stage unless the defendant can demonstrate detrimental reliance on it.

  • Pre-judgment interest at Practice Note rates applies only to the portion of a damages award that reflects past loss. Where an award contains a future component (such as future loss of enjoyment of life), interest does not run on that future element.

  • Under the Calderbank offer and formal offer of compromise regime, the reasonableness of a defendant's failure to accept an offer is assessed at the time the offer was made. Where the plaintiff's pleaded case was genuinely uncertain at the time of the first offer, the court may decline to award indemnity costs from that earlier date, even if later offers clearly triggered the entitlement.

  • Indemnity costs from the date of the second offer of compromise were awarded without controversy once the Supreme Court confirmed the plaintiff had obtained an outcome no less favourable than each of his three offers.

Legislation and Cases Referenced

Legislation
- Civil Procedure Act 2005 (NSW), s 100(1)
- Costs in Criminal Cases Act 1967 (NSW)
- Uniform Civil Procedure Rules 2005 (NSW)

Cases
- Spedding v New South Wales [2022] NSWSC 1627 (principal judgment)
- Beckett v State of New South Wales [2015] NSWSC 1500
- Murray v Commonwealth of Australia (1986) 5 NSWLR 83
- Baulderstone Hornibrook v HBO & DC & Ors [2001] NSWSC 821
- Kieran Leslie Walzel & Anor v Stephen Paul Francis (2010) 77 NSWLR 92; [2010] NSWSC 75
- Bennette v Cohen (No 2) [2009] NSWCA 162
- Caine v Lumley General Insurance Ltd (No 2) [2008] NSWCA 109
- Calderbank v Calderbank [1975] 3 All ER 333