Banks v Copas Newnham Pty Ltd
[2001] QDC 262
•22 October 2001
DISTRICT COURT OF QUEENSLAND
CITATION: Banks & Ors v. Copas Newnham Pty Ltd & Ors [2001] QDC 262 PARTIES: RODNEY ROY BANKS and
JEANETTE ELLEN BANKS Plaintiffs
and
COPAS NEWNHAM PTY LTD
(ACN 009 893 172) First Defendant
and
GRAHAM NEWNHAM Second Defendant
and
WONDERLEY AND HALL (A FIRM)
Third DefendantFILE NO/S: 3792 of 2000 DIVISION: Civil PROCEEDING: Claim ORIGINATING COURT: Brisbane DELIVERED ON: 22 October 2001 DELIVERED AT: Brisbane HEARING DATE: Written submissions 8-12 October 2001. JUDGE: Judge Robin Q.C. ORDER: Stay pending appeal and interest on judgment refused, costs orders made CATCHWORDS:
Uniform Civil Procedure Rules r 360, 361, 364, 761
Berry v. Green BC 9904671, Appeal No. 398 of 1999 Barrs v. Crossman & Pritchard (1897) A.C. 172
Workcover Queensland & Midwest Radio Limited v. Arnold, D4038 of 2001, 5 October 2001.COUNSEL: Mr A Maher for the plaintiff
Mr Hassett for the first and second defendants
Mr D G Clothier for the third defendantSOLICITORS: Quinn & Scattini for the plaintiff
David Prince & Associates for the first and second defendants
Brian Bartley & Associates for the third defendant
Since publishing reasons to the parties on 26 September 2001, which indicated, inter alia, the plaintiffs were entitled to judgment against the defendants for $50,356, the court has received the following written submissions:
1.8 October 2001 from the plaintiff regarding costs and interest.
2. 8 October 2001 from the first and second defendants regarding costs and submissions in support of a stay.
3. 9 October 2001 from the first and second defendants regarding interest (and “indemnity costs”) as sought by the plaintiff.
4. 9 October 2001 from the third defendant regarding interest and costs.
5. 11 October 2001 from the third defendant – in reply.
6. 12 October 2001 from the plaintiff – in reply.
Offers to settle
Communication 4 was accompanied by an affidavit of Mr Bartley, the third defendant’s solicitor, exhibiting copies of various offers to settle the contribution proceedings with the first and second defendants. The first, of 4 May 2001, was an offer by the third defendant to accept 40% liability, admit liability to the plaintiffs and offer them $40,000. The offer stated it was “made pursuant to the provisions of Part 5 Chapter 9 of the UCPR”. Following rejection of that offer, Mr Bartley made a revised offer of 24 July 2001 to settle the third party proceedings on the basis of his client contributing 50% to any amount agreed to be paid to or awarded to the plaintiffs, including costs.
The next offer deposed to by Mr Bartley is the plaintiffs’, of 9 August 2001, to all defendants to settle for $34,000 plus costs to be assessed on the standard basis, or as agreed. The third defendant’s last offer to the co-defendants was made the same day and proposed acceptance of the plaintiffs’ offer, the third defendant contributing 50% to the settlement.
The plaintiffs’ solicitor had filed an affidavit on 2 October 2001 proving the making by the plaintiffs of their offer of 9 August 2001.
The situation in relation to offers was clarified by paragraph 13 of the submission numbered 2 above which has not been challenged insofar as it reports an offer of the plaintiffs dated 15 December 2000 to settle for $52,230, plainly greater than the award of damages indicated in the court’s reasons delivered on 26 September 2001, (paragraph [57]): the sum assessed exceeds the plaintiffs’ later offer by a significant margin.
The published reasons invited the parties to make submissions regarding interest and costs. As to the former, the issue of interest is very much bound up with the principal judgment amount, insofar as the assessment of that amount was based on Mr Thompson’s work in bringing matters relatively up to date, in the sense of their not being assessed as of the date of making or completion of the contract (which the plaintiffs would not have made but for the defendants’ breaches of duty). Mr Maher has detected an arithmetical error of $100 which calls for reduction of the assessed amount to $50,256. To “balance the ledger” he has called attention to Mr Thompson’s exhibit 50 which brought his original exercise in exhibit 49 up to date, and asked the court to award the later (higher) sum indicated. The essential change has been to apply a 10% interest rate to outstanding amounts, which Mr Thompson has indicated was the rate he was “instructed” to use by the plaintiffs’ solicitors. (Mr Hassett has drawn attention to the curiosity of such an “instruction”.) I had noted in paragraph [57] the discrepancy with the 6% interest claimed in the statement of claim. Mr Clothier’s final written submission (number 5 above) includes a calculation using the rate of 6%, which produces the following award:-
“Capital Loss $30,000.00
Incidental costs of acquisition $ 4,820.00
Interest on incidental costs $ 1,400.00
Nett income losses $ 6,243.00
Interest nett income losses $ 374.58
Loss on investment returns $ 4,288.61Future costs $ 2,934
Total $50,060.19
Misgivings that 10% might have been over-generous (see paragraph [47] of the reasons) and concerns generated by Exhibit 50 about awarding interest on interest, which I think courts normally avoid, except where it is clearly appropriate, for example, on the basis of an agreement, lead me in all the circumstances to adhere to the judgment sum already indicated, but subject to correction for the arithmetical error: it is comfortingly close to Mr Clothier’s total.
In the circumstances, no additional award of interest will be made.
Should the plaintiffs receive indemnity costs?
Rule 360 of the UCPR is:-
“360(1) If –
(a) the plaintiff makes an offer to settle that is not accepted by the defendant and the plaintiff obtains a judgment no less favourable than the offer to settle; and
(b)the court is satisfied that the plaintiff was at all material times willing and able to carry out what was proposed in the offer;
the court must order the defendant to pay the plaintiff’s costs calculated on the indemnity basis unless the defendant shows another order for costs is appropriate in the circumstances.
(2)If the plaintiff makes more than 1 offer satisfying subrule (1), the first of those offers is taken to be the only offer for this rule.”
Until 1 July 2000, subrule (2) was :-
“If a plaintiff makes more than 1 offer, the offer most favourable to the plaintiff is taken to be the only offer for this rule.”
Mr Maher’s original submission (1) to the effect that the 9 August 2001 offer justified an order for indemnity costs could not have been accepted, except in relation to costs incurred after that offer was made, and on some basis independent of the Uniform Civil Procedure Rules, such as under Calderbank v Calderbank (1976) Fam 93. I am troubled by the non-disclosure of the plaintiff’s earlier offer; on any version of subrule (2), it was the one to be looked at. I do not understand Mr Maher’s submission that “although other offers had been made by the plaintiff, both formal and Calderbank style, the offer of the 9 August 2001 is the relevant one in terms of rule 360(2).”
There is no basis for saying that at any time before the later offer the plaintiff was “willing and able to carry out what was proposed” for purposes of rule 360(1)(b). Mr Maher’s revised position (12 October 2001) was :-
“2. The Plaintiff maintains the submission that he is entitled to indemnity costs pursuant to Rule 360 and to the revised quantum in the initial submission. All the defendants attempt to make the point that if indemnity costs are to be awarded, then such should occur only from the date of the offer. This is a complete misreading of Rule 360, the intention of which is to provide an incentive to a plaintiff to make a realistic offer because a successful plaintiff would normally be entitled to costs. While Rule 361 (costs if defendant’s offer beats the judgment) does contemplate the day of service of the offer, no such caveat exists in respect of Rule 360. The plaintiff is entitled to indemnity costs for the whole of the action, not just from the date of service of the offer.
3. It is respectfully noted that the submission of the First and Second Defendants does not address the relevant rules and makes general complaint about fairness. It is trite law that a costs order is not a “punishment” against an unsuccessful litigant and such considerations are not relevant to the exercise of an award of costs. The fact that the First and Second Defendants were “resolutely opposed” to the Plaintiff’s claim is simply irrelevant. It is further submitted that there is nothing “unclear” about the law in relation to this point.
4. At any time the Plaintiff’s offer to settle was capable of acceptance by each or any Defendant, and further contribution proceedings could have been instigated after this action had settled by say the Third Defendant against the First and/or Second Defendants. Therefore the argument by the Third Defendant that it should only have to pay costs on the standard basis is untenable.”
Success in obtaining indemnity costs depends on the plaintiffs’ obtaining a judgment more favourable than their original offer – which has not been the outcome. The plaintiffs will have an order for costs of the action against all defendants to be assessed on the standard basis. I would add that this was not by any means a case in which it was clear the defendants were doomed to lose, and so should have accepted a reasonable offer, on pain of suffering an onerous costs order. There were authorities located by Mr Hassett in which the view was taken that plaintiffs arguably situated similarly to Mr and Mrs Banks were held substantially the authors of their own investment misfortunes.
Is the third defendant entitled to indemnity costs against the first and second defendants?
Rule 364 of the UCPR provides:-
364 (1) This rule applies if a defendant makes a claim (a “contribution claim”) to recover contribution or indemnity against a person, whether a defendant to the proceeding or not, in relation to a claim for a debt or damages made by the plaintiff in the proceeding.
(2) A party to the contribution claim may serve on another party to the contribution claim an offer to contribute towards the settlement of the claim made by the plaintiff on the conditions specified in the offer.
(3) The court may take account of an offer to contribute in deciding whether it should order that the party on whom the offer was served should pay all or part of –
(a) the costs of the party who made the offer; and
(b) any costs the party is liable to pay to the plaintiff.
(4)Rules 256 and 35796 apply, with any changes necessary to an offer to contribute as if it were an offer to settle.”
96 Rules 356 (Effects of offer) and 357 (Disclosure of offer).
Although this rule is not as prescriptive as rules 360(a) or 361(2) I think that it exemplifies a similar policy. In my opinion the appropriate order is one that the first and second defendants pay to the third defendant their (that is, the third defendants’) costs of the contribution proceedings from 4 May 2001, to be assessed on the indemnity basis. (It is inappropriate to award costs of the indemnity proceedings before that date, given that rule 364 does not contain a specific retrospective effect like that in rule 360, and that the first and second defendants have had some success in their quest to obtain contribution from the third defendant. Having regard to rule 364(3)(b), I would order that the first and second defendants indemnify the third defendant in respect of costs payable to the plaintiffs which the plaintiffs incurred after 24 July 2001. Both dates correspond with those of offers deposed to by Mr Bartley.
Should the judgment of the court be stayed?
In the circumstances, I can see little point in declining to consider the question of a stay in the absence of what Mr Maher calls “proper application pursuant to rule 761”. Valiantly, Mr Hassett has set out in great detail the arguments proposed to be made in support of a foreshadowed appeal by his clients to the Court of Appeal, presumably to establish reasonable prospects of success. Mr Clothier has taken up the cudgels to present the contrary argument. In my opinion it is not for this court to assess prospects of success, which is something an appeal court asked to stay a judgment under appeal will often consider. I regard my task as one to be approached on the assumption that the appeal will succeed, focusing on an enquiry whether, in the absence of a stay, the appellants might not enjoy the fruits of a successful appeal. The problem is usually that moneys paid to satisfy a judgment or costs will prove to be irrecoverable. This may be a common enough situation, but the court should not be concerned about it in the absence of evidence casting doubt on the ability of the plaintiffs (or their solicitors, in relation to costs) to repay moneys. There is no evidence of this kind. The Court of Appeal recently in Berry v. Green BC 9904671, Appeal No. 398 of 1999, stated (through the Chief Justice) that “it is plain that there must be some particular feature about the case which warrants departure from … the fundamental or prima facie position (that a successful plaintiff is entitled to the fruits of his or her judgment, and that we must strive to avoid crafting a position in the Court of Appeal whereby judgments in the trial division of the District Court are seen to be provisional only pending the result of an appeal).”
In the absence of any appropriate evidence, I decline to grant any stay or to regard the matter as one calling for an undertaking to repay by the plaintiffs’ solicitors (see Barrs v. Crossman & Pritchard (1897) A.C. 172) or by the plaintiffs (of the kind whose enforcement caused difficulty in Workcover Queensland & Midwest Radio Limited v. Arnold, D4038 of 2001, 5 October 2001).
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