Glover v Fuller (No 3)
[2023] ACTSC 101
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
| Case Title: | Glover v Fuller (No 3) | ||
| Citation: | [2023] ACTSC 101 | ||
| Hearing Date: | Decided on the papers | ||
| Decision Date: | 5 May 2023 | ||
| Before: | McWilliam J | ||
| Decision: |
|
(ACT), the plaintiff is entitled to any determined fee at the
Supreme Court rate and 75 percent of the costs and
disbursements that the plaintiff would have been entitled to
recover in the Supreme Court had the judgment been
more than $250,000.
Catchwords: | PRACTICE AND PROCEDURE – COSTS – where plaintiff successful in negligence claim – where costs awarded were less than jurisdictional limit of Magistrates Court – application of r 1725 of the Court Procedures Rules 2006 (ACT) – relative success of parties – whether some indemnity costs should be awarded – |
| alternative costs order made | |
| Legislation Cited: | Court Procedures Act 2004 (ACT) s 5A Court Procedures Rules 2006 (ACT) rr 1721, 1752, 1725 |
| Cases Cited: | Australian Capital Territory v Lewis [2016] ACTCA 34; 311 FLR 77 Campbell v Blackshaw (No 2) [2019] ACTCA 28 Clarkson Williams Partners Ltd v Vaughan (No 2) [2016] ACTCA 8 Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 536; 46 FCR 225 |
| Cressy v Miloriad (No 2) [2016] ACTSC 339; 317 FCR 267 | |
| Donohue v Volanne Pty Ltd (No 3) [2021] ACTCA 20 | |
| Glover v Fuller (No 2) [2023] ACTSC 12 | |
| Latoudis v Casey (1990) 170 CLR 534 Lewis v Australian Capital Territory (No 2) [2015] ACTSC 343 | |
| Luongo v Clarke (No 2) [2018] ACTSC 108 Mareva Building Consultants v Zevon (No 2) [2012] ACTSC 24 | |
| McLaughlin v Dungowan Manly Pty Ltd [2010] NSWSC 306 | |
| McLennan v Clapham (No 2) [2019] ACTSC 100 | |
| McLennan v Meyer Vandenberg (No 2) [2020] ACTCA 15 | |
| Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 Woodger v Federal Capital Press of Australia Pty Ltd (1992) 107 ACTR 1 Yogini v Eveille [2006] ACTSC 23 | |
| Parties: | Jack Glover (Plaintiff) |
| Daniel Fuller (Defendant) | |
| Representation: | Counsel |
| N Farooq (Plaintiff) | |
| S J Walsh (Defendant) | |
| Solicitors | |
| United Legal (Plaintiff) | |
| Barry Nilsson Lawyers (Defendant) | |
| File Number: | SC 281 of 2018 |
| McWilliam J: |
1. On 31 January 2023, I delivered judgment on a claim for personal injury brought by the
plaintiff: Glover v Fuller (No 2) [2023] ACTSC 12. The plaintiff was successful in
obtaining an award of damages of $92,585, plus interest in the sum of $310.95.
The defendant was ordered to pay the plaintiff’s costs. Because the amount ultimately
awarded was less than $175,000 and the matter was one which the Magistrates Court
would have had the jurisdiction to hear and decide, r 1725 of the Court Procedures Rules
2006 (ACT) (Rules) applies. Under r 1725(2)(c) of the Rules, the plaintiff is only entitled
to recover 50% of the costs and disbursements to which he is entitled (that is, 50% of
costs on the ordinary basis).
3. Through written submissions, the plaintiff sought alternative costs orders as follows:
(a) The plaintiff sought the entirety of its costs pursuant to r 1725(3) of the Rules, which gives to the Court a discretion to make a different order from that which
would apply under r 1725(2).
(b) The plaintiff also sought a specific order for indemnity costs in respect of discovery, expert and re-pleading. The basis relied upon was a letter where the
plaintiff said that he would seek those costs on an indemnity basis if the
defendant did not admit liability.
4. The defendant opposed each of the orders sought. Accordingly, the two issues presently
arising for determination are whether each of those orders should be made.
Should the Court make a different order, pursuant to r 1725(3)?
Principles guiding the exercise of the discretion
5. Costs are in the discretion of the Court: r 1721(1) of the Rules. The discretion is a very
wide one, though it must be exercised judicially, in accordance with established principle
and the statutory context: Oshlack v Richmond River Council [1998] HCA 11; 193 CLR
72 (Oshlack) at [35], [65].
6. The fundamental purpose of the discretion on costs is to compensate the successful
party, not to punish the unsuccessful party: EMI Songs Australia Pty Ltd v Larrikin Music
Publishing Pty Ltd [2011] FCAFC 92 at [9]. A substantially successful party is entitled to
recover its costs from the opposing party because of the compensatory nature or the
order; that is, it is just and reasonable that the party who has caused the other party to
incur costs should reimburse that party for the liability incurred: Oshlack at [35]; Latoudis
v Casey (1990) 170 CLR 534 at 543 per Mason CJ, at 562-563 per Toohey J, at 566-
567 per McHugh J.
7. The question is not what is the appropriate starting point, but what should be regarded
as a fair and just outcome in ordering costs: McLaughlin v Dungowan Manly Pty
Ltd [2010] NSWSC 306 per Ward J (as the President then was) at [22] and [24].
Statements in this Court are to similar effect. In Clarkson Williams Partners Ltd v
Vaughan (No 2) [2016] ACTCA 8, the Court of Appeal stated (at [12]) that ultimately, the
Court is required to determine the appropriate order in the interests of justice.
8. Adding to those general propositions, r 1725 is designed to provide a costs motivation
for parties to commence proceedings in the Magistrates Court where that is appropriate:
McLennan v Meyer Vandenberg (No 2) [2020] ACTCA 15 at [9]. In that decision, the
Court of Appeal went on to say (in relation to r 1725) at [24]:
…The rule does not itself require special circumstances. It provides an unconstrained
discretion to make a different order. That requires the court to be satisfied that a different order is appropriate. Obviously that discretion has to be exercised in the context of the rule itself, which is clearly designed to encourage parties to commence claims in the appropriate court within the judicial hierarchy. It must also be exercised in light of the requirements of s 5A of the Court Procedures Act.
Arguments of the parties
9. The plaintiff argued the claim was complex and did not have the usual features of a low
value damages claim in personal injury litigation. That had a costs consequence in that
the legal costs were increased by the said complexity. The question of liability involved
expert opinion evidence. Expert medical evidence was also required for both liability and
quantum. The complexity of the judgment is seen through the reasons for judgment.
The plaintiff’s solicitor client costs far exceeded the value of the judgment obtained. The
disbursements alone exceed $270,000. Allowing only 50 percent of the recoverable
costs would see a successful plaintiff suffer a real disadvantage in the present case.
The defendant’s counterfactual argument, which was ultimately accepted by the Court,
relied on events in the plaintiff’s life that occurred after the commencement of
proceedings. The counterfactual (that is, the issue of whether the plaintiff would have
been in a similar position of disability had the accident not occurred because of his
underlying spinal vulnerability and active lifestyle) significantly affected the quantum of
the claim, such as the component for future economic loss.
12. The plaintiff argued that this was the type of case that warranted an exception under
r 1725(3), to “ameliorate unjust consequences that might arise from the application of
the rule”, citing McLennan v Clapham (No 2) [2019] ACTSC 100 at [28] (McLennan).
13. The defendant argued that it was for the plaintiff to satisfy the Court that the discretion
should be exercised in his favour. Factors relevant to the exercise of the discretion here
include:
(a) Fairness: Mareva Building Consultants v Zevon (No 2) [2012] ACTSC 24 at [21]; (b) The complexity of the proceedings: Woodger v Federal Capital Press of Australia Pty Ltd (1992) 107 ACTR 1 at 40;
(c) The quantum of damages actually awarded: Cressy v Miloriad (No 2) [2016] ACTSC 339; 317 FCR 267 at [61];
(d) The conduct of the parties: Yogini v Eveille [2006] ACTSC 23 at [25]; and (e) Proportionality: s 5A of the Court Procedures Act 2004 (ACT) (Court Procedures Act); McLennan at [28].
14. The defendant argued that fairness involves looking at whether there will be injustice to
the party itself and not the party’s lawyers. The fact that the lawyers may be significantly
out of pocket or that the plaintiff will have to pay any shortfall in his solicitor-client costs
that cannot be recovered from the defendant is not the type of unfairness that r 1725(3)
contemplates as needing to guard against.
15. It was further submitted that fairness must be considered from the perspective of both
parties. The defendant has no power to control how much the plaintiff incurs in legal
costs through forensic or strategic decisions made. Rule 1725 provides some protection
for a party, in that if a party chooses to run a matter in the Supreme Court that ultimately
could have been run in the Magistrates Court - and they resource the matter accordingly
(such as engaging Senior Counsel and extensive expert evidence) – the opponent
should not be required to shoulder that burden. If the order sought by the plaintiff were
made, the effect would be to shift the additional expense incurred by the plaintiff to the
defendant. That would be equally unfair.
16. As to complexity, the defendant argued that it should not be assumed that the
Magistrates Court is not in a position to deal with medical issues in personal injury cases
that are not straightforward, nor that it is ill-equipped to decide matters involving some
factual or legal complexity. Personal injury claims commonly involve disputes about
liability and limitation issues. Many claims that are low in value involve complex legal
and factual issues. Litigants are more likely to proceed to trial on cases where the
outcome is not simple or obvious.
17. Further, the defendant drew attention to the fact that one of the main complexities at trial,
the establishing of the counter-factual, was an issue on which the defendant succeeded.
18. In relation to the other considerations addressed by the defendant, being quantum,
proportionality and parties’ conduct, the defendant contended:
(a) The quantum claimed throughout the trial was not realistic. (b) As an example, this was a claim which involved an aggravation to a pre-existing back condition. The plaintiff’s damages claim based on 45 percent of a most
extreme case did not take account of that reality.
(c) The plaintiff abandoned his claim for past loss of earnings at trial, and pressed a substantial claim for past and future domestic assistance in circumstances
where the plaintiff’s own evidence did not establish that he actually had any
need. These were not matters of which the plaintiff was unaware at the time
the decision was made to commence proceedings.
(d) The defendant made an offer of compromise in the amount of $90,000, which was only $2,584 less than the amount awarded by the Court. Even then, the
damages award included additional past treatment expenses that were incurred
shortly before trial. If that amount is excluded, the defendant’s legal advisors
predicted an outcome that was within 1-2 percent of the judgment. Essentially,
if the defendants could see the writing on the wall in August 2022, the plaintiff
certainly should have had an appreciation of the likely quantum if he was
successful on liability.
(e) The fact that the plaintiff’s disbursements are, on their face, disproportionate to the damages awarded is precisely the mischief r 1725(2) is designed to address. The objective is to encourage parties to conduct litigation as quickly,
inexpensively and efficiently as possible, at a cost that is proportionate to the
importance and complexity of the matters in dispute. The Court should be slow
to make exceptions to deprive the rule of its effect and should only do so in clear
cases.
Consideration
19. This was a complex and difficult matter. It was not plainly inappropriate for the
proceeding to be commenced in the Supreme Court. However, that is only one
consideration in determining whether to make an order under r 1725(3) and what is a fair
and just outcome to both parties. I agree with the defendant that the plaintiff had
unrealistic views about the quantum of his claim and also that maintaining proportionality,
even in complex proceedings, is a clear objective of s 5A of the Court Procedures Act.
20. As stated by Elkaim J in Luongo v Clarke (No 2) [2018] ACTSC 108 at [16], the discretion
conferred by r 1725(3) is open-ended. Making a different order for costs enables the
court to choose a percentage in order to achieve a just result.
21. Here, taking proper account of the complexity in this case, a different order is appropriate.
Having regard to the quantum ultimately achieved and proportionality considerations
lying behind the rule, it is in the interests of justice to allow the plaintiff to recover 75
percent of the recoverable costs on an ordinary basis.
Should the court order the defendant to pay indemnity costs in respect of discovery, expert evidence and repleading?
22. The defendant put liability in issue. The plaintiff succeeded in establishing liability. Costs
follow the event. Those costs would include the costs of discovery, expert evidence and
repleading on the ordinary basis.
23. The plaintiff has sought indemnity costs of those matters apparently because he said in
a letter that he would seek indemnity costs if the defendant continued to deny liability.
24. Rule 1752(1)(b) of the Rules provides for the Court to order that costs be assessed on
an indemnity basis. The principle to be applied in the judicial exercise of the Court’s
discretion is that usually there must be some special or unusual feature that justifies the
Court in departing from the usual position that costs should be ordered to be paid on a
party and party basis: see Lewis v Australian Capital Territory (No 2) [2015] ACTSC
343 (Lewis (No 2)) at [28], affirmed on appeal in Australian Capital Territory v
Lewis [2016] ACTCA 34; 311 FLR 77 at [70], and cited with approval more recently
in Donohue v Volanne Pty Ltd (No 3) [2021] ACTCA 20 at [22].
25. It is difficult to see here what special feature is relied upon to seek indemnity costs. An
opponent is not exposed to indemnity costs simply because a matter is put in issue. On
no view can the letter relied upon constitute an offer of compromise. As submitted by
the defendant, it simply required the defendant to capitulate on liability without offering
any concession, such as for the parties to bear their own costs on liability to date.
26. In the case of Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 536; 46 FCR
225 at 232-234, Sheppard J “helpfully distilled a number of guidelines for the exercise of
the Court’s discretion to award indemnity costs” (being the language used in Lewis (No
2) at [29] in extracting the relevant passage). Of those guidelines, Sheppard J’s list of
some of the circumstances where an indemnity costs order may be warranted, was also
more recently summarised by the Court of Appeal in Campbell v Blackshaw (No
2) [2019] ACTCA 28 at [15] (again, citing Lewis (No 2)).
27. Without setting out those matters in detail, relevant to the present application, the
circumstances where a court may consider the case warrants the making of an order for
payment of costs other than on a party and party basis include:
(a) where proceedings have been pursued in wilful disregard of known facts or established law; and (b) where the allegations ought not to have been made, or the proceedings have been unduly prolonged by groundless contentions. 28. I am not persuaded here that the denial of liability was in any way conducted in wilful
disregard of known facts or established law. The facts were only determined as a result
of cross-examination and contested expert evidence. The question of liability also
carried with it a degree of complexity in the statutory defences raised, and again, those
defences relied upon contested facts that were only resolved at hearing.
29. I am otherwise unpersuaded that putting liability in issue was unreasonable for any
reason and accordingly, there is no basis that I can discern for requiring the defendant
to pay indemnity costs.
Conclusion
30. The orders of the Court are as follows:
(1) Pursuant to r 1725(3) of the Court Procedure Rules 2006 (ACT), the plaintiff is entitled to any determined fee at the Supreme Court rate and 75 percent of the costs and disbursements that the plaintiff would have been entitled to recover in the Supreme Court had the judgment been more than $250,000. I certify that the preceding thirty [30] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice McWilliam.
Associate:
Date: 5 May 2023
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