Hunt v Lemura

[2012] QSC 7

SUPREME COURT OF QUEENSLAND

CITATION:

Hunt v Lemura & Anor [2012] QSC 7

PARTIES:

CARLA LOUISE HUNT
(Plaintiff)
v
CARL SEBASTIAN LEMURA
(First Defendant)
AUSTRALIAN ASSOCIATED MOTOR INSURERS (ACN 004 791 744)
(Second Defendant)

FILE NO/S:

564 of 2010

DIVISION:

Trial

PROCEEDING:

Costs Order

ORIGINATING COURT:

Supreme Court, Cairns

DELIVERED ON:

31 January 2012

DELIVERED AT:

Cairns

HEARING DATE:

14 December 2011

JUDGE:

Henry J

ORDER:

The second defendant will pay the plaintiff’s costs of this proceeding on the standard basis on the District Court scale up to and including 28 October 2010.1.         

The plaintiff will pay the second defendant’s costs of this proceeding on the standard basis on the District Court scale from 29 October 2010.2.          

The second defendant will pay the plaintiff’s reserved costs of the application filed on 27 July 2010 on the standard basis on the District Court scale.3.          

The plaintiff will pay the second defendant’s reserved costs of the application filed on 5 April 2011 on the standard basis on the District Court scale.4.         

The second defendant will pay all statutory refunds from the judgment sum of $140,594.32 within 28 days of all clearances having been received.5.         

Payment of the balance of the judgment sum is stayed until such time as the parties have resolved the issue of costs by agreement or court order.6.         

Each party has liberty to apply on two clear business days notice in writing.7.         

CATCHWORDS:

COSTS – WHERE OFFER OF COMPROMISE MADE – where the award or damages at trial was less than the mandatory final offer made under s 51C of the Motor Accidents Insurance Act 1994 (Qld) – where a subsequent offer was made under Chapter 9 Part 5 of the Uniform Civil Procedure Rules1999 (Qld) which was also in excess of the award of damages at trial– whether the plaintiff should pay the defendants’ costs from the date of the expiry of the first offer or the second

COSTS – WHAT SCALE – where the posting and the filing dates fell either side of changes to the jurisdictional limits – whether the costs should be measured under the old jurisdictional limits

Acts Interpretation Act 1954 (Qld) s14A
Motor Accidents Insurance Act 1994 (Qld) ss 3(e), 51C
Uniform Civil Procedure Rules1999 (Qld) r 361

CIC Insurance Limited v Bankstown Football Club Limited (1995) 187 CLR 384
Lawes v Nominal Defendant [2007] QSC 103
Monement v Faux & Anor [2005] QSC 342
Reardon-Smith v Torres-Farr & Anor [2007] QSC 8
Xu v Thurgood & Anor (No 2) [2008] QSC 319
Zevering v Callaghan [2011] QCA 180

COUNSEL:

A R Philp SC for the plaintiff
G Crow SC for the defendants

SOLICITORS:

Roati & Firth Solicitors for the plaintiff
Miller Harris Lawyers for the defendant

1. There are several matters arising for determination out of the submissions as to costs in this matter.

From what date should the plaintiff bear the defendants’ costs?

1. The judgment sum of $140,594.32, ordered on 2 December 2011, is less than the settlement amounts offered by the defendants, which were:

(a) On 14 October 2010, the defendants’ mandatory final offer under s 51C of the Motor Accident Insurance Act 1994 (Qld) (“the Act”), of $150,000, and

(b) on 27 March 2011, the defendants’ offer under Part 5 Chapter 9 of the Uniform CivilProcedure Rules (“UCPR”, “the Rules”) of $250,000.

1. It is common ground that pursuant to UCPR r 361 the plaintiff should pay the defendants’ costs from 27 March 2011, the date of the defendants’ offer to settle under the Rules. At issue is whether the plaintiff should pay the defendants’ costs after the date of the defendants’ offer to settle under s 51C of the Act.

1. One of the Act’s objects, per s 3(e), is to encourage the speedy resolution of personal injury claims resulting from motor vehicle accidents. Consistent with that purpose the Act imposes a scheme, at Division 5A of Part 4, by which, before a claimant brings an action in a court for damages for personal injury arising out of a motor vehicle accident, there must first be a compulsory conference of the parties who must actively participate in an attempt to settle the claim and, failing settlement at the conference, must exchange mandatory final offers[1]. It is obviously a scheme calculated at promoting the above-mentioned purpose of the Act.

   [1]ss 51A, 51B, 51C.

1. As to mandatory offers s 51C of the Act relevantly provides:

51C Parties to exchange mandatory final offers if claim not settled at compulsory conference

(1)  If a motor vehicle accident claim is not settled at the compulsory conference, each party must (unless the court has dispensed with this obligation) exchange written final offers…

(2)  A written final offer required under subsection (1) is called a mandatory final offer. …

(6)  A mandatory final offer must remain open for 14 days…

(8)  The insurer must, before or at the time of filing a defence, file at the court a sealed envelope containing a copy of the insurer’s mandatory final offer.

(9)  The court must not read the mandatory final offers until it has decided the claim.

(10)  However, the court must (where relevant) have regard to the mandatory final offers in making a decision about costs… (emphasis added).

1. The parties referred to a number of authorities in addressing how s 51C(10) ought be applied.

1. The plaintiff submitted there was an onus on the defendants to show that the plaintiff imprudently or unreasonably failed to accept the defendants’ mandatory final offer. That submission drew on comments made by Byrne J in Lawes v Nominal Defendant [2007] QSC 103 to the effect that s 51C(10) makes a mandatory final offer a significant, but not decisive, consideration in deciding whether to award costs on an indemnity basis and that the section operates in the same manner as a Calderbank offer that is bettered at trial. However, Lawes dealt with the situation where a mandatory final offer made by the plaintiff was less favourable than the judgment received and the plaintiff sought indemnity costs.  It is in that situation that the case law requires imprudence or unreasonableness. Indemnity costs are not sought here and the defendants’ are not obliged to prove impudence or unreasonableness on the plaintiff’s part.

1. The defendants referred to the decisions of this Court in Xu v Thurgood& Anor (No 2)[2] and Reardon-Smith v Torres-Farr & Anor[3], which indicate that in the absence of any contrary or countervailing considerations, a defendant who has made a settlement offer in an amount more favourable to the plaintiff than the eventual judgment amount should be awarded costs following the date of the mandatory final offer, or alternatively the date of the expiry of the offer[4].

   [2][2008] QSC 319 (“Xu”) [9], [10].

   [3][2007] QSC 8 (“Reardon-Smith”) [11].

   [4]See also Monement v Faux & Anor [2005] QSC 342 (“Monement”), a case with some similarities to the present (particularly in that there was little difference between the ultimate award of damages and the defendants’ offer), where Douglas J found that the defendants were entitled to costs following the date that their mandatory final offer expired. 

1. Unlike r 361, s 51C(10) does not articulate a presumption in favour of a defendant who has made a settlement offer in an amount more favourable to the plaintiff than the eventual judgment amount. Care should be taken not to impose a limitation which is not contained in the statutory provision[5].  However the approach taken in Xu and Reardon-Smith does not involve a limitation upon the discretion in respect of costs and merely reflects the logical consequence of considering that such an offer was made in a case where no contrary or countervailing consideration is present.

   [5]See for example Zevering v Callaghan [2011] QCA 180 at [49] citing FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 at 290; Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 205 per Gaudron J; Patton v Buchanan Borehole Collieries Pty Ltd (1993) 178 CLR 14 at 17, 23-24, 28-29.

1. Where a defendant has made a settlement offer in an amount more favourable to the plaintiff than the eventual judgment amount then such an offer will be a significant relevant consideration in the defendant’s favour and the court must have regard to it. That follows from the language of the s 51C(10), the Act’s purpose of encouraging the speedy resolution of personal injury claims[6] and the context of s 51C(10) in the statutory scheme promoting that purpose[7].  Whether such an offer is a consideration that should result in an order in the defendant’s favour will depend on the circumstances of each case, particularly the force of any contrary or countervailing considerations.

   [6]The Act’s purpose is a relevant consideration in the interpretation of s51C(10), per s 14A Acts Interpretation Act 1954 (Qld).

   [7]Recourse to context being a first instance consideration in the modern approach to statutory interpretation, per CIC Insurance Limited v Bankstown Football Club Limited (1995) 187 CLR 384 at 408.

1. A consideration advanced by the plaintiff as significant in the present matter was the supposed degree of uncertainty as to the future impact of the injury, particularly upon her future capacity to earn income full-time, at the time of the mandatory final offer.  In this regard the plaintiff emphasised my finding that she was not fit to return to work until 1 November 2010 (the offer was made on 14 October 2010), that there was conflicting medical evidence about her injuries and that the defendants did not advance any clear medical evidence about when or indeed whether she would manage full-time employment.

1. The state of affairs was not as uncertain as the plaintiff submits.  It would have been obvious when the plaintiff was considering the final mandatory offer that this case would turn to a large extent on the court’s decision about which side’s line of competing expert opinion should be preferred at trial.  The plaintiff would have been aware of the content of the reports of the experts, both favourable and unfavourable. She would have appreciated the real risk that a trial judge would prefer the expert opinions of the defence experts, Doctors Weidmann, Toft and Burke, and conclude that her neck and back injuries had resolved or largely resolved by the time of the 2010 examinations.  In turn, there was an obvious risk that a court would infer from such a conclusion that the plaintiff would be physically able to perform full-time work[8].

   [8]An inference drawn at judgment at [152].

1. There will inevitably be some element of uncertainty inherent in forecasting future loss and deciding whether or not to accept a mandatory final offer.  However, the plaintiff had ample material upon which to make an informed decision. Such uncertainty as existed here was unremarkable and not of such a degree as to detract in any material way from the regard that must be had to the defendants’ mandatory final offer in making a decision about costs.

1. The plaintiff also emphasised that the defendants’ mandatory final offer was only about $10,000 less than the eventual judgment.  This was advanced in the context of arguing that the defendant had not established that the plaintiff had been unreasonable or imprudent in rejecting the offer, although as earlier explained this is not a matter which the defendants must prove.  However, it was also advanced as generally relevant in the plaintiff’s favour that the plaintiff’s decision to reject the offer was a mere $10,000 off the mark.

1. The quality of the offer that makes it a material consideration in the defendants’ favour is the fact that it exceeded the amount of the eventual judgment sum. It follows that generally the more significant consideration about the amount of the offer is likely to be the fact that it exceeded the eventual judgment sum at all rather than by how much it did so. Further the reference to “offers” in s 51C(10) means that a court may consider, where relevant, the mandatory final offers made by both parties. Here, the plaintiff’s mandatory final offer of $650,000 exceeded the ultimate award by approximately half a million dollars. It was not remotely close to the mark. The excessive quantum of her offer is relevant in that it suggests she would have been unwilling to accept any amount in the vicinity of the final judgment. In this case the proximity of the defendants’ mandatory final offer to the eventual judgment sum carries no material force as a countervailing consideration.

1. In the circumstances the plaintiff should pay the defendants’ costs from the date of expiry of the defendants’ mandatory final offer. 

1. Section 51C(6) of the Act requires that mandatory final offers remain open for 14 days so the relevant date for the purposes of the costs order favouring the defendants will be 29 October 2010[9].

   [9]The date of expiry of the offer rather than the date of the offer was identified as the relevant date in this context in both Reardon-Smith and Monement.

On what scale should costs be awarded?

1. On 1 November 2010 the jurisdictional limits of Queensland courts changed.  The plaintiff’s claim and statement of claim were dated and posted to the Registry on 29 October 2010 (before the changes took effect) but were not filed by the Registry until 4 November 2010 (after the changes took effect).  The result is that on the date of posting this was a claim that should have been commenced in the District Court but on the date of filing it was a claim that should have been commenced in the Magistrates Court which by then had an increased jurisdictional limit of $150,000. 

1. On this basis the defendants argued that costs should be assessed on the Magistrates Court scale.  This was not pressed in oral argument by the defendants and the plaintiff, despite earlier written submissions that the Supreme Court scale should be used, properly conceded that the District Court scale was appropriate.

1. Given that the date of posting and filing of the claim fell either side of the date the changes took effect it is appropriate to use the District Court scale. 

Reserved Costs

1. There were two applications heard for which costs were reserved.  The first application was heard before the Compulsory Conference and the offer to settle under the Rules whilst the second was heard after those events.  The plaintiff submitted that therefore the defendants should pay the costs of the first application and the plaintiff should pay the costs of the second.  Senior Counsel for the defendants conceded that this submission was reasonable and did not argue the matter further. 

1. In the circumstances, the appropriate order is that proposed by the plaintiff.

Stay

1. The defendants seek orders staying the payment of the balance of the judgment (after statutory refunds) until such time as the parties have resolved the issue of costs by agreement or court order.  Under r 658 of the Rules the court has a general discretion to make any order that the nature of the case requires.  The plaintiff does not oppose the stay but does seek liberty for each party to apply.  Given the agreement between the parties a stay will ordered and the parties will be at liberty to apply. 

Orders

1. My orders are:

1.          The second defendant will pay the plaintiff’s costs of this proceeding on the standard basis on the District Court scale up to and including 28 October 2010.

2.          The plaintiff will pay the second defendant’s costs of this proceeding on the standard basis on the District Court scale from 29 October 2010.

3.          The second defendant will pay the plaintiff’s reserved costs of the application filed on 27 July 2010 on the standard basis on the District Court scale.

4.          The plaintiff will pay the second defendant’s reserved costs of the application filed on 5 April 2011 on the standard basis on the District Court scale.

5.          The second defendant will pay all statutory refunds from the judgment sum of $140,594.32 within 28 days of all clearances having been received.

6.          Payment of the balance of the judgment sum is stayed until such time as the parties have resolved the issue of costs by agreement or court order.

7.          Each party has liberty to apply on two clear business days notice in writing.