Moloney v Zhu

[2020] ACTMC 3

MAGISTRATES COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Moloney v Zhu and Anor

Citation:

[2020] ACTMC 3

Hearing Date(s):

26 February 2020

DecisionDate:

4 March 2020

Before:

Acting Chief Magistrate Theakston

Decision:

The plaintiff’s costs are to be assessed in accordance with the Civil Laws (Wrongs) Act 2002, s 181.

Catchwords:

CIVIL LAW – assessment of costs - application of Road Transport (Third Party Insurance) Act 2008 – application of Civil Law (Wrongs) Act 2002 – mandatory final offer – non-economic loss

Legislation Cited:

Civil Laws (Wrongs) Act 2002 s 181

Legislation Act 2001 s 139

Road Transport (Third Party Insurance) Act 2008 s 155

Cases Cited:

Albrecht v Insurance Australia Limited [2016] ACTCA 58

Farah Construction Pty Limited v Say-Dee Pty Limited [2007] HCA 22; 230 CLR 89

Haureliuk v Furler [2012] ACTCA 11; 6 ACTLR 151

Insurance Australia Limited v Anor v Albrecht [2015] ACTSC 68

Mitchell v ACT [2018] ACTSCFC 1; 13 ACTLR 208

Parties:

Paula Moloney (Plaintiff)

Lei Zhu (First Defendant)

Insurance Australia Limited (Second Defendant)

Representation:

Counsel

Mr Andrew Muller (Plaintiff)

Mr Brendan Jones (First and Second Defendants)

File Number(s):

CS 205 of 2018

ACTING CHIEF MAGISTRATE THEAKSTON:

Introduction

1. The parties have made a joint application for the Court to determine which provision applies for the purpose of limiting the costs to be paid by the second defendant to the plaintiff.  The question is significant, because one provision could yield a result of $0.00 and the other a result as high as $10,000, plus disbursements.

Background

1. The matter involved a personal injury claim arising out of a motor vehicle incident.  That claim was resolved by way of consent orders that provided judgement to be entered for the plaintiff against the second defendant for $25,000, plus costs as agreed or assessed.  The defendants’ correspondence to the plaintiff before the settlement expressly stated they were of the view that costs would be subject to the Road Transport (Third Party Insurance) Act 2008 (repealed), s 155(2), although the General form of consent judgment is silent about that assertion.

1. The parties had earlier exchanged the following mandatory final offers which were not accepted:

Plaintiff	Defendant
Damages for non-economic loss	$81,916.27	$0.00
Damages other than non-economic loss	$826.00	$10,000.00
Total	$82,742.27	$10,000.00

1. The application proceeded on the basis that the Civil Laws (Wrongs) Act 2002, s 181 applied to limit the costs payable for modest judgments unless the Road Transport Act, s 155 applied. Those provisions relevantly provide:

181  Maximum costs for claims of $50 000 or less

(1)This section applies if the amount recovered on a claim for personal injury damages is $50 000 or less.

(2)If this section applies—

(a)a lawyer is not entitled to be paid; and

(b)a court (or a taxing officer) must not decide that a lawyer is entitled to be paid; and

(c)a court must not order anyone to pay to a lawyer;

an amount for legal services in relation to the claim that (or that together with other amounts) is more than the maximum costs allowable under this section.

…

(4)The maximum costs allowable for legal services provided to the plaintiff in relation to the claim are the greater of—

(a)the relevant percentage of the amount recovered; and

(b)the relevant amount.

(5)The maximum costs allowable for legal services provided to the defendant in relation to the claim are the greater of—

(a)the relevant percentage of the amount sought to be recovered by the plaintiff; and

(b)the relevant amount.

(6)In this section:

amount recovered, on a claim—

(a)includes an amount paid under a compromise or settlement of the claim, whether or not an action has been begun; but

(b)does not include an amount attributable to costs or to the addition of interest.

amount sought to be recovered by a plaintiff means, if an action is begun—

(a)the amount sought to be proved by the plaintiff at the hearing of the claim; or

(b)if the claim is for unliquidated damages—the amount that the court (or a taxing officer) decides is, for this section, the amount sought to be recovered by the plaintiff on the claim.

relevant amount means $10 000 or, if another amount is prescribed by regulation for this definition, the prescribed amount.

relevant percentage means 20% or, if another percentage is prescribed by regulation for this definition, the prescribed percentage.

155  Costs—small awards of damages—generally

(1)This section applies if a court awards $50 000 or less in damages in a proceeding (other than an appellate proceeding) based on a motor accident claim.

NoteDamages does not include damages for non-economic loss (see s (5)).

(2)If the court awards $30 000 or less in damages, the court must apply the following principles:

(a)for a claimant other than a claimant mentioned in paragraph (b)—if the amount awarded is less than the claimant’s mandatory final offer but more than the respondent’s mandatory final offer, no costs are to be awarded;

(b)for a claimant who was a child at the time of the motor accident or holds a Commonwealth concession card when the damages are awarded—costs not exceeding $5 000 may be awarded;

(c)if the amount awarded is equal to, or more than, the claimant’s mandatory final offer, costs must be awarded to the claimant in the way prescribed by regulation as from the date on which the proceeding began (but no award is to be made for costs up to that date);

(d)if the amount awarded is equal to, or less than, the respondent’s mandatory final offer, costs must be awarded to the respondent as prescribed by regulation.

(3)If the court awards more than $30 000 but not more than $50 000 in damages, the court must apply the following principles:

…

(5)In this section:

…

damages does not include damages for non-economic loss.

1. There are several questions that need to be answered to resolve the ultimate issue, namely:

(a)Does the Road Transport Act, s 155 apply to a judgment entered by consent?

(b)Does the term ‘mandatory final offer’ in s 155(2)(a) include non-economic loss?

(c)Did the parties agree that s 155 should be used to determine the limit of costs?

(d)What limitation, if any, does the application of s 155 yield?

(e)What are the consequences if s 155 does not yield a limitation?

Does the Road Transport Act, s 155 apply to a judgment entered by consent?

1. Section 155 applies where a court awards $50,000 or less in damages. It was argued by the plaintiff that a court does not award an amount in a judgment entered into by consent and therefore the provision did not to consent orders. Mossop M, as he was then, in Insurance Australia Limited v Anor v Albrecht [2015] ACTSC 68 at [68] and [73] held that the section does apply in the cases of judgments entered into by consent. In doing so he applied the various principles of statutory interpretation summarised in Haureliuk v Furler [2012] ACTCA 11; 6 ACTLR 151 at [19] – [30] by considering the context and purpose of the legislation.

1. Mossop M’s decision was appealed.  In Albrecht v Insurance Australia Limited [2016] ACTCA 58 at [18] the Court of Appeal determined that s 155 did not apply to that case as a mandatory final offer had been accepted and s 155 only applied in the circumstances where a mandatory final offer had not been accepted. That construction was preferred in light of the purpose of the provisions. In those circumstances, the Court of Appeal declined to consider whether the reference to the term ‘award’ referred only to an award based on an adjudication of the merits of the claim by a court.

1. The plaintiff in the instant case argued that certain obiter dicta by the Court of Appeal at [54] and [55] suggested that had the Court of Appeal been required to determine the issue it would have determined that the term ‘award’ did not included judgments entered into by consent. The plaintiff also argued that notwithstanding the doctrine of precedent, I was not required to follow the above ratio provided by Mossop M, as the Court of Appeal had provided contrary ‘seriously considered dicta’. However, that dicta involved the consideration of the expression ‘if making a decision about costs’, rather than the term ‘award’. Additionally, it is not clear to me that the Court of Appeal was suggesting that those words would exclude consent orders as to costs, as suggested by the plaintiff. In any event, the Court of Appeal’s observations were not about the meaning of the term ‘award’ in s 155, and therefore at best bear indirectly on the issue and do not amount to seriously considered dicta: Farah Construction Pty Limited v Say-Dee Pty Limited [2007] HCA 22; 230 CLR 89 at 150-151 [134] and 159 [158]. Additionally, it remains unclear to me that the principle of ‘seriously considered dicta’ would apply to a matter in the ACT Magistrates Court, where there remained clear authority to the contrary from the ACT Supreme Court.

1. In the above circumstances I adopt the reasoning of Mossop M and rule that the Road Transport Act, s 155 applies to a judgment entered into by consent.

Does the term ‘mandatory final offer’ in s 155(2)(a) include non-economic loss?

1. Section 155(2)(a) compares two sets of figures, namely the amount awarded and the mandatory final offers. By operation of sub-s (5) the former excludes an amount for non-economic loss, but the Act is silent about whether the latter does likewise.

1. In Haureliuk, at [17], the Court of Appeal accepted, without a contradictor, that the latter did not include non-economic loss. In doing so it accepted the submission that to do otherwise, a court would not be comparing like with like and the inclusion of the extra component in one of the figures only would distort the operation of s 155.

1. It may be the case that I am bound by that ruling, but in any event I am of the view that that interpretation is open and the preferred interpretation, compared to a restricted literal interpretation, when the context and purpose of the provisions are considered.  The preferred interpretation better serves the purpose of encouraging parties to make meaningful offers and incentivise the early resolution of claims: Mitchell v ACT [2018] ACTSCFC 1; 13 ACTLR 208 Burns J at [179]. The alternative interpretation would create a degree of uncertainty that would temper the intended incentive. The preferred interpretation therefore addresses a legislative oversight and avoids an irrational and absurd result. I note out of completeness that the Legislation Act 2001, s 139 requires the court, when working out the meaning of the provision, to prefer the interpretation that would best achieve the purpose of the Act.

1. Accordingly, the expression ‘mandatory final offer’ in s 155(2)(a) does not include a component for non-economic loss.

Did the parties agree that s 155 should be used to determine the limit of costs?

1. The defendants argued that the parties agreed that the relevant provision for the calculation of costs was the Road Transport Act, s 155 and that such an agreement superseded any operation of law that may prevent the application of that provision.

1. The Schedule of Correspondence contains two documents that refer to that provision, prior to the judgment.  The first is an email that includes the following statement:

To make our position perfectly plain we view the settlement of this matter as being subject to s155(2) of the Road Transport (Third Party) Insurance Act 2008 (sic).

1. The second is the Terms of Settlement attached to the General form of consent judgment filed with the Court, which includes the following provision:

… plus costs assessed under the Road Transport (Third Party) Insurance Act 2008 (sic).

1. That latter document was signed by on behalf of the parties.

1. Ultimately, I do not need to decide whether the parties could and did contract out of any legislative requirement. That is because I have ruled s 155 applies to judgments entered into by consent, and the requirements of subs 155(1) and (2) are met due to modest size of the judgment. In such circumstances clearly the question of costs is subject to the effect of subs 155(2). Any agreement, should it have legal effect, has no work to do.

What limitation, if any, does the application of s 155 yield?

1. The damages awarded were $25,000 and therefore no matter what proportion of that amount should be discounted as non-economic loss, the damages were less than $50,000 – triggering the operation of s 155, and less than $30,000 – triggering the operation of subs 155(2).

1. As the plaintiff’s offer for damages other than non-economic loss was lower than the defendants’ offer for the same, it is impossible for the conditions at paragraph 155(2)(a) to be satisfied.

1. As the award does not describe the component attributable for non-economic loss, it is impossible to make a positive determination that the $25,000 awarded, minus the unknown component for non-economic loss, was equal to or more than the $826 being the plaintiff’s mandatory final offer.

1. Finally, for similar reasons it is not possible to make a positive determination that the $25,000 award, minus the unknown component for non-economic loss, was equal to or less than the defendants’ final offer of $10,000, being for damages other than non-economic loss.

1. In such circumstances, while sub-s 155(2) applies, no relevant determination can be made and the provision has no consequential effect.

What are the consequences if s 155 does not yield a limitation?

1. In the circumstances where s 155 does not yield a limitation, there are two possible consequences, namely costs associated with this modest judgment continue to be limited by the Civil Wrongs Act, s 181; or there are no statutory limitations on the costs due to the modest size of the judgment. I understand the joint application to be framed in a way should s 155 not provide a limitation, then the limitation in the Civil Wrongs Act does apply; and that the application amounts to a concession by the parties to that effect.

1. While s 181 is a general provision that would be subject to the specific provision s 155, there is no reason why s 181 should not operate in the circumstances were s 155 does apply but ultimately has no effect.

Orders

1. For the above reasons the Court declares that the plaintiff’s costs are to be assessed in accordance with the Civil Laws (Wrongs) Act 2002, s 181.

I certify that the preceding twenty-six [26] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Chief Magistrate Theakston.

Associate:  Lauren Dreyar

Date:  04 March 2020